Imagine discovering that your bank savings had plummeted in value by 83% in just 18 months. You would likely feel quite frustrated. This grim reality reflects what has occurred in Venezuela…
“Since February 2013,” reports El Universal, “the government led by President Nicolás Maduro has maintained the exchange rate at VEB 6.30 per US dollar, despite prices of goods increasing by an average of 83%. In contrast, inflation rates in major trade partners like the United States, China, Colombia, Mexico, and Brazil remain significantly lower. Thus, the purchasing power of VEB 6.30 in Venezuela is far less than what a US dollar can buy in those countries.”
Clearly, the exchange rate dictated by Maduro is misleading. If 6.30 bolivars were genuinely equivalent to 1 US dollar, they would afford the same amount of goods and services. The inability to purchase similar items reveals that Maduro is failing to fulfill his obligation to responsibly manage the nation’s currency and meet the declared exchange rate. Continue reading
Last Thursday, the DOW surpassed 17,000 for the first time in history. A remarkable milestone, perhaps, but it raises concerns. The relentless forces of mass money creation and speculative enthusiasm have inflated the market to levels once deemed unattainable by rational individuals.
As stated in a recent Annual Report by the Bank for International Settlements, “financial markets are euphoric.” The BIS further advises central banks to consider raising interest rates while economies remain strong, preparing them for future downturns. Jim Edwards at Business Insider breaks down the implications.
The key message from the BIS’s annual report suggests that many central banks, having reduced interest rates to zero, might find themselves without the necessary tools to stimulate the economy if another crisis arises. After all, you can’t lower rates below zero. Continue reading
The ideals of uncompromising independence, strong individualism, and limitless personal freedom once defined the American ethos. According to popular belief, these values still prevail. However, we have our doubts.
By 2014, the principles that sparked America’s War of Independence had largely faded into mere concepts. Limited government and personal liberties have been sacrificed in favor of expansive state control. Similarly, the notion of personal freedom has been replaced by a reliance on safety nets and a collective approach.
Can you recall a time when you could browse the internet without the NSA tracking your every move? Perhaps there was a fleeting moment at the turn of the millennium, but those days seem long gone.
Moreover, long gone are the times when you could earn a living without the IRS investigating your every transaction. Equally distant are the days when boarding a plane didn’t require passing through TSA’s intrusive screening. Much has been irrevocably lost. Continue reading
Federal Reserve Chair Janet Yellen characterizes the 0.4% increase in the CPI for May as noise. While she may be correct, it raises the question: What kind of noise is it?
Is it the sort of noise we can dismiss, akin to the random babblings of a street vagrant? Or is it more akin to a fire alarm, warning us to evacuate before disaster strikes? The distinction is crucial.
Though Yellen did not elaborate, it seems she implies that the CPI fluctuations are insignificant and that inflation is not a pressing issue. Here at the Economic Prism, we are inclined to disagree.
No matter the CPI readings, the prices of many essential items are on the rise. Research from MarketWatch indicates that costs for healthcare, gas, housing, pork, beef, chicken, orange juice, milk, and coffee have all surged. Who cares if you can snag a high-quality laptop for $500 when pork prices have skyrocketed by over 50% in the past year and beef prices have increased by 74% since 2009? Continue reading
Conclusion:
These articles highlight critical economic challenges faced both globally and within the United States. From currency devaluation in Venezuela to burgeoning inflation in consumer goods, it is evident that many are grappling with the ramifications of unstable fiscal policies. These pressing issues demand attention, as they directly impact livelihoods and the overall economic landscape.
