10 reasons for the new economic failure that is coming for the government of Nicolás Maduro.

We explain in a simple way, digestible for all, at least 10 reasons why the recent measures announced by Maduro, like the previous ones, will also inevitably fail, let's see:

1. First of all, if the government assumes the payroll of the private company definitively, the cancellation of these will be through injection of money without support (inorganic), money that is one of the main engines of hyperinflation, that is, the rise of prices will continue and for the volume of money of this type that is planned to inject the battered Venezuelan economy to hyperinflation will be an 8-cylinder engine.
2. In the same way, via Carnet de la Patria, the government will continue its hemorrhaging of bonds with money without support, obviously, the mega fiscal disorder and its disastrous inflationary consequences will be accentuated.
3. The scheme increased the VAT, as is known, this increase will fall on the final prices of goods, services and products, is another factor that will push hyperinflation.
4. Likewise, Maduro increased the ISLR, as did the value-added tax, this burden will be reflected in the final price of absolutely everything.
5. Tax collection is inefficient in a context of hyperinflation, in addition, our currency is devalued daily, erratic controls and economic policies reduce our industrial park on a daily basis, a large part of small and medium enterprises operate outside of official records ... the bureaucracy corrupt, dull, partisan, the perfid de-institutionalization caused that reality.
6. A determining factor is that the government exponentially increased the official exchange rate, it does so in a context of scarcity of foreign currency that worsens, this action has a consequence as disastrous as inevitable, triggers the rise of the parallel dollar which is the only one that it stimulates the economy, the dollar that imports what is still sold and produced in the country, that is, the impact on prices will be catastrophic. The higher the official change, the more and more the parallel goes away, simple, this price is not controlled by the government or by the private sector, but rather by the market, as everything that is scarce increases in value day by day.
7. The announced 300 exchange houses at national level have an almost exclusive mission, to be captors of the currencies existing in the country, not to sell them as many believe. The government is betting that the private ones offer their currencies to the State, stopping to obtain very superior profits that the parallel market will always offer. It is a chimera!
8. The repeated promise of consummating 3 or 5 weekly Dicom auctions will depend on the collection of previous currencies, that is, it will also fail, the levels of distrust and uncertainty that emanate from Chavismo are getting worse every day, nobody will dare to invest in a regime that it does not offer any kind of security or confidence, the main qualities sought by investors.
9. Petro only exists in the minds of its desperate creators, with it the government can not carry out international operations, it will continue to depend on anemic international reserves, grimly exploiting our riches and, above all, compromising the nation's assets under a spiral of obscurantism.
10. Gasoline measures are still missing, whatever they may be, they will put upward pressure on prices, likewise, the government does not have the capacity to reactivate its production in the country or import the necessary one, PDVSA went bankrupt, its internal subsidy will also be with more lethal inorganic money.

August 23, 2018

Paoli