Henke’s Idea

Steve Hanke at Cato has a good idea:

To stop Venezuela’s death spiral, it must dump the bolivar and adopt the greenback. This is called “dollarization.” It is a proven elixir. I know because I operated as a State Counselor in Montenegrowhen it dumped the worthless Yugoslav dinar in 1999 and replaced it with the Deutsche mark. I also watched the successful dollarization of Ecuador in 2001, when I was operating as an adviser to the Minister of Economy and Finance.

It is a good idea but monetary policy is not the only lever available and inflation is not the only problem in Venezuela.  Dropping Chavismo,

Sidebar: WordPress really wants to convert Chavismo into Charisma.  We hope that it stays as we wrote it.  End Sidebar.

Venezuelan socialism, would be a great idea.  The advantage of Hanke’s idea is that it is easy to implement but a real blow to the current Yankee hating administration in Venezuela.  Renouncing Chavismo would be more important but way more difficult.  The current state of affairs may lead to both.

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