Hello everyone.
This is a post about my view of venezuelan economic crisis from the point of view of someone currently suffering it. Im not an expect of economic or politics so be mindful that this are my opinions abd personal experiences.
Everyone have heard about venezuela on the news lately at least once, and things dont seem to be improving at all, the current situation, outside the increase crime and insecurity is the rapid increase in prices that makes makes very difficult to keep up. Price of products increase naturally as well as minimum wage, the problem start when the price of products increase too fast and/or to much surpassing the expected increase and the relation with the minimum wage, in othrr words things cost more every day but you aren't making more money.
Now how badly is this in venezuela? Lets make a real comparison, current minimum wage is 65000 bolivares while the official dollar exchange circle the 7100 bolivares for 1 (one) dollar $, last year a bag of potato chips was close to 120 bolivares, today that same bag cost 1500 bolivares, a pot of butter: from 520 to 4600 in a year, an increase of 1000% in price is not acceptable in a year, even in a decade would be an anomaly,you imagine a product you buy every month rise in cost from 2 dollars to 20? How much more money you would need to make to correspond to those expenses? , and when this extends to all products it creates a terrible economy for everyone. Everyone is affected since everyone to eat , if the price of flour,sugar, eggs, anything you need to cook and survive scale faster than you can make the money to buy it then you have to start making tough choices, do I buy meat this month or soap to wash? Clearly choices that most people out there hadn't need to make gladly. Other people also struggle, specially those that sell this products for a living, if you buy big amounts of something to then sell it for a profit, but the price keep increasing you end in a cycle where you have to invest your profit just to buy the same product again (example, buy a box of gum at 5000, sell it for 6500 just to buy it again at 6000 or more) what option you have? Either you buy less everytime or you abjust your margin expecting the price to increase (which just makes the inflation worst for everyone). What about the none consumables? Cars, houses, electronics, houses go from 300,000,000 to 1,000,000,000 bolivares a car over 10 times minimum wage easily for a cheap car, sure is easy to fill it with gas since in venezuela gas is cheaper than water ( too bad you cant drink it and the roads are horrible), you can even use it as cheap solven (if you can afford the paint) but even if you are able to buy the car, the maintenance would sooner than later force you to leave it in your garage/front of your house being unable to find nor pay for the repair piece and work, electronics? 300,000 and up in price for a simple computer which explain why most people have ten year old computers running unofficial software, what about services? Well not gonna lie they been unaffected mostly by the inflation, but very little people in this country have steady water supply (most people use one or more water tank to store water when it does come) and power black outs are extremely common, phone service have seen a terible decay in quality as well as internet (adsl technology that use 20 years old phone landlines infrastructure failing? Shocker) while their price have not increase dramatically is definitely not good at all
How did venezuela reach this point? Basically it kill private industries, reducing the competition between products and reducing the supply, once you dont see one product you need for a week, the next time you see it you will buy much more of it, if it happens for a while with many different products then the market enters a fear state where you dont know if what you need will be there next week so you buy alot of it. Soon the supply cant cover the demand because you force all sane private industries away from the country. They try to solve that with controlled prices that just make more industries leave, when the only salvation would be to let the market saturate heavily to the point people no longer fear something won't show up next time, but at this point that's not possible. Other tactics that have been apply are the CLAP, a periodical bag of products for a reasonable (insanely cheap compare to all else) price, is basically a group of food products gather bag and distribute to the communities after a serie of gubernatorial procedures that can easily be the salvation to many people unable to pay for overpriced stuff around ; sound too good to be true? It is since a big group of the population have not seen one at all, and others get it with such little regularity that they cant count on it at all.
In conclusion the venezuelan economy have reach a point where no patching can cover the holes and a big change have to come to stabilize it.