Venezuelans Ransack Stores as Hunger Grips the Nation

>There has been little rain in Venezuela in the past three years, and a crippling deficit last year in particular—a predictable effect of El Niño, the global climate cycle that periodically warms parts of the Pacific Ocean, causing deluges in Texas and Florida, warm weather in eastern Canada, and desiccation in Indonesia and parts of Latin America. As a result, the water behind Venezuela’s dams, which supply around two-thirds of the country’s electricity, is at a historic low. At the Guri Dam, the nation’s largest hydropower facility, the water is reportedly within five metres of dead pool. At this low level, the worry is that air will get into the dam’s inner workings along with the water, producing vibrations in the metal turbine blades that can rattle the structure to death. If Venezuela’s reservoirs run dry and its dams stop working, its grid will, too.

http://www.newyorker.com/tech/elements/the-electricity-crisi...

Yeah, it's possible that chavez's attempts at socialist policy created this. But having the intelligence agency of the most powerful nation in the world spend decades trying to fuck up your government might possibly have an impact, too.

The main issues I think have been rampant government corruption under Chavez's cult of personality and the papering over of economic problems with oil money. There are many stories of Chavez basically buying votes with oil revenues. Having a huge source of essentially free money let the government operate like a sports star fresh out of college, buying expensive houses and cars, until the money dries up and they promptly go broke.

How come ?

It's a good thing you don't have the stick. I'd liken such a policy to the Taylor Rule, which can produce ridiculous results, but even that relies on macroeconomic data at all times. If your policy is such that 3% is the new lower bound, you have just created the lower bound you seek to avoid.

At present, there is no lower bound. Many countries are employing negative interest rates to attempt to stimulate their respective economies. A notable exception is Switzerland, which maintains negative rates primarily to devalue its currency (of course the magnitude of the exception is debatable). While negative interest rates are not well understood, they are utilized.

Central banks have additional tools at their disposal as well, like ON RRP, which means that talking about a single 3% rate is poorly specified. Ultimately though, we are encountering the limits of monetary policy and governments should be considering a fiscal approach, especially with such low interest rates. At a fixed 3%, fiscal policy is less appealing even when absolutely necessary.

Not a single economist in the world would agree to your insane 3% rule. That rule is so absurd that its hard to even argue against it.

Comparing QE to people burning down a store is also totally wrong. You seem to have never picked up an economic book in your life.

Just because economics is not physics does not mean you can just shit all over the thought of millions of smart people who have studied these issues.

If your rule would be applied you would wish that you lifed in the great depression.

I have studied many different school of economics, from 1400 spanish monks to modern day schools. Not a single one would think your "proposle" is anything put insanity.