The Economy of Venezuela
Hyperinflation
The government financed deficits by printing money, causing inflation of tens of thousands of per cent and wiping out savings.
Money lost its value.
Cause
Deficits covered by central bank money creation led to explosive price growth.
Scale
Annual inflation reached tens of thousands of per cent in 2018-19, according to IMF estimates.
Redenominations
Several zeros were removed from the bolívar in 2008, 2018 and 2021.
Effect
Wages lost value, and people turned to dollars and barter.
A worthless note
A month's salary could buy only a few basic items.
Assuming hyperinflation is only a monetary accident
Fiscal choices created it.
Key takeaways
- Money printing drove inflation.
- Prices rose enormously.
- Zeros were removed from notes.
- People turned to dollars.
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