How is it possible to survive a nation with inflation rates of 20%/month and 1700%/year? The answer? The underground economy. This is the level of hyperinflation we have found ourselves with here in Venezuela, and considering the spread of inflation worldwide, it would be well worth the prepper’s time to glean what we can learn here.
Virtually everything you read dictates inflation on this scale necessitates civil war.
Yet Venezuela hasn’t seen this. Why not? Why are the streets not being taken by armed civilians?
While the main reason revolves around 20 years of disarmament and anti-self-defense teachings, I would argue that there is a second reason we haven’t delved into full on anarchy as well: our underground economy.
Underground economies keep people fed.
I’ve lived in four different and fallen South American countries, and it’s been the underground economy which has kept people going in each case.
When I used to work in the Venezuelan oil industry, our salary was taxed heavily just like everyone else’s. As expected, these taxes can quickly make it hard for a family to pay its bills.
But the underground economy? It’s completely unregulated.
I know guys with a hot dog cart who make much more money than engineers down here. And this isn’t new – our world has been like this for many years now. The guy working with the hot dog cart doesn’t pay taxes. He doesn’t pay rent. And usually, (and this is a now an “accepted” practice) these street vendors will run a wire from some nearby pole for their music and lights.
This man is a member of the underground economy. And he is just one of many.
Our stated hot dog vendor is not an isolated case either. He is part of what is keeping this country alive. In all probability, it is the men of this underground economy who likely comprise over half of our GDP here in Venezuela.
More than half of the money generated here is a result of men such as our hot dog vendor. Of course, much of this money also comes from the cartel and Russian mafia, but the point remains: it is the underground economy which is keeping the people of Venezuela (somewhat) fed.
More overreach, more underground.
One thing is for sure. The larger and more bloated the government control is, the greater the underground activity. “Irregular” business is the answer to these controls. It’s simply to be expected – especially in Latin American countries.
I believe I don’t need to explain why.
The government has seized the right to own foreign currency, trapping you in your hyper-inflated national fiat currency? A booming forex black market will spring up, regardless of how hard one attempts to stamp it out.
Store shelves are empty? Well, I know a guy who knows a guy that can get you a 20 kilo pack of cornmeal flour for a bit of arepas (a Venezuelan bread). (You should also check out our FREE Quickstart Guide to help you figure out how to keep a properly stocked larder to help your family ride out troubled times…)
Corruption and trafficking of certain items was already a way of life here. These statist thugs just came into the equation to incorporate it further as a part of our lifestyle. How else do you explain that a simple Venezuelan pilot of a former State President can buy himself a 200 million dollar yatch? Unless this guy works for pleasure and his surname is Onassis, I find that highly suspicious.
Need further proof? The rumor in Caracas is that Ferraris, Lamborghinis and other luxury cars are being brought in for the corrupt elite. And all paid for by our tax dollars.
You can still prepare for this though.
Yes, rampant corruption and government overreach is bad, but it doesn’t have to hit your family as hard as it could if you’ve made some preparations beforehand.
For Venezuelan preppers, getting rid of these insane controls actually worked. It kept us alive.
I sold the inflated money I earned and then bought food, and everything else we needed in the black market. It was the only way we could make it.
But one thing I’ve realized is that there are some underground services which are more profitable than others (outside of the truly criminal). For the prepper considering how he is to survive an underground economy during an economic crisis, one may want to consider the following list of occupations I’ve seen perform well here in Venezuela…
One of the most attractive business you can develop in an underground economy is fumigation. Sure, you need a machine and chemicals, and unless you really know what you’re doing, you can face problems, but this is something most don’t like to mess with. The end result? A lot of potential.
Local regulations do impact some of the people down here with this job, however.
I’m astonished about how extensive this income source is for families all throughout Venezuela. Yes, I do know we Venezuelans love hot dogs, hamburgers, shawarmas, and the like, but it’s simply ridiculous to see the excessive amount of fast food businesses flourishing near my home.
I can’t figure it out, and neither can anyone else.
