Why does socialism typically lead to a currency crisis?
For the third time in 13 years, the socialist government of Venezuela initiated a currency redenomination.
Beginning in August, the central bank will remove six zeros from the bolivar. This is part of the government’s efforts to “simplify daily transactions that hardly fit on a calculator or that require swiping the card several times to complete a purchase.”
Inflation has destroyed the bolivar. It is so bad in Caracas that officials do not even publish monthly inflation data anymore.
That said, observers note that inflation now stands at 2,339 percent per year.
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