Protect Your Business From All Kinds Of Harm With This Advice

When you own a business, making sure that it is safe should be one of your top priorities. But, it is not always easy to know the kind of things that you need to do to make this happen. Don’t worry th...

News Company - avatar News Company

Expect tax cuts and an emptying of the cupboards in a budget cleanout as the billions roll in

Prime Minister Morrison and Treasurer Frydenberg will do their best to leave the cupboard bare next Tuesday while still delivering a budget surplus in 2019-20.ShutterstockIt has been just over three m...

Warren Hogan, Industry Professor, University of Technology Sydney - avatar Warren Hogan, Industry Professor, University of Technology Sydney

Morrison flags new laws to stop social media platforms being 'weaponised'

Scott Morrison is foreshadowing tough new criminal laws to crack down on social media companies which fail to quickly remove footage like that streamed by the gunman in the New Zealand massacre.Under ...

Michelle Grattan, Professorial Fellow, University of Canberra - avatar Michelle Grattan, Professorial Fellow, University of Canberra

Australian political journalists might be part of a ‘Canberra bubble’, but they engage the public too

Australian journalists often use Twitter to comment on the issues of the day.Nina Maile Gordon/The Conversation, CC BY-NC-NDThe federal election is fast approaching – less than 100 days away in ...

Axel Bruns, Professor, Creative Industries, Queensland University of Technology - avatar Axel Bruns, Professor, Creative Industries, Queensland University of Technology

A new twist in the elusive quest for the origins of the word 'bogan' leads to Melbourne's Xavier College

Drawing of a 'bogan doll' which featured in a 1984 edition of a student-produced Xavier College magazine Sursum Corda.Author providedBogan is the most significant word to be created in Australian Engl...

Bruce Moore, Honorary Associate Professor in the School of Literature, Languages, and Linguistics, Australian National University - avatar Bruce Moore, Honorary Associate Professor in the School of Literature, Languages, and Linguistics, Australian National University

Massacre is now part of Christchurch's identity, so how does a city rise above that?

Christchurch has a challenging new aspect to its identity. The city is now inextricably associated with the March 15 mass shootings at two mosques. So how does a city come to terms with and recover fr...

Will Rifkin, Chair in Applied Regional Economics and Director, Hunter Research Foundation Centre, University of Newcastle - avatar Will Rifkin, Chair in Applied Regional Economics and Director, Hunter Research Foundation Centre, University of Newcastle

Schools are asking students to bring digital devices to class, but are they actually being used?

Not everyone has a digital device to bring to school.from shutterstock.comIt’s been over ten years since Kevin Rudd’s Digital Education Revolution placed small laptops (also called Rudd-to...

Nicola F. Johnson, Associate Professor of Digital Technologies in Education, Edith Cowan University - avatar Nicola F. Johnson, Associate Professor of Digital Technologies in Education, Edith Cowan University

Older people are more digitally savvy, but aged care providers need to keep up

Moving into aged care can affect a person’s ability to remain connected to their local community, but most aged care facilities don't provide access to digital devices.from www.shutterstock.com...

Dr Wendy Wrapson, Senior Research Fellow, Auckland University of Technology - avatar Dr Wendy Wrapson, Senior Research Fellow, Auckland University of Technology

Pets and owners - you can learn a lot about one by studying the other

The personality of a pet owner can help a veterinarian understand the health and welfare of the pet.Shutterstock/PM ProductionThere’s an old saying that pets and their owners become more similar...

Paul McGreevy, Professor of Animal Behaviour and Animal Welfare Science, University of Sydney - avatar Paul McGreevy, Professor of Animal Behaviour and Animal Welfare Science, University of Sydney

Shorten to announce Labor's 'living wage' plan but without an amount or timing

Bill Shorten will unveil on Tuesday a process to have the Fair Work Commission phase in a “living wage”. But he will not say what it should be as a proportion of the median wage, or how lo...

Michelle Grattan, Professorial Fellow, University of Canberra - avatar Michelle Grattan, Professorial Fellow, University of Canberra

Health check: can eating certain foods make you smarter?

