In response to its economic problems, Venezuela has been rapidly inflating its money supply. In just the last two years, Venezuela has almost quadrupled its M0 and M2 Money supplies. According to the International Monetary Fund, Venezuela now has the world’s highest level of inflation.
Such hyperinflation has, not surprisingly, led to shortages and problems that go with this strategy. But According to a Bloomberg report, Venezuela’s inflation has been so rapid that it is now having problems locating firms to actually print the money it needs.
The story began last year when the government of President Nicolas Maduro tried to tamp down a growing currency shortfall. Multi-million-dollar orders were placed with a slew of currency makers ahead of December elections and holidays, when Venezuelans throng banks to cash their bonuses.
At one point, instead of a public bidding process, the central bank called an emergency meeting and asked companies to produce as many bills as possible. The companies complied, only to find payments not fully forthcoming.
Last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.
Third world problems.