Inflation problem is a ghost that continues to haunt undeveloped countries and makes a successful economy seem an impossible goal for the government in charge. Recently, the virtual money (gold) from World of Warcraft was worth more than the Venezuelan Bolivar. Meanwhile, 1 dollar is worth 8385 gold in WoW, the same dollar buys around 8494 VBs, leading to a historical point to the Inflation issue in the country. How can this happen? Here's why.
Money's value
For most of us, it’s difficult to truly understand how a piece of paper impressed by the Central Bank has value on the market.
I mean, if you got a money printer all to yourself, what would you do? Probably print money like never before, and I’m sorry to tell you – this would be a total waste of paper. In fact, monetary regulation is made daily by governments around the world so that cash keeps flowing. And even if you had a ton of paper money, the market ability to produce goods wouldn’t be that great, leading to a strange situation: Having money, but not something to buy with it – then prices go higher to keep market flowing – the so called inflation happens.
Repetition of history's mistakes
Although in theory avoiding inflation seems easy, that doesn’t happen in practice – historically, governments have made repeated mistakes of creating too much money, so patterns were first established in the UK to regulate the matter, creating the gold-pattern: It would be necessary to have 7.3g of gold for every pound in circulation.
Continuously, the advent of global marketing made some changes in the policy adopted so far necessary: another pattern was adopted worldwide, and then, in the 70’s, USD became the new coin to regulate commercial trades. In resume, the more money you need to buy a dollar, the cheaper your coin is in the global market. In Venezuela’s case, the problem is worse by the hour – daily changes in prices, incapability of assuming long term debits and a vast feeling of uncertainty in people’s heart’s: Is it possible to fall even harder?
The poor become poorer
As the prices go high for food and other items, the poor who had already suffered enough gets even poorer. All the while, the necessary things in life such as a house and education gets harder to afford as compared to non-essentials. What could possibly the government do for this? Or has this been an ongoing discussion that particularly has been accepted due to the fact that this is inevitable?
