LONDON — The South American state of Venezuela is in deep trouble.

The country, which was once hailed by many on the Western left as a shining example of socialism in action, is crumbling, both economically and politically.

The scale of the country's fall can be seen in cold, hard data, some of which is truly shocking.

In 2017, Venezuela's economy is 35% smaller than it was in 2013 in terms of gross domestic product and 40% lower in GDP per capita terms, as noted by Harvard economist Ricardo Hausmann, who was the country's minister of planning in the early 1990s, in a piece for Project Syndicate.

Hausmann reflected on the scale of the contraction in a recent article for Project Syndicate, writing that the shrinking was "a significantly sharper contraction than during the 1929-1933 Great Depression in the United States, when US GDP is estimated to have fallen 28%."

He continued: "It is slightly bigger than the decline in Russia (1990-1994), Cuba (1989-1993), and Albania (1989-1993)."

Beyond the headline numbers, things are even more stark. Here is Hausmann once again:

"Clearly, a 40% decline in per capita GDP is a very rare event. But several factors make the situation in Venezuela even bleaker. For starters, while Venezuela's GDP contraction (in constant prices) from 2013 to 2017 includes a 17% decline in oil production, it excludes the 55% plunge in oil prices during that period. Oil exports fell by $2,200 per capita from 2012 to 2016, of which $1,500 was due to the decline in oil prices."

You can read Hausmann's full analysis here.

Economically speaking, Venezuela's main problem is that it relies far too heavily on oil exports as a means of generating economic prosperity.

When times were good in the oil markets and oil was worth more than $100 a barrel the country was able to grow rapidly and offer its citizens a great quality of life.

But three years on from the crash in oil prices, the country simply cannot do that anymore, and its citizens are suffering. Venezuela certainly had problems before the oil-price crash, but the downturn accelerated and exacerbated those issues.

Fresh trouble has been sparked in the country this week by an election decried by critics as illegitimate and designed to give the unpopular government of President Nicolas Maduro powers to rewrite the country's constitution and sideline its opposition-led congress.

The US labelled Maduro a dictator and accused him of "seizing absolute power," and it imposed sanctions on the country, potentially compounding the state's economic woes.

At the same time, inflation in the country is still growing uncontrollably, while the country's currency, the bolivar, devalues at an almost unbelievable rate.

While the official rate of exchange between the US dollar and the bolivar is roughly 10 bolivars to the dollar, in reality it is more like 10,000.

A recent analysis by CNN Money showed that at the end of July a dollar was worth 10,389 bolivars, up from about 3,000 at the start of the year and 8,000 just a week before.

Inflation could exceed 1,600% by the end of 2017, according to some estimates, and many restaurants have stopped publishing prices because costs are rocketing so fast.

Restaurants, however, are but a dream for the vast majority of Venezuelans. Associated Press correspondent Hannah Dreier recalled on Wednesday how food shortages were so bad that a bakery near where she lived in Venezuela's capital, Caracas, allowed people to line up outside not to buy bread but to rummage through its bins for scraps.

"People waited for their turn to hunt through black bags of bakery garbage," Dreier wrote. "A young woman found a box of muffin crumbs. A teenage boy focused on finding juice containers and drinking whatever remained."

As The Economist — which ran a special report on the country last week — writes: "Over the past year around three-quarters of Venezuelans have lost weight, averaging 8.7kg per person, because of a scarcity of food."

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CARACAS/CIUDAD GUAYANA, Venezuela (Reuters) - There was no way Jose Ramon Garcia, a food transporter in Venezuela, could afford new tires for his van at $350 each.

Whether he opted to pay in US currency or in the devalued local bolivar currency at the equivalent black-market price, Garcia would have had to save up for years.

Though used to expensive repairs, this one was too much and put him out of business.

“Repairs cost an arm and a leg in Venezuela,” said the now-unemployed 42-year-old Garcia, who has a wife and two children to support in the southern city of Guayana. “There’s no point keeping bolivars.”

For a decade and a half, strict exchange controls have severely limited access to dollars. A black market in hard currency has spread in response, and as once-sky-high oil revenue runs dry, Venezuela’s economy is in free-fall.

The practice adopted by gourmet and design stores in Caracas over the last couple of years to charge in dollars to a select group of expatriates or Venezuelans with access to greenbacks is fast spreading.

