“Those who cannot remember the past are condemned to repeat it.” – George Santayana
Some ideas have long records of complete failure, yet people try them again and again. Venezuela’s meltdown has two of these ideas that have never ended well, but people keep trying them.
First, Socialism never works. From Korea, Russia, Africa, to Latin America, it has never worked. But people keep wanting it. Venezuela has had a bad decade with their socialist experiment and within the last year the final domino has fallen. Their economy is in meltdown. When the price of oil plummeted, Venezuela could no longer afford their socialist programs and the state-controlled industries failed.
The second bad idea is an economic “solution” that has always failed: Venezuela kept printing money so they could pay for everything their socialist experiment demanded. Of course, Venezuela went the way of every other country that has tried devaluing their currency—hyperinflation has completely wrecked the economy. Venezuela’s currency inflated so fast that they couldn’t afford to buy more paper and ink to print more.
Socialism and hyper-inflation may not be immediate threats to us. But we can look at the meltdown in Venezuela to see how an economic collapse could play out, if, no matter the cause, it did happen here.
1. The Government Makes A Lot Of Mistakes
The markets and the economy work best when they are not interfered with by the government. But we elect officials expecting them to do something. When there is economic turmoil, don’t expect your elected officials to just sit in their offices. President Herbert Hoover tried letting the markets work themselves out during the Great Depression and everyone hated him for it. President Roosevelt is still praised with saving us all from the Depression despite the research that says his worker programs actually prolonged the Great Depression. Had Hoover had his way of non-intervening in the markets, the recovery could have happened much sooner.
The government in Venezuela solves all their problems backwards. No money? Print more. Now they don’t even count money, they weigh it by the kilo. Bread lines stretching for a mile? Make standing in line illegal. No more bread lines. Prices of goods double every other day. Make a law freezing all prices, but keep printing money. So, just because the government says a loaf of bread can only cost 100 bolivars, it doesn’t mean anything when everyone’s millionaires from all the inflation.
Any economic disaster we may experience you can expect our elected officials to go head over heels trying to be the next Roosevelt. Anyone remember the bank bailout? Or the current rounds of Quantitative Easing? Or negative interest rates? The government is helping the economy to death.
If another housing bubble bursts, or car loan bubble, or tuition bubble, or healthcare bubble, or if the Fed stops keeping interest rates at a frightening low level, we can expect large disturbances in the markets. But corrections are a good thing, until someone says, “I’m from the government, and I’m here to help.”
2. Hungry People Will Do Anything
The currency in Venezuela has less buying power every day. People are weighing bricks of paper money that they carry around in wheelbarrows. The people who don’t have enough cash can’t buy food. So they loot it. And those who do have enough may discover that food shortages have left grocery shelves empty. And delivery trucks get mobbed by crowds of thousands of hungry families. Now food is being delivered in armored cars with military escorts in Venezuelan cities. But the food shortages have continued.
People in Venezuela have resorted to eating wild dogs, cats, and pigeons. Women are selling their hair to wig companies for some extra cash. And many armed militias have taken to the streets to restore or disrupt the peace.
How fast would your neighbors gang up to “redistribute” the food in your pantry if grocery shelves haven’t been stocked in a week? We’ve already seen how the riot police in our own cities have allowed “protesters” to loot grocery stores, service stations, electronics stores, and even auto parts stores to let them “get it out of their system.” That’s nice of them, if it isn’t your neighborhood or your store.
3. Money Isn’t The Answer To Everything
As in Venezuela, any major turmoil will usually see a black market develop. And it’s not always money that people want. Trading your skills and goods can get you further than money in hard times. If your country is struck by hyperinflation, paying your plumber with some canned goods may be more beneficial than a brick of paper money if there’s no store to spend it at and no goods to spend it on.
Some people stockpile silver and gold in case paper money becomes worthless. I buy it as part of my investor portfolio, but don’t ask how well that’s worked out. They even make credit card-sized slices of gold that can be broken down into 1 gram squares so you can make change in a barter economy. If an economic collapse has ruined the faith of your currency then having precious metals to trade could be valuable, provided the people you trade with would accept it. After all, you can’t eat gold and silver.
The Historical Answer To Economic Turmoil
An economic collapse is usually a long and drawn out process. Stockpiling food can help but isn’t always the answer if there’s going to be food shortages at the supermarkets for the next year. You will run out of stock eventually. And no one wants to turn their guest bedroom into a small grocery store.
Basic human needs haven’t changed since we were cavemen. After air we need shelter from the environment. I’ll just guess that no one reading this is homeless. Then comes water. Once again, I assume you have indoor plumbing. Then it’s food. Hungry people have brought down empires. Some smart people have theorized that every significant regime change in history was brought about by food shortages more than any other factor. Food shortages have been attributed to the collapse of the Soviet Union, and more recently attributed to the Arab Spring movement.
If the economy experiences a major disruption, like the next great depression, having a reliable food source is the most important factor. Considering you still have shelter and running water, that is. Growing a few plants in your home is a good start. Even if you don’t have a lot of space. You can buy dwarf fruit trees that you can grow on your counter top. Or a few potted plants for vegetables if you have the room for it. Growing a few plants can be a fun hobby and livens up your place, too. And it makes a great contingency in the event of economic trouble. You may not be growing enough to be self-sufficient, but if signs point to trouble coming, you could always add more plants. And having some experience in it before trouble hits would be ideal.
Another thing to consider is cooking food from scratch. It will be easier to get your hands on bags of flour and the like instead of foods already prepared when the people make a run on the grocery stores. Even Roosh has taken the Bread Pill and makes his bread from scratch. In economic hardships it will become cheaper to make food from scratch, and easier to acquire in a rush.
Knowing food is key to keeping people out of the streets demanding revolution, Venezuela has decreed a massive farming operation and created bylaws to force people to the fields involuntarily for up to 60 days, or indefinitely, to grow that food. That gets them out of the streets I suppose.
You might be thinking, learn to garden? Learn how to cook? This sounds like something that should be posted on Return of Queens, not here. Like I’ve said before, men shouldn’t be dependent on anyone else. Especially not government handouts. What would happen if a major economic disaster happened and everyone was fine because they had a couple weeks of food to fall back on? And if independence can be had by taking a few easy steps and being a little more self-sufficient then we should all take those steps.
Read More: 7 Ways The Collapse May Unfold