One million percent inflation

If I’m telling you that inflation can reach to the point of 1,000,000% and a currency can be devalued by 95% overnight, you must think I’m talking about something fictional that cannot happen in real life. In fact, I’m talking a real story that is still ongoing unfortunately!

About 5 years ago we visited Panama and fell in love with it immediately. So we decided to look into its housing market while being there. We met a beautiful female real estate agent who showed us some properties. During the causal talk, we learnt that she was from Venezuela. “Why did you move here?” I was curious as I thought Venezuela was richer than Panama back then. “Well, we don’t like what the government is doing and a lot of people of middle or upper classes are worried about what is going on in the country!” In hindsight, I must say this girl and her family are very visionary. They have foreseen and avoided an epic human disaster that could have totally destroyed them otherwise if they didn’t fleet the country! Venezuela, a once most affluent country in Latin America, has totally collapsed. Just weeks ago, its currency, bolivar, has been devalued by 95% overnight and its annualized inflation is reaching an unbelievable 1 million percent now! You have to pay millions of bolivar to just buy one bread there. So how Venezuela, the country with the largest oil reserve and was extremely affluent just years ago, would fall apart so much so fast? There are many things they can blame but one fundamental culprit has to be rooted back to their extremely popular late President Chávez and his socialist policies. The key element of the socialism experiment conducted by Chavez with a good will was redistribution of wealth to help the poor. For example, against the basic economic rule, Chaves implemented price control to make basic goods more affordable to the poor by capping the price of flour, cooking oil and toiletries. Of course, it was an extremely popular and welcome policy among the vast majority of people in Venezuela as they were virtually getting a lot of things like free lunch. But unfortunately anything against the basic economic rules cannot continue for long and they have to pay the price down the road. We are now seeing the result of such socialist policies, which have completely destroyed the purchasing power of Venezuela’s money and the whole economy!

So why I’m talking about this, which seems to have very little connection to us, you may wonder? Well, it may sounds utterly impossible, but there is something very troublesome ongoing in the US, which will lead this country toward this unfortunate outcome if not checked effectively. Heard about “Universal Basic Income (UBI)”? Simply put, UBI is aimed for basic income for everyone just because of being alive regardless of anything else. You probably have heard about Utopia: to not have to work so much or so hard; to pass time in leisure rather than labor; to do what one wants rather than what one’s told. Sounds very attractive, right? Just like what had attracted Venezuelans 5-10 years ago, this kind of Utopian scheme will always get ill-informed general people excited and supported before they are facing the ultimate end: total collapse of the whole society! But “That can’t happen here” is just what the Venezuelans thought five years ago. The scary trend I’m seeing is that UBI has started to be promoted aggressively by some politicians here in the US. Bernie Sanders, the DEM president candidate in 2016, has openly said he is a socialist. He and a number of prominent Democrats support a UBI. I think UBI will become a hot political topic in the coming mid-term election as well as the president election in 2 years. Here is the most scary part: UBI will be promoted by the extremist politicians as a panacea for income equity, without much cost to pay. As such, it will probably gain more and more support due to economic ignorance of most of voters. After all, who does not want a free lunch if not costing anything? Eventually UBI may become part of reality in the US. If so, the economic situation will deteriorate quickly and there will be no way back as it will be a political suicide for any politician if he/she wants to get rid of any free lunch already offered. Here you can see a good article about the dangers of UBI.

I may sound too unrealistic and worried for nothing, but just think twice after the young lady in 20s without any political experience (a bartender and waitress) has won a shocking victory against longtime Rep. Joe Crowley in the New York Democratic Party congressional primary just weeks ago. Her ideology?  Medicare for all; Tuition-free public college and trade school; and Universal jobs guarantee. All these sound very beautiful and attractive. The only problem none of her supporters is interested to know is where comes the money to pay for it! Don’t be surprised to see this kind of unthinkable in the weeks ahead during election. This kind of ridicules are easy sells to young people particularly as they don't have much life experience and know very little about economics and they tend to hold the naive ideology that income equity can be easily reached via wealth redistribution (or 劫富济贫-robbing the rich to pay for the poor type of thinking).     

I’m not stupid enough to expect that everyone will agree with what I’m talking here. Actually it is fully expected I will see some strong rebuke from someone who shares and supports the UBI idea. But if you happen to agree with me, then don’t waste your vote to fight against those extremist politicians, for the sake of a more prosperous US future for ourselves as well as our kids and future generations!  Spread out the words to make people more aware of the true nature of UBI and its extreme dangers for our future. It is just like a malignant tumor or cancer, if metastasized, it cannot be cured but will only get us killed! 
If it helps, please share this article with your friends! I hope people will be more informed before they vote!!👊👊