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Chris Martenson: Welcome to this Peak Prosperity podcast, I am your host Chris Martenson. We need to talk. We need to talk about Venezuela; it’s in meltdown right now, social, financial, economic, political – meltdown, is that too strong a term? I don’t think so because people are rioting. They are storming grocery stores because they’re starving; street justice is taking root, death squads are roaming all over which explains why the morgues of Caracas are overflowing. Inflation is running in the hundreds of percent officially, maybe more unofficially and accelerating. And of course Argentineans experienced a sort of thing like this back in 2001, it's close, and so we’re wondering what sorts of lessons learned can be gleamed from that experience.

Today are fortunate to be speaking with Fernando Aguirre, also known as Ferfal, Author of Surviving the Economic Collapse and also Bugging Out and Relocating, two books, you should check them out.

Ferfal experienced the hyperinflationary destruction of Argentina’s economy in 2001 up close and personal. And has since dedicated his professional career to educating the public about his experiences and observations of the lingering aftermath. His blog, Surviving in Argentina, found at Ferfal.blogspot.com, is covering the events as they unfold there as well as elsewhere and more general topics around the idea of navigating an economic dislocation wherever you happen to live.

Now, given rising concerns—we are seeing this in major hedge fund operators. Really large financial titans are beginning to express their concerns about the possibility of a much larger and unfortunate conclusion to central bank meddling, one that could sweep the world. Our listeners are increasingly asking to hear from voices that have firsthand experience of what it’s like to live through a large upheaval such as the one Venezuela is undergoing. So Fernando, thank you so much for being with us today.

Fernando Aguirre: Chris it’s great to be talking with you again.

Chris Martenson: Okay right from the top, what are the similarities between Venezuela and what you experienced in Argentina?

Fernando Aguirre: I think that the greatest points to keep in mind is overwhelming corruption. People sometimes get lost on what exactly went wrong in Argentina or Venezuela or what’s happening right now or even Brazil. What they all have in common is that the people in charge had no real interest in doing things right, they really did not care about destroying the country. They just cared about filling their own pockets as much as possible and that’s exactly what you’re seeing in Venezuela.

You have this communist speech going on in Venezuela and it was very similar to what the government had in Argentina as well. Now these are people that were wealthy beyond our wildest dreams, people that have no problem with amassing huge fortunes. So they have no problem doing this by any means possible.

Chris Martenson: So this corruption obviously it leads to all sorts of problems. We’re seeing very low investment back in the country. We’re seeing a lot of the capital that does come from the country flee. In Venezuela this is bizarre. We’re talking about the country with the second largest stated oil reserves on the planet; I know it’s the junk out of the Orinoco Belt but still bestowed with plenty of oil. Nigeria, another country with plenty of oil, but again just crushing sorts of poverty, corruption… how does that happen?

Fernando Aguirre: I understand how confusing it can be. But Chris think of it this way, you have a country where water is more expensive than gasoline. What sense does that make? I mean you had a guy, you had Uwu Chavez walking down the street and pointing with his finger saying “Nationalize this, nationalize that”. And when he was saying "nationalize", he was saying "steal this". Well he doesn’t have any great plans or any political grandeur things going on in his mind. He just wanted to steal as much as he could and that’s basically what populism is all about. You see it in Venezuela, you saw it in Argentina. The [Inaudible 00:04:45] government now has – they, right now they’re talking about… the new president of Argentina, which is a much more serious type of person—they’re talking about an entire year's GDP being stolen during the [Inaudible 00:05:00] government. So imagine what kind of corruption we’re talking about.

Chris Martenson: An entire year's GDP, is that what you just said?

Fernando Aguirre: Yes that’s exactly what I said.

Chris Martenson: Huh, well that seems like quite a lot; so that would be stealing $18 trillion from the US.

