Hyperinflation: A Certain Kind of Hell in an Economy Gone Mad

|August 17, 2021

“All our wealth is just 15 miles away. But I worry we’ll never see it again.”

Even after we got to where we were going, we sat in the car and talked with our Aruba-born cab driver last week.

His story was fascinating… and quite worrying.

“My father and I used to provide most of the beef for this island,” he said. “But now we aren’t allowed on our land. The money is all gone.”

“It is very sad,” he said in an odd accent.

The car sat with its front bumper facing south, facing a beautiful white sand beach and ice-blue water. For many, this is paradise. But a certain kind of hell lies just across the horizon.

Just 15 miles from the high-tide mark are the northern beaches of Venezuela.

“We used to go there all the time,” the driver said. “It’s where Arubans went to vacation and where we went to ranch.”

Now, the tiny island’s coast guard lights up the water separating the two countries each night. It closes the beaches as it searches for Venezuelan refugees making the perilous 15-mile journey from one country to the other. The rough water is little deterrent to those fleeing an economy gone mad.

It Never Works

What’s destroyed Venezuela is no secret.

The nation has a long history of economic manipulation and political strangleholds.

As our cab driver knows, in a socialist regime, what is yours one day is likely to be the government’s the next.

But it goes both ways, of course. That’s how lousy dictators get to power. They take from one and give to another.

Former President Hugo Chávez thought of himself as a sort of political Robin Hood. He took the nation’s oil wealth and used it to build state-run food markets. He gave cash directly to the poor. And he offered free healthcare.

If you needed it… the state would provide it.

The nation loved him for it.

Like we said, native Arubans would leave their version of paradise and head to Venezuela for its shopping, its entertainment and its good food.

But a nation built on oil dies on oil.

When prices were high, the country could afford to pay folks for not producing anything. But when prices sank… oh boy. The folks who produced nothing still produced nothing. But they still got hungry every morning. They still needed trips to the doc. And they still wanted to live the good life.

The government went broke.

Sound Familiar?

So the politicians did what all politicians do. They lied. Instead of using real money backed with real things, they fired up the printing press.

The prevented one catastrophe by creating a much larger one.

“The best currency over there these days,” our driver said, “is eggs.”

One of the biggest problems in Venezuela in recent years is the lack of currency. For the last decade, folks have had to line up at their local bank to get cash – only to find out, usually, that the bank has run out.

The state’s printing press couldn’t keep up with inflation.

But that’s the thing with chickens. With them… you get what you get.

No more… no less.

If they gave you an egg a day last week, they’ll give you an egg a day this week.

In an economy where store shelves have no price tags because prices rise so quickly, the reliable, useful chicken is quite a store of value.

But that won’t do our cab driver much good. Venezuela is so broke, the land that he and his father invested their life’s work into is worthless these days. They can’t get to it. And even if they could paddle past the flood of refugees spilling across the sea, the land wouldn’t do them much good once they got there.

A desperate government has made its claim.

It’s not hard to see why it was so hard to get a smile from the cabbie.

His life has been hell over the last year.

The government took his land. A virus closed down his home. And the future looks like more of the same.

“I’m worried,” he said as we climbed out of the car.

We paid our fare and gave him a nice tip.

He was happy to have some American dollars. Now he can go buy a few dozen eggs… and put some real money in the bank.

P.S. Venezuela’s biggest problem is cash. And the same problem is coming to America. That’s why a secretive meeting next month in Washington could be flat-out devastating. If things go the way we think they could… your cash could be worthless. Here’s what’s happening now.

Andy Snyder
Andy Snyder|Founder

Andy Snyder is the founder of Manward Press, the nation’s premier source of unfiltered, unorthodox views on money and what it means for a free society. An American author, investor and serial entrepreneur, Andy cut his teeth at an esteemed financial firm with nearly $100 billion in assets under management. Andy and his ideas have been featured on Fox News, on countless radio stations, and in numerous print and online outlets. He’s been a keynote speaker and panelist at events all over the world, from four-star ballrooms to Senate hearing rooms. Today, Andy’s dissident thoughts on life, liberty and investing can be found in his popular daily newsletter,  Manward Financial Digest.