Food sellers, dental and medical clinics, and others are starting to charge in dollars or their black market equivalent — putting many basic goods and services out of reach for a large number of Venezuelans.

According to the opposition-led National Assembly, November’s rise in prices topped academics’ traditional benchmark for hyperinflation of more than 50 percent a month — and could end the year at 2,000 percent. The government has not published inflation data for more than a year.

“I can’t think in bolivars anymore, because you have to give a different price every hour,” said Yoselin Aguirre, 27, who makes and sells jewelry in the Paraguana peninsula and has recently pegged prices to the dollar. “To survive, you have to dollarize.”

The socialist government of the late president Hugo Chavez in 2003 brought in the strict controls in order to curb capital flight, as the wealthy sought to move money out of Venezuela after a coup attempt and major oil strike the previous year.

Oil revenue was initially able to bolster artificial exchange rates, though the black market grew and now is becoming unmanageable for the government.

Trim the tree with bolivars

President Nicolas Maduro has maintained his predecessor’s policies on capital controls. Yet, the spread between the strongest official rate, of some 10 bolivars per dollar, and the black market rate, of around 110,000 per dollar, is now huge.

While sellers see a shift to hard currency as necessary, buyers sometimes blame them for speculating.

Rafael Vetencourt, 55, a steel worker in Ciudad Guayana, needed a prostate operation priced at $250. “We don’t earn in dollars. It’s abusive to charge in dollars!” said Vetencourt, who had to decimate his savings to pay for the surgery.

In just one year, Venezuela’s currency has weakened 97.5 per cent against the greenback, meaning $1,000 of local currency purchased then would be worth just $25 now.

Maduro blames black market rate-publishing websites such as DolarToday for inflating the numbers, part of an “economic war” he says is designed by the opposition and Washington to topple him.

On Venezuela’s borders with Brazil and Colombia, the prices of imported oil, eggs and wheat flour vary daily in line with the black market price for bolivars.

In an upscale Caracas market, cheese-filled arepas, the traditional breakfast made with corn flour, increased 65 percent in price in just two weeks, according to tracking by Reuters reporters. In the same period, a kilogram of ham jumped a whopping 171 percent.

The runaway prices have dampened Christmas celebrations, which this season were characterized by shortages of pine trees and toys, as well as meat, chicken and cornmeal for the preparation of typical dishes.

In one grim festive joke, a Christmas tree in Maracaibo, the country’s oil capital and second city, was decorated with virtually worthless low-denomination bolivar bills.

Most Venezuelans, earning just $5 a month at the black market rate, are nowhere near being able to save hard currency.

“How do I do it? I earn in bolivars and have no way to buy foreign currency,” said Cristina Centeno, a 31-year-old teacher who, like many, was seeking remote work online before Christmas in order to bring in some hard currency.

SEE ALSO: Venezuela is 'a target-rich environment' for more US sanctions — but it could backfire

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NOW WATCH: Venezuela was Latin America’s richest country and now it is in complete crisis — here’s how it fell apart

• Inflation in Venezuela has hit an annual rate of 830,000% — and is likely to keep rising.
• A report published to the country's parliament by a coalition of opposition parties said the annual rate had almost doubled since in the month since the most recent report was published in October.
• The International Monetary Fund expects inflation to hit 1 million percent this year, with local economists expecting a further pickup in price rises as Christmas bonuses are handed out.

Inflation in the stricken South American nation of Venezuela hit an annual rate of 830,000% this year to October, according to new data released this week to the country's parliament.

A report published by a coalition of opposition parties said the annual rate had almost doubled since in the month since the latest report was published. In the year to September, inflation stood at 488,000%.

Monthly inflation actually fell somewhat, with that figure falling to 147% in October from 233% in September.

Read more: 10 pictures reveal the huge amounts of cash Venezuelans need to buy everyday things

This week's figures may seem troubling, but things are set to get even worse for Venezuelans, with the International Monetary Fund arguing that the country's annual inflation rate is likely to pass 1 million percent this year.

"The collapse in economic activity, hyperinflation, and increasing deterioration ... will lead to intensifying spillover effects on neighboring countries," the director of the IMF's Western Hemisphere Department said in a blog post in July.