Fernando Aguirre: I mean our entire structure of over-pricing anything that’s being done by the States, going to friends that are actually owners of companies and that are owned by the same people in power [Inaudible 00:05:36] they basically stole in such a shameless way and one of the things that is being said a lot in Argentina and people are now just realizing it, all the money being stolen – it’s not being stolen out of thin air, it’s being stolen from the people. All that money that hasn’t been invested in roads and hospitals and schools, that’s all money that’s missing and it’s in their pockets and in their bank accounts in Seychelles or wherever.

Chris Martenson: This corruption idea is very interesting. When I had John Perkins on, Confessions of an Economic Hit Man writer, author, he talks about this sort of corruption and it happens a lot. It’s a very systemic thing. It’s not just the United States doing it but there’s a system in place which really encourages this behavior and a lot of these leaders are encouraged to participate in this bribery. The IMF is involved, the world bank, these big loans are created and never actually enter the country they’re supposed to be dedicated towards, although the assignment of the repaying those gets attached to the country. But the money goes from a server in a bank in New York to a server in a bank in New York and that’s it, right?

Fernando Aguirre: Right.

Chris Martenson: And many of these leaders think they’re rich because they siphon that money off, they squirrel it away, but then as Mr. Perkins said they really don’t actually have access to it because as soon as they run afoul of what certain worldwide interests want, they’re outed as corrupt dictators and the money is seized. So they never really actually had it, but it felt like it. Meanwhile the country just gets looted. So are you saying that Venezuela is just at the tail end of a long run of corruption and that’s where it’s problems mainly stem from?

Fernando Aguirre: Yes it’s basically the end of a very sad story of out of control corruption fueled by a very populist present with that common speech of taking away from the rich and giving to the poor. Basically I mean that sounds all very Robin Hood but who is really the rich? I mean if you’re the wealthiest guy in the country, who is it that you’re stealing from to get to give to the poor? You’re stealing from yourself? We know that’s not true. You know you’re not stealing from yourself to give to the poor.

It’s all very systematic. I mean for instance there’s an entire agenda—and this isn't theory; this is fact. They had an entire plan of forming the mentality of people. In Argentina they had a Ministry of National Thoughts, which was pretty much as bad as it sounds. The idea was to indoctrinate kids from a very early age, basically destroy their ability to read and understand text. Right now in Argentina about half of the kids that even finish primary school, they don’t understand what they’re reading, right? They lack reading comprehension to such an extent. So that kind of population is very easy to control and abuse them in all these ways.

Chris Martenson: Well that sounds familiar to other countries, let me leave that topic for a moment. So Venezuela, how bad are things there right now?

Fernando Aguirre: Well it’s pretty disastrous. There’s an interesting website where they’re showing what people actually have in their fridges; I mean it’s less than a grocery bag full for any of us. I mean a couple bananas, half a bag of flour and I mean it’s really desperate. That’s why you see people truly starving. It makes no sense. As you said, they have oil. They have a country that it’s – come on it’s in the middle of a tropical region where they should be able to produce as much food as they could possibly want, and they’re starving to death? Last year they didn’t have even toilet paper. What country ends up not having toilet paper?

Chris Martenson: Yeah it’s really tragedy at this point but you know the videos I’ve seen of people rioting – rioting is maybe the wrong word. Very, very hungry people who have been queuing in line for eight or nine hours in the hot sun, being told the store is closed, get a little angry and say “I’m still hungry and I’ve got hungry kids at home” and they break into the store. I’m not sure that’s the same as rioting, per say, but it sounds like people are actually getting to starvation at this point, like losing weight.

Fernando Aguirre: Yeah and as you were explaining pretty accurately now it’s not always as easy seeing everyone that’s looting and breaking into – it’s not as simple as it’s sometimes seen. These are honestly people that are starving, right? And folks don’t understand how complex that is. I was reading in a forum some of them were saying “Well that lady looks pretty fat and she’s hungry”? They don’t even understand – most folks don’t understand that many times people that have a weight problem are some of the poorest people around the world. They don’t have the quality of food or the gym subscription that some other folks have. It's people that are really desperate. I mean six months ago I was writing about an incident where one sister killed another over a pack of rice or flour. These are honestly people that are very desperate.

