When I was teaching about the causes of World War Two I had to discuss the rampant inflation rate in Germany following World War One. In 1914 the exchange rate between the German mark and the American dollar was roughly 4.2 to 1. According to Wikipedia, nine years later it was 4.2 trillion to 1. I remember telling my students that the mark was weakening so fast that people would pay for a restaurant meal when ordering because if they waited until the meal was finished, the price would have gone up.
This came to mind last week when I heard a report about inflation in Venezuela. Given the horrible monetary policies of the past several governments, the value of goods and services in Venezuela have exploded by over a million percentage points. The simple example is, that Snickers bar that once cost you a dollar will now set you back a million dollars. There are so many zeros in the exchange rate between the US dollar and Venezuelan currency my brain can’t do the conversion.
All this equates to many things but just like in 1923 Germany, where violence erupted and the door to political upheaval opened, you can see ever growing violence in the streets of today’s Caracas.
POINT OF REFERENCE: The highest inflation rate in the US was reported in 1778 at 29.78%. In my life, the highest took place sometime in 1980 when it reached 14.8%. For about two years during that time inflation remained in the double digits. It was not a good time to buy a car, a home, or even a loaf of bread.
PPS: Look at the photo at the top of this piece; have you ever seen an American trillion dollar bill? Well, you better hope you never do.