Planet Money: Venezuela’s Recent Economic History (Update)

NPR • January 4, 2026
Hosted by: Kenny Malone, with reporting from Robert Smith, Noel King, Amanda Aronczyk

Overview

This episode revisits a decade of Venezuela’s economic unraveling and its partial stabilization, exploring the mechanics and consequences of its boom-and-bust cycle, catastrophic hyperinflation, and eventual retreat from currency control. The first half, originally reported in 2016, chronicles Venezuela’s crash following years of oil-fueled populism and central economic controls. The second part, updated in 2024, details the consequences of hyperinflation and the reluctant embrace of dollarization as a stabilizing force, while noting ongoing political and economic challenges.

Key Discussion Points and Insights

1. Oil Wealth, Populism, and the Seeds of Collapse

[01:13 – 05:05]

• Venezuela was once wealthy, boasting the world’s largest oil reserves.
• Hugo Chavez, elected in 1998, built his populist and socialist agendas on oil revenue, spending lavishly on subsidies and social programs without saving for downturns.
  • “The foundation for the collapse started, as it always does during these boom years. Chavez wasn't big into saving any of his oil money for, you know, the day when it will run out.” – Robert Smith [03:34]
• Non-oil industries withered; the country imported nearly everything, becoming highly dependent on oil and imports.
• The government controlled the currency tightly, setting the exchange rate and requiring permission for obtaining dollars.

2. The Currency Trap and Chaotic Controls

[05:06 – 12:25]

• Following a 2003 oil workers’ strike and fears of instability, Chavez fixed the Bolivar’s exchange rate to the dollar, a move meant to be temporary but maintained for years.
  • “Chavez essentially said, the value of our money is what I say it is. And if you want dollars, you have to come to the government, you have to come to me.” – Robert Smith [05:21]
• Importers had to navigate dense bureaucracies, getting government sign-off on products, sometimes down to specific materials or colors.
  • “They printed entire official gazette documents… books of code, basically, where you would check whether a particular material or article… had been centrally authorized by the government.” – Alex Rosenberg [06:51]
• When oil prices crashed in 2014, Venezuela was unprepared. President Maduro, lacking Chavez’s charisma, failed to respond effectively and “did nothing” to prepare or adapt.
• Demand for dollars skyrocketed, leading to a black market and currency arbitrage schemes (“Raspar,” or “the Scratch”), exploiting the multiple exchange rates.

3. The Vicious Cycle: Inflation, Shortages, and Scams

[12:26 – 15:29]

• Rather than liberalizing the currency, the government invented multiple exchange rates and printed more money, fueling hyperinflation.
  • “Absolutely wrong move. Inflation soared.” – Robert Smith [12:16]
• The government responded by hiding economic data, capping profits, and enforcing price controls, which further crippled production.
• Importers could not get dollars, resulting in massive shortages of basic goods, like food and medical supplies.
  • “Every day he waits for that approval...You go to your computer every morning, once you get to the office, you open that system and you’re like, okay, let’s see if I hit the lottery today.” – Alex Rosenberg [13:35]
• The crisis amplified: hospitals were dangerous, schools and offices cut hours to save electricity, and industrial collapse spread.

4. The Post-2016 Spiral: Hyperinflation and Exodus

[16:41 – 19:05]

• After 2016, U.S. sanctions under the Trump administration further isolated Venezuela, precipitating the worst bout of hyperinflation yet.
  • “When sanctions hit, that became the catalyst for most significant hyperinflation… from several hundred percent to several thousand and eventually dozens of thousands of percent.” – Alejandro Velasco [17:22]
• By 2018, inflation hit 65,000%. The Bolivar became nearly worthless; people carried bags of cash.
  • “By 2018, it was estimated that inflation peaked at 65,000%, making even those bags of Venezuelan bolivaras essentially worthless.” – Amanda Aronczyk [17:38]

Memorable moment:

• “At some points, you would see people walking around with bags full of cash.” – Alejandro Velasco [16:54]

• The country lost 5% of its population in a year (2018), with millions fleeing and sending remittances home, which became a lifeline for those left behind.

