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Venezuela's 32-per-cent devaluation of its currency is a further step toward currency ruin. President Hugo Chavez claims his socialist-inspired policies are original, but cheapening the bolivar against the dollar follows the pattern of Argentina and others before 1995. Government largesse and inflation fuel further devaluations and more price increases. It's a well-worn path to hyperinflation.

In one sense Venezuela's move is overdue. Even the new official exchange rate of 6.3 bolivars to the U.S. dollar, announced on Friday, does not reflect the full decline in the currency's purchasing power – the black market rate in the last few weeks has been running nearly four times the official rate. But it's also an alarming echo of the inflationary spirals seen in other South American countries just a few decades ago.

Argentina, Brazil and Peru experienced the full-on version starting in the late 1970s and through the 1980s, when annual inflation in all three economies averaged above 500 per cent. All three engaged in repeated redenominations of their currencies, with the dollar exchange rate of their banknotes losing 11 zeros in Argentina, 12-plus zeros in Brazil and nine zeros in Peru over broadly the same period.

Inflation in Venezuela, meanwhile, was officially reported at 20.1 per cent in 2012, but with monthly price rises of 3.5 per cent in December and 3.3 per cent in January it seems to be accelerating. And the longer-term devaluation trend is in place: before last week's move, Mr. Chavez had cut the dollar value of the bolivar in half in January of 2010 and undertook a 1,000-to-one redenomination in 2008.

Venezuela's government will benefit in the short term, with income largely from oil priced in dollars and expenditures in bolivars. But ordinary people will suffer. News reports reveal shoppers in Caracas snapping up the last available appliances imported at the old rate of 4.3 bolivars to the dollar. And rightly so – with the dire results of similar policies in nearby countries easily within living memory, Venezuelans would be naive to assume it won't happen to them.

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