Brother, can you spare several hundred million bolivars?
The online version of Foreign Policy features a list of the word’s five worst currencies: The Somali shilling, Iraqi dinar, North Korean won, Venezuelan bolivar, and Zimbabwean dollar. What their countries all have in common should be obvious: Lack of any semplance of rule of law. Somalia and Iraq have weak central governments that have proved unable to bring rampant murderous violence under control, while the other three are ruled by insane despots whose whim passes for law. Take the ridiculous measures Venezuela’s Hugo Chavez has taken to stem the slide of his country’s currency, which his own policies have helped bring about:
Venezuela’s currency has lost 21 percent of its value since January 2007, the worst performance of all 72 currencies tracked by Bloomberg News. Seeking to staunch the bleeding, ChÃ¡vez has announced a bizarre series of measures, including imprisonment for those who violate price caps, removing three zeroes from the bolÃvar and renaming it the “strong bolÃvar” and—most bizarre of all—the reintroduction of 12.5-cent coin that ChÃ¡vez promises will help whip inflation.
Gold bugs should feel vindicated by this list of ignominy: The value of gold, or other precious metals, for that matter, cannot be set by government fiat (no matter how hard some governments my try). But the list also shows the value of sound institutions. So, as the presidential race heats up and people begin to complain about how American politics are boring and designed to appeal to the lowest common denominator, remind them of what “interesting” politics can bring.