Venezuela's situation has drawn comparisons to the hyperinflation incidents seen in Zimbabwe in the early 2000s and in Weimar Germany after World War I.

Local economists, Reuters reports, also say hyperinflation could become even more aggressive in the final months of the year. That's because public-sector workers are given bonuses ahead of the holiday season that could boost purchasing power and push the cost of goods up even more.

The data is the latest to suggest that measures introduced by the country's embattled president, Nicolas Maduro, are failing to achieve their aims. Maduro announced a series of radical economic interventions over the summer that were designed to bring down inflation and stabilize the Venezuelan economy.

Maduro's policies included devaluing Venezuela's currency, the bolívar, by 95% and pegging it to the state-backed cryptocurrency, the petro.

With the policies failing to have any real impact, the continued hyperinflation of goods means everyday items are unaffordable for many Venezuelans, and poverty and violence are widespread in the country.

News of Venezuela's still-surging inflation rate comes just days after reports that the country has approached the Bank of England about getting back approximately 15 tonnes of gold bullion held in the UK.

Citing two sources with direct knowledge of the operation, Reuters said the plans related to recently announced sanctions by the US aimed at disrupting the South American country's gold exports.

US President Donald Trump last week signed an executive order barring Americans from dealing with entities and people involved with "corrupt or deceptive" gold sales from Venezuela.

SEE ALSO: A cryptocurrency is making huge inroads in Venezuela as inflation runs wild — and it's not bitcoin or the petro

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NOW WATCH: Venezuela was Latin America’s richest country and now it is in complete crisis — here’s how it fell apart

• Power blackouts, hyperinflation, and chronic shortages have become parts of everyday life for millions of Venezuelans.
• Five people sent INSIDER pictures showing what it's like to live through the humanitarian crisis.
• Whether meat rotting in a warm fridge or a Happy Meal that is worth more than a monthly salary, they see the effects of the crisis everywhere.
• Visit INSIDER's homepage for more stories.

Venezuela continues to spiral into a worsening humanitarian crisis as the government and the opposition jostle for support.

More than 3 million people have left the South American country. For those who have stayed, crippling power blackouts, hyperinflation, and chronic food and medicine shortages are their everyday reality.

INSIDER asked Venezuelans to send in pictures that best captured their lives under the crisis.

The internet in Venezuela frequently fails, which can make communication difficult and slow. The photographs were taken in March and April and reached INSIDER piecemeal over the past few weeks.

They show life before the failed uprising last week, led by opposition politician Juan Guaidó. Despite the drama of Guaidó's gambit, little has changed for ordinary people. Here is what they showed us.

This worthless "money tree" uses black humor to show Venezuela's hyperinflation.

This photo is from Jesus Yepez, an architect who lives in Venezuela's capital, Caracas.

He found this "money tree" in the street, made mostly from bills in Venezuela's currency, the bolívar soberano, on the street. 

Skyrocketing hyperinflation has made cash almost worthless: $1 is worth roughly 5,200 bolívares soberanos.

Yepez saw local workers adding their tips to the tree, while other people contributed Monopoly money.

"Many people commented that that is what our currency has turned into: Monopoly money," he told INSIDER. "It's an ingenious protest for the insane inflation we've been experiencing."

You can follow Jesus Yepez on Instagram.

This man is hunting for food in a garbage dumpster — now an everyday sight in Caracas.

As prices for basic goods like food and medicine have soared, it is pretty common to see people sifting through the trash in the streets of Caracas.

Yepez observed this young man, most likely in search of food, clothes, or plastic containers that he could sell.

"I could see by his face that he was hungry," Yepez said.

Another photo shows a McDonald's in Caracas offering a Happy Meal for 18,500 bolívares — more than the monthly minimum wage.

When Yepez took his daughter to buy an ice cream at a McDonald's — a special treat — the price of the Happy Meal immediately caught his attention.

The meal — a Cajita Feliz in Spanish — cost 18,500 bolívares soberanos, or $3.50, a little more than the minimum monthly wage at the time in March.

The government has since raised the wage to 40,000 bolívares soberanos ($7.70).

Yepez said the restaurant was mostly empty since eating out had become so expensive.

"Seeing how grave the crisis is, all we can do is 'be happy,'" he said.

"Medicine urgently" scrawled on the side of a highway highlights the chronic — and sometimes deadly — lack of supplies.

