Kenny Malone

No one said petrostate before you?

How do you know that?

Petro-states are simply countries with an economy built around having oil.

And overnight, Venezuela had become the first.

Venezuela would not have known about these issues in the 1920s.

But today, these things have memorable names like the Dutch disease, the resource curse, mono economic exposure to exogenous shock, which, OK, fair enough.

That doesn't have a memorable name.

But all of these things would debatably shape Venezuela over the next century.

Like in the Netherlands, when natural gas was discovered, international money poured into this new sector.

And that raised the value of Dutch currency in the global market, which is great, I guess.

Now, in Venezuela in the 1920s, it was like Dutch disease on steroids.

Remember, they had a coffee industry.

Terry Carl explained to us that the oil boom caused the bolivar, the Venezuelan currency, to skyrocket, which meant Venezuelan coffee was like suddenly way too expensive compared to coffee sold by other countries.

So which is to say they lose their entire economy up to that point.

Gone.

So in case you just heard a loud thump, that was Terry doing the motion of a switcheroo of commodities.

Yes.

Coffee to oil and whack on the old mic.

You'll also hear this called the paradox of plenty.

And the evidence for this is spotty as a general rule.