Chris Martenson: And it’s the – the pictures that I’ve seen of the hospital conditions are just beyond third world at this point. Like Greece did a while ago, Venezuela has run out of basic medicines and people who are on certain medicines are finding that they’re not available at any price because the country doesn’t have the hard currency to import them. So it’s rapidly becoming a food crisis, a medical crisis, a security crisis. It’s really hitting the bottom of Maslow’s hierarchy of needs. I mean these people are really getting down to a very serious humanitarian situation at this point.

Fernando Aguirre: Again we go back – the key word is corruption. You know what they did in Argentina during the middle of the [Inaudible 00:12:01] government? They replaced medicine for cancer patients with water. They stole the actual medicine. They charged it to the government as real medicine. The government would be paying for them. Of course all this money was always channeled to the [Inaudible 00:12:11] family but they were giving water to cancer patients and killing these people. Again, not anything that I’m making up; it’s all available on the internet and people are actually being charged for this right now. But those that are dead, they’re not going to come back.

Chris Martenson: Now do you think – let me guess, you think things are going to get worse in Venezuela before they get better?

Fernando Aguirre: I think in the case of Venezuela, yes. Yes because – in the case of Argentina fortunately they changed… We still need another year or so to see if really things are – if there’s hope. Right now they have Mauricio Macri for President which is a guy that I never thought would – because he’s actually a well-educated person, seems quite decent, which is a very nice change. But you still need some more time, another six months or a year to see if things – now in the case of Venezuela they are really heading to – they’re really crushing bad before they see something better. We haven’t still gotten to that point. Until you actually have people, decent people in the government, there’s little hope.

Chris Martenson: Now what’s the chance there of something more serious like a coup, civil war, rebellion of some kind do you think?

Fernando Aguirre: Chris it’s already very bad. I mean how much worse – people are – I know for a fact that they’re slaughtering one another in the streets right now in Venezuela. And it’s not just now, it’s been for – I mean for at least three years it’s been a case of out of control crime and corruption over there. And people have been having – a significant percentage of the population has been struggling with food for at least a year as well now. So it really – it’s not getting better any time soon unless something changes on a deeper level.

Chris Martenson: All right so let me ask you this: Assume for the moment you’re not one of the lucky ones who can leave—and I know a lot of Venezuelans have left to go to Miami—it's really a study in Venezuela in some sections. So those are the people who could afford to leave, let’s assume you’re not one of those people and you’re in Venezuela, what would you be doing right now?

Fernando Aguirre: Well as you mentioned, the people that actually left, those are the ones that have the right strategy. I mean there’s – for the average middle class person in Venezuela and talking about the middle class, even a little bit of an upper middle class, right, educated a good job? He needs two years of wages to buy a single plane ticket in their own economy, in their own currency. He needs to work for two full years to buy one single – I mean that average middle class person is stuck there. The problem is that he waited too long and he didn’t manage to leave. That is something that I write about often is know when you have to leave. In order to leave Venezuela was at least three or four years ago. Right now you’re getting to the point where you’re stuck there. Now you’re stuck in a country where no matter what it is that you do, you’re always going to be earning in bolivars, which is a currency that is completely fake. They have an exchange rate – official exchange rate of 1:10 dollars, but unofficially, which is the real one, it’s almost like 1:1,000 dollars. So they basically are starving you to death through the economy, completely devaluated currency which is what you’re getting paid for, you basically need to find ways of leaving the country.

