Here are great current event illustrations of supply and demand, inflation, prices, and government intervention in a socialist economy.
Venezuela’s Central Bank says the annual inflation rate has hit 36 percent in the Caracas metropolitan area as food prices soared.
Prices for goods and services, health and restaurants also showed strong gains. Inflation in the oil-producing nation is rising as demand outpaces supply.
President Hugo Chavez has figured out how to use Venezuela’s vast oil reserves to increase his regional influence while diminishing U.S. clout: He all but gives it away.
The self-proclaimed socialist revolutionary is allowing impoverished U.S. allies such as Honduras and the Dominican Republic to buy discounted oil with low-interest loans. Then he rebates the revenue back to those countries in the form of aid – – attached to strings he controls.
The blackout hit several of the country’s most populous states, including the capital, Caracas.Venezuelan President Hugo Chavez praised officials for quickly detecting and beginning to repair the fault.Mr Chavez says upgrading the grid after years of under-investment will take time but rejects criticism that nationalisation has made things worse.
So Chavez is:
1) Giving away oil (except to USA)
2) Threatening to cut off oil to the USA- the only country which actually pays market price for it
3) All while he cannot provide electricity for the oil rich country
4) And normal people are paying 36% more for food
Nice, don’t you think?