A century ago, John Maynard Keynes recognised the deadly threat inflation posed to a body politic. He wrote: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.” It is a lesson that Venezuela’s Nicolás Maduro has yet to learn. Yearly price rises are predicted to hit 1,000,000%. Venezuela’s situation, says the IMF, is not as bad as that faced by Germany in 1923 or Zimbabwe in the 2000s. But it’s not far off. The economy is set to shrink by a fifth. Jobless Venezuelans are leaving in droves for neighbouring countries – only to be greeted by mob violence over the borders.

Keynes warned that the ruling class could be overthrown. The irony is that it is Venezuela’s revolutionaries who risk being toppled in nightmarish scenes. Mr Maduro, heir to Hugo Chávez’s populist politics, narrowly escaped an assassination attempt this month. Chávez’s Bolivarian revolution had its roots in social justice, and tapped the world’s biggest oil reserves to aid the poor. Mr Maduro took over just as inflation took off and before oil prices crashed. He failed to tackle an incipient crisis. Instead, he oversaw Venezuela’s descent into economic and social catastrophe. Security forces, who are suspected of killing hundreds of demonstrators, enjoy immunity from prosecution. In June the United Nations warned that the rule of law is “virtually absent” in the country.

Mr Maduro’s rescue plan is to devalue Venezuela’s currency, the bolívar, by 95%. Instead of an exchange rate of 250,000 bolívars per US dollar, one greenback will be worth 6m bolívars, the current black market rate. The new bolívar will have five zeros lopped from it so it can be carried in wallets, not wheelbarrows. It will be pegged to a new cryptocurrency, the petro – worth $60 or 3,600 new bolívars and linked to oil prices. Caracas’s anti-market mindset was at the root of the problem. State controls meant anyone wanting to buy or sell bolívars was supposed to do so via the government at a fixed rate. A black market in dollars flourished – where local currency was worth a thousandth of its official rate. It led to rampant corruption and stoked inflation as those with access to the official rates were able to buy dollars and import goods cheaply, and sell them at a handsome profit.

Caracas acted too late. It ought to have floated its currency, but this was foolishly – and wrongly – ruled out as “neoliberal”. Even if Mr Maduro has changed course, Donald Trump’s arrival in White House has made a recovery almost impossible to engineer. Last year, Mr Trump launched sanctions to stop Caracas from borrowing or selling assets in the US system. This means Venezuela is unable to restructure the $60bn New York law-governed debt it currently is defaulting on. Another big power might intervene. But Mr Maduro’s best ally, Beijing, is already owed $20bn. The petro might have offered a way out. However, the US banned trading in it. Washington wants regime change. Mr Trump, thankfully, thought better of invading Venezuela to achieve this. But Venezuelans face, through sanctions, a war by other means.

• This article was amended on 22 and 30 August 2018 because an earlier version referred to yearly price rises as “running at 1,000,000%.” The IMF predicts yearly price rises to hit 1,000,000% by the end of 2018. An earlier version said the petro was worth 60 new bolívars. This has been corrected to $60 or 3,600 new bolívars.