What I would do if I was in Venezuela right now, I would leave on foot. I would leave any way I could because it’s not safe, it’s definitely – I know people that have killed people to survive in Venezuela. I actually know guys that had to do that to live. And the only solution you have is you cannot stay there. If you had – and again folks that have a fridge with a couple bananas and an orange, how can you sustain life like that? At the same time, if you’re thinking about farming, you have a government that stole people’s land. I mean Chavez, he [Inaudible 00:16:42] those forms. Those folks that are thinking of buying a chunk of land and growing our own food—you cannot do that when you have the government stealing it from you. And you’re not going to be winning against the government's military or police. It’s a no-win situation.

Chris Martenson: So let’s rewind then, what were the warning signs that Venezuelans should have been listening to, if they could have, before things got bad? How long ago were those and what were those warning signs?

Fernando Aguirre: Well again the similarities with Argentina… Many years people in Argentina were saying “We’re turning into Venezuela” and there was actually a phrase, a word coined was "Argenzuela", because Argentina was looking so much like Venezuela that the local joke was “We’re turning into Argenzuela”. And you see the same thing. You see it so clearly. First you see a populist leader rise and has this hate speech, which is something that unfortunately we’re seeing in many places around the world these days. That hate of "we’re the poor ones, they’re the rich ones" and I mean at the end of the day you know as well as I do that behind all this there’s always a big bank person running things, right? But when you have this kind of populist leader with that Socialist, Communist thing going on and he says he’s going to be stealing or nationalizing stuff and giving it back to you, and one of the things he does is right away he tries to control the media. Of course when he cannot control the media because they’re own desires clash with reality, they want people to believe something that’s not true; so they get desperate with the media. They try to control it, to censor it any way they can. They start closing media outlets that are not friendly to them. Those are real serious warning signs.

Chris Martenson: All right and so those signs have been cropping up for a while. And things are clearly very bad in Venezuela; we’ve been writing about it for a while and commenting on it. But the articles just come on a daily basis, failed state collapse and things like that; so it’s clearly on a bad road so I agree with you. I think that if you have the chance, even if it’s by foot it’s probably best to leave.

But let’s talk about some other places where maybe we’re seeing the same warning signs. So where do we start even? Well let’s start with Argentina. How are things shaping up there? Were you invited to the international bond market, some recent political turnover; how are things looking there?

Fernando Aguirre: Right, in December of last year were elections and [Inaudible 00:19:31] lost to  Mauricio Macri. Mauricio Macri is a rich guy, from a rich family, a wealthy family from Argentina, has been around for some time now. His father was actually one that had a big company and Macri is actually – Mauricio Macri is actually an engineer, he speaks English fluently, he’s well educated. And he is someone that was pretty much interested in keeping the family business. He got an interest in football, what you guys call soccer, and he became the president of Boca Juniors Club, which is a pretty big club which is a big deal in Argentina football. So that was his pretty much first step in politics. Then he got into politics when the [Inaudible 00:19:51] government started doing its populist thing and whenever someone complained about something they said “Okay if you have a problem with us start your own party and win the election” and that’s exactly what Mauricio Macri did. He started his own political party, brand new, picking up the people that he thought would be good for the job. So you see Macri with a – everyone in his political party is well educated and has a good background of transparency and – there’s always something a little bit gray here and there but in general honestly it’s maybe one of the best things we have going on in terms of politics since as long as I can remember, definitely in the last 30 years.

So you have a guy that honestly seems to be – if you want to put in some box, he's a center right type of conservative type of person. I think he's more of a center. But again the important thing is he doesn’t have that corruption thing going for him which [Inaudible 00:21:33] exact opposite. But you still need at least a year or so because they’re still very much – the [Inaudible 00:21:43] government made sure an entire generation—as we were talking about before—the entire generation of people that they taught that it was right to be corrupt and to steal through the government. So what do you do with thousands of people like that, hundreds of thousands of people like that? It’s not going to be an easy job, but yeah I think it’s a good start.

