Buckets of U.S. Dollars for Everyone — You Get a House and You Get a House!
Posted by Ed Folsom, August 17, 2024 (typo-edited upon return from travels, 8/29/24).
I’m about to travel to places that were once governed under communism, in the immediate wake of Kamala Harris’s announced plan to impose federal food price controls and toss 25 grand at new home buyers, among other giveaways, and it’s got me thinking about lessons learned during previous travels.
Back in 1975, 19-year-old me took a European backpacking excursion that began in England, where the exchange rate was roughly 1 British pound sterling for 2 U.S. dollars. Ouch! For every $20.00 American Express Traveler’s Check, I got roughly 10 pounds sterling. That didn’t go very far, even in 1975 when — for an idea of what the dollar was worth back then — the U.S. minimum wage was $2.10/hour.
I can’t recall what the exchange rate was on the Dutch guilder or the German mark as I made my way south and eastward. But when I got to Italy I was pleasantly surprised to discover that the exchange rate for the lira was more than 670 to a single U.S. dollar. Imagine getting only 10 pounds sterling for every $20 traveler’s check, and then arriving in a place where they gave out more than 13,400 of their currency for each $20 traveler’s check! Then I looked at my first restaurant menu and I realized it cost thousands and thousands of lira for not very much.
Somewhere along the line, inflation had rendered the Italian lira so useless that it took nearly 7 of them to equal the value of a single U.S. penny. In fact, the lira was so useless that stores and even banks didn’t bother with the small stuff needed to make small change. They’d just toss you a pack of Chicklets gum, or a postage stamp, or a gettone phone booth token to make up the difference.
Another thing about Italy at that time was that its politics were heavily influenced by communism and socialism. To ensure that the workers received appropriately high wages, the government printed and distributed lots of lira. Everyone had buckets of them and, figuratively speaking, it took a bucket of them to buy a loaf of bread.
Or, rapacious corporations and billionaires were driving up the price of everything to stratospheric levels in pursuit of their greedy ambitions. Ya, that must have been it.
Then, I was thinking about a trip I took to Venezuela in 1988. We all know what happened in Venezuela after 1988, under the strict price controls imposed by socialist Hugo Chavez followed by socialist Nicolas Maduro. I don’t even know how many buckets of bolivars it would take to buy a loaf of bread there today, if you could find one to buy. But my wife and I, and some traveling companions, took a couple of trips to Venezuela in the 1980’s: one to Margarita Island, in 1987, and another to Puerto La Cruz, in 1988.
On the second of those trips, one of our traveling companions was a friend who managed a restaurant. He wondered why there were so many items on restaurant menus in Puerto La Cruz that were not available when he tried to order them. So, he asked the manager in one of the restaurants why that was. As the manager explained it, the prices that restaurants could charge were set in Caracas, by the government. There were some items that simply could not be sold at the regulated price without being sold at a loss. Those were the unavailable items.
I have to say, it was very cheap to eat at a restaurant in Venezuela in 1987 and 1988, but the choices were limited by price controls. You could say that the price controls caused shortages of the missing items. And this was years before the socialists commandeered the Venezuelan economy in earnest and ensured that way more stuff became unavailable.
These days, it takes lots more buckets of bolivars to buy whatever can be found than it did in 1988. But that part must have been caused by rapacious corporations and billionaires who drove up the price of everything in Venezuela to stratospheric levels in pursuit of their greedy ambitions. Ya, that must be it.
And now, with Kamala Harris’s magic for achieving “what can be, unburdened by what has been,” pumping huge amounts of money into the economy surely no longer causes inflation, and imposing price controls on food will surely no longer lead to shortages and other market distortions. That’s why “what can be, unburdened by what has been” is so magically… Well, shouldn’t we just call it “joyful” and full of hope, and not be any more specific?
Onward, with chin thrust upward and eyes gazing into the future, toward the end of history, and shortages, and buckets of dollars for everyone!
