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When the inflation is getting out of control, you have a lot of very bad market effects. People start buying whatever they can because nothing depreciate more than money, a car becomes a store of value instead of a depreciating asset, thus increasing even further the inflation. That's why it becomes difficult to buy anything in Venezuela, nothing is worth selling because money is less valuable than whatever asset you already have.



Great point! People want to get out of money as soon as they get it. The money velocity essentially approaches infinity as its value drops faster.

In this case, I think a new money supply is needed or no one will want to sell anything, as they’d be stuck with a much more depreciatimg asset.

I have a simple definition of money that I haven’t seen anywhere else:

Money is the most liquid asset in an economy.

What would that be in Venezuela at the moment? Rice?


> In this case, I think a new money supply is needed or no one will want to sell anything, as they’d be stuck with a much more depreciatimg asset.

Yes indeed, that's exactly how they solved this issue in Brazil: https://www.npr.org/sections/money/2010/10/04/130329523/how-...


Similar approaches were used during the French revolution [0], after the American revolution [1], and by the Nazis before the war [2].

[0] https://en.wikipedia.org/wiki/Assignat [1] https://en.wikipedia.org/wiki/Early_American_currency#Contin... [2] https://en.wikipedia.org/wiki/Reichsmark


People sometimes barter in the short term, but usually end up using another currency. In modern times, it's often dollars.




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