Less than four weeks after starting his new job, Panama’s President Juan Carlos Varela already has a serious challenge to deal with: empty grocery shelves.
Over the last five years, in fact, food prices have risen more than 24%.
Inflation isn’t a particularly unusual phenomenon in Central America, or in developing countries in general.
But what sets Panama apart is that the country is dollarized.
In its entire 111-year history as a sovereign nation, in fact, Panama has never issued its own currency.
This means that the country is subject to US monetary policy; when the Fed prints money, negative effects are quickly exported to Panama.
Of the jobs that the Fed claims they have created by printing $3.7 trillion over the last few years, zero of those have ended up in Panama.
Not to mention, the Panamanian government doesn’t have an endless supply of foreigners lining up to buy its debt.
Source: Sovereign Man