Inflation in the world

 Hyperinflation in the world

In the economic world, an important issue is inflation because it can affect the entire sector of the economy of a country or region.

Inflation is a natural process in the economy caused by many reasons, for example demand or supply side shocks. In many countries, those in charge of setting inflation at reasonable levels are the central banks.But there are some important examples that when prices rise exponentially it is impossible for entities in a country to maintain inflation levels.

When a country experiences exponential growth in the overall prices of its economy, it is called hyperinflation. Some important examples are Zimbabwe, South Sudan and Venezuela.

In this work we focus on Venezuela, hyperinflation in this country began at the end of 2017, according to some important experts the main reasons were the legacy of some governments, for example the Chávez government, the dependence on the international price of oil.

The 2017 crisis began when the country did not have enough money to finance the budget and began to print money. This imbalance in the money supply caused the devaluation of the Bolivar (the currency of this country) compared to the US Dollar. The highest level of inflation was in 2018, the inflation rate 65,000%, here the central bank tried to do a few different things, the most notorious was to remove the zeros in the value of money.

Inflation in Venezuela is the main cause of the migration of people from this country who have high poverty rates and if they continue in this country they do not have opportunities to improve their lives.

 

The autonomy of the central banks.

Making decisions without external influences and restrictions is an important idea that demonstrates the importance of independence in this institution. If the central bank were  related to the political sector or political parties, it would be complicated because its decisions will be conditioned by some sector of the economy. .

It can favor groups of people and also, if it were totally dependent on the governments, there must be a consensus in the sectors involved in it, an issue that can lead to decisions that were required immediately being carried out when there is no longer a solution to the problems, due to the complicated bureaucracy .