Yo, Venezuela. Being socialist doesn’t repeal laws of economics

Venezuela has just devalued its currency, and also instituted a two-tiered system of exchange – three if you count the black market.

“The bourgeois are already talking about how all prices are going to double,” [President Hugo Chavez] said “People, don’t let them rob you. Denounce it and I’m capable of taking over that business.”

If you devalue the currency and make imports much more expensive, inflation will increase. Nationalizing a business does nothing to stop this. Nor does denouncing inflation.

“It’s too easy a game to steal money through a multi-tiered exchange rate. You make a bundle just on the exchange differential” said a former planning minister.

Or the economy just shifts to the black market.

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