Although I have done my best to try and describe most of what we have gone through, I realize there are some gaps that I should cover, and new readers that could benefit from an update.
Let´s say it plain and simple:
What were the factors that led to the economic crisis in Venezuela?
- Currency control
- An incredible level of corruption
- The seizing of the public institutions
These are the root causes. Everything started because of these three criminal actions. We did not need a currency control. With a proper monetary adjustment and tying our currency to the USD or Euro, it was enough. They needed it to launder illegal money and to avoid people getting wealthy with their trade. They needed a poor population, depending on a bag of food issued by the seized State.
I think we are about to face this situation in many countries, so it would be very useful for any fellow out there to learn from our experience.
How did it begin?
Living in Venezuela until 2013 was relatively peaceful initially. There was some turmoil and unrest, of course, and people were starting to get uneasy. Being the discreet man I am, I just went to work on my bicycle, trying to avoid being noticed. I left my SUV at home because driving it was too conspicuous and could leave me defenseless in the middle of a riot, turmoil, or shooting.
Usually, the demonstrations started on the main avenue by 11 AM, sometimes earlier, and everything was usually quiet again by 5 PM. I had an advantage: I could ride my bicycle through a private subdivision to avoid getting into the middle of the agitation, and that offered some more protection than the open streets, where you could occasionally stumble upon some thugs who would ruin your day.
Keep in mind that Hugo died in 2012, and the streets started to get stirred up after that. Violence started to erupt. The difference this time, as I explained in other previous articles, was that convicts previously released from prison were given weapons (paid with state money, supposedly to defend the “integrity of the Homeland”) to attack the demonstrations with live gunfire. It’s part of the needed plot for a terrorist, rogue state. No investigation and no troopers were involved to avoid international interventions. Never think that it cannot happen wherever you are. This is a global method to spread fear. Just see what recently happened in France.
Other than this situation, the fact of the economy tanking was a stress factor that would make most people flee.
Let’s divide the 2013-2021 period into three stages, to ease further analysis.
The thing with hyperinflation is that it attacks over several months. Unless you have some means to protect yourself against it, whatever capital you may have put together will dissolve like cotton candy in a water bowl. The more I see its effects, the more I am convinced that it is an engineered process. The rumors of our national currency devaluation usually started on Friday night. By next Monday, all the prices were much higher, 30% or 40% higher. Everything was so sudden that if you didn’t buy daily, the next day you could find the money you had for that wouldn’t be enough.
It’s terrifying if you depend on a wage in the depreciated currency. Like I did. Imagine if you have a medical emergency like we did with our mom and the recent virus…we barely made it. Check the real base wage in this article, graph Nr. 6 page 9.
Happily, back then, I had a decent second income in USD, working for a company not Venezuela-based. This allowed me to cope with the worst of the situation. I had some food stashed, enough for the 3 of us living in the house at that moment for 3.5 months. I could build an elevated water tank (I paid for it to be built, to be honest), remodel all the bathrooms, one of which had a bad leak that almost destroyed a wall, and rebuild some roofs. Some stone masonry work in the backyard walls to make them look nicer and avoid in the future the use of any paint was another improvement that would prove to be a good one.
As I previously explained, also in another article, some of my ex’s family (unrelated to me) came looking for better opportunities in our area, being oil producing and all that, and staying for three months. Our pantry was quickly emptied, leaving us without any reserves. It was a family contingency, though. I never denied support to someone in need.
The worst of the crisis had not even begun. The peak and the worst impact would be in the lapse of a couple of years, like in 2015-2019. The gang leaders yelled incoherently from the microphones, “Sanctions, US blockage, yadda yadda”…and people ignored their nonsense, empty words. The most violent ones threatened on TV and media to the “traitors” who dared to “oppose the Revolution” with prison in their gulags.
These were dark times, but most of us tried to keep living peacefully, albeit the turmoil in the big cities was worrisome. It was then that I used my savings to get my CNC equipment, with the idea of using it to build a home-based business if things went sideways. The negative part is that the economy crashed for all of us, and the market for this type of machining business tanked, too.
This process took like one year and a half and ruined most of our industrial infrastructure. One after another, different industries were shutting down. Pharmaceuticals, car parts, petrochemicals, all these industries decided to cut their losses and leave.
2015 – 2018
Beginning in the second half of 2015, this period was the real turning point. It ended with 10 million percent inflation, a record that few countries have experienced and that no country should ever experience again.
