10 Lessons We Should Learn From Venezuela’s Economic Collapse

Sometimes back, taking a vacation to Venezuela was one of the best things one could do. It is a surprise that such a thriving nation which everyone desired to be associated with has been brought down to its knees within a very short span of time. The truth is if the wrong combination of economic events line up, even the greatest nation on earth can be brought down overnight leading to an economic collapse and chaos among the people.

By looking at the cascade of events that lead to the collapse of the once thriving Venezuelan government and economy, we can see the events that lead to the collapse and rectify our course before the same happens to our nation. Lessons from the collapse of Venezuela can make things easier for us when it comes to understanding the prevailing economic situation and how much time we have before we experience a similar disaster in the United States. 

1 inflation is as a result of currency devaluation

Back in the 1980’s, you could buy a pound of ground beef only for $1.39 per pound. However, despite all the increases in food [production, these days the average cost of meat is about $4.25 per pound. Despite the fact that we have not had any bank holiday for nearly 40 years, now every single dollar in your pocket is worth only a quarter of what it was worth a few decades ago.

Before the collapse in Venezuela, the value of their currency had dropped by 700 percent and this was one of the main contributors of the economic collapse that came later. If your money is buying less than what it used to buy, don’t fall to the hype being created by the media that you need a higher wage and of obviously a chuck of the increment will go to the taxes. The truth is that the currency has already weakened and this is what is causing money problems not that you are not making enough money. Currency devaluation can be caused by many internal and external factors and this can easily trigger an economic meltdown just like it happened in Venezuela.

2 Economic failures can be covered up by fake statistics and the media

Only a few tangible and profitable assets can rival oil. Even if the oil price has dropped, oil remains the lifeblood of consumer based activities and various production sectors. Venezuela has one of the largest oil reserves in the world but despite this, the loaming collapse was well hidden by fake data about profitability and the general performance of the economy. 

Here are a few economic disasters that were presented as major economic benefits to the people of Venezuela.

  1. Back in the days when Hugo Chavez rose to power in Venezuela, he promised that his policies would lift the Venezuela people out of poverty, increase consumer spending, and lead to greater and better-distributed wealth for everyone. Just like the former USSR and other nations that have experienced an economic collapse, Venezuela took their policies too far creating a bubble that was unsustainable and at one point everything had to burst.
  2. Using money for the betterment of others is a good idea. However, venezuella got it wrong and instead of expanding the oil production plants, they spent a lot of money and socialist ideas which were of little benefit. The media spread propaganda on how things were getting better but in reality these were poor decisions that resulted to an economic disaster.

There is a great similarity to Venezuela’s case and what is happening to the United States now because we have all kinds of manipulated data on the performance of the economy. The employment numbers are rigged and in reality a large number of Americans are still unemployed.

We you look at what is happening in the US, the media has created a big hype about the economic progress and everyone is very “positive” without knowing that there are some hidden factor that indicates an economic failure.

The best way to understand what is happening is by looking into your own life; if you and your neighbors are not better off than you were about 7 years ago, then something is wrong and probably the prosperity that the media is trumpeting every day might be fake. The whole system might have been rigged for political gains and this is the time you should think differently.

3 Global events can contribute to internal economic collapse

It is absolutely fine to say that if the oil prices remained high, an economic disaster would not have occurred in Venezuela and the yoke of pure socialism would not have triggered an economic collapse in Venezuela as quickly as it happened. The decline in oil prices was as a result of global events that happened outside Venezuela and this is why it is always wise to be aware of what is happening outside your country. Keep track of what is happening in various stock markets, hosing markets and even what is happening in various developing nations because any overheating can easily trigger an economic collapse.

4 Money cannot buy what is not available

It is not a surprise that when an economic collapse happens, one cannot buy anything they need even if they have a lot of cash. In Venezuela, basic necessities like food, water, medicine, electricity, and other basic needs are being rationed and even if one has money, it is impossible to get more than the ration amount. Venezuela has been a  perfect representation of what an economic collapse looks like. In these conditions the government will try to do the best with the available resources and this will not efficiently run everything as it was before. For this reason, it is good to develop a self sufficient lifestyle by having your own food, water, electricity, medicine and other necessities.

