Venezuela in Chaos With Work Camps and 1,000% Inflation – Coming Soon to the West?

We’re keeping track of Venezuela and have written about its deepening disaster numerous times, including  HERE. In fact, I personally visited a few months ago to see the disaster with my own eyes.

Every time we look at this poor country, things are getting worse. The rate of price inflation is soaring toward 1,000 percent, with looting and shortages of critical necessities such as medicine and food.  Hyperinflation is well underway. June monthly figures put inflation around 22%, with inflation at 488% for the year but I know from personal experience that the government numbers, as with all governments, are heavily lied about.

Now comes a new disaster for Venezuela’s beleaguered citizens: Forced farm work to grow food that Venezuela lacks. That “effectively amounts to forced labor,” according to Amnesty International, which derided the decree.

The state itself is nearly broke thanks in part to the slumping price of oil. But the real problem is state socialism.  About 1,200 companies have been taken over by the state. Domestically, price controls are destroying productive resources. Not enough food is being grown because so many investments are illegal. And not enough food is being purchased for import purposes due to the collapse of the currency and foreign exchange controls.

In simplest terms, the economy has broken down because the government is not allowing its people to do what they must do to produce what they need. They are being prevented from producing even fundamental goods and services. Gradually, the economy is beginning to return to barter. And increasingly people will try to provide for their wants surreptitiously outside of government control.Alternatively, people will try to cross over into Colombia, where, strangely enough, and without slave labor, there is plenty of food.

Unfortunately, that is a long-term process. In the short-term Venezuela will try to fill its food gap by putting people to work in the fields. It didn’t work for Russia and won’t work for Venezuela, but no doubt the government under “Mad Dog” Nicolas Maduro, a former bus driver, will push ahead by placing public and private sector citizens in the countryside for at least 60-day periods.

It’s nothing but wild desperation. Erika Guevara Rosas, Americas’ Director at Amnesty International, said in a statement, “Trying to tackle Venezuela’s severe food shortages by forcing people to work the fields is like trying to fix a broken leg with a band aid,” In the meantime, those who are gradually starving to death will continue their futile hunt for food amidst markets and shops lined with empty shelves.

The current disaster in Venezuela began with the installation of a socialist regime under Hugo Chavez in 1999. At the time, the country had ample food and other consumer products. But as Chavez and then Maduro burdened the economy with more and more destructive regulatory demands, the ability of average Venezuelans to produce necessary commodities began to fail.

The government began to buy necessities directly but then the price of oil fell from $100 to about $41 a barrel now and the government found it impossible to make enough purchases to feed all its citizens.  And it wasn’t helped by the pilfering of most of the country’s wealth by Chavez.  Hugo’s daughter, Maria Gabriela Chavez is now worth $4.2 billion from all the stolen loot… yet many in Venezuela still consider Chavez to be a demigod.

The country, left broke, turned to the same solution all governments do in these circumstances: Print more money.  And printing vast amounts of paper currency and adding zeroes to electronic currency has only managed to debase the bolivar and further destroy the economy.

The Venezuelan newspaper El Nacional wrote, “inflation is out of control.” Inflation distorts supply and demand and the result is that even basic necessities are not available. Some 1,000 street protests took place in 2016, so far, though no one really knows. And sooner or later we’ll see direct, organized violence aimed at the government… and rightfully so!

The US mainstream media has been fairly accurate about what’s going on in Venezuela because the problems are being blamed on the anti-American government and military in power. Bloomberg reporter, Fabiola Zerpa, documented efforts throughout the month to ensure her family obtained food. She kept a diary and Bloomberg published excerpts.

My one chance in the week to buy staples—cooking oil, rice, laundry detergent—at state-set prices. All Venezuelan adults are assigned days of the week to shop for regulated goods based on the numbers on our national ID cards. My days are Sundays and Thursdays. Sundays are useless, though. Stores stopped selling regulated goods over the weekend a long time ago. Thursdays are only marginally more useful. For the past several months, the lines at the two supermarkets near my house in eastern Caracas have been so long, stretching out for two blocks, that it’d take hours to get a chance to shop.

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Around midday, I swing by a bakery in search of bread. I’m greeted, impatiently, by a young woman. “We only sell bread at 5 p.m., señora.”  On my way out, I notice a sign on the front door that I somehow missed on my way in: “NO BREAD.” As I get back in my car, I realize I’m low on cash. I head to a nearby ATM. It’s out of money.  But later, as my day’s winding down, I stumble upon a little treasure. At a local kiosk, I spot a generic, lactose-based product. It isn’t quite milk—that’s almost impossible to find—but it’s worth a try.

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My day of the week to buy staples. I head over to the local supermarket just after 10 a.m. Sixty people or so are waiting outside. They’ve come from all over the city, especially the poorer neighborhoods where food is scarcest, to stand in line. No one knows anything: what time the regulated goods will be put up for sale; which items, if any, will be offered; nothing. They just wait, doggedly, under the blistering Caribbean sun.  “This is the line of hope,” one woman says to me. “We are hoping they have something to sell us.”   

No matter what the government does, it will not be enough. Over time the chaos mounts until finally the government collapses. This is what’s happening now in Venezuela. The military is taking over but military governments don’t work in the long run either.

Venezuela’s current torture has been generated by a power-hungry leadership and there is no redeeming quality to what’s occurred.

What is most disturbing is that much of what is going on in Venezuela can be seen taking place elsewhere throughout the West. The problems in the West are growing worse and the results are predictable. Price inflation, power-hungry leadership in Washington and Brussels and, above all, an elite in London’s City that is determined to impose chaos, will generate increasing Western disasters.

The rate of monetary debasement continues to climb. As wealth is stripped away, the  middle class gets more impatient and resentful. Military confrontation is being fanned in Russia, China and the Middle East.  And the word’s “civil war” are used commonly to refer to what is coming in the US.  The end-result of these trends is a deepening depression in Europe and America intermingled with increasing government power, military confrontations and eventually outright war.

Here at TDV we track these trends and have, in fact, anticipated them with our Shemitah and Jubilee analysis. We do much of our day-to-day analysis in our TDV newsletter, which is where you will find the insights of our Senior Investment Analyst Ed Bugos.  Our TDV portfolio is up well over 200 percent in the last year thanks to Ed and many of our subscribers have profited considerably as a result.  Here’s some commentary from just today in TDV’s private Facebook group for subscribers:

As we approach the end of Jubilee in October, things are going to get even worse than they are now. The falsified terrorist activities will continue and economic dysfunction will grow even more terrible. Our TDV newsletter (subscribe here) is constructed to help you cope, as thousands of new subscribers have learned for themselves.

When I was in Venezuela, I often asked people why they didn’t leave. The answer was that people didn’t know where to go or were too scared to take their chances elsewhere.  Of course, they knew what they faced, but they seemed to be paralyzed by fear.

Hopefully many of them are not currently undergoing slave labor in the fields.

TDV actually has a few subscribers in Venezuela and they have told us how they have survived better than most from our advice and bought gold, silver and bitcoin in the last few years.

The West is on the same trajectory as Venezuela, with almost identical socialist policies and Keynesian central banks… it is just a matter of time.

If you don’t want to suffer the disasters that citizens in Venezuela face, you will  need to take action to avoid what’s now happening there. We have the information and services you need to help you construct a better and more secure future. Your government is your enemy at this point, but you have arrived at a place where you can find friends. To begin with, please subscribe HERE. 

Originally Appeared At The Dollar Vigilante