by Virginia Fidler, Gold Telegraph:
Venezuela may have achieved the socialist dream. It once had gold and oil in abundance, yet now, people are starving, and toilet paper is a luxury.
Venezuelans can no longer afford the most basic necessities. During the first quarter of 2018, consumer prices rose again, this time by 454 percent. Hyperinflation has made the bolivar essentially worthless. The country experienced 8,900 percent inflation in just 12 months.
While the bolivar has turned into mere paper, Venezuela continues to print the currency at breakneck speed. The money supply has risen 2,900 percent over the last year, while goods are becoming scarcer and scarcer. Welcome to hyperinflation 101.
Venezuela plans on solving the crisis by eliminating three zeros from the Bolivar while it retains its current value, which has plunged by over 99 percent since 2013. The elimination of zeros was necessitated by the near crash of the Caracas stock market computers, which were unable to handle the burgeoning volume of transactions.
How did once-prosperous Venezuela get to this point? It has the world largest oil reserves, but it is importing millions of dollars of oil on a daily basis. Oil is the only affordable commodity left in Venezuela, although few civilians own cars.
It is believed that Venezuela’s oil fields are operating at a mere 40 percent of capacity. Oil production declined by 100,000 barrels in a single day in February. As Venezuela continues to mismanage its own oil supplies and neglects its refining infrastructures, it continues to import oil at an unprecedented rate. If this continues, Venezuela’s need for oil could soon cause a global oil deficit.
Venezuela has access to 25 percent of the world’s heavy crude. This crude needs to be diluted for commercial use. For the past two years, Venezuela has imported up to 200,000 oil diluents a day, with the US being the major supplier. Everyone knows about Venezuela’s long food queues. These days, this oil-rich country is seeing cars queuing up for cheap gas at $0.01 (0.7p) per liter.