Chris Martenson: Well to sort of paraphrase a famous scientist who said that science advances one funeral at a time. People with belief systems that are entrenched, sometimes you have to really literally wait for them to die before those belief systems will go away because that’s how it works for them and that’s how they see the world, so I understand. It’s a real tragedy to have a whole generation of corrupt, let’s say inoculated people who grew up that way. Or in the case of Greece and even Spain, which I understand I’m calling you in, which we’ll get to in a minute. But having a huge chunk, 50% or more of young people out of work has a corrosive long term effect; so that corrosion of society, I get it. It’s a really big deal and I think it’s overlooked; so thank you for bringing that up.

Now let’s shift just a little north from Argentina. How about Brazil? That’s really in the news; it seems to really be having trouble finding its footings. If you lived in Brazil are you seeing warning signs there that would say time to go to Miami?

Fernando Aguirre: Brazil is definitely not as bad as Venezuela by any means. But I mean it always was a third world country. It’s not a politically correct term but it is what it is. A third world country simply that lacks that kind of structure that allows – in a developed nation you can put a turtle for a president for a term or two and the country will still roll, right? In places like Argentina or Brazil or Venezuela which don’t have the stability, you really need someone to change course, maybe a guy like Macri. Right now in Brazil they have Dilma Rousseff, which she has been removed from her presidency and it’s a pretty serious political crisis. It’s hard to say how that will end up. I think that it will – especially with the examples you have around when you have your neighbors like you have in Venezuela, then people are more likely to say "okay, let’s calm down a little bit and see how we can fix things unless we end up like those guys," you know? So that’s always an encouragement. I know it was for Argentina. Argentina, the greatest fear we had was ending up like them, ending up like Venezuela; we never wanted that. People in Brazil I assume will try to fix things but it’s definitely going through some serious political crisis.

Chris Martenson: So Fernando in Brazil it’s a political crisis at this point but it’s not yet economic or monetary?

Fernando Aguirre: Well it’s not doing great economically because it is affecting of course – as you well know the economy is all about trust. The fiat currency we use is pure trust in a piece of paper. So as soon as people lose faith in a country and its economy and ability to answer, then the economy starts struggling pretty bad. But it still has—Brazil is the largest economy in South America so it still has a little bit of backbone left to get back on track. We need a little bit more time to see if it gets back on its feet or not.

Chris Martenson: Okay well how about Puerto Rico though? We’re looking at… well it’s bankrupt at this particular stage so they’re going through debt restructuring. That situation I’m not as familiar with in terms of how much corruption has played a role in what’s happened there. Whether that was just good old fashioned mismanagement in Puerto Rico or how much corruption might have been welded in. What’s your view there?

Fernando Aguirre: Yeah I think Puerto Rico had its fair share of corruption. It’s smaller, which makes it easier to fix. It doesn’t have the leverage like a bigger country has but it’s also somewhat easier. Puerto Rico always had that paradise thing going for it. Many expats chose it as their location, so with that kind of… it still has a little bit of hope of getting back on track but it’s not as serious as Venezuela. When there's people with money that have an interest in a place, usually a way is found to get things fixed.

Chris Martenson: Well all right, so Europe then. I have increasing debts in my brain about the idea that Europe is not going to survive a lot longer as a single union, and I know that’s maybe a slightly controversial view. The refugee crisis, the way that second state status has been granted and shoved down Greece’s throat and it’s probably going to visit some of the other southern European nations over time. Italy is fully bankrupt as a nation, but yet things sort of carry on. You’re living over there now, what’s your views from the street view; what do you see?

Fernando Aguirre: I’m actually very close to [Inaudible 00:27:34] which is near the southern part of Spain and actually right in front of the ocean now, the Mediterranean Sea –

Chris Martenson: You get sunshine there.