Green vegetables, nuts and berries are among the foods that could improve our brain function.From shutterstock.comTrying to keep up with what constitutes a “healthy” diet can be exhausting...

Margaret Morris, Professor of Pharmacology, Head of Pharmacology, UNSW - avatar Margaret Morris, Professor of Pharmacology, Head of Pharmacology, UNSW

A skilful and stirring one-man treatment of George Orwell’s Animal Farm

Renato Musolino is the beating heart of a new production of Animal Farm.James HartleyReview: Animal Farm, State Theatre Company of South AustraliaIn a new one-man production, Renato Musolino brings Ge...

Lisa Harper Campbell, Lecturer in Drama, Flinders University - avatar Lisa Harper Campbell, Lecturer in Drama, Flinders University

Expect tax cuts and an emptying of the cupboards in a budget cleanout as the billions roll in

Prime Minister Morrison and Treasurer Frydenberg will do their best to leave the cupboard bare next Tuesday while still delivering a budget surplus in 2019-20.ShutterstockIt has been just over three m...

The Conversation - avatar The Conversation

A chess program helped this 8-year-old raise $240,000 and get his family out of a homeless shelter – here's what to look for in a chess program for your child

Third-grader Tanitoluwa Adewumi was crowned as a New York State Scholastic chess champion on March 10.GoFundMeBefore he won the primary (K-3) championship section of the New York State Scholastic Cham...

Alexey W. Root, Lecturer in Education, University of Texas at Dallas - avatar Alexey W. Root, Lecturer in Education, University of Texas at Dallas

The promise and peril of the Dominican baseball pipeline

Boys practice baseball at a park in San Antonio de Guerra, a small municipality in the Dominican Republic.Reuters/Ricardo RojasLatinos will comprise about 30 percent of Major League Baseball rosters o...

Rob Ruck, Professor of History, University of Pittsburgh - avatar Rob Ruck, Professor of History, University of Pittsburgh

Why the Vatican needs to open its archives on Pope Pius XII

Pope Pius XII.AP PhotoPope Francis announced recently that, in 2020, the Vatican will open to researchers its archival materials related to Pius XII, who served as pope from 1939 to 1958. The Vatican ...

Alan Avery-Peck, Kraft-Hiatt Professor in Judaic Studies, College of the Holy Cross - avatar Alan Avery-Peck, Kraft-Hiatt Professor in Judaic Studies, College of the Holy Cross

Saudi women are going to college, running for office and changing the conservative country

Saudi Arabia is a notoriously difficult place to be a woman.The kingdom enforces a strict interpretation of Islamic law that sees the separation of men and women as a defining aspect of an Islamic soc...

Alainna Liloia, Graduate Associate, Ph.D. Student, University of Arizona - avatar Alainna Liloia, Graduate Associate, Ph.D. Student, University of Arizona

Why Trump's recognition of the Golan Heights as Israeli territory matters

Israeli Prime Minister Benjamin Netanyahu, center, Republican U.S. Sen. Lindsey Graham, left, and U.S. Ambassador to Israel David Friedman, right, in the Israeli-held Golan Heights on March 11, 2019Ro...

Dina Badie, Associate Professor of Politics and International Studies, Centre College - avatar Dina Badie, Associate Professor of Politics and International Studies, Centre College

Despite consumer worries, the future of aviation will be more automated

Human pilots, surrounded by automation.Sorbis/Shutterstock.comIn the wake of the Lion Air and Ethiopian Airlines crashes of Boeing 737 Max planes, people are thinking about how much of their air trave...

Stephen Rice, Associate Professor of Human Factors, Embry-Riddle Aeronautical University - avatar Stephen Rice, Associate Professor of Human Factors, Embry-Riddle Aeronautical University

We need to stop conflating Islam with terrorism

The Christchurch terrorist attack has shown us that we need to address the threat posed by far-right extremism to our ideals of peaceful social cooperation in a multicultural society. Unfortunately, i...

