See küsimus on tihti üles kerkinud, et hei MMT-lased, Venezuelas on suveräänne valuuta, mis seal viga on? Mina nii täpselt ei tea, aga siin keegi kirjutab, milles häda on põgusalt.
Juan Pablo Farah Ok, I’m Venezuelan and I’d like to intervene.
Caracaschronicles.com is a website you should read if you want context (explainers section) and a real view of how things are developing back home.
MMT can’t apply to an economy which despite having a sovereign currency doesn’t have a sovereign market. Venezuela’s inflation is a cost push inflation driven by devaluation: thus, a devaluation-push inflation. The government managed to create a system in which all VEF (Bolívares) pursue USD. So, demand for USD is inelastic. Why? No local production. When the spread between demand for Oil in the global markets and demand for USD in Venezuela widens, inflation happens. The peg is worthless, it is an instrument to create arbitrage opportunities for those connected with the government. On top of everything, the peg is being used to hide the ballooning of the Debt/GDP when accounting for depreciation. Venezuela’s current account surplus cannot withstand its gross financing needs and import demands simply because we are stuck using a currency that doesn’t belong to us in paying most of that. Even when we pay workers in VEF they immediately turn around to try to buy USD. Again, inelastic demand for a foreign currency.
So, yes, like every other theory, MMT has a limit of conditionality here. All theories and hypotheses are tools to be applied to a wide array of problems. It’s like trying to nail something to a wall, we can use a hammer, or even a screwdriver if you hold it upside down. The outcome won’t be optimal but you can. Economic theories are the same thing. They are best applied under a certain set of conditions. On this topic, I’d like to recommend Danny Rodrik’s “Economics Rules”.
Any other questions you have on Venezuela, please let me know. I’ll be happy to try to find a solution/answer.