Last week, Hugo Chávez announced he had bought 1 billion dollars worth of Argentinean bonds, a new lot of the so called Boden 15. In my first analysis of the transaction I wanted to focus on the open hypocrisy of Hugo Chávez, who supposedly lends Venezuelan money to his friend, the Argentinean president Cristina Fernández de Kirchner, because he has great confidence in the Argentinean economy, while at the same time he proceeds to dump the bonds as soon as possible, selling them to Venezuelan banks, that only buy them because it's a nice way to obtain US dollars at a lower exchange rate than the parallel (dollar they are forbidden to get freely due to the exchange control in place since 2003).

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The Venezuelan Central Bank published yesterday July's price inflation numbers, which turn out to be very very bad, despite the attempts by the bank to hide reality with word games.

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The Venezuelan Government Hugo Chávez announced last Tuesday he had bought 1 billion US dollars in Argentinean bonds (Boden 15) in another big favor he's conceding his good friend and troubled Argentinean president Cristina Fernández de Krichner. Chávez, who always pretends to be an altruist and to act in the interest of everybody else but him and Venezuelans, this time decided he would be no more altruist and is charging a very high 15% interest for the 1 billion loan.

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What would you answer me if I told you that the revolutionary justice court's decision upholding the constitutionality of Clodosvaldo Russian's candidate blacklist was predicted in 1851 by an South Carolinian politician named John C. Calhoun? You would very likely tell me I've lost my mind.

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Under Venezuela's five year old exchange control regime there is a Commission for the Administration of Foreign Currency, (known as CADIVI for its Spanish acronym), whose bureaucrats decide who can and who can't buy foreign currency at the official exchange rate.

CADIVI yesterday announced it has temporarily suspended almost 48 thousand people from its electronic system, which means this people can no longer buy foreign currencies at the official exchange rates and will be forced to go to the parallel exchange market.

What crime did these 48,000 people committed?

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Thanks to one of my loyal readers, Luis from "Diario de la Crisis", I woke up on Friday to the news of the most recent whim of Hugo Chávez: the nationalization of Banco de Venezuela, a subsidiary of the Spanish group Santander Central Hispano.

There are so many wrong things with this announcement that I spent several hours thinking where to begin.

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In another episode of the sag saga of hyperinflation in Zimbabwe, the central bank of the African nation has announced a new monetary reform, this time to slash ten (10) zeroes from the Zimbabwean dollar.

The official price inflation rate in Zimbabwe is over 2,000,000% year-over-year, but private estimates place the CPI on the vicinity of 4 or 9 million per cent (you choose the poison).

As you probably know, we in Venezuela also implemented a "monetary reform", slashing only three (3) zeroes from the devalued bolívar, but so far this year, the new "bolívar fuerte" (strong bolivar) hasn't fared so strong, with an accumulated official inflation rate over 15% (up to June).

So, what is it about these monetary reforms that seem to go wrong all the time? Why don't they work? You see, Zimbabwe, or Venezuela are not special and they're not different the every other country, when the issue are the laws of economics. There's people who vehemently deny the existence of economic laws, but austrian economists have demonstrated the indeed there are universal, immutable laws that apply to human action everywhere at any time. And what do these laws tell us about money? That when you create money out of thin air, the value of already existent money will decrease, with a consequent rise in prices.

It's as simple as that, no matter how many zeroes you make disappear from paper bills.

 Economics, International