Grubby greenbacks, dear credit, full shops and empty factories … Inflation reached an absurd 231,000,000% in the summer of 2008. Output measured in dollars had halved in barely a decade. A hundred-trillion-dollar note was made ready for circulation, but no sane tradesman would accept local banknotes. A ban on foreign-currency trading was lifted in January 2009. By then the American dollar had become Zimbabwe’s main currency, a position it still holds today. … Zimbabwe’s dollar had been too liberally printed: a swollen stock of local banknotes was chasing a diminished supply of goods. Now the American banknotes the economy relies on have to be begged, borrowed or earned. Even so, the monetary system works surprisingly well. A scarcity of greenbacks keeps inflation in the low single digits. The economy has made up much lost ground.
With greater oil reserves than Saudi Arabia, Venezuela should be at least moderately prosperous. Instead, it has the world’s fastest contracting economy, the second highest murder rate, inflation heading towards 1,000% and shortages of food and medicine that have pushed the poorest members of its 30 million population to the edge of a humanitarian abyss. ... It takes just five minutes to cross from the porous border at Pacaraima. Locals say the government in Caracas lifted food import tariffs from Brazil two months ago in a sign both of its desperation to ease shortages and its weakening control over the economy. There is now a steady stream of traders buying sacks of rice, sugar, wheat and spaghetti for resale in Venezuela. ... Life could be made easier if the authorities printed notes with higher denominations than 100 Bolivars, which is worth less than 8p, or 10 cents. But the central bank appears reluctant to make a move that would confirm a level of hyperinflation not seen in Latin America since the crises in Brazil and Argentina in the 1980s and 1990s. As a result, locals have to pay for everything in the equivalent of dimes. Even when made of paper, that can be cumbersome and heavy. ... The government’s tendency to subsidise many products below the cost of production is a major reason why the economy is in such a mess. ... Even in the midst of crisis, the government still hands out free or massively discounted homes, cars, DVD players and microwave ovens.
The medical student told me to use his name. He said he didn’t care. “Maduro is a donkey,” he said. “An a**hole.” He meant Nicolás Maduro, the President of Venezuela. We were passing through the wards of a large public hospital in Valencia, a city of roughly a million people, a hundred miles west of Caracas. The hallways were dim and stifling, thick with a frightening stench. ... Why were hospitals so heavily guarded? Nobody threatened to invade them. The guards had orders, it was said, to keep out journalists. Exposés had embarrassed the government. ... For decades, the country had been ruled by two centrist parties that took turns winning elections but were increasingly out of touch with voters. A move to impose fiscal austerity was rejected, in 1989, with a mass revolt and countrywide looting—a paroxysm known as the Caracazo—which was put down by the Army at a cost of hundreds, perhaps thousands, of lives. Chávez was an Army lieutenant colonel, from a humble background—his parents were village schoolteachers. He crashed the national stage in 1992, by leading a military-coup attempt. The coup failed, and Chávez went to jail, but his televised declarations of noble intent caught the imaginations of many Venezuelans. He offered a charismatic alternative to the corrupt, sclerotic status quo. After his release, he headed a small leftist party and easily won the Presidency. ... He soon rewrote the constitution, concentrating power in the executive. ... After Chávez barely survived a 2002 coup attempt, the Cubans also sent teams of military and intelligence advisers who taught their Venezuelan counterparts how to surveil and disrupt the political opposition Cuban-style, with close monitoring, harassment, and strategic arrests. ... Polar employs about thirty thousand workers (it is the country’s largest private employer) and is responsible for more than three per cent of Venezuela’s non-oil gross domestic product. Besides corn flour and the country’s top-selling beer, Polar produces pasta, rice, tuna fish, wine, ice cream, yogurt, margarine, ketchup, mayonnaise, and detergent. Yet it operates in an atmosphere of continual uncertainty, its planners and logistics mavens never sure what roadblock or subterfuge the government will toss up next. ... The crisis has a small but crucial constituency, starting with the generals and other high government officials who are thriving financially, mainly through smuggling, graft, and import fraud.