Another glorious success for the system of socialism…
Venezuela, a country just a tiny step up from total anarchy, is launching a new exchange rate as their economy continues to collapse.
Despite gigantic oil reserves, Venezuela suffers from shortages of almost everything, as their incompetent socialist government has destroyed the economy.
There are shortages of even basic essentials such as toilet paper and medicine.
New Bolivar-US Dollar exchange rate
Venezuela has two exchange rates recognized by the government. The DIPRO rate gives 1 US Dollar for 10 Bolivars (Venezuela’s currency). The SIMADI rate gives 1 US Dollar for 709 Bolivars.
However, the real exchange rate is closer to 3,000 Bolivars for each US Dollar. This is the rate on the black market, which is far more reflective of real prices.
Hilariously, the Venezuelan government claims they are perfecting the system with the new rates:
“In a process of perfecting the system of collecting, administering and stabilizing the flow of hard currency in Venezuela, we have decided to activate from next week a new model of DICOM,” said Venezuelan President Nicolas Maduro.
“Perfecting” isn’t the word I would use.
As reported by Reuters, “Government critics say Venezuela’s complex set of currency controls are at the heart of its worsening economic mess. Millions of Venezuelans are not eating enough due to soaring inflation and shortages.”
The failure of socialism
Socialism keeps failing, and yet fools keep trying it. Venezuela shows how truly destructive the system is. If a country with immense oil reserves can experience food shortages and near total collapse, it should be a lesson to everyone that putting control of the economy in the hands of politicians is a horrendous idea.
Any national or even regional economy is far too large and complex to be managed centrally. Market forces must be the dominant driver of economic activity. When politicians try to take control themselves, it always ends in failure.
The government has become a laughingstock, with Reuters saying “The various acronyms for new official rates – SITME, SICAD, SICAD II, SIMADI, DIPRO and DICOM – have become a joke among critics as the currency falls on the black market.”
The decline experienced by Venezuelans is almost impossible to imagine. Since Maduro came to power four years ago, Venezuela’s currency has lost almost all of its value. As Reuters explained, someone who had $1,000 Bolivars in savings four years ago now has just $7.
Once again, socialism fails miserably.
Photo – Twitter