"This is more than a simple graffiti," Yepez wrote on his Instagram post about this spray-painted message on the side of a highway bridge, which means "medicine urgently."

Venezuelans have experienced an acute medicine shortage as the economy crumbles and the government can't afford to import basic drugs and supplies.

Yepez says he has struggled to buy something as simple as flu medicine.

"But my flu is a grain of sand in light of the mountain of needs," he wrote.

He said other people he knew were looking for even more scarce things like morphine to deal with problems like metastases — painful growths spreading through the bodies of people with cancer.

One of the most desperate scenes shows a crowd of people collecting water from a leaking sewer pipe, after the running water to their homes stopped.

This photo is from Stephanie Vita Marcelot, an administrator in Caracas. 

She captured people crowding around a leaking sewage drain to collect water to drink and bathe in during a blackout that stopped running water from getting to their homes.

Water pumps have been failing regularly because of crippling power failures.

On this day in early March, Marcelot saw people of all ages taking plastic containers, pots, and pans to collect water. Others bathed or played in the leak, she said.

The water was running clear, Marcelot said, even though it came out of dirty pipes that feed into the polluted Guaire River.

"The sad reality was that no one had the faintest idea what risk they were taking by collecting this water, even if they just use it to shower," she told INSIDER.

"Many people told me they had gone days without running water, and this was the only place they could get it."

Though the power failures were at their worst in March and April, many parts of the capital still struggle with water shortages, she said. 

You can follow Stephanie Vita Marcelot on Instagram.

Frequent blackouts also mean no electric lighting. These ketchup bottles, turned into kerosene lamps, are a makeshift way to light one's home.

This photo is from Dinora Lucia Villalba Navarro, an engineer in the northern city of Maracay. 

She started making her own kerosene lamps with her husband when nationwide blackouts kicked off in March. 

"With so many days without electricity, one needs a generator, which many of us don't have," she told INSIDER.

Intermittent power failures still persist in Maracay. That means Villalba cannot count on light, water, gas, refrigeration, phone service, internet, or ATMs. 

The DIY lamps have been popular among friends and colleagues, she said, because they don't require electricity or expensive, scarce batteries.

She said she also taught her brother how to make them because he broke his nose in the dark during one blackout. 

It's also hard to cook with no power. This photo shows an improvised stove, used to cook an arepa from the heat of a single candle.

This photo is from Stiven Landaeta, an economics student from Mérida in northwestern Venezuela.

He improvised this stove with a candle because the gas was not working during one of the many power failures. 

"And we managed to eat. It was slow, but we made it," he told INSIDER. 

He said he had not eaten since breakfast when he finally had his arepa, at 10:30 p.m.

Landaeta said he could not buy food because the card readers were down, and barely anyone in Venezuela used cash since the hyperinflation began.

You can follow Stiven Landaeta on Instagram.

This pile of worthless cash is another reminder of the grim economic situation.

Landaeta still has a mound of cash in the old currency — the bolívar fuerte — which was in circulation until August.

The pile of money was worth almost nothing even before it was replaced by the bolívar soberano.

President Nicolás Maduro slashed five zeroes from the new currency to combat the hyperinflation, but prices have continued to soar.

Bloomberg's Cafe con Leche Index found that annual inflation hit 199,900% on May 1.

Even if you can get hold of food, the lack of proper refrigeration means it can easily rot, like this.

This photo is from a Caracas woman who asked to stay anonymous. 

She said she had to throw out 4 kilograms, or 8.8 pounds, of beef during one of the blackouts in the capital of Caracas.

Her food started rotting after spending days in a warm fridge.

"Meat is really expensive here," she told INSIDER. "The price goes up every week, so it's hard to see it rot without being able to do anything about it."

A meal like this is all most people can hope for — and even that doesn't come without sacrifice.

The same woman also shared an image of one of her meals during the blackouts: a fried egg, rice, and ketchup.

Without power, she could not take public transport to the supermarket to buy anything else.

"This is not a dignified lunch, and other people eat even less than this," she told INSIDER.

With food prices skyrocketing, many Venezuelans can't afford to buy the hearty meals they were used to, she continued.

"But it gets to a point where you have to decide between buying eggs or toilet paper," she said.

"Because you can't do both or your entire salary for the month is gone."

