Saturday, March 1, 2014

The Consequences of Price Controls in One Picture

Price inflation is out of control in Venezuela. Some put the inflation at around 300% (See: Venezuela’s Real Inflation May Be Six Times the Official Rate).

The cause of the inflation is massive money printing by Venezuela's central bank. In an attempt to halt the price inflation, the Venezuelan government has resorted to price controls, instead of stopping the printing presses. Price controls always result in shortages and long lines for basics. Here is a recent  picture of a food line in Venezuela:


  1. Those poor people! No doubt the capitalists will be blamed.

  2. I love seeing pictures from Socialist Utopias. Warms my heart on such a cold, rotten day.

  3. Oh but wait the Venezuela budget office says "core" inflation with hedonic pricing is running at a mere .. 8.423% . Its just animal spirits and weak aggregate demand. :)

  4. On July 23, 2013, in his article "The Death of High Inflation", Paul Krugman wrote, ". . .but high inflation has largely vanished everywhere."

    As usual when confronted with cold hard reality, he's begun to lay the groundwork for backpedaling by intimating that Venezuela has made the same old political mistakes, which resulted in its inflationary spike. He justifies this with the archaic presumption that, contrary to basic economic thought, high inflation is the result of severe political and social disruption, rather than a cause.

    And as is typical of Krugman and his acolytes, his mere assertion is evidence enough, no need for pesky facts to support it.

  5. The argument that inflation drives consumption and creates demand and jobs has never been more obvious.

    What a great example of the prosperity of inflation.

    if the prices were to drop people would start hoarding money which would be even worse. Trust me, you wont want to see the images of that, truly dreadful.

  6. How long until regular Venezuelans storm the capital building?