Saturday, June 29, 2013

Hyperinflation: Venezuela’s Intensifying Stock Market Melt up Amidst a Currency Meltdown

The melt-up of Venezuela’s stock market as measured by the Caracas Stock Market index (IBVC) has been accelerating.


Friday’s 5.5% gains is part of to the weekly 18.52% advance. 

Year to date, the same index has been up a whopping 144%. 

Last year, the same index posted around 300% nominal currency gains.


This isn’t your conventional stock market boom-bust cycle though. 

Instead Venezuela’s skyrocketing stock markets are symptoms of hyperinflation or a currency crisis. It’s Zimbabwe all over again.


Cato’s Steve Hanke has a chart of Venezuela’s currency, the bolivar, as of March 2013.  

The rate of collapse of the bolivar has been inversely reflected on the stock market. Venezuelans have increasingly used stock markets (titles to real assets and capital goods) as shelter to their savings.

If hyperinflation in Venezuela will reach the scale of Zimbabwe, then zooming stock markets would only buy 3 eggs.

Interesting to see in real time, what seems as another fiat money regime on the brink of extinction.

1 comment:

theyenguy said...

Extinction is an interesting and apporpriate word for Venezuela.

Please consider the Dispensation Economist Manifest ... ...which explains that inasmuch as the US Federal Reserve, and the other world central bankers have crossed the Rubicon of sound monetary policies via interventionism of Quantitative Easing, POMO, Global ZIRP and Kuroda Abenomics, “money good” investments have failed, on the death of fiat money; and thus the “mass extinction” of investors has commenced.

Jesus Christ, operating in the economic plan of God for completeness of every age, epoch, era, and time period, Ephesians 1:10, has completed Liberalism’s moral hazard based age of investment choice via the “extinction event” of the sharp rise in the Interest Rate on the US Ten Year Note, ^TNX, to 2.01% on May 24, 2013, and then to 2.51% on June 21, 2013.

Now, Christ is introducing Authoritarianism’s Beast Regime and the age of diktat, featuring regional governance, totalitarian collectivism, and debt servitude, where people will increasingly trust in the diktat of regional nannycrats for regional security, stability, and sustainability, as presented in Revelation 13:1-4.

Under Liberalism, the Interest Rate on the US Treasury Note, ^TNX, sustained economic and political life. Now under Authoritarianism, diktat sustains life. Liberalism’s element of financial life, that being credit, has perished. With Liberalism’s financial life element of credit dead, Authoritarianism’s economic and political life element of diktat is rising to rule mankind