The best I can figure is this: people like to eat.
In the Venezuelan underground economy, almost every business related to food is going to put food on your table as well. Honestly, these people do so well (such as our previously mentioned hot dog man) that I’m to get my own deep fryer to delve into the market on fried chicken.
It doesn’t matter the machine here. If you’re skilled enough to repair it, congrats. You’ve the makings of an incredible underground business. I’ve written about this extensively in the past, but whether it’s HVAC, small engines, cars, sewing machines, farm equipment, or anything else, you will never be short on business in an underground economy.
A prepper should seriously consider becoming knowledgeable in at least some aspect of machine repairs.
Every single house owner will sooner or later need to repair something that is outside of their range of experience. I’ve found here that if your fees are reasonable, you work fast, you do good work, and you arrive on time (a rare combination for a contractor, I know), you will get multiple jobs from the same customer.
I’ve also discovered that the suburbs seem to have more money in their pockets than do many of the other neighborhoods in Venezuela. If you’re going to delve into the world of underground house repairs, that may be a profitable market to dive into.
When the normal economy dies, the underground economy thrives.
The Venezuelan people have been through a lot. Hyperinflation, famine, rampant corruption and crime – we’re not new to any of it. Yet despite all this, people still had to find a way to keep bread on the table and in their family’s tummies. And the underground economy was the way we did it.
That’s the way things have played out here (and are continuing to play out), and will be the way things happen in other collapsing nations as well. The prepper needs to not only be prepared for disaster, but prepared for this form of black market as well.
But what are your thoughts on the situation? Are there other aspects of an underground economy to discuss? Other jobs you think would do well? Let me know in the comments below!
Thanks for reading! Jose
Jose is an upper middle class professional. He is a former worker of the oil state company with a Bachelor’s degree from one of the best national Universities. He has an old but in good shape SUV, a good 150 square meters house in a nice neighborhood, in a small but (formerly) prosperous city with two middle size malls. Jose is a prepper and shares his eyewitness accounts and survival stories from the collapse of his beloved Venezuela. Jose and his younger kid are currently back in Venezuela, after the intention of setting up a new life in another country didn’t go well. The SARSCOV2 re-shaped the labor market and South American economy so he decided to give it a try to homestead in the mountains, and make a living as best as possible. But this time in his own land, and surrounded by family, friends and acquaintances, with all the gear and equipment collected, as the initial plan was.
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That makes sense to me. I ran a small trading post at a festival for a couple of years. There was a woman who had a button making machine, and she’d bring a big basket of these buttons with cute home made pictures. She’d sell them for a buck apiece, and it shocked me to notice that she would outsell many people who had much costlier items by quite a bit. I think people will buy themselves or their kids a cheap ‘treat’ easier than an expensive meal or item if money is short. I also knew a guy who had been in the peace corps in very rural nicaragua, in the 80’s. He noticed that it wasnt uncommon for children to die of malnutrition due to the extent of the poverty. After his time was up, he took what money he had, bought some land in this town, bought a bunch of chickens, and would sell eggs for a very small amount apiece. It doesnt sound like much, and of course it wasnt about getting or being rich. The families might not have been able to afford a dozen egg, but the kids could scrape together enough to buy an egg or 2 during the day, and the rate of death from malnutrition decreased drastically. Both of those things really made me think alot about the same things you were talking about in your article.
Dear Desert Dolphin,
Thanks for your comment! It´s incredible how much can be achieved with just observation, reflection and action. I just can´t understand how people in a wonderful weather, with access to fertile land gets to that extreme conditions. My own father told me, upon mention of your comment, that when he was a child the only product they got out of their compound was rice. That was back in the 50s. Afterwards, in the middle 70s, our state became one of the biggest rice producers until Uncle Hugo and his merry gang arrived, taking to bankruptcy to a myriad of small producers because they were abusing selling “flavored” rice (with a chemical product that imitated garlic) at twice the market price. And under the current conditions, most people (including us of course) can “scrape” (funny we use that very same word here, LOL) a few bucks to make it throughout the week.
