Ever since Hugo Chavez came to power in 1999, Venezuela has been subjected to socialist policies. For example, it has undertaken a colossal social spending program, combined with price and labor-market controls. As the Government spent more and more, it was forced to rely on the profits of the State-owned oil company, PDVSA, and and on the country’s central bank, in a desperate attempt to prolong the socialist project. The private sector has been eviscerated by expropriations. Oil now accounts for over 96 percent of export earnings, and represents a massive increase in the past ten years. Furthermore, the State has done such a terrible job of managing PDVSA that production has dropped dramatically.
In order to fund its Socialist experiment, the government of Venezuela has resorted to printing more and more money. This has resulted in astronomical levels of inflation. A report by the International Monetary Fund puts annual inflation in Venezuela at approximately 700