Venezuela on the road to hyperinflation
Duncan Richardson, News Editor
5 Feb 2016, 3:39 p.m.
According to the The Wall Street Journal thirty six 747 cargo planes have landed in Venezuelan capital stuffed with bank notes.
The notes were ordered by Nicolas Maduro the countries President in the latter half of 2015 in an attempt to increase the amount of money in circulation. The President did not stop there, the country’s central bank held a number of meeting to discuss the possibility of ordering 10 billion more notes. If sanctioned this transaction alone would double the total amount of money in circulation. Injecting roar cash into an economy will only accelerate the country’s economic collapse. The International Monetary fund is forecasting that inflation will reach 720% this year.
Venezuelans are struggling and many have restored to carrying large sacks of money to pay for simple everyday items. The price of fruit and vegetables have risen from 2,632 bolivars in December 2014 to 14,138 bolivars in December 2015. ATM’s are being emptied as locals attempt to spend their money before it is devalued.
I guess we should not be surprised as all paper currencies eventually return to their intrinsic value. In the last 100 years there have been 29 reported cases of hyperinflation with 18 cases between 1986 and 1996.