The country with the largest oil reserves in the world can’t afford to brew its own beer, stay in its own time zone, or even have its own people show up to work more than two times a week.
Venezuela already has the world’s second-highest murder rate.
It has more oil than the United States or Saudi Arabia or anyone else for that matter.But despite that, economic mismanagement on a world-historical scale has barely left it with enough money to even, well, pay for printing money anymore. That’s right: Venezuela is almost too poor to afford inflation. Venezuela, you see, doesn’t have its own printing presses, but rather pays foreign companies to print their money for them. That means it needs dollars just to be able to create bolivars.
Hugo Chavez replaced people who knew what they were doing with people he knew would be loyal to him at the state-owned oil company. It didn’t help that he scared foreign oil companies off too. Or that he took money out, but didn’t put it back in, so that they can no longer turn as much of their extra-heavy crude into refined oil. Add it all up, and Venezuela’s oil production actually fell by about 25 percent between 1999 and 2013.
But that didn’t stop the government from going on a spending spree. How big of one? Well, even triple-digit oil prices weren’t enough to balance its books. So it got money from the one place it could: the printing press. And it has had to get a lot more now that oil prices have fallen so far the past two years. The result, as you might expect, of printing all these bolivars is that the bolivar has lost almost all its value against the dollar — and no, that’s not hyperbole. Since the start of 2012, the bolivar has, according to black market rates, fallen 99.1 percent against the dollar.
But rather than face this reality Venezuela has opted for a game of economic whac-a-mole. It has tried to legislate inflation away by telling businesses what prices they’re allowed to sell at, and even tried to wish it away by saying it “does not exist.” All that has done, though, is make it harder for businesses to sell things at a profitable price — which means they haven’t sold things at all. So the government has tried to fix this by doling out dollars to select companies on better terms than anyone else can get them. The idea is that giving them money will let them keep making money — and, as a result, filling their stores — when they sell at the prices they’re supposed to. But the problem with this is while it’s not profitable for unsubsidized companies to stock their shelves, it’s not profitable enough for subsidized ones to do so either when they can just sell their dollars in the black market for more than they can resell imported goods.
The upshot is that stores go empty, prices go up, and lines last for hours — although, in typical fashion, the government has tried to, I guess, solve this by forcing people out of them.
It’s a lot easier to come up with a list of things that aren’t failing. That’s nothing. Venezuela’s economy is collapsing, its currency is too, its stores have nothing in them, and it can’t keep the lights on or its people safe.
Oil Rich and Rich
Canada yes the only reason this is a good as it is because it has oil. It is the largest supplier of oil to US.
Norway really small population. Lots of oil. But really high cost of living and their money is not strong at all.
Saudi Arabia basically just has control over everything.