September 14, 2018

LATE-STAGE SOCIALISM: Venezuela’s hyperinflation fuels misery for poor but enriches elite through currency exchanges.

Skyrocketing prices have ruined Venezuela’s economy with many people unable to afford even basic necessities — unless you are part of tight circle of politically connected elites with access to a government-controlled currency exchange that one financial expert in Miami summed up as a “perpetual money machine for insider criminals.”

The exchange offers bolivar-for-dollar rates insulated from the country’s hyperinflation, a currency system that the socialist government of the late President Hugo Chávez first set up to stabilize the economy and lower the prices of essential goods like food and medicine for the poor.

In the 15 years since, financial experts and U.S. prosecutors say the government exchange has also turned into a tool to empower Venezuelan leaders and enrich already wealthy business insiders. They’ve siphoned billions out of national coffers by exploiting exchange rates rigged to make astronomical profits in currency transactions that are inaccessible to a population struggling with widespread food shortages and runaway prices.

Why, it’s almost as though socialism were nothing more than a scam to trick the people into thinking they could get something for nothing, when actually it enriches the politically well-connected elite at their expense.