In the following video, Professor Engelhardt says that if he were a "Super Villain" and wanted to destroy an economy, there are two ways that seem obvious to him. The first is "Central Planning", aka. "Socialism" and the Second is Hyperinflation. Since he would be a lazy super villain, he says Central Planning is "too much work", so he would choose hyperinflation. He goes on to say that hyperinflation is difficult to define; even Economists like Murray Rothbard and Ludwig Von Mises used different definitions of plain inflation depending on the context. Generally, inflation was originally defined as an "increase in the money supply in excess of the increase in the demand for money". More … [Read more...]
How has Venezuela’s Bitcoin experiment Fared?
In early 2018, in an effort to fight a collapsing economy and hyperinflationary currency Venezuela decided to jump on the BitCoin bandwagon and create its own cryptocurrency called the Petro. On December 3rd 2017, Venezuelan president Nicolás Maduro announced the petro in a televised address, stating that it would be backed by Venezuela's reserves of oil, gasoline, gold, and diamonds. Other reports claimed that the initial issue price would be based on the price of oil i.e. 1 Petro = 1 Barrel of Venezuelan oil. On 5 January 2018, Maduro announced that Venezuela would issue 100 million tokens of the petro, for a total value of just over $6 billion. The government stated the pre-sale raised … [Read more...]
Can Crypto Solve Venezuela’s Hyperinflation Problem?
It is important to note that Hyperinflation doesn't just happen to a country's currency for no reason. In What is Hyperinflation? we found that "Hyperinflation is an extremely rapid period of inflation, usually caused by a rapid increase in the money supply. Usually due to unrestrained printing of fiat currency." Generally, the increase in the money supply is because the government can't pay its debts so it simply prints more money, these debts are usually the result of War, Corruption, or Fiscal Mismanagement. In Venezuela's case, the problem is not that they don't have the assets (they have some of the largest oil reserves in the world), but rather it is a result of their economic … [Read more...]