Venezuela was one of the richest countries in Latin America. The country sits on the largest oil reserves in the world. However, the country is in the middle of a political, economic, and societal collapse that will be soon on parity of a humanitarian crisis as Syria. This collapse is happening without a war. People are starving, food and medicine are not in supply or too expensive to buy, and crime is the commonplace in a society falling apart. Diseases such as measles, tuberculosis, etc. are making a comeback. Refugees are escaping the country to Columbia and Brazil.
The collapse of oil prices in 2014 was the spark of the rapid decline of the economy in Venezuela. The other issue is the crushing debt that has made the situation even worse. The government making a decision to make debt payments instead of feeding its people should make us in America very concerned. What happens to our country in the event of an economic event with our $20 Trillion in debt. Will Americans be forced to scour garbage to put food on our tables? This misery in Venezuela could happen to us if we do not change our fiscal policy.
In Venezuela, the horrific stories are told in the news daily. The country has a leader more concerned about his power and not working to solve the economic crisis of his country. The vital commodity of oil is the lifeline of the economy in exports but the lack of investment in infrastructure has impacted oil production in Venezuela. Oil production has dropped 20% in one year to the lowest level in 30 years. This is a country sitting on top of the world’s largest oil reserves.
Photo Courtesy of NPR
In Venezuela, grocery stores shelves are empty, people are suffering, and the country is heading toward total economic collapse. The country has a leader who cares not about the suffering of his people but the protection of his power. The country’s debt has made a bad situation worse with a focus on so far using the country’s reserves to pay interest on debts. There is no money to pay for food and medicine imports into the country or investment money to improve infrastructure to increase oil production. This situation should be a wake up call for America. We have a Congress that likes to spend money like drunk sailors with no consideration of the debt servicing or the impact on our country or the future generations.
As our economy is growing, this is the time to be reducing our deficit spending and adding to our national debt. This article in The Washington Times explains our fiscal situation:
Republicans’ tax cuts and the new spending bill Congress approved last month will send the economy surging this year to 3.3 percent growth — but will also send the deficit soaring back to the record levels of the early Obama years, the Congressional Budget Office said Monday.
Deficits will top $800 billion this year and will reach $1 trillion by 2020, just as President Trump prepares to face voters in his bid for re-election. They will remain above $1 trillion for the foreseeable future, the analysts said, painting a better economic picture but a significantly worse fiscal picture than last year.
Those deficits will quickly build, doubling the government’s main pool of debt over the next decade. Debt held by the public will stand at a staggering $29 trillion by 2028, the analysis said, prompting a warning from CBO Director Keith Hall.
“Nobody knows what’s too much debt — what will cause a fiscal crisis,” he said, detailing the grim news. “The bigger the debt, the bigger the chances of a fiscal crisis.”
Venezuela may be a small country and their problems have no relation to America. That is not true. If we keep on our same path of spending by leaders with no concern of the consequences of our exploding debt, we may soon be facing an economic collapse of our own that will make the situation in Venezuela seem like a whisper compared to a collapse in America.