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Venezuela and Hyperinflation: When Currency Loses All Meaning
A case study of how an oil-rich nation destroyed its currency and economy in less than 20 years
M
MarketPedia Editorial
9 min read·July 20, 2024
Between 2016 and 2019, Venezuela recorded inflation of over 1,000,000%. Prices doubled every few days. The national currency became worthless.
From a wealthy nation to a humanitarian case
Venezuela holds the largest proven oil reserves in the world. Yet, between 2013 and 2020, GDP per capita collapsed by 75%.
The mechanism of hyperinflation
The Maduro government began printing money to finance public spending. The more currency that circulated, the higher prices rose—a spiral that became unstoppable. In 2018, the IMF estimated inflation at 1,370,000%.
Lessons
- Hyperinflation destroys savings quickly and totally.
- Dependence on a single commodity is an existential risk.
- Institutions matter more than natural resources.
# Venezuela# Hyperinflation# Currency# Emerging Markets# Macro