peace & understanding

Venezuela Currency Devaluation cont’d

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Shoppers picked through half-empty shelves at the Game-Zone electronics store in Caracas yesterday after a surge in demand drove up sales 70 percent over the weekend, said salesman Xavier Manrique. Colgate, the world’s largest toothpaste-maker, forecast a charge of up to 6 cents a share each quarter this year and Clorox Co., the biggest bleach maker, said it expects as much as $30 million in Venezuelan currency-related losses.

Chavez’s threats to seize businesses that raise prices following the first devaluation in five years may deepen shortages by making companies hesitate to restock, said Juan Pablo Fuentes, an economist at Moody’s He forecasts inflation could reach 60 percent, the highest since 1996 and more than double the government’s forecast.

“It’s going to be a tough year,” Fuentes said in a telephone interview from West Chester, Pennsylvania. “The devaluation has an immediate impact on consumers. You’re going to see a sharp contraction in consumption, which is the main driver for GDP.”

Now, the real question is when will a monetary event hit the shores of the United States. Americans are just waking up to the fact that we have experienced a massive devaluation of the U.S. dollar over the last 35 years and are just approaching the land of no return. Hyperinflation is sure to set in as an unprecendented decade of record spending, borrowing, and budget deficits threaten to topple the almighty dollar into oblivion.


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