Venezuela

Maria was a primary school teacher in Caracas. In 2012, her monthly salary covered rent, food, school supplies for her two children, and an occasional dinner out. She wasn’t wealthy. But she was stable.

By 2018, her salary — which had tripled in nominal terms — bought a kilogram of rice.

Venezuela had the largest proven oil reserves in the world. It had a functioning government, universities, hospitals, a middle class. What it also had was a government that, facing falling oil revenues and rising debts, turned to the only tool it had unlimited access to: the money printer.

Inflation hit 1,000,000% in 2018. A million percent. Prices were changing faster than shops could update their labels. Workers asked for wages twice a day. Supermarket shelves emptied not because there was no food in the country, but because no one could agree on what anything cost.

People like Maria — educated, employed, responsible — found that a lifetime of doing the right things financially had left them with nothing. Their savings, denominated in bolivars, were now essentially worthless. The currency had been destroyed.

Those who survived best were the ones who had converted savings into dollars, gold, or — increasingly — Bitcoin before the collapse. Not because they were speculators, but because they had put their savings somewhere the government couldn’t devalue.

Venezuela is not an anomaly. It’s a case study in what happens when monetary discipline collapses completely.

Some people treat Bitcoin as an investment. For others, it’s infrastructure.

Tomorrow: week three in review — inflation, explained without the spin.

— The Daily Bit