5 Riots and protests continues until everything is settled

An economic collapse always results to many social troubles as people cannot get access to various basic needs because of the limitations imposed by the government. In Venezuela’s case, the society’s way of life cannot continue when the law enforcement officers are shot dead just for doing their jobs. Usually people feel insecure making crime levels soar as people fight to survive.

6 Governments are not fully reliable

The United States economy is steadily declining and most people believe that if a total economic collapse happens, our leaders will hide in bunkers as people fight to survive. However, this is not the case; Venezuela has proven that the government will still be around and various agencies will try to control the situation even if it spiral out of control. As the government becomes more desperate, they might use these tactics to try and remedy the situation.\

  • There will be increased law enforcement and punishments as we saw in Venezuela. In these conditions people cannot rely on the government for your survival because they will impose increased limitations on free speech, gun rights, other weapons, and self-sufficiency.
  • Because of riots and crimes at this period, many people in Venezuela were killed by government security agencies.
  • Politicians will tend to isolate themselves from people as a way of protecting themselves. At the same time, there will be a lot of political conflicts as they fight among themselves in a desperate attempt to gain control.
  • The government will attempt to control the money supply or even stop the money flow just like it happened in Venezuela. Access to basic things like food may be limited and in these hard times, it becomes almost impossible to rely on the government.

An economic collapse precedes a serious social collapse and in this situation, the government is always trying to gain control over things and at times the authority can be brutal in attempts to control people. 

7 Dictators can easily come to power

 When a nation begins to crumble, most people will intuitively align themselves with the strong and dominant voices. When you are tired of waiting for months to get some medical care, when it takes months to resolve a credit report issue and when everything seems gummed up by a red tape; a “take charge” dictator who is able to cut through these issues will look like a great relief to a common person.

Usually, dictators rise due to the slowness of the laws governing agencies and when people are desperate and trapped in a difficult social-economic situation as it happened in Venezuela. Because of this desperation, any solution looks like the best and will always be welcomed  even if a dictator will bring even bigger problems later on.

8 People can easily sacrifice ethics and honor

The black market and the darkenet reveal a subset of the population that has no ethics and they can do anything for money. What about when your child is starving, the price of food has skyrocketed and someone else has food in their home? This is what happened in Venezuela when people begun committing crimes in order to feed themselves. In Venezuela, starving neighbors could bang your door and demand food by force and in this case people defended themselves with whichever way they could because the government can’t bail itself out and cannot help people. In such a crisis, people do even what is unlawful just to survive.

9 Terrorism can thrive in an economic collapse

With the collapse of the Venezuela’s currency and the whole system, something more chilling was going on in Venezuela. These desperate conditions among people create an ample environment where terrorism can thrive. Radical Islamism could have been easily adopted by some Venezuela’s people and this could have opened up south America to a new wave of terrorism. 

The event I’m referring to is an “angry and embittered” former detainee from Guantanamo Bay leaving Uruguay (his nation of asylum after Obama released him in 2014) to go to Venezuela. We do not know what this man did or did not do any terroristic activities during his weeks away from direct supervision.

Perhaps we will not believe the worst if rioters turn to terrorists in Venezuela and claim allegiance to ISIS or Al Qaeda we can be sure of one thing; terrorism can easily mushroom among rioters.

10 There society structure can be destroyed

Usually an economic collapse similar to what happened in Venezuela can be clipping to any society and within a short time the fabric of the society can be damaged. In Venezuela’s case, while the economy and the government were in their death throes, life became too difficult and every individual was only concerned with their survival. People would either cut back on the usage of electricity or even come up with their own cheaper power alternatives. Others went back to growing their own food and gathering herb seeds and edible insect eggs among other things as they fought to survive. If such a collapse happens on a global scale, the whole human civilization will be destroyed as people go back to traditional systems for their survival.

There are people whore say that a similar economic collapse cannot happen to the United States. Nevertheless, our economy and the patterns occurring in the legislative process all point to something very similar. History repeats itself and socialists in the United States should learn their lesson from what happened in Venezuela. If there is a way for socialism, this isn’t. Instead of formulating cautious economic policies, Venezuela leaders chose to ignore the menace of hyperinflation and the nationalization of private businesses across the country. The outcomes were predictable and Venezuela faced one of the worst self-inflicted catastrophic economic collapses in recent years.

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