Chavez Claims Inflated

Chavez Claims Inflated

Chavez is worried about inflation in Venezuela. He cut the VAT 1 percent to fight inflation. Fortunately for Venezuelans I have discovered the cause of inflation. IT IS CAUSED BY THE GOVERNMENT PRINTING UP TOO MUCH MONEY! Most people believe inflation is higher prices for goods and services. Actually these are signs of inflation.

What actually is occurring is Chavez is printing extra money to pay for the things that his socialist economy cannot pay for because this form of economy never can generate enough wealth. Inflation is one of the three ways government funds itself. Government can tax and spend, borrow and spend or inflate the money supply and spend. For Venezuela the poverty induced by bad government makes taxing unrealistic because they generate so little wealth. Also the people see it being taken and it upsets them greatly. Borrowing is not possible for Chavez because – well…would you lend this crook money? Of course not! So Chavez must settle for inflating his money supply. Unfortunately, as the supply of money increases there, while the supply of goods and services stays the same or even shrinks, prices must rise to reflect the drop in value of the currency. For example, if Chavez doubles the supply of money in Venezuela its value drops by one half. Money is NOT wealth. Money is but a means to convey wealth.

But for Cubans and Venezuelans alike who want to see Chavez go here is the good news. Every government that has inflated the money supply has been replaced shortly thereafter. That is because once you start down this road to inflating the money supply to make the economy feel better you become like an alcoholic who takes another drink to feel better. It is hard to stop. The longer it continues the more painful the withdrawal symptoms. So all those who love freedom lets hope Chavez turns up the printing presses to Ludicrous Speed.