Inflation is the disease and cancer that ravages the body of the economy, and the delay in taking solutions to it will make the possibility of solving any economic problem a real dilemma.
The Venezuela crisis is witnessing a mixture of many crises, the most prominent of which are many internal factors such as corruption and mismanagement, random printing of money and a decline in purchasing power. And many external factors, some related to the nature of the economy and the other political.
It's an extreme example of economic failure.
Yes, as I said in the topic. The reasons for Venezuela’s economic nightmare are complex.
Whether it is the Dutch disease caused by a single industrial structure or the economic sanctions imposed on Venezuela by the United States and other countries, they have a certain impact on this inflation.
But these are not the most important reasons. Venezuela could have survived this crisis steadily by relying on the foreign exchange reserves accumulated by previous oil sales.
During the international financial crisis (2009-2010), as the Venezuelan government continued to expand fiscal expenditures on a large scale, its foreign exchange reserves were gradually depleted, and the market exchange rate accelerated its tendency to depreciate. Beginning in 2013, coupled with domestic political turmoil, the tendency of market exchange rate depreciation has become more serious, which in turn promoted domestic inflation. As mentioned earlier, after the surge in domestic inflation, the growth of foreign trade was further frustrated and the growth of fiscal revenue was weak. The Venezuelan government had to resort to monetary policy to maintain fiscal expenditures, which in turn triggered a rise in inflation expectations and actual inflation, which eventually became out of control.