Beginning Friday, January 8th, Chavez simultaneously devalued his currency by half, and created a three-tiered currency system. When Venezuela tried this exact same stunt in the 80s, it led to widespread corruption, food shortages, and inflation. So we see they’ve learned from their mistakes…

In addition to the currency devaluation, Chavez ordered stores to keep their prices at the same nominal value as before - effectively forcing every store and company to incur 100% of the damage of his devaluation. He sent armed troops into the streets to crack down on stores attempting to raise prices, and set up phone lines for consumers to report stores that raise prices. Stores and companies are now being seized and nationalized for attempting to stay in business.

A few days later, he enacted rolling blackouts throughout the country, for four hours per day, every other day. Soon after - and Likely due to personal inconvenience - he repealed the blackouts for the nation’s capital, Caracas.

Now, in the latest stunt aimed at combating inflation, Chavez has chosen to raise the minimum price for a person’s services by 25% over the next few months. Yes, you read that right: Chavez is trying to combat increasing prices by raising the price of the most important natural resource:

Mr Chavez said the minimum wage will increase by 10% in March and 15% in September to offset inflation, which is widely expected to surge following the devaluation.

Now obviously, stores and companies are expected to completely absorb this huge increase in the minimum wage. The inevitability will be more inflation, more nationalization of companies, increased unemployment, and decreased production.

It will be interesting to watch all of this unfold. I have created a discussion thread at the Objectivism Online Forum to monitor the collapse.