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Venezuela's new 'lettuce'-based economy is good enough for now

Section: Daily Dispatches

By Virginia Lopez Glass
The New York Times
September 6, 2021

CARACAS, Venezuela -- A few years ago, Venezuela was experiencing such devastating food shortages that people stood for hours in lines just for a chance to buy basic staples. Venezuelans reported losing an average of 24 pounds in 2017. Today such hard times feel like a distant nightmare.

People can now buy groceries, medications, and other goods that for nearly a decade were impossible to find. This is thanks to the informal dollarization of the economy and the partial lifting of price controls and import tariffs by President Nicolás Maduro's government. After years of deprivation, near economic collapse, and political chaos, this shift has improved the quality of life for many people across Venezuela. Using the dollar instead of the local currency, the bolívar, has its drawbacks, but it has brought fragile stability, for now.

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Venezuelans spontaneously began to adopt the dollar in 2019 as a way of fending off hyperinflation. American dollars, and other foreign currencies like the euro and the Colombian peso, have breathed some life into the production of rum and the collapsing oil industry.

Steve Hanke, an economist at Johns Hopkins University and an expert on hyperinflation, told me that dollarization, even if it is improvised, rather than an official policy, can help people "protect themselves from the ravages of the bolívar's hyperinflation." 

In the case of Zimbabwe, making the U.S. dollar the official currency in 2009 brought the economy back from the brink. ...

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