Make no mistake: this was all due to the corruption that looted our national treasury. This was possible because our court system was rigged as soon as Hugo Chávez took office. Judges and magistrates capable of independent judgment based on our laws were replaced by those loyal to the “revolution” under Fidel Castro’s guidelines.
This allowed the development of paramilitary structures all over the country, which were provided with AK-47s to “defend the revolution.” It’s all there in the reports issued by independent organizations, in the General Attorney of the Intl. Crim. Court. These structures eventually evolved into armed gangs that controlled basic materials, trafficking in collusion with the uniforms, like food and all sorts of staples and materials. (They took control of the fuel market entirely. Hence the scarcity we face nowadays.)
Our social life was reduced to a minimum. Some visits to friends, no restaurants, or buying prepared food. Only DVD movies, listening to music, and lots of reading.
This was the lapse where I realized that leaving out would be a good idea. However, as my mountain cabin wasn´t prepared to live there, and the field was not yet ready for growing anything, reasonably I didn´t have any support. That made it easier to split up and finish the relationship. It already had lead in the wings, though. No need to beat a dead horse.
Most of my colleagues decided to head for wherever they had a visa or found a job. Chile, Peru, Curacao, Argentina, Spain, Italy, and of course, the US. Having so much invested in the country and not willing to leave my family behind, I resisted as much as I could. However, the uncertainty was too high, and the threat of a border-closing operation was the final milestone. The employees of the State companies that decided to quit were already getting in prison, charged with treason. This did not have any precedent in our history and with very disruptive sequels for our professional staff.
2018 – 2019
Those years were terrible. I wasn’t there at the time, but I interviewed many people, including my parents. When you see your childhood friends tell you something with a shadow in their eyes, you know it is bad.
Cash flow dried up. The only currency circulating in cash was euros and US dollars, and electronic payments in national currency. God forbid someone be caught with cash in their wallet. They would be taken to the nearest uniform checkpoint and charged with whatever they wanted. Of course, there was also a criminal element, such as those who smuggled our banknotes to Colombia for counterfeiting (the paper seems to be very similar to the one used in US currency banknotes of $20 and up).
The only medicines available were in the few pharmacies owned by the so-called “socialist” system. They did not allow private donations of medicines, confiscating them as soon as they arrived in the country… only to sell them on the black market.
This was the period where people averaged a weight loss of 12-15 kilos per capita. I left in 2017, so I escaped this harsh period, but I got my quota. I remember before leaving the incredible, spooky silence in the streets, the ghostly solitude, and skinny beggars that once were people with a job and a family, wandering on the streets looking for something to eat. On my way to the airport, a runway that was to the brims with cars on a weekday, we barely saw 4 or 5 other cars in a 2.5-hour trip.
It was even hard to bury someone. A cremation service costs $200, and usually, people still have to make public collections with the neighbors when someone dies, and the family is too poor to afford a proper burial.
This article was written by a leftist analyst, however, he described with hard data the situation with very little bias.
The transition to hyperinflation was so fast that we never expected something like that happening. Sadly, in such a limited space is not easy to compile all that happened back then.
How did people cope with the situation?
Many would leave the country. The actual count is close to 9 million migrants. That means 30% of the population scattered all over the globe. The other ones would look for alternatives to make money: close their business to cut losses and start a different activity, quit their jobs in the State and go to some private companies, or open a different business. A few of them headed for the countryside to farm.
Although it was a terrible time and cost us a lot of pain, and part of our patrimony, we could overcome the obstacles.
The only thing getting me through these dark times was my son and the knowing that things eventually would get better, as it effectively was.
No matter how awful and grim things seem to be, just watch a funny movie with your loved ones, with abundant popcorn, and do not watch the news until the next day. Laugh, make jokes, cook together. Bath the dog or wash the car. Go for a hike.
Relax, even if your pockets are empty. Do whatever you can to avoid it, but do not overstress about it, or you´ll get sick as I did.
Being penniless is temporary. Being skillless or lacking in knowledge…that is different.
Keep prepping. Even if that means getting a weekly salad out of your balcony garden.
Thanks for your sponsorship!
Stay safe, and keep tuned.
What are your thoughts?
Considering some of the corruption investigations happening in Congress and the state of our own economy, do you see similarities between the Venezuelan collapse and the situation in our own country? Do you think the whispered accusations in the news reflect this level of future turmoil? Do you expect to see a full Venezuela-style economic collapse in the USA?
Let’s discuss it in the comments section.
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.