Slow Robbery

From Bloomberg:

Venezuela Will Raise Regulated Prices Gradually After Bolivar Devaluation

Venezuela will raise regulated prices gradually on items such as milk, rice and corn flour in a bid to avoid an inflationary spike caused by the devaluation of its currency, said central bank board member Armando Leon.

“The government will not raise prices of regulated food immediately,” Leon, 49, said in a phone interview in Caracas. “The adjustments will be gradual in order to dilute the effect that these increases might have on inflation in the coming months.”

Finance Minister Jorge Giordani announced Dec. 30 that Venezuela would devalue the bolivar for the second time since January 2010. President Hugo Chavez’s government eliminated the 2.6 bolivars-per-dollar exchange rate on so-called essential goods, including food and medicine, weakening the rate to 4.3 bolivars per dollar.

The devaluation will add 2 percentage points to inflation this year, Leon said, after the central bank said consumer prices rose 26.9 percent in 2010, the most among 78 economies tracked by Bloomberg.


I love Hugo Chavez's Marxist government.
It does so many things that must be written exclusively for our entertainment.
How do they come up with these one-liners?
They drop the value of the currency by 40% for the second time in one year and then have the nerve to say that this will only add 2% to inflation this year, and that the regulated food price adjustments will be gradual.
They claim that by making the adjustment gradual, the effects of inflation will be diluted. That is like a thief saying that instead of stealing all of the furniture and jewelry from your house today, he will just steal the TV and couch tonight and come back for the rest of your belongings tomorrow.
Note that inflation was officially almost 27% last year after the first currency devaluation. Based on this number, we can expect the latest devaluation to increase inflation again this year into the 20 to 30% range.
With these type of negative impacts on the economy, one wonders how long Chavez will manage to hold onto the reins of power before the poor masses wake up to this form of slow robbery?
Anyone who thinks the government can manage the economy better than free market forces needs to study the case of Venezuela closely.