Venezuela overnight bank rates hit 120%

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This appears to be because Chavez wants to take control of the central bank and is leaning on it to not make loans. While I applaud much of what Chavez has done, this is just dumb. Unless he wants hyperinflation.

Meanwhile, in the bizarro world of Wall Street, this bad news is being looked at as good news because it means the Fed might lower interest rates. I’m not sure who is crazier.


  1. Chavez is already close to hyperinflation because he’s monomaniacal and doesn’t believe in any of the classic laws of economics which apply regardless of your economic system. He’s already depressed the price allowed farmers for beef below the cost of production, and professes to be surprised when there’s no supply. His response is to threaten to nationalize everything, including farms.

    I know that the American left loves Chavez, but, as I’ve said a zillion times, they’re going to be sorely disappointed. Chavez is not substantially different from other South American strongmen, and his economy is following the usual steps toward shortages and inflation. What he’s doing is typical Chavez; only the wilfully blind should be surprised. Worst of all, Venezuela has been down this road many, many times with different strongmen. As the old song goes, “Vi pasando la historia de nuestra pobre nación/siglos trans siglos sin solución.” Written, I think, by an Argentine, but applicable throughout the hemisphere.

  2. “monomaniacal and doesn’t believe in any of the classic laws of economics which apply regardless of your economic system.”

    Sounds like another leader closer to home, doesn’t it? The one who forgot that when you use Keynesian tools like tax cuts and deficit spending to get out of a recession, you have to stop using them when the economy imprioves or they backfire. Now we’ve got that Keynesian abomination that is not supposed to exist: rising inflation AND a shrinking economy. Ooops.

    Unfortunately, in a democratic system, a leader doesn’t have to be qualified to get the job. I’m not sure I’m ready to trade for totalitarianism, but it does make one think.

  3. I agree that Chavez and Bush deserve each other, and probably dislike each other because they share more characteristics than either of them would like to think. True, Bush prefers the rich and Chavez prefers the poor, but both prefer themselves over all others and are enamored with power itself.

    I don’t know that in totalitarianism or authoritarianism the leader has to be particularly qualified, either. I just finished reading a biography of Perón, who was one of the political geniuses of the 20th century and a master of mass media politics. It’s astonishing, though, how mediocre his entourage became about three years into his regime, and became totally inept during the last three years. Modern states, hollowed out or not, have a momentum/inertia all their own, and the wheels usually keep turning even if the guy at the top is out to lunch.

    Of course the problems with the entourage depend on the ability of the leader to tolerate alternative centers of power and politicos of equal ability as the leader.

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