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What is MDEF™ Investing? Strategy before tactics. Strategic investments dictate tactical actions in the Metals, Defense, Energy & Food sectors.

- Jeffrey C. Borneman

Food Inflation In Venezuela Leads To Fingerprinting Customers & More

Jeffrey C. Borneman | August 22, 2014

In what is surely the most bizarre order yet emanating from the socialist government of Venezuela, President Nicolas Maduro has announced a "mandatory fingerprinting system in supermarkets to combat food shortages and smuggling." 

But the "More" in the title above is: What do Energy prices, the ability to produce Energy and Inflation have in common? Or, why is the Venezuelan Food shortage news important to investors? 

It is necessary to understand the correlation of Energy prices to Food prices discussed here. It is also necessary to understand that under Hugo Chavez and his successor Nicolas Maduro, the Venezuela ship of State has resembled a NASCAR track - limiting itself to left turns only. The state cannot provide enough Food for its people because it cannot sell its Energy. It cannot sell its Energy for two reasons: First, the US was the main buyer of Venezuela's heavy crude shipped to Gulf of Mexico refineries which were built to handle both Venezuelan and Mexican heavy crude. The US switched to buying Canadian crude for political reasons. Second, the Energy infrastructure has deteriorated from years of neglect. Vast amounts of Energy cannot be extracted much less stored, shipped or processed. 

That is a 'major economic threat to a country that depends on oil for 95 percent of its exports and 45 percent of its federal budget revenues.' said The New York Times, in 2013.

But wait, there's still "More":

Fifteen years of Hugo Chavez "21 Century Socialism" began with commandeering most of the countries production, including agriculture.

"Overall agricultural productivity has dropped, as most farms and food companies expropriated by the state suffer from inflated payrolls and inefficiency but "Venezuela is the 13th-largest market for U.S. agricultural exports, with sales totaling $1.7 billion in calendar year 2012. It is one of the fastest growing U.S. markets, due to a widening gap between local supplies and rising demand ... As a result, there are growing opportunities for U.S. exports, despite strong competition and other challenges" says the USDA.

The takeaway for investors is that countries that cling to socialism will go hungry in the dark. Chavez and Maduro whipped the only workhorse they had to death (Energy) under the guise of serving "the people," which has lead to Food riots. What does the government do in response? Invite foreign investment back in like Mexico just did? No. It blames its own citizens for Food hording and now require the extraordinary control of purchase-by-fingerprint.

Venezuela cannot feed itself and 

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