How Venezuela’s Oil Output Dived

Venezuela has the world’s largest proven oil reserves. But its oil output, once Latin America’s largest, has fallen faster in the past year than Iraq’s after the American invasion in 2003, according to data from the Organization of Petroleum Exporting Countries.

See Teresa Bo’s video report here.

‘Xenophobic’ Latin America?

Reply to Al Jazeera’s Megan Janetsky on ‘Xenophobia’

by Serban V.C. Enache

In this article, Megan Janetsky claims that “Venezuelans have faced increased xenophobic attacks and attitudes,” but doesn’t invoke a single example of such an attack. The fact that countries in Latin America have begun to take measures to stem immigration is not a sign of xenophobia, it’s the inevitable consequence of the reality on the ground. It’s simply impractical for these countries to accommodate higher and higher inflows of people from Venezuela. There’s only so much space, facilities, job offers, and money [foreign funds on which these countries are largely dependent] to go around. Instead of playing the xenophobia card, lecturing countries and governments about how bad they are for not being xenophiles, the author should lay the blame on Washington’s foreign policy, not just on Maduro’s Government. By the way, Megan Janetsky doesn’t mention the trade sanctions, doesn’t mention the West’s hostile policy toward the country at all. This fact alone betrays the article as being nothing more than propaganda, a liberal’s virtue signalling, false humanitarianism, and promotion of the ‘no-borders’ and ‘limitless immigration’ mentality.

Crippling Western sanctions and theft of Venezuelan assets held abroad, on top of efforts to foment civil unrest and treason within the country’s law enforcement and military, are the major factors – but Maduro’s Government certainly has its share of the blame, and it goes back to Chavez’s administration as well.

And, yes, it’s also a failure of Venezuelan type of socialism. Take Cuba, for instance. Cuba has lived under US trade sanctions for more than half a century [plus US-sponsored terrorism]; and despite the odds, living on the hegemon’s doorstep, it managed to retain socio-economic and political stability. Cuba doesn’t have a fraction of Venezuela’s natural wealth; but it does have 1/3 of Venezuela’s population. Since the 1960s, Venezuela’s birth rate, measured per 1000 people, has fallen dramatically as you can see in the graph below.

In order to move away from the ‘resource exporter’ model, a country requires an increase in population size in order to diversify production, without depriving its traditional sectors of manpower. Simply put, if you want to diversify without causing shortages elsewhere, you need a bigger labor force. Chavez and Maduro didn’t even try to diversify, nor would they have succeeded without promoting population growth. The fact that a country the size of Venezuela has only three times the population of Cuba is a statistic worthy of national shame. The same goes for my country of Romania, which has only two times Cuba’s population. The fact that there are stores, filled with produce while people face severe malnutrition, that gasoline basically has no price in Venezuela, but electricity is rationed and public transportation is curtailed or paralyzed, points to the fact that Bolivarianism, or more accurately Chavism, was carried out with a total disregard for true economic and geopolitical planning. While hostile state actors and domestic renegade forces do offer the ruling political class in Venezuela a degree of extenuating circumstances, such adversity doesn’t wash away the complacency and criminal incompetence of the country’s Left wing governing parties and leaders. All decision factors across the hierarchical chain, who place ideology or their own status above the Nation must be ejected and their designs carefully examined and purged of any ideological adventurism and self-seeking schemes. Maduro and his crew aren’t fit for office, and Guaido should be arrested and condemned for high treason.

Lindsey Graham is a TERRORIST!

by Serban V.C. Enache

On national television, Lindsey Graham, a republican senator, engages in a particular and detestable activity called terrorism. If the people of Venezuela and Cuba don’t choose Washington’s puppet, then they are going to suffer violence and death via invasion; because US economic warfare [forcing casualties via dearth] against both these countries is not enough. Graham wants to imitate Reagan’s invasion of Grenada and apply it to Venezuela and Cuba.