Nicolas Pirsoul, Sessional lecturer in Middle Eastern Politics, Australian Catholic University - avatar Nicolas Pirsoul, Sessional lecturer in Middle Eastern Politics, Australian Catholic University

Huawei exposes critical weaknesses. We need the infrastructure to engage with China

The European Commission has decided to ignore US calls that its allies keep Chinese tech giant Huawei away from significant telecommunications infrastructure. Britain, France and Germany had already m...

Alice de Jonge, Senior Lecturer, International Law; Asian Business Law, Monash University - avatar Alice de Jonge, Senior Lecturer, International Law; Asian Business Law, Monash University

From Mahometan to Kiwi Muslim: history of NZ's Muslim population

New Zealand Muslims have come from several parts of the world, including Pacific Islands, Asian countries, the Middle East and Africa.AAP/Martin Hunter, CC BY-SAMuslims make up just over 1% of New Zea...

Eva Nisa, Lecturer in Religious Studies, Victoria University of Wellington - avatar Eva Nisa, Lecturer in Religious Studies, Victoria University of Wellington

Plant Hire For Small Businesses

All companies face challenges. However, small businesses face a unique set of challenges. From restricted resources to client dependency, there are various hurdles you need to overcome if your busines...

News Company - avatar News Company

Imagine going to the store and finding that nothing has a price tag on it. Instead you take it to the cashier and they calculate the price. What you pay could be twice as much, or more, than an hour earlier. That’s if there is even anything left in stock.

This is the economic reality that underpins Venezuela’s current “political crisis” – though in truth that crisis has been going on for years.

The government headed by Nicolás Maduro, who has presided over Venezuela since 2013, declared a state of emergency in 2016. That year the inflation rate hit 800%. Things have since gone from bad to worse.

By 2018 inflation was an estimated 80,000%. It’s difficult to say what the rate is now, but Bloomberg’s Venezuelan Cafe Con Leche Index, based on the price of a cup of coffee, suggests it is now about 380,000%.

About 3 million Venezuelans – a tenth of the population – have fled the country. This is the largest human displacement in Latin American history, driven by shortages of everything including food as well as the Maduro regime’s oppressive treatment of dissent.

Read more: Venezuela is fast becoming a 'mafia state': here's what you need to know

No wonder, then, that Maduro, who has just begun his second term as president, is now under considerable domestic and international pressure to call new elections.

So how did things get so bad? How did inflation become hyperinflation in Venezuela? And how do Venezuelans deal with it?

Venezuelans living in Santiago, Chile, protest against the regime of of Nicolás Maduro on February 2. A huge diaspora of Venezuelans is now spread throughout Latin America. Alberto Valdes/EPA

The cost of goods and the value of currency

What we pay for goods and services reflects not only their cost of production but also of the value of the currency we buy them in. If that currency loses value against the currency the goods are sold in, the price of those goods goes up.

By 2014 the value of Venezuela’s currency, the bolívar, and the prosperity of the Venezuelan economy, was highly dependent on oil exports. More than 90% of the country’s export earnings came from oil.

These export earnings had enabled the government headed by Hugo Chavez from 1999 to 2013 to pay for social programs intended to combat poverty and inequality. From subsidies for those on low incomes to health services, the government’s spending obligations were high.

Then the global price of oil dropped. Foreign demand for the bolívar to buy Venezuelan oil crashed. As the currency’s value fell, the cost of imported goods rose. The Venezuelan economy went into crisis.

The solution of Venezuela’s new president Nicolas Maduro, who succeeded Chavez in March 2013, was to print more money.

The sign in a store in Cucuta, the Colombian-Venezuelan border, reads: ‘We do not accept bolívares, only Pesos. Schenyder Mendoza/EPA

That might seem silly, but it can keep the economy moving while it gets over a hump caused by a short-term price shock.

The Venezuelan crisis, however, just got worse as the oil price continued to fall, compounded by other factors that reduced Venezuelan oil output. International investors began looking elsewhere, driving the value of the bolívar even lower.

