Living in Hyperinflation

Of almost 6000 million people living on this planet only about 30 million live in hyperinflation, those of us living in Venezuela. In order to give you an idea of what we are talking about, I bring you some numbers taken from the “Carta Financiera” portal corresponding to March 2019. Venezuela's inflation was estimated by that time at more than 1,600,000%. Yes, a completely incredible amount. The second country with high inflation was Zimbabwe, with 66.8% and then Argentina with 54.7%.

An inflation of such a magnitude turns the income in dust and brings to the chaos the economic activity. Living in these conditions is a totally unsettling experience.

There are issues that work in the normal world but in the hyperinflation situation they stop making any sense, one of them is saving. Everywhere saving is a guarantee to be able to face future situations, it is saved in good times to face difficult times. The nations that have encouraged savings have achieved great economic development.

But when you live in hyperinflation, saving is an outdated concept, it is useless. What does make sense is to spend the income as quickly as possible, because tomorrow everything will be more expensive than today. What we do, the vast majority of people, who are in this situation, is to receive a payment and immediately go to spend it, that is what we call "protect", so we guarantee that at least we can acquire something. If today any good costs me $ 1, it is likely that at the end of the week it will cost me $ 1.4 or more.

Another thing that dies with inflation is the credit. Surely many of you cannot imagine what the world is like without a credit card. Since in Venezuela credit cards are useless, no private bank can grant credits for projects of any kind. Can you imagine how life can be without credit from the banks? Yes, of course ... it's hard to imagine.

Without credit, economic activity is reduced to a minimum, new projects that generate employment are not developed, so most of the population has to dedicate themselves to very precarious jobs managed by them, the kind of projects that generate little income and keep them at the level of survival. People try to find income by doing what they can, it is very common to see in the houses notices promoting the sale of anything and offering all kinds of services.

The most affected by inflation are those who work or have worked in the public sector: teachers, nurses, doctors, firefighters, police officers. To have an idea: I am a professor at HighSchool and the University, when I started working in the mid-70s, my salary as a teacher exceeded $ 1000. After working 30 years I obtained the right to retirement. Currently, my retirement income is $ 18 per month. Incredible…! It is not?

Another serious problem is the means of payment, money paper loses value in a dizzying way, the country has to be issuing new bills very frequently. That represents a great expense for the State and greatly obstructs economic activity. Currently, the highest denomination bill is 50,000 BS, the day I write this text it represents about 65 usd cents. Imagine that in your country the highest bill were 65 cents. What would it do for you? What could you buy with that?

In Venezuela, bills are useful only to pay for public transport and car parking. Everything else is done through electronic transactions.

Hyperinflation is installing in our mind a strange idea of reality, where it is not possible to think about the construction of the future; the certainty disappears, one lives in a state of permanent emergency and uncertainty. We all seek to solve it as quickly as possible because we don't know if later will be possible…

Thank you for your time.