I’m curious if people can afford healthcare and if not if there is an underground economy with that. Also medications they may need.
Also I’ve always wondered if there was the same thing going on here in the US during the Depression. I haven’t read up on it but was wondering if it did happen. In my mind I’m pretty sure it did. I mean people didn’t have money or very little so bartering would seem to have been used
Many MDs and health specialists didn’t flee away but they do charge a fair price for their services. Those running independent business (that’s why I’m so eager to develop our own) are the only ones striving and living peacefully and with everything they could need. Qualifications and knowledge are key for this, of course. Professions like my own, relying on heavy industry (or even light), are basically destined to oblivion. People is getting the needed means to solve their health problems. No matter if this means to eat beans and rice for a week on a row, or not getting eggs, or poultry, or meat. One of my friends has had a twisted ankle for months now, and is going to one of those Cuban centers (which I’m pretty sure they’re a spies nest to measure the “scope of the Revolution”). Medicines are available, and even public health is sort of working, maybe not 100% like in Europe, but the most needed usually find a way: charity, or exchanging hard labor for bartering items.
All sort of medicines can be found, but at international pricing.
I would like to add healthcare. I am a nurse that hasn’t bowed to the v. mandate nor will I! I have been trying to acquire skills such as suturing, that will enable me to be of help to others when SHTF begins. So is this like a barter system, I scratch your back and they scratch mine with needed supplies?
Look at Dr. Jones at homegrownherbalist.com He has some classes that might fit the bill.
Such an excellent article with great insights! Even though the topic is national dysfunction, the ‘underground economy’ actually gives one hope! Again, emphasis on having skill sets is good, too. Thanks for this encouragement.
I have a question: Many prepper scenarios involve neighbors looting each other, or gangs robbing city homes and country homesteads, in times of great duress and lack of food. Did you see any of that? Did you have communities that banded together for protection?
Answering your question: in some smaller cities, especially in the frontier states close to Colombia (they´ve a lot of crime activity there because many criminals just cross the border to avoid getting caught), yes, there were some aggressions. Looting, well, occasionally but news hid the majority of the events. Mind you, censorship a la Cubana is alive and kicking down here. Gangs still try to mess with the producers, but the uniforms have learned that their families get fed thanks to the farmers, and they opted to keep an eye and get rid silently of the gangsters they find in the open country. Nowadays food is much more available that in the terrible years of 2018-2020. Can´t understand the reasons, other than the uniforms controlling the black market understood that people was going to start reacting against them (actually that happened in isolated and quickly censored events: one NG beaten to death with a pipe because of he assaulted an elder in public, another one ran over with a car because of the gasoline trafficking, and some more) and they chickened out, opting for a full open market to take place.
And yes, sure, the communities banded together…and the sort of DIY weaponry they exhibit was incredibly creative. Good thing I wasn´t around…I surely avoided to get myself in some trouble. But I shouldn´t mention the reasons. 🙂
Something similar already occurs in the US. When someone goes on Social Security Disability, that’s it. That will be your income for the rest of your life, and it typically puts you at or below the Federal Poverty Level. To help make ends meet, I do a little welding on the side. Always for cash. On a good month I might generate $500 – $600 for a few hours work. I used to do a little circuit board repair, but more and more micro boards are being used and these are impossible to work on as they’re too small and finding parts is difficult as many are proprietary.
Take a talent you have and use it to generate some extra income.
I am a little surprised how many guys don’t do any home or auto maintenance. I did college, then grad school, started out as a mathematician, but I’ve always loved working on cars. I do all my own auto work, except the newer automatic transmissions, and windshield glass replacement. I to all aspects of engines, paint,etc. ….. use to do Jags as a hobby…. I’ve done welding and a little machine shop stuff in the past.
I just finished installing a new gas hot water heater. I was shocked at current prices just for the heater, and then double shocked as friends said many plumbers get $1,000 buckaroos just to install it. Next week I will install a new well pressure tank for the widow next door…. no charge for my labor after she buys the tank. I am retired now, have no need for extra income, but I guess I could do well in an underground economy. Yet I am not looking forward to it…..
