STEVE HANKE: ON VENEZUELA’S DEATH SPIRAL. “I compute the implied annual inflation rate on a daily basis by using PPP to translate changes in the VEF/USD exchange rate into an annual inflation rate. The chart below shows the course of that annual rate, which peaked at 800% (yr/yr) in the summer of 2015. At present, Venezuela’s annual inflation rate is 150%, one of the highest in the world (see the chart below). To stop Venezuela’s death spiral, it must dump the bolivar and adopt the greenback. This is called “dollarization.” It is a proven elixir. I know because I operated as a State Counselor in Montenegro when it dumped the worthless Yugoslav dinar in 1999 and replaced it with the Deutsche mark. I also watched the successful dollarization of Ecuador in 2001, when I was operating as an adviser to the Minister of Economy and Finance. Countries that are officially dollarized produce lower, less variable inflation rates and higher, more stable economic growth rates than comparable countries with central banks that issue domestic currencies. Dollarization is, therefore, desirable.”
Not to Maduro, for whom it would be a humiliating admission of just how thoroughly he’s screwed the country.