Archive for May 7th, 2008

A simple cure for Venezuela’s inflation.

May 7, 2008

This is NOT one of those very educated posts about swapping (rates), unstructured notes, solidity and celestial bonds for which you need a Ph.D. in Economics and Subatomic Physics. This is a much simpler and yet
effective method that this DDGB (Devoted and Distinguished Ghost Blogger) is proposing to drastically reduce the inflation in Venezuela. The conclusions at the end are irrefutable and MUCH simpler than any of Miguel’s convoluted analysis.

The background:

Ultimas Noticias is a popular high circulation tabloid that has maintained a rather uncritical role with
respect to the Goverment. As a result, it has earned the trust of the Revolution and a
lucrative supply of goverment advertising.

Once in a while, however, even Ultimas Noticias exposes some of the
negative realities that are touching its readers, such as inflation.

The story:

On Saturday, May 3, UN headlines was “in Mercal prices have inflated.” The headline specifically
mentioned that milk prices were raised from “4.70 BsF to 8.00 BsF (70% more)”.

On Sunday, May 4, in Alo Presidente, Chavez had some harsh words about
Ulltimas Noticias.

He said that the information was false, that milk was still costing 4.70 BsF
and that UN should retract if they still wanted to have their respect. He also mentioned that
the Capriles family, that owns Ultimas Noticias, were oligarchs.

The new developments:

The next day (May 5), when the Ultimas Noticias journalist visited a Mercal, the inflation had
vanished: the President WAS right, the cost of the milk was still 4.70 BsF.

Unfortunately for Chavez, Ultimas Noticias did not retract….
when the journalist went to the Mercal, she also saw some customers waiting
in line asking for a reimbursement for the difference in the price of milk.

As a matter of fact, they had paid 8BsF for the milk a few days before.

The journalist took a picture of the receipt and the picture was put it in the May 6 Ultimas Noticias’
frontpage with the headline: the milk price had indeed been 8BsF.

The observation:

In a matter of a few days, the price of milk went down from 8 to 4 BsF.

The Conclusion:

Why bother about inflation?

Just publish prices in the front page of Ultimas Noticias!

Jorge Arena
Most Distinguished Ghost.

Last minute news:

The Minister of food just said that the price of Milk is still 4.70 BsF and that it was due to
a technical failure that the milk was sold at 8 BsF. He said that thanks to Ultimas
Noticias headline he inmediately realized the technical problem and fixed it.

The corollary of the post

Publishing prices in UN not only contains inflation but it also helps the goverment improve
its IT system.