Friday, January 8, 2016

Economic Czar of Crisis-Hit Venezuela: Inflation 'Does Not Exist'

Venezuela's new economy czar Luis Salas is tasked with controlling what is believed to be the world's highest rate of inflation, reports Reuters.

President Nicolas Maduro on Wednesday tapped the 39-year-old  as vice president for the economy amid soaring consumer prices and chronic product shortages.

He has a tough task ahead of him. A late 2015 Bloomberg headline: Venezuela sees 85 pct inflation this year.

So what does Venezuela's new economic czar think about this?

"Inflation does not exist in real life," he wrote in a 2015 pamphlet called "22 Keys to Understanding the Economic War." "When a person goes to a shop and finds that prices have gone up, they are not in the presence of 'inflation.'"

Salas has argued against the idea that the printing of money causes inflation . He insists prices rise primarily because corporations seek excessive profit margins.

Notes Reuters:
The appointment of Salas appears to signal a break with the Socialist Party's promises for market-friendly reforms last year, which ended in aborted efforts to liberalize cumbersome currency controls.

His designation augurs a further tightening of state controls in a country where supermarket lines routinely stretch for blocks...

Salas' numerous online essays are written in flowing academic prose featuring caustic turns-of-phrase such as "speculative-parasite-vulture capital" or "global war of the planetary plutocracy."

Few offer specific policy proposals. One list of ideas for economic policies for 2016 published on Salas' blog includes a recommendation that economic policy should be "coherent" and "should not be passive but rather active and on the offensive."...

He has held up as an example of success the 2013 "Dakazo" in which troops took over a group of businesses including electronics retailer Daka and ordered them to slash prices.

"The first thing we can conclude is that prices can be controlled and speculation tied down if there is a combination of state guarantees and mobilization of the people," Salas wrote.
How bad could it get in terms of controls and socialist oppression under Salas?

  Pedro Rosas Rivero at America 2.1 gives us a clue:
. The new cadre of economic advisors comes from a hard-left fringe within chavismo, as scary as that sounds. If their policy proposals are enacted, they will bury Maduro and chavismo under a mountain of worthless paper money. But not before unleashing havoc and pain on our economy and society.

The most prominent of The Undertakers are Tony Boza, Luis Salas, and a Spaniard linked to Podemos, Alfredo Serrano. The first two have been around chavismo for years, without gaining much influence. They held posts in obscure government institutions and universities, appearing frequently in the chavista media, and writing books and pamphlets on the “economic war”. Salas just broke into the limelight, as the new Vicepresident for Economic Policy and minister without portfolio for Economic Productivity...

They favor controls on basically everything. For them, existing exchange controls have been a resounding success, with just a few minor details to adjust. Their craziest proposals include nationalizing all foreign trade and the banks, controlling every price in the economy, – all of them – and seeking ways to involve all citizens in the enforcement of official prices.
In a country struggling through an economic depression and on the brink of hyperinflation, their views on inflation and the exchange rate – the two must pressing issues today for the Venezuelan economy – are genuinely dangerous. Their proposals, if enacted even half-heartedly, can be expected to push Venezuela over the hyperinflation edge.
They believe inflation in Venezuela is caused by the speculative profit margins of private companies (Boza), the power of private importers (Serrano) andselfishness (Salas). More importantly, they claim that the massive financing of the government’s deficit by the Central Bank is not the problem. Judging from Maduro’s recent decision to essentially expropriate the Central Bank, they intend to speed up the money printing madness.



  1. I haven't encountered someone this delusional since Pol Pot.
    For the sake of the Venezuelan people, I hope the collapse is swift and non-violent.

  2. One of the funniest things about socialism is that it's ultimately self-defeating. Things just get worse and worse until the people get pissed off enough to toss them out.

  3. Socialists are such liars, but fortunately for them they have a scapegoat in business, and they also have people of all stripes desperate to believe it all. History repeats itself:

    (France 1790) “Articles of common consumption became enormously dear and prices were constantly rising. Orators in the Legislative Assembly, clubs, local meetings and elsewhere now endeavored to enlighten people by assigning every reason for this depreciation save the true one. They declaimed against the corruption of the ministry, the want of patriotism among the Moderates, the intrigues of the emigrant nobles, the hard-heartedness of the rich, the monopolizing spirit of the merchants, the perversity of the shopkeepers,—-each and all of these as causes of the difficulty.” – Andrew Dickson White, ‘Fiat Money Inflation in France’

    Good luck with your denial-fest, Venezuela. Keep the socialist faith.

    1. Yeah. Notice how socialists always keep at least a little bit of the private sector around. Thats their scapegoat.

  4. Venezuela is going to continue down this path until the people start lynching government agents.

  5. Lol! Is he one of Krugman's students?

  6. These guys are characters straight out of an Ayn Rand novel, but on steroids.

  7. Someone should make a spanish language translation of "Forty Centuries of Wage and Price Controls- How Not to Fight Inflation" and send it to all the govt planners down there in Venezuela. The ordinary 'mundanes' should get copies too.

  8. Colombians get subsidized every time they set price controls in Venezuela. These items get loaded and trucked over the border illegally where Colombians enjoy the cheaper prices. Venezuela´s shelves are then empty.

  9. This ought to be amusing, go ahead print and print eventually we'll be able to buy half the country for a couple of bucks. Also does anyone else think this resembles Tiger Woods?