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Venezuela's Grim Reaper: A Current Inflation Measurement

The Grim Reaper has taken his scythe to the Venezuelan bolivar. The death of the bolivar is depicted in the following chart. A bolivar is worthless, and with its collapse, Venezuela is witnessing the world’s worst inflation. 

As the bolivar collapsed and inflation accelerated, the Banco Central de Venezuela (BCV) became an unreliable source of inflation data. Indeed, from December 2014 until January 2016, the BCV did not report inflation statistics. Then, the BCV pulled a rabbit out of its hat in January 2016 and reported a phony annual inflation rate for the third quarter of 2015. So, the last official inflation data reported by the BCV is almost two years old. To remedy this problem, the Johns Hopkins – Cato Institute Troubled Currencies Project, which I direct, began to measure Venezuela’s inflation in 2013. 

The most important price in an economy is the exchange rate between the local currency and the world’s reserve currency — the U.S. dollar. As long as there is an active black market (read: free market) for currency and the black market data are available, changes in the black market exchange rate can be reliably transformed into accurate estimates of countrywide inflation rates. The economic principle of Purchasing Power Parity (PPP) allows for this transformation.


I compute the implied annual inflation rate on a daily basis by using PPP to translate changes in the VEF/USD exchange rate into an annual inflation rate. The chart below shows the course of that annual rate, which last peaked at 2662.03% (yr/yr) in the beginning of October 2017. At present, Venezuela’s annual inflation rate is 2385.76%, the highest in the world (see the chart above). 

Past Blogs

Zimbabwe Inflates ... Again

September 30, 2017

Zimbabwe experienced the second-highest recorded inflation rate in history, and with that, it entered the Hanke-Krus World Hyperinflation Table. That’s when the annual inflation rate reached a peak of 89.7 sextillion

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Venezuela's Grim Reaper: A Weekly Report 9/27/2017

September 27, 2017

The Grim Reaper has taken his scythe to the Venezuelan bolivar. The death of the bolivar is depicted in the following chart. A bolivar is worthless, and with its collapse, Venezuela is witnessing the world’s worst inflation.

more »

Venezuela's Grim Reaper: A Weekly Report 9/20/2017

September 20, 2017

The Grim Reaper has taken his scythe to the Venezuelan bolivar. The death of the bolivar is depicted in the following chart. A bolivar is worthless, and with its collapse, Venezuela is witnessing the world’s worst inflation.

more »

Only Private Property Will Save Africa's Wildlife

September 18, 2017

At 72 years of age, Leakey is still going strong. Among other things, he is chair of the Turkana Basin Institute, which he founded. The Institute is a world-class research center located on the site in northern Kenya where the Leakeys made many notable discoveries, including an almost complete 1.6 million-year-old skeleton known as Turkana Boy. But, that’s not all Leakey is up to. In 2015, Leakey, founder and former director-general, was appointed by President Uhuru Kenyatta to chair the Kenya Wildlife Service.

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Forget The Hype: Public Infrastructure Generates Waste, Fraud And Abuse

September 14, 2017

Economic policy is subject to fads and fashions. The most recent economic-policy fad is public infrastructure. Its advocates include progressives on the “left” and populists on the “right.” It is an undefined hallmark of President Trump’s economic program. They all tell us to take the chains off fiscal austerity and spend — spend a lot — on public works. They allege that this elixir will cure many, if not all, of our economic ills. Let’s take a look at their arguments and evidence.

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