Today, there are 1 trillion bolivars in circulation in Venezuela. A year ago, there were Bs.583 billion. That, right there, is pretty much all you need to know to understand why inflation is increasingly out of control. You can’t grow the money supply by 71% and expect prices to just sit tight.
Now, unless you use the Gold Standard (or run an Ecuadorean style dollarized economy), there’s really no way for the state to shirk responsibility for this. In states where the Central Bank is genuinely independent, government actors might say it’s not their bit of the state that’s at fault, but in a chavista system that has gone way out of its way to reaffirm the BCV’s subordination to the Executive Branch, even that avenue is closed.
To be clear: all of the policy instruments that determine the money supply are under the tight, direct control of the revolution. It’s the damn BCV Chairman’s John Hancock that’s on the damn bills. It’s PDVSA and CVG and the government whose demand that the Central Bank monetize their overspend creates most of the extra liquidity now sloshing around fueling price hikes. These things are not ambiguous.
And yet, here’s Vice-president Jorge Arreaza opining on the liquidity situation,
Este jueves el Vicepresidente Ejecutivo, Jorge Arreaza, señaló que factores económicos han inyectado liquidez deliberadamente a la economía, a fin de generar presiones que sirvan como arma de la supuesta guerra económica que adelantan los empresarios contra el país.
Yup, you read that right: even the liquidity spike is a CIA conspiracy!
Then he adds this cherry-on-top…
Dijo que ya están identificados y que próximamente el Presidente Nicolás Maduro dará a conocer sus nombres.
Why wait? I got yer names right here, pal: