21 3 mins 7 yrs

Socialism and price controls are taking their natural path in Venezuela. Government is not content with hammering the economy into pieces; now its Praetorians have been authorised to shoot hungry protestors if they get a bit too uppity.

As Venezuelans face chronic food shortages and their country’s economic crisis deepens, its government has authorised its armed forces to use lethal force against protesters if they believe their lives are at risk during demonstrations.

This is government all over. Having made the crises, it creates dupes and targets at which to strike. This is the cycle of government:

It prints up money to create the false illusion of economic wellbeing. It’s not wealth. It actually drains wealth from real assets, but it’s a short economic sugar rush. It usually works because hardly anyone looks at money supply stats. They see only jobs and goods in the shops and think all is good.

The extra money bids up prices. Taken to excess, price inflation accelerates. At this point government often blames mysterious “speculators”. Price controls are imposed, which even mainstream economists realise always lead to shortages. Venezuela is short of everything. Long queues exist for basic staples, people are going hungry. They protest and the government responds with threats of deadly force. This is government, and this is a crises completely, absolutely and 100 per cent caused by government intervention in the economy. Its money printing shot prices sky high, then its price controls choked off supply.

Only less government, fewer regulations and much more free markets can possibly resolve the situation, but as always it’s a hopeless situation. People are conditioned to call for more government to resolve problems. That the problems are caused by government in the first place is rarely seen. If today’s leaders cannot make us better then we’ll vote for another bunch of distorting, interventionist leaders. That’s what they’ll do, when all along they need no leaders, just free markets.

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  1. The EU which you are part of just started the process of quantitative easing. (printing money out of nothing).

    Now there are millions of people here in the US trying to get people elected to stop this insanity here in the states.

    Since you think voting is a fools errand what do you propose to do to stop your government from going down the path that they have chosen to follow us down?

  2. I don’t propose to do a thing.

    The European Central Bank, not the EU, has started printing money. It concerns only the eurozone, which is those countries which use the euro. It’s nothing to do with us.

  3. Actually I slightly misspoke

    The UK does own a share in ECB – right? But the ECB does not govern the pound.

  4. Troll –

    The UK is part of the EU, but not the eurozone. The eurozone is those countries which have the euro, and the European Central Bank is the monetary authority for the eurozone. The QE was annunced by the ECB and means more euro, a currency which the UK does not use.

  5. It sounds very convoluted. Has the Pound been used to prop up the EU and the Euro?

    How much is the British financial contribution to the EU?

  6. Good post Pete. There is now an international currency war in full swing. It’s the equivalent of the tariff war in the 1930s. Central banks are printing money like mad all over the world. The ECB has come late to the party but it will do its est to make up for lost time. And of course it will end in tears. The only winners, as always, will be the 1% whose financial assets will soar in value. None of the extra money will be lent to real businesses to create real jobs and output, as Draghi well knows.

  7. It prints up money to create the false illusion of economic wellbeing

    Wasn’t the Bank of England’s independence to instruct the Royal Mint to do the same one of the central arguments against Britain entering the Eurozone, (argued by your good self if I remember correctly).

  8. Paul McMahon –

    Yes, I think I made that argument, but it shouldn’t be taken as an endorsement of (say) QE by the Bank of England. It’s more a comment of national independence and control over your currency.

    In theory, a Venezuelan political party can spring up tomorrow and come to power on the promise of abolishing the central bank and money printing. Voters in the eurozone will never have such an option.

  9. It’s more a comment of national independence and control over your currency

    Perhaps Pete but it’s still an argument for the BoE doing exactly what you state above?

    Voters in the eurozone will never have such an option

    Interesting. The cops have said more than 180,000. The news channels are reporting 300,000.


  10. Paul

    I think you live in Spain? If so, you should hope for liberation from the Eurozone. Greece will be forced out, as Frau Merkel has made clear today:

    “German Chancellor Angela Merkel has ruled out cancelling any of Greece’s debt, saying banks and creditors have already made substantial cuts. But Mrs Merkel told the Die Welt newspaper she still wanted Greece to stay in the eurozone.”

    She well knows that those two sentences are 100% contradictory.

  11. Yes Peter, I live in the Basque Country, on the Iberian peninsula 😉

    Of course the two sentences are contradictory. We live in interesting times my friend.

  12. Paul McMahon –

    Yes, a huge crowd demonstrates against economic policy in Madrid … and the ECB doesn’t even notice it. It makes my point.

  13. Syriza needs the courage to stick to its mandate. If no debt write-off is available, default and departure from the Euro will be the consequence. Vlad the destroyer, ever the opportunist, has offered Greece a loan from Russia, undesirable, but it may be a case of needs must for Greece when the day comes.

  14. I live in the Basque Country, on the Iberian peninsula 😉

    Which is part of the Spanish state, currently a monarchy 🙂

  15. I agree with the many here in saying that Greece should exit the euro and move to Plan B with a new drachma.

    There has to be a writedown of unpayable debt. The current situation is bad for all and can only get worse unless the unworkable structure is changed.

    The Greeks are not without leverage, hopefully there will ultimately be sober minds in Germany and ECB etc who will work for an exit that is orderly and as fair as possible.

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