Notice how the interviewer on Fox News treats this terrorist threat as if it’s something vaguely out of the norm and thanks this subhuman filth of a senator for the interview, instead of invoking the US constitution, international law, and basic common sense against this maniac’s reprehensible proposal.

Let’s make it abundantly clear. All institutions [state, private and quasi] and all actors pressing for military confrontation and labeling diplomatic solutions as treasonous or anti-American are the scum of the earth, a cabal of death and ruin. They are war profiteers. They are a threat to other nations, including their own – a threat to all Humanity and a scourge before the eyes of any god worthy of worship. And in the interest of peace and rational dialog among and between nations, these supreme criminals should receive life sentence in prison.

I will cite three paragraphs from Emmerich de Vattel’s The Law of Nations 3rd book: Of War.

§ 32. Pretexts.

Let us, however, entertain a better opinion of nations and their rulers. There are just causes of war, real justificatory reasons; and why should there not be sovereigns who sincerely consider them as their warrant, then they have besides reasonable motives for taking up arms? We shall therefore give the name of pretexts to those reasons alleged as justificatory, but which are so only in appearance, or which are even absolutely destitute of all foundation. The name of pretexts may likewise be applied to reasons which are, in themselves, true and well-founded, but, not being of sufficient importance for undertaking a war, are made use of only to cover ambitious views, or some other vicious motive. Such was the complaint of the czar Peter I. that sufficient honours had not been paid him on his passage through Riga. His other reasons for declaring war against Sweden I here omit.

Pretexts are at least a homage which unjust men pay to justice. He who screens himself with them shows that he still retains some sense of shame. He does not openly trample on what is most sacred in human society: he tacitly acknowledges that a flagrant injustice merits the indignation of all Mankind.

§ 33. War undertaken merely for advantage.

Whoever, without justificatory reasons, undertakes a war merely from motives of advantage, acts without any right, and his war is unjust. And he, who, having in reality just grounds for taking up arms, is nevertheless solely actuated by interested views in resorting to hostilities, cannot indeed be charged with injustice, but he betrays a vicious disposition: his conduct is reprehensible, and sullied by the badness of his motives. War is so dreadful a scourge, that nothing less than manifest justice, joined to a kind of necessity, can authorize it, render it commendable, or at least exempt it from reproach.

§ 34. Nations who make war without reason or apparent motives.

Nations that are always ready to take up arms on any prospect of advantage are lawless robbers…

The Duran: Bolton on the way out?

Alex Christoforou and Alexander Mercouris discuss President Trump’s relationship with his national security adviser John Bolton. After the embarrassing failure of the recent US-backed coup in Venezuela, rumor has it that Trump grows frustrated with Bolton’s work. His uber-hawkish worldview and lust for US-led military interventions is at odds with Trump’s core campaign pledge to keep the United States out of costly foreign entanglements. Before becoming POTUS, Trump consistently called for an end to the wars in Afghanistan and Syria.

My comment: Previous US presidents have criticized hawkish foreign policy, especially during political campaigns, and once they got into office, they all did 180 degree turns on that subject. Donald Trump is by no means different from the likes of Obama, Bush Jr, Kennedy, Nixon, Eisenhower and others.

Trump is a genius political whore. He is one of the best salesmen out there, at least for the American political market. Even if Bolton gets fired, or steps down at Trump’s request, another war hawk is going to take his place. During the electoral campaign [in the Trump vs Hillary confines], I actually believed Trump might be the lesser evil, but since then, I’ve come to the conclusion that the lesser evil is a myth… Just like his predecessors, Trump faithfully serves the interests of usurers, rent-seekers, and war profiteers. He is the anti-PC version of Globalism.

I’m certain the White House will soon give the green light in Venezuela for professional mercenaries to go in and attempt a better coup d’etat. Such a move ensures no guarantees of success, but it will certainly be a prolonged and bloody operation – on top of the West’s economic bleeding of Venezuela.