• A McDonald's Happy Meal cost more than the country's minimum monthly wage in March as crippling hyperinflation continues in the country.
• Jesus Yepez, who lives in Caracas, sent a photo of McDonald's' menu to INSIDER, showing showed a Happy Meal costing 18,500 bolivares soberanos.
• He said the McDonald's was almost empty because eating out has become so expensive in Venezuela.
• "Seeing how grave the crisis is, all we can do is 'be happy'," he said, in a stoic reference to McDonald's cheery branding.
• Visit Business Insider's homepage for more stories.

Hyperinflation in Venezuela is so bad that, for a time in March 2019, a McDonald's Happy Meal cost more than the country's minimum monthly wage.

Jesus Yepez, who lives in Caracas, Venezuela's capital city, sent INSIDER a photograph of a McDonald's menu that showed a Happy Meal costing 18,500 bolivares soberanos in March.

The photo appeared in a broader photo series showing the often grim reality of Venezuela in its present economic crisis.

That was more than the minimum monthly wage at the time, though the wage has since increased to 40,000 bolívares soberanos — just over double the cost of a Happy Meal, or "Cajita Feliz" in Spanish.

Yepez, an architect, was buying his daughter an ice cream when he spotted the price, and decided to take a picture. He said that there was almost no one in McDonald's because of the price of eating out in Venezuela.

Read more:Water from sewer pipes, cooking with tiny candles, and a Happy Meal that costs a month's pay: Photos by ordinary Venezuelans show life under an economic meltdown

"Seeing how grave the crisis is, all we can do is 'be happy'," he said, a reference to McDonald's cheery branding.

People in Venezuela are trying to continue living their lives, though intense hyperinflation, food and medicine shortages, blackouts, and uprisings continue. Three million people have fled the country. 

Its currency, the bolivar, has lost more than 99% of its value since 2013. The Guardian reported that people have turned to bartering or using other currencies, if they can get them.

Yepez also sent photos to INSIDER that showed how Venezuelans had put their almost-useless money on to a "money tree" in the street, with some even adding Monopoly money. 

Read more:13 ways Venezuelans are trying to live like normal as their country falls apart around them

"Many people commented that that is what our currency has turned into: Monopoly money," he said. "It's an ingenious protest for the insane inflation we've been experiencing."

See the full photo series here from INSIDER.

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• In a CNBC interview on Friday, Nassim Taleb told investors that bonds "have no upside" and "have run their course."
• Taleb pointed to negative interest rates as reasons investors could no longer count on bonds as a traditional hedge against market sell-offs.
• Taleb suggested that to protect investment portfolios, stock investors should have a tail hedge to protect against systemic risks.
• Taleb is an adviser to Universa Investments, which runs tail-risk-hedge investment strategies and posted a 4,144% return in the first quarter.
• Visit Business Insider's homepage for more stories.

The famed investor Nassim Taleb told investors on Friday that bonds "have run their course" and would no longer serve as a traditional hedge against a market sell-off.

In a CNBC interview, Taleb said that because of negative interest rates, "bonds practically have no upside structurally." Taleb said he didn't believe that bonds could really have negative interest rates, adding that the Federal Reserve had lost a weapon by dropping interest rates to near zero in response to the coronavirus pandemic.

Taleb suggested that investors hold on to stocks for upside and protect against downside by having a tail hedge. "If you don't have a tail hedge," he said, "I suggest not being in the market."

Taleb added that uncertainty loomed over the market because of the Fed's increased printing of money and lack of room to lower interest rates. And even if the coronavirus pandemic calms down, consumers will remain cautious, which will harm many industries, he said.

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Taleb said that while stocks could pick up if we enter an inflationary environment, any inflation would be hyperinflation, not mild inflation; on the flip side, we may be in a state of continuous deflation. He said that because of these uncertainties, investors needed to have an investment portfolio that's conservatively positioned and hedged for both scenarios.

Taleb is an adviser to Universa Investments, a hedge fund that specializes in tail-risk strategies. These strategies tend to perform well when volatility unexpectedly spikes in the markets: Universa posted a 4,144% return in the first quarter amid the coronavirus-related market sell-off.

"You need to be hedged for these two states, which makes things very delicate, and the first thing I would say is bonds will hedge you against nothing from here on," Taleb concluded.

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