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Venezuela Devalues Bolivar Against the Dollar by 50%

 Today, Venezuela's Hugo Chavez announced it has devalued the bolivar against the dollar by 50%, despite recent highs of $84 in the oil market per Bloomberg.  Chavez's United Socialist Party is struggling to maintain its reckless spending.  In 2009, Venezuela reported an inflation rate of 27%.  Despite the historical angst between America and Venezuela, the country remains a key exporter of oil to the United States.  (Photo courtesy Kevin Hotaling)

Recent articles from the campaign have included "Is the Dollar a Ponzi Scheme?" (Yes!) and federal "stimulus" spending practices have been soundly dismissed in "Why the Stimulus Plan Will Fail... And a Better Alternative."

Americans should realize that our country is not immune to a massive currency devaluation.  In fact, the last one took place during the middle of the Great Depression when FDR stole the people's gold and devalued the dollar by almost 70% overnight.  It is obvious that the central bank and Congress prefer reckless spending if it can be managed with a slow but accelerating depletion in purchasing power from 1980-2009 as I demonstrated in "The Real Interest Rate" so the populace does not notice the extent of the theft.

Note the looming political changes in the country as yet another country besides the USSR figures out that socialism does not work.  I hope to help prevent the United States of America from making the same error.

Chavez, who won re-election in 2006 with more than 60 percent of the vote, saw his approval rate dip below 50 percent last year over electricity and water rationing and a slumping economy that has failed to recover from the global crisis as quickly as regional neighbors such as Brazil and Chile.

The country, a founding member of the Organization of Petroleum Exporting Countries, fell into recession in 2009 after oil revenue and manufacturing plunged. Gross domestic product sunk 4.5 percent in the third quarter.

Chavez’s United Socialist Party faces elections in September for all 167 lawmakers in the country’s National Assembly.

The government holds almost every seat in the legislature after the opposition abstained from elections in 2005 in a bid to isolate Chavez internationally.

The former army paratrooper had previously resisted calls to devalue, saying such “neo-liberal policies” were more akin to the IMF and the World Bank than a socialist economy and state.

Julio Borges, an opposition leader with the Primero Justicia Party said the devaluation is a “baseball bat to the stomach” of Venezuelans and criticized the government’s 2010 budget that was calculated at 2.15 per dollar.

“Don’t try to say that this devaluation is to stimulate national production after 11 years of kicking the private sector Mr. President,” Borges said in an e-mailed statement. “This devaluation is to get more bolivars per dollar from oil exports.”

Check out the campaign's first newspaper ad here!!!

Disclosure: No positions