The Reuters headline says it all: Oil Rich Venezuela Devalues Currency. Just as the IMF always recommends to developing (but not donor) countries. ‘It will raise your exports!’ they lie.

Chavez didn’t need the IMF to order him to do this, he was happy to commit economic suicide on his own. What’s confounding is that Venezuela is an oil-exporting country with a huge stream of dollar revenue, quite unlike the usual IMF-bait basket case. The net result will be theft of savings, soaring inflation, and reduced purchasing power, impoverishing the poor most of all. Venezuelan is a high importer of US goods in its economy. Prices of basic goods are going to rise.

Reuters says that Chavez is possibly planning to take Venezuela into more capital-market debt by doing this, and they are probably right. But Chavez’s aims are also likely political. The net impact will rob Venezuela’s middle class of its savings, further stripping potential opposition of economic power, and increase his own. It will boost government revenue, thus strengthening a government that already controls everything. But, what the hey, Chavez likes NeoLiberalism as much as the next loser! Who wins in this economic warfare? He wins.