In the geopolitics of empire, if you can’t have it [the treasure], no one can. So if the Russian and Chinese military aid to Maduro won’t suffice, Venezuela may very well face a civil war. As long as European political elites dance to Washington’s tune [making the US hawks and the Deep State bolder], things will only get worse for those countries blacklisted by the West.

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The Cure For Hyperinflation: Weimar and Venezuela

by Serban V.C. Enache

We frequently hear people bemoan the dreaded phenomenon of hyperinflation. We often hear only one explanation for it – the government printed money like crazy. We rarely hear the reasons behind the overuse of the currency press, which are: loss of output capacity [human and material] as a result of natural disasters or loss of a war, unfair war reparations, political instability, brazen corruption, the end of a fixed exchange rate with a strong currency. In this article I’ll focus on the cure for the phenomenon of hyperinflation – and this cure won’t entail brutal fiscal austerity that halts inflation by condemning much land and capital [buildings and machinery] to idleness and a great many souls to involuntary unemployment, poverty, and sickness.

The Weimar Republic. Background.

After WW1, life in Germany became hell. The political and economic burdens the creditors of the Versailles Treaty [Woodrow Wilson especially] imposed on the Germans created the conditions for the hyperinflation which soon followed. These impositions were highly unjust and impossible to meet. Meanwhile, the Ruhr Valley, Germany’s industrial heartland was occupied by the Allies. Workers responded to the occupation by organizing strikes. Crashing economic activity led to falling tax revenues and higher welfare payments. The Government, deprived of gold reserves and output capacity, had no choice but to print money to cover its costs plus the war reparations. Hyperinflation ensued. Farmers and manufacturers more and more refused to sell their output for the increasingly devalued Papiermark. This is the context of the phenomenon. Those interested in the facts will verify them, those interested solely in confirming their preconceived notions will dismiss them.

The Plan To Fix The Problem

Finance Minister Hans Luther, working together with Hjalmar Schacht [later head of the Central Bank], using Karl Helfferich’s idea of a currency backed by real goods, formulated a scheme to contain the rampant inflation of the Papiermark. In 1923, Berlin, the Rentenbank was created. The institution provided credit to agriculture, industry, and commerce.

The term “Rentenbank” stems from “annuity bonds”, fixed-income securities [bearer bonds] issued by the first pension banks during the 19th century. Since the Middle Ages the peasants were forced to provide easements to their landlords – various hand services and the like. In the early 19th century, though, agrarian reforms started in Prussia and other German states aimed to disband these obligations. The effort initially failed owing to a lack of a proper credit system.

To accelerate the agrarian reforms, pension banks were established as state-owned mortgage banks. They gave state-guaranteed, freely tradable and fixed-rate bonds (annuities) as money compensation for the expired privilege of the landlords. On the other hand, the peasants paid fixed income to the pension funds over a long period of time, from which the banks were able to service the principal and interest on the bonds. These reforms and the liberation of the peasants gained traction and agricultural productivity rose dramatically.

Enter the Rentenmark

Returning to the 1920s, November 1923 to be precise, the Rentenbank issued its own currency, the Rentenmark, which was covered by mortgages on the grounds of holdings. Total amount of mortgages and land imposts was valued at over 3.2 billion gold-marks. The Act creating the Rentenmark ensured twice yearly payments on property, due in April and October. In return for the real estate, Rentenbank issued interest-bearing bonds with a value of over 500 gold marks or a multiple thereof. The exchange rate between the Rentenmark and the Papiermark was set at 1:1 trillion, and with the US Dollar at 4.2:1.

The Rentenmark didn’t have legal tender status, so there was no legal obligation for private agents to accept it as a means of payment, however, all public institutions had to accept it. Even without legal tender status, the citizens embraced it right away. The Rentenmark’s value was relatively stable, while its quantity remained fixed, Shacht insisted on it. On August 30th, 1924, the newly-introduced Reichsmark became legal tender and was given equal value to the Rentenmark. It’s very important to note that this exchange rate was applied to two fiat currencies over which the Government had power of authority. It retained the right to alter the exchange rate if it wanted or needed to. The issued Rentenmark nominal remained in circulation up until 1948.