5. The Surprising Turnaround: Dollarization

[18:29 – 20:10]

• The real shift began as the US dollar organically took over parts of the economy—often out of necessity and in direct defiance of government controls.
  • “You started to see targeted sectors of the economy turn over into dollars... this was really an acknowledgement that it was no longer going to control that flow.” – Alejandro Velasco [18:29]
• The government relaxed currency controls in 2019, and the dollar “allowed people to plan for the future.” Remittances and cash smuggling from abroad became critical.
  • “People come with cash, they pack it in, hide it in various places… sometimes have to use a little bit of it to pay off authorities… then it’s stored under mattresses…” – Alejandro Velasco [19:23]
• After some sanctions were eased during the Biden administration, oil production stopped declining and stabilized slightly.
• Dollarization improved stability but exacerbated inequality: only those with access to dollars (via remittances, connections, or the private sector) fared well; most continued to struggle.

6. Ongoing Challenges and Political Stalemate

[20:10 – 21:56]

• Despite “stabilization,” Venezuela remains deeply damaged: inflation—though slower—is still high, oil production and GDP are greatly diminished, and the vast majority live in precarious circumstances.
• The July 2024 election was widely regarded as fraudulent, with Maduro officially “winning," opposition candidate Gonzalez forced to accept defeat and flee.
  • “The consensus is that the opposition candidate, Edmundo Gonzalez, got more votes. This kicked off a tighter crackdown on opposition…” – Amanda Aronczyk [20:39]
• NYU’s Alejandro Velasco predicts no major economic policy changes soon, despite the somewhat calmer financial climate.
  • “But he says at least the economy has stabilized.” – Amanda Aronczyk [21:51]

Notable Quotes & Memorable Moments

• Chavez trolling the U.S. at the UN:
  “Chavez stands there and he says, devil stood for me... He crosses himself... and he waves away and he says, ‘I can still smell the sulfur.’” – Noel King [02:16]

• On import controls:
  “They printed entire official gazette documents where… you would check whether or not a particular material… had been centrally authorized by the government.” – Alex Rosenberg [06:51]

• On inflation's absurdity:
  “At some points, you would see people walking around with bags full of cash.” – Alejandro Velasco [16:54]

• On dollarization:
  “Again, it is the single greatest factor to the stabilization of Venezuela’s economy. Without a doubt…” – Alejandro Velasco [19:05]

• On entrenched inequality:
  “If you're shut out of that [the dollarized economy], which is the case for most of the population, you continue to struggle.” – Alejandro Velasco [20:10]

Timestamps of Key Segments

| Segment | Start Time | Speakers | |-----------------------------------------------|-------------|----------------------------------| | Introduction & context of 2016 report | 00:06 | Kenny Malone | | Chavez’s populism and early oil era | 01:13 | Robert Smith, Noel King | | Exchange controls and import dependency | 05:06 | Robert Smith, Alejandro Velasco | | Oil crash and Maduro’s inaction | 08:21 | Smith, Velasco, King | | Black market & multiple exchange rates | 10:03 | Smith, Velasco | | Hyperinflation and shortage spiral | 12:16 | Smith, King, Rosenberg | | Economic crash and lack of solutions | 14:44 | Smith, King, Velasco | | Update 2024: Hyperinflation, exodus | 16:41 | Amanda Aronczyk, Velasco | | Dollarization and policy relaxation | 18:29 | Aronczyk, Velasco | | Sanctions eased and persistent inequality | 19:51 | Aronczyk, Velasco | | 2024 Elections and continued stasis | 20:39 | Aronczyk |

Tone and Style

The episode blends Planet Money’s trademark wit with clear-eyed analysis, using vivid anecdotes and accessible interviews to illustrate both the absurdity and tragedy of Venezuela’s decline. There’s a sense of both incredulity and frustration at repeated mistakes, as well as empathy for ordinary Venezuelans navigating chaos.

Summary

Planet Money’s look at Venezuela’s recent economic history is a cautionary tale of how oil wealth, when mismanaged and tied to rigid controls, can become an economic curse. The episode reveals how a mix of populism, relentless government intervention, and external shocks led to collapse, with hyperinflation and mass emigration ensnaring millions. The somewhat accidental turn to dollarization has brought relative calm but deepened inequalities—and the underlying problems remain unresolved, trapped in enduring political and economic gridlock.