Friday, February 15, 2008

Where is the fire? 

To listen to some because Venezuela has a fairly high inflation rate (though inflation seems to be breakin out all over these days) the world must be coming to an end. Or at least the sky must be falling.

Truth be told, I think Venezuela will muddle through. After all, in the decade before Chavez came to power inflation was several times worse than it is now and somehow the country survived.

In the past I've made graphs to show that fact which many who oppose Chavez like to ignore. But my graphs are primitive and ugly and maybe that is why some don't seem to grasp them.

Fortunately, someone made a much prettier graph of Venezuela's experience with inflation for the recent VeAmCham conference so I thought I'd cadge it:

As you can see before Chavez came to office inflation was a LOT higher. In fact if those governments had ever managed to get inflation below say 30% they'd probably think they were the greatest thing since sliced bread.

Fortunately for Venezuela, Chavez was elected and went on to produce a dramatic reduction in the inflation rate. You would think the guy would get a pat on the back but then again knowing what his opponents are like we should understand why he hasn't.

And speaking of his opponents many of the same luminaries who fill the airwaves complaining about the current inflation rate were actually responsible for the economy when inflation spiked to 80 and even 100%. Petkoff, Torres, Naim, Haussman, etc all were in these governments that had truly outrageous levels of inflation. Not only that, but during much of the time that they had sky high inflation the economy was actually in a recession too!!!! What should that be called - hyper stagflation?

Chavez sure has helped create some real problems that need to be fixed. But this inflation non-sense is not very high up on the list. And the peanut gallery that screwed things up far worse when they were in office is best ignored. Chavez needs some good advice but he isn't going to get much of it listening to them.


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