Tight Money Policy

In charge of the Central Bank, Hjalmar Schacht implemented a tight monetary policy, the institution ceased discounting Papiermark bills and, despite political pressures, he kept the volume of Rentenmarks strictly limited. As for fiscal policy, Finance Minister Hans Luther went on the austerity route, the correct choice given the circumstances. He brought forward due dates for taxes, increased prepayments of assessed taxes, raised the sales tax, and readjusted the fiscal burden between the regional governments [Lands] and the Reich [the Central Government]. Spending-wise, Luther shrank the number of Reich bureaucrats by a quarter over four months, froze bonuses and reduced their wages. These measures accompanying the issuance of the ‘land-backed’ Rentenmark succeeded; hyperinflation was brought to an end immediately. People spoke of the ‘miracle of the pension mark.’

Between 1926 and 1929 inflation hovered below 2 percent. In the early 30s, however, in reply to the Great Depression, the Government of Heinrich Bruning imposed harsh austerity measures needlessly [tightening credit, cutting wages, cutting public assistance, and increasing taxes], which exploded unemployment and poverty levels in the country and, in the process, made the once marginal Nazis incredibly popular with the people. The National Socialists opposed Bruning’s Government from the beginning, unlike the other right wing parties. Bruning and his policies became widely hated.

See the graph below.

The reader will rightly ask, why did fiscal austerity work for Schacht and Luther, but not for Bruning’s Government? Schacht and Luther applied counter-cyclical fiscal and monetary policy, while Bruning applied pro-cyclical policy. Excess demand relative to supply is eliminated via taxation [draining income from the private sector]. But during the Great Depression, there was too little demand relative to what was actually on the shelves. Bruning’s reforms collapsed aggregate demand levels even further.

Thoughts On Venezuela

The geopolitical aspect is very important, for it can greatly amplify minor or general problems very fast [See Turkey], or it can spark them. The State Central Bank’s dollars in non-cash form reside in accounts at the Federal Reserve, which are beyond Maduro’s control. The Government can’t access these funds. Recently, the US and the UK stole Venezuelan oil and bank assets worth about 30 billion dollars. More so, the US has imposed an outright embargo against Venezuela [trade sanctions levied since 2013 got harsher and harsher, depriving the country of hundreds of billions of dollars in economic activity]. Lastly, belligerent statements coming from Europe and Latin America [Brazil and Colombia especially] and Washington threatening with ‘all options on the table,’ which includes assassination, sabotage, coup, and invasion.

Footage from supermarkets in the capital, stores filled with produce, reveal that a shortage of goods isn’t the problem, but high prices. If it’s true that Maduro’s Government kept public spending high without re-adjusting it to falling prices of crude, then his policy is a key contributor to the bolivar’s dramatically reduced purchasing power. Currency pegs and indexation of wages and pensions with anticipated inflation feed the vicious loop. The Venezuelan Government announced that it’s accepting payments in Euros. In my opinion, this is a big mistake, because the ECB can pull the same stunt on Venezuela that the FED pulled. Maduro is much better off negotiating an entry into the Petro-Yuan with Beijing. Why? You can purchase virtually anything from China. China has made numerous investments across the developing world without asking for political concessions in exchange, in stark contrast to the likes of the IMF. Beijing doesn’t seek regime change or privatizations in exchange for its money. It does business with whoever is interested and it offers advantageous rates too. Trade-wise the Chinese are interested in two things: securing raw material imports and securing demand for their factories. It’s a win-win for both sides.

In my opinion, Venezuela will become Syria 2.0, because there’s no sign that Washington is going to accept any other outcome. The satanic crowd around Trump, the Deep State, and their servants in the corporate media are all pushing the same old hypocritical, war-mongering narrative. They spew it as if it’s a new dish too, not the same rotten thing, teeming with slime and worms. And before we blame it all on the Republicans, remember that 85 percent of journalists in the US are registered Democrats. Since this issue is bipartisan, we know it’s outright devilry. Bolton, Pence, Trump, and the rest – they want to cover up their failure to dismember Syria and Iran by picking on Venezuela, a more vulnerable target closer to home.

