How to Survive Hyperinflation

in #equipocardumen5 years ago

How to survive hyperinflation?

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Greetings, dear Steemians

I wrote this post in response to a suggestion by @chrisrice, who was curious about our situation in Venezuela and also concerned about his own country’s economic crisis and the possibility of facing increasing inflation levels in the near future. Hopefully, that won’t be the case for the Philippines or any other country in the world. What hyperinflation has done to Venezuela I do not wish to any other country. I want to believe that people will learn the lessons taught by this monumental disaster called bolivarian revolution.

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The carton of eggs went up to cost 480,000 VEF (Bolivares Fuertes) in January 2018. By May 2018 it was 1,500,000. Then came the monetary reconversion and our currrency got a new name: Bolivar Soberano. They removed 5 zeros, so the carton of eggs was "only" 15Bs, right? Right. Six months later, they cost 12,000 Bs (keep in mind that minimun wage is 18,000Bs). A university professor makes about 30,000 Bs a month!

What is Hyperinflation?

Hyperinflation is defined as a “monetary inflation occurring at a very high rate” (OED); that is, prices of products increase rapidly and the value of the local currency decreases proportionally. Ironically, it took many years for economists to start talking about hyperinflation in the Venezuelan case. Even though it is agreed among experts that we are facing hyperinflation whenever a country has a monthly inflation equal or above 50% and accumulated inflation equal or above 100% over three years, it wasn’t until last year that people started calling Venezuela’s illness hyperinflation, despite the obvious over 50% rate since 2013 (according to official records, unofficial empirical data placed it way above 50% during Chavez’s times). In 2016, according to some sources, Venezuela’s inflation was 500%.

Last year, it was estimated around 1,000,000 %. The Maduro administration obviously denies such numbers. But, the average Venezuelan who bought a pair of shoes for 4 Bs in December 2016 and sees the same shoes in December 2017 going for 40,000 Bs knows that there has to be a huge percentage separating those dates.

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Causes:

Hyperinflation is usually the result of the printing and circulation of “inorganic money”, that is money that is not supported by the economy’s growth in goods and services. Wars or natural disasters usually precede hyperinflation, given the fact that only under such circumstances countries suffer serious shortages of basic products, the production apparatus is destroyed or seriously impaired, and there is a considerable reduction of the population due to death, illnesses, or migration. Venezuela faced all that without having experienced a war or a serious natural disaster. The revolution has been a man-made disaster!


Inefficiency, corruption, ideological and political interests over economic or social ones, ineptocracy, among other factors, made it possible for the chavistas to ruin one of the wealthiest countries on earth in 20 years.

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How can you cope?

For those who are going through it, it may be too late to know what to do because part of the survival strategy under hyperinflation has to do with investment and restrictions. Someone who is already living a hyperinflation must have zero money to invest by now.

For those who are about to experience it or fear their countries currency may sink in value and may drive them eventually down escalating inflation, this is what you can do to avoid personal and family collapse:

No point in saving

Forget about saving money in your own currency. It will be worth nothing in a matter of months, weeks even. One way of saving is:

Investing in hard currencies (Dollars or Euros).

Investing in gold or other precious metals.

Or

Buying things that can keep and increase their value (nonperishable food, electronics, hardware and school supplies, clothes and shoes, etc).

At some point trueque (bartering) will become the most common form of economic exchange among regular people. You want to make sure you will have items people will find valuable and will be willing to give a lot for them.

Get your priorities straight.

  • Spend any money you get on food and medicine. Medications such as antibiotics, painkillers, long-term treatments for chronic diseases, and any other medications for minor emergencies should be bought in abundance (if possible). Check expiration dates, keep record of all the medications you have stored,and when they are about to expire sell them. By then they must have ten-folded their price.
  • Ask loans, use all credit cards. Borrowing money from banks at stable rates is better than facing the escalated inflation in the market. Borrow all you can, spend on priorities or invest on any of the previous suggestions. In a few months those loans will be insignificant.
Price of dollar in the last 40 years

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By now, a dollar is worth about 3,000 Bs each.

It is of the upmost importance that under grave economic crises you strengthen your family ties. You will need all the help you can get and family and friends must help each other. Solidarity is key to survive under extreme circumstances.


Also, it is vital that you redefine your way of life. By simplifying your routine, by reducing unnecessary expenses, and by devoting more time to yourself and your loved ones, you will reduce considerably the amount of stress that ends up aggravating the economic crisis. Mental health is the ultimate challenge.


The storm will pass eventually, and whether you emerged stronger or survive at all will depend on how much you plan ahead and how much resiliency and adaptability you show during the downpour.

I hope you find this information useful. Comments are always welcome.

Thanks for your visit

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Visit at at: www.equipocardumen.com.ve

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Never knew Venezuela had higher GDP/ capita than Canada in the 50s. Sorry you have to deal with hyperinflation, good luck!

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Thanks. We'll need it

Man this is the realest post! Was just talking about this situation today and saying this could happen anywhere ! Good info and food for thought bro, stay Up ! Bless up !

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Glad you find it useful, brother.
That's the scariest thing. It can happen anywhere. 20 years ago we were as cocky as hell. Most people disregarded the warning of an economic collapse caused by populist economic measures or inaction. Here we are 20 years later, waiting for international humanitarian assistance.

It's incredible and painful to check out the numbers you put up in this article. Jesus Christ... that 1950s chart. I have not really felt the effects of hyperinflation though in the '90s my parents surely did (I was too young to remember those few years of craziness). It's painful to realize also that you are giving the above advice based on your experience...
I can only wish that your country will manage to throw down this moustache dictator (how come all dictators wore moustaches?!) and I REALLY hope that you will be able to do it without the interference of the USA or anybody else. Having Trump (or Putin) mingle over your internal businesses and lives will not grant you real economic freedom... though staying in this state of affairs is just inhuman.
The best of luck to you and your close ones! The best of luck to Venezuela!

Thank you very much. That would be ideal, not to have to depend on a third party to overcome this situation, but as I have explained in other posts, given the circumstances one has to choose the lesser of two evils.
About dictators, there's actually a list of clean-shaven ones, chavez included. Don't be fooled by all the elections he won. He was as hated as maduro, but when you have money and absolute power, it is easy to appear to be loved.

Useful information in the year 2019... I think the best way is gold and you have a private garden in order to provide your own food...

Yep. That sounds right. The government actually tried to institutionalize a national urban farming program, they even created a ministry for that purpose. Didn't work.
Unfortunately for me, i live in a house without a yard or lot to plant. But those who do have land have the upper hand.

If money is a hard currency for energy, it sure makes for a lot of wasted time in a matter of a very short moment in history. Hyperinflation manages to illustrate the absurdity of life: loans and debts become sensible means for survival; energetically you are living off negatives and going round in circles on "Empty". My commiserations to your situation, but something similar is going on all the time everywhere only we don't call it hyperinflation (yet). When will love and spiritual reality replace cash and stuff? The dreamer dreams on.....

Very true. The demands of the material world outdo our capacity to satisfy any whim. Artificial needs replicate themselves in our minds and translate into a never-ending cycle of disatisfaction.

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