Printing Money for Reparations: A Dangerous Path for Colombia

The recent proposal by Colombian President Gustavo Petro to print money to finance reparations for the victims of the armed conflict has raised significant concerns. Amid the populist rhetoric of the president, who emphasizes settling a “deep social and historical debt,” this approach is leading Colombia down a dangerous economic path. One only needs to look at the consequences of such monetary policies in neighboring countries like Venezuela and Argentina, where uncontrolled money printing has resulted in hyperinflation and economic collapse. The Dangers of Printing Money When a government decides to print money to cover its expenses, it increases the amount of currency in circulation without a corresponding increase in economic production. This practice, known as debt monetization, might provide a short-term solution for financing government obligations. However, the long-term consequences are often disastrous. When the money supply grows faster than the supply of goods and services, inflation is the inevitable result. With more money available to purchase the same amount of goods, prices rise. If this process accelerates, it can turn into hyperinflation, a scenario where prices increase uncontrollably and the currency loses its value almost overnight. Lessons from Venezuela and Argentina Venezuela offers a clear example of the...