You know your country is in trouble when .............

When people abandon a country in droves, it is rarely a sign of a healthy economy. 2.3 million Venezuelans (7% of the population) have fled poverty and economic despair, and another 2 million are predicted to leave over the next year and a half. For scale, imagine if half of London’s population left the UK, and the other half were about to leave. And we may be underestimating the crisis, since the situation is rapidly becoming nightmarish.

Hyperinflation has risen above 61,000% and is predicted by the IMF to reach 1,000,000% by the end of the year. When inflation runs this high, the lag between tax assessments and payments means that inflation wipes out the real value of taxes. This forces the government to print yet more money in a hyperinflationary death spiral. The recent botched operation to remove five zeros from banknotes has only caused further panic and confusion among the population.

This is from Jamie Nugent and Joshua Curzon at the Adam Smith Institute blog in a posting on Venezuela Campaign: A Country in a Death Spiral.

The only real question is how long will be until Venezuela hits rock bottom and just how bad will things be for the people when it does? Recovery will be long and hard.