My neighbor can´t even change a tire on his own truck. Not every male seems to have the same genetic setup these days like you and I do. LOL.
They have all the properties of money – fungible, durable, recognisable etc.
And they have great utility – two aspirin can mean a good night’s sleep.
Excellent for barter – no-one would want to be without them.
Willow bark tea, the aspirin that grows in your yard. Too many other uses to list here, for example fungicides for plants and rooting compound for cloning plants.
Wild Lettice the painkiller you can grow and make tinctures of (or simply chew like tobacco).
Tobacco pest killer for gardeners in a tea form, a habit-forming addiction for many.
Knowing how to brew beer.
Knowledge and skills plus attitude to thrive made many a Great Depression Family survive and do well.
Now you know why our OWN government won’t mention, start, or support the 2nd Amendment Militia in America even though it is a requirement.
The people, however, have accepted a poor compromise. Conceal carry, harassment to buy arms in most States, a tedious registration process, and some instances just plain treason in being a citizen armed Militia.
If they knew about the 2nd Amendment Militia there are NO compromises. NONE, whatsoever.
Disarming the population is the very first thing that communist and dictatorships do once they grab the power. From there, it´s all about freedom loss.
It´s like the system has convinced a good portion of youth EVERYWHERE to not making responsible even for their own lives and wellbeing anymore. They trust in the uniforms to keep them safe, instead of reacting with their instincts.
It’s hard explaining to a guy whose only coffee source is a supermarket, and can’t even change a tire in his own car, how satisfactory is to pour some coffee from beans raised in your OWN LAND…roasted and ground by yourself.
Great Writing Jose. The black market is the only 100% free market indeed.
Thanks Fabian! 🙂
Fast food has always been around and always will be as long as there is some type of economy.
It allows travel, hustling and very hard work to happen without stopping to cook.
Cooking and sales/peddling are skill sets.
My whole idea of prepping is long-term. Of course it includes some stockpiling until things get stabilized, then one must produce something in exchange for what he can’t produce himself. I don’t anticipate a long war like what Selco describes, though I do expect a nuclear war, rather one that is over in a few months, then comes the long slog of survival.
Those who think that prepping is merely stockpiling supplies will be in for a rude awakening, because the supply chain will not recover. Small scale production will recover, but not major products. There will even be computers, but more likely on the scale of Raspberry Pi than a Macintosh. People who can keep old computers running will be in demand, along with auto mechanics, even handymen. Are you a blacksmith or machinist? You may find yourself making parts for automobiles, parts that one can’t buy. Or maybe parts for horse drawn farm equipment. Can you sew? Tents to dresses, jeans to curtains, so many products are open to you. All of these can be parts of the underground economy. Piecework done for barter or cash. I envy those who are in farming, but that’s a field that I cannot join for various reasons.
So how are you prepping, long-term or short-term only?
My plan is short-term, medium-term, and long-term.
With the recent events in Ukraine and their immediate impact in the days to come, things can speed out FAST!
You´re right about the computer stuff. I have laying around a few old PCs to run my CNC machine that I need to put to work but don´t have the means.
Good thing is I´ve been managing to acquire some skills in a lot of different stuff, from plumbing to bakery, automotive mechanics, ECU car diagnose, roof fixing/waterproofing, and alike. As soon as I can makeshift a good induction heating device, basic blacksmithing will be added to that list. I have a rototiller that will need new blades and new (electric) motor this year to start cultivating our rocky hillside patch.
All excellent information and I can support your assessments by my experience in Cape Town for 10 years. South Africa has an official ‘unemployment rate’ of around 50%! Really, are half the working population economically inactive? Of course not.
I have spent many happy hours in townships around the country – they have their own, off grid, localised economies; pay no taxes, electricity is free from illegal connections to poles, use very little money but trade effectively and live a happy and productive life far from oppressive government interference.
As the global economy contracts, this phenomenon will be pervasive and centralised economies and their government parasites will wither away.