Venezuela is dying.
The country lived large a few years ago; it was making a helluvalota money in oil with which it lived large.
Unfortunately Venezuela didn’t follow the advice of Ben Franklin who would have advised them that a penny saved is a penny earned.
Or to save for a rainy day.
Instead Venezuela followed the advice of the morons at our elite business schools who through their eco-babble convinced the leadership to get arrogant and begin modernizing the economy.
Venezuela got suckered in by con-men who sold them a shitload of eighteen dollar bills.
It happens to us all. We make a little money and think we’re somebody. The next thing you know we’re putting down payments on all sorts of bullshit we don’t need that comes with a loan attached.
Thus the IMF.
The IMF – The International Monetary Fund – is the bank to the nations of the world. It is where nations go to borrow a lot of money to “upgrade” their economy.
Usually what happens though is that the nation borrows money that it can’t pay back.
This is what happened to Venezuela. They borrowed boatloads to modernize their country. They figured they could pay it back with oil revenues that were coming in.
They were wrong.
What happened was that the price of oil dropped. Now Venezuela is stuck with a bunch of debt to a bank.
Like you, Venezuela would rather spend the money on itself to make itself better. But it can’t.
So Venezuela had to make a choice between austerity – cutting back – or fooling its citizens. It chose to fool its citizens by printing money to pay them the same amount of money that they were making before.
This caused inflation. A lot of inflation.
This doesn’t change the situation though. The price of oil is still low. And Venezuelans still have to come to grips that they’re not making as much money as before.
It would be like you going from making $100,000 a year to $25,000 a year. You can print up a bunch of money fooling yourself that you are still making $100,000 a year, but you would be fooling yourself. Eventually you would realize that.
Now imagine yourself making 25% of what you were making before; now, add a big bill for an oversized house that you bought.
You become unhappy; you may even lose your house. You act out and get angry as the cupboard becomes bare.
Well, that is what is going on in Venezuela today. And that is why you see mobs and lynchings in the streets. That’s why you see increased criminality.
It’s a dire situation. What are you going to do?
I’m glad you asked. I happen to be a specialist in getting out of a mess.
I’ve spent half my life digging a hole for myself and the other half climbing out of it.
- Don’t panic. Things are never as good or as bad as they seem to be. Panic produces unclear thinking. What you need is clear thinking.
- Accept reality. It is what it is. Fighting pain only makes the pain worse.
- Accept responsibility even if it’s not true. In Venezuela’s case it would be good for the leadership to say the following: “I fucked up. I accept responsibility. It’s my fault. It’s not the fault of the United States (even though we all know damn well it is).” Honesty and responsibility are good for the soul.
- Cut all frivolous expenditures even if they seem like a drop in the bucket. It’s good for the soul; it’s good for morale. In Venezuela’s case it would be good for the leadership to cease eating cake at government galas. The people need to see that the elites are willing to get down in the mud.
- Slow-pay and partial-pay your debts. Slow-pay and partial-pay are better than no pay. Resolve to pay the debts in full. Never default.
- Lengthen the term of the debt if you can.
- Take your foot off the gas. Quit borrowing. Borrowing got you into this mess. Now, is not the time to borrow more.
- Start selling assets to pay off debt. There’s no reason why Venezuela can not lease oil rights today, or pay off huge debt with land sales.
- Increase the value of your citizens. If the government has unused real assets in its possession, now is the time to share.
- Enlist the citizenry to help solve this problem. People want to help, and they will respond.
- Engage in a pride campaign to make citizens feel better about their country. You tell them: “We may be poor, but it is our country.”
- Resolve never to get yourself into this position again. Plan to make yourself as self-sufficient as possible.
- Resolve to educate yourself and your citizens by investing first in education.
- Kick gobbledygook artists and slick talkers out of your home, personal space and consciousness.
- Resolve to adhere to some sound principles not taught at the elite business schools such as: a) a penny saved is a penny earned; b) save for a rainy day; c) a stitch in time saves nine; d) never throw good money after bad; and e) a bird in hand is worth two in the bush.
Finally, remember this: You don’t need the elites; they need you.
You know how to grind it out and survive. Parasites don’t.
If you die, they die.