Fernando Aguirre: Yeah, a lot of it, yes, yes. It’s a beautiful place really. It’s full of tourists. That’s the thing – the thing about Europe that maybe none of our people will have that much of an understanding especially if they haven’t traveled through it. It’s a collection of countries really and each country has its own very rich culture in terms of thousands of years of history. And each country, even though right now it’s the European Union, each country has its way of dealing with things. I think for example Spain would say you look at the – kind of put together a government you would think people are at one another's throats on the street, and really that’s not the case. It’s quite peaceful. You have more of a relaxed way of doing things. We went through a pretty big crisis which they’re somewhat recovering from. Unemployment is still an issue but at the same time you walk on the streets and you see some signs of, you know, jobs wanted and such. So it’s definitely not good but it’s not as disastrous as it may seem.

One of the things I try to explain is the difference between crisis and collapse. Venezuela is collapsing right now. It has been collapsing for some time. Argentina collapsed. Collapse, in my mind, means the president resigns and escapes in a chopper like we saw in 2001, right? The people start burning everything you know? And no one wants to even be president of the country; that’s what collapse is in my mind.

Crisis is still very bad and when you have that kind of economic crisis and you see such a shift from middle class to poor, it’s a real tragedy. It’s not joke; definitely not. But the example here in Spain is there’s not the level of crime that we saw in Argentina, not nearly anything like that. People here walk on the streets in the city and it’s definitely much safer than many other places I’ve been to. The murder rate is like a fifth of what it is in the United States. So it’s still a safe place to be.

Now what you were mentioning about the integrity of the European Union and especially now with Brexit—with Britain thinking about leaving and such, it can be compromised and there's always a possibility of things going south pretty fast.

Chris Martenson: Yeah well that’s the piece I’m sort of tracking here. So here in the United States— and I'd love to get your views on how Europe is sort of watching this circus of a presidential cycle over here. But before we go there, there’s a growing discontent in the United States between the protected class and the unprotected class. The unprotected has a much harder run of it here in the United States in many places than Europe because we don’t do a social safety net thing here. You get a few weeks of unemployment if you happen to have been working in a job that qualified, and then you’re out. Meanwhile we’re just absolutely screwing ourselves every possible way we can with healthcare, food costs, you name it. It doesn’t matter, whatever it is. If you can get away with charging people for it, that’s fine; so people are getting squeezed and we’re seeing it really show up.

I was starting to detect strains of that particularly around the refugee crisis where there was a little bit of a cultural crisis going on, which I totally understand. When you have a culture and you try and drop ship a whole bunch of a young males in particular who are insistent in bringing their own culture in, there’s some shock involved with that. You can’t just sort of have Brussels wave their bureaucratic wands and "say you have to suck it up because we say so." That’s what I thought the Brexit was about was more and more ordinary people saying “Hey that ruling body in Brussels seems really out of touch and bureaucratic and kind of heavy handed and increasingly so; we don’t want any part of that”; is that a reasonable characterization or is that going too far?

Fernando Aguirre: Well there’s probably some of that – the thing is I’m always giving my experience of why I distrust governments in general. I distrust mainstream media a great deal. I know there’s always interests involved. I mean look at what’s happening for example with Brexit, who is going to be benefiting from it. I see a media fueling it on a certain direction, which they have a point in some things. Then again right now I mean they have a Muslim mayor in London, that’s happened in the last six or 12 months. The entire community over there already in place. So is it really that way you want to be leaving or is it maybe some financial interest that benefits greatly from separating itself from the European Union and some of the things that they don’t like as much about it? I tend to be quite distrusting.

It is very true what you’re saying about having such a mass of people… and I have refugees here, I see them. Honestly there’s a lot of people who have been here far longer than many of us maybe for several generations with their own cultural thing. And there's clash; they have their ideas of how you should treat women. Maybe I don’t agree with them that much, you know what I mean? I think it’s always possible at the end if you really try you can live together. I think it’s possible to have peace even if you have different ideas of what a family is and how you manage yourself and your loved ones. It’s not always easy –

Chr