If I were in Maduro’s shoes, I’d escalate things ahead of my rivals. I would invite in Russian and Chinese troops and war-gear. Washington doesn’t like to cooperate or negotiate with sovereign regimes. For many decades now, the logic has been, you do as we say, otherwise we treat you as a rogue state. Against a rival who doesn’t wish to bargain and who has threatened [euphemistically or not] violence and murder, you’ve no choice but to take all measures required. Maduro has to choose the 2nd most extreme of defence options [2nd only to the preemptive strike, which doesn’t apply here] because in this context, it’s the wisest step.

If mainstream commentators are fine with US gangsterism, with countries purchasing protection from Washington and the Military Industrial Complex, then they should be fine with Venezuela purchasing protection from Russia and China. They can’t oppose it without being hypocrites and without being Monroe Doctrine apologists, defenders of imperialism, oppression, and mass-murder; not that that’s gonna stop them. Let’s not be naive, US hegemony is shaking. The 2nd Cold War is on.

Update on Venezuela: a report by CEPR finds that US sanctions against Venezuela, started by Trump in 2017, are responsible for tens of thousands of deaths.

So What’s The Cure, Dammit?

The recipe for a return to price stability is contingent on the factors which spawned the instability. This list of measures will hopefully cover all eventualities: 1) Counter-cyclical fiscal policy [drain excess money in circulation via taxation, while cutting superfluous spending.] 2) Land-value capture to replace taxation of buildings, labor, sales, and enterprise [taxing natural monopolies, the rent of location; the site-value tax carries negative dead weight – it brings efficiency to the marketplace]. 3) Buffer stock policies [the public authority buys seminal commodities during periods of excess production and sells these commodities domestically during times of dearth]. 4) Allow the national currency to float freely according to demand [drop any fixed exchange rate, whether it’s to gold or foreign currencies, and embrace a sovereign fiat regime]. 5) Negotiate with rival political factions to settle differences and produce a national accord that appeases all sides to a reasonable extent. 6) Ration basic resources to ensure no section of the population starves [hands and minds are precious and must be kept alive and functional to create goods and services for another day; there’s no sense in killing off one section of the population to feed another extra rations]. 7) Bring in a second or third great power in your region, in order to decrease the bargaining power of the established one/s and strengthen your own position in the process. 8) Link up the country’s regions through a comprehensive system of infrastructure, high speed rail especially [the points of resource extraction with the manufacturing centers, the latter with the marketplaces]. 9) Restrict bank lending for speculative purposes [do not permit banks to accept financial assets as collateral for loans, or to mark their assets to market prices.] 10) Discourage private and public agents from borrowing in foreign currency [always ensure loans in domestic currency are cheaper than in foreign currency; never subsidize the latter type of loans]. 11) Employ all available labor to achieve maximum output [Depending on the situation, participation in public works programs would be mandatory or voluntary. In case of emergency, working hours could be increased and holidays decreased.] 12) Don’t lose a war [or better said, don’t lose peace negotiations concerning your fate]. 13) War Bonds [While the role of War Bonds is to allegedly fund a war, in practice what they do is drain liquidity from those who purchase them. They can be denominated in foreign currency, domestic currency, or both. That being said, liquid or illiquid purchasing power is still purchasing power. People can still purchase things on credit, contingent on their own financial situation. War Bonds may have a psychological effect on the populace, reminding households that they must tighten their belts, deferring consumption to the future, so more supplies can be allocated to the troops in the now. The promise is that, after the war is won, bond holders get paid at a profit. 14) Retiring the currency and replacing it with another [Brazil did it several times in the last 77 years; the Government announces taxes and fines payable in a different currency. This method involves burning away people’s cash savings. To escape hyperinflation, Zimbabwe gave several foreign currencies legal tender status.]