How to survive hyperinflation?
Greetings, dear Steemians
I wrote this post in response to a suggestion by 
What is Hyperinflation?
Hyperinflation is defined as a “monetary inflation occurring at a very high rate” (OED); that is, prices of products increase rapidly and the value of the local currency decreases proportionally. Ironically, it took many years for economists to start talking about hyperinflation in the Venezuelan case. Even though it is agreed among experts that we are facing hyperinflation whenever a country has a monthly inflation equal or above 50% and accumulated inflation equal or above 100% over three years, it wasn’t until last year that people started calling Venezuela’s illness hyperinflation, despite the obvious over 50% rate since 2013 (according to official records, unofficial empirical data placed it way above 50% during Chavez’s times). In 2016, according to some sources, Venezuela’s inflation was 500%.
Last year, it was estimated around 1,000,000 %. The Maduro administration obviously denies such numbers. But, the average Venezuelan who bought a pair of shoes for 4 Bs in December 2016 and sees the same shoes in December 2017 going for 40,000 Bs knows that there has to be a huge percentage separating those dates.
Causes:
Hyperinflation is usually the result of the printing and circulation of “inorganic money”, that is money that is not supported by the economy’s growth in goods and services. Wars or natural disasters usually precede hyperinflation, given the fact that only under such circumstances countries suffer serious shortages of basic products, the production apparatus is destroyed or seriously impaired, and there is a considerable reduction of the population due to death, illnesses, or migration. Venezuela faced all that without having experienced a war or a serious natural disaster. The revolution has been a man-made disaster!
Inefficiency, corruption, ideological and political interests over economic or social ones, ineptocracy, among other factors, made it possible for the chavistas to ruin one of the wealthiest countries on earth in 20 years.
How can you cope?
For those who are going through it, it may be too late to know what to do because part of the survival strategy under hyperinflation has to do with investment and restrictions. Someone who is already living a hyperinflation must have zero money to invest by now.
For those who are about to experience it or fear their countries currency may sink in value and may drive them eventually down escalating inflation, this is what you can do to avoid personal and family collapse:
No point in saving
Forget about saving money in your own currency. It will be worth nothing in a matter of months, weeks even. One way of saving is:
Investing in hard currencies (Dollars or Euros).
Investing in gold or other precious metals.
Or
Buying things that can keep and increase their value (nonperishable food, electronics, hardware and school supplies, clothes and shoes, etc).
At some point trueque (bartering) will become the most common form of economic exchange among regular people. You want to make sure you will have items people will find valuable and will be willing to give a lot for them.
Get your priorities straight.
- Spend any money you get on food and medicine. Medications such as antibiotics, painkillers, long-term treatments for chronic diseases, and any other medications for minor emergencies should be bought in abundance (if possible). Check expiration dates, keep record of all the medications you have stored,and when they are about to expire sell them. By then they must have ten-folded their price.
- Ask loans, use all credit cards. Borrowing money from banks at stable rates is better than facing the escalated inflation in the market. Borrow all you can, spend on priorities or invest on any of the previous suggestions. In a few months those loans will be insignificant.
It is of the upmost importance that under grave economic crises you strengthen your family ties. You will need all the help you can get and family and friends must help each other. Solidarity is key to survive under extreme circumstances.
Also, it is vital that you redefine your way of life. By simplifying your routine, by reducing unnecessary expenses, and by devoting more time to yourself and your loved ones, you will reduce considerably the amount of stress that ends up aggravating the economic crisis. Mental health is the ultimate challenge.
The storm will pass eventually, and whether you emerged stronger or survive at all will depend on how much you plan ahead and how much resiliency and adaptability you show during the downpour.