Read more: Curious Kids: why don’t poorer countries just print more money?

In these conditions, printing more money simply made the problem worse. It added to the supply of currency, pushing the value down even further. As prices rose, the government printed more money to pay its bills. This cycle is what causes hyperinflation.

Playing the currency market

Circumstances like these quickly make saving money in the local currency nonsensical. To protect themselves, Venezuelans started to convert their savings into a more stable currency, like the US dollar. This lowered the value of the bolívar even further.

The government responded by issuing currency controls. It set a fixed exchange rate, to stop the official value of the bolívar dropping against the US dollar, and made it difficult to actually get permission to exchange bolívares into US dollars. The idea was to stabilise the currency by effectively shutting down all currency transactions.

US dollars were still available on the black market, however. This meant going to any number of operators on the streets of downtown Caracas or asking some friend or to hook you up. As the crisis deepened, more and more Venezuelans looked to switch their bolívares into US dollars.

By mid-2018 the official foreign exchange rate was about 250,000 bolívares to one US dollar. shutterstock

This increasing demand meant the black market price for greenbacks rose, creating a difference between the official exchange rate (set by the government) and the unofficial going rate.

With this came new opportunities. In 2014 reports emerged that groups of middle-aged women were crossing the border to use ATMs in Colombia. They could withdraw funds from their Venezuelan accounts as US dollars at the official rate. They could then cross back into Venezuela and exchange the dollars for bolívares at the unofficial rate, making a tidy profit. Government officials able to exchange bolívares for US dollars within Venezuela had their own version of this practice.

This pushed the price of US dollars up, and that of bolívars down, even more. As the crisis deepened increasing numbers of ordinary Venezuelans began to engage in the unofficial currency market.

Sometimes this took the form of taking subsidised Venezuelan goods like food across the border to sell. This earned the sellers foreign currency, but it also exacerbated shortages of goods within the country, driving prices up even further.

This does not mean Venezuela’s currency crisis is the fault of ordinary Venezuelans. Illegal economic activity is largely a coping mechanism, a bellwether of the actual economy’s ability to provide for people. When a government fails its responsibilities, it should be no surprise that people protect themselves through unofficial currency trading. This is exactly what big international investors do all the time, albeit through more official channels.

A street kid uses now worthless currency to make handicrafts to sell in the streets of Caracas, Venezuela’s capital. The currency was changed from the ‘Bolívares Fuertes’ to the ‘Bolívares Soberanos’ in August 2018. Miguel Gutierrez/EPA

Cannot be trusted

By August 2018 the Venezuelan currency was worth so little that it was more prudent to use cash for toilet paper rather than buy toilet paper.

The government tried to get on top of this situation by issuing a currency devaluation. Maduro devalued the bolívar by 95%, the largest currency devaluation in contemporary world history. He also tied the new currency to the price of oil, an economic experiment designed to show the Venezuelan economy had solid foundations.

By bringing the bolívar’s value into line with the reality of what people actually thought it was worth, and showing it was backed by something valuable, oil, Maduro’s government hoped Venezuelans would believe in their own currency and not exchange it for dollars. This would help stabilise the economy overall.

But within weeks of the devaluation it was clear ordinary Venezuelans had not been convinced.

They had no reason to be, given the government was not addressing other issues, such as policies contributing to low productivity across the economy. The government’s increasing authoritarianism, including interfering with the constitution and elections, also signalled it was not to be trusted.

Read more: Is authoritarianism bad for the economy? Ask Venezuela – or Hungary or Turkey

Hyperinflation is a very difficult hole out of which to climb. Very few economies ever experience it, and it’s hard to stop it without massively cutting government spending.

It is easy, then, to see why millions of Venezuelans responded by dealing in the black market or taking their savings, and themselves, out the country altogether.

As the political crisis in the country deepens, Venezuelans will have to continue to seek ways to allow them to survive the storm any way they can.

Authors: The Conversation

Read more http://theconversation.com/how-public-ineptitude-and-private-enterprise-combined-to-give-venezuela-hyperinflation-102483