Venezuela

Venezuela Slashes Zeros From Currency to Fight Inflation

Venezuela attempts to combat economic illiteracy with more economic illiteracy.

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Juan Carlos Hernandez/ZUMA Press/Newscom

Venezuelan President Nicola Maduro took to television last week to announce his solution to the country's monetary woes: eliminating five zeros on all new Venezuelan bolivar bills.

Sure, that's an unorthodox—some might say useless—attempt to combat hyperinflation, but the great Venezuelan experiment with socialism continues apace.

At present, the highest denomination bill available is 100,000 bolivars. The new bills, set to hit the streets on August 20, will range from two to 500, with each unit representing 100,000 bolivars. To put that into perspective, as of last month, a cup of coffee in Venezuela cost 1 million bolivars. Maduro initially floated the idea of eliminating three zeros from bolivar bills in March, but didn't follow through—and four months later it's seemingly clear that hacking a mere three zeros off the currency won't solve anything. But five, ah, now you're getting somewhere.

Hyperinflation has been a consistent problem in socialist Venezuela. Maduro's predecessor, President Hugo Chavez, enacted a similar policy in 2008, eliminating three zeros from the national currency. It did little to fight the underlying causes of Venezuela's inflation. Instead of trying the same silly plan again, Maduro must address the underlying problems leading to Venezuela's inflation if he has any real intention of alleviating the problems facing his country.

With price and wage controls, and a largely centrally planned economy inherently incapable of meeting the needs of its populace despite being gifted with the largest oil reserves in the world, inflation in Venezuela is here to stay until people abandon the state-sponsored currency.

Already in some parts of Venezuela, many people have turned to Bitcoin, derided as highly unstable in the developed world, for an alternate store of value to the overabundant bolivar. As Matt O'Brien noted on Thursday in The Washington Post, the International Monetary Fund increased its end of year projections for Venezuelan inflation from 12,875 percent to 1 million percent in just a few short months.

On Tuesday, economist Daniel Mitchell examined the World Bank report that compared the Chilean and Venezuelan economies on his blog. Despite their similar histories and cultures, Chile abandoned the socialist experiment in 1973 while Venezuela embraced brutal economic collectivism 1999 under Chavez.

The differences are astonishing. Chile has been blessed with enormous economic growth and some of the highest standards of living in South America while Venezuela lags behind with what the IMF has described as one of the worst economic crises in the last 60 years.

Even as socialists in America assert that "Venezuela wasn't real socialism," the evidence to the contrary is clearer than ever. The number of zeros on the bolivar is a symptom; socialist central planning is the disease.

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  1. “Even as socialists in America assert that “Venezuela wasn’t real socialism,””

    Seems like a lot of “libertarians” are now repeating that line of nonsense.

      1. The Jacket appears to have completed its parasitic cycle and will have to find a new host.

      2. Do we have to have this argument again?

        Fine, then you come up with a consistent concrete definition of “socialism” that includes:
        1. something that Karl Marx would have agreed with
        2. includes the Soviet Union
        3. includes Norway
        4. includes Venezuela
        5. and that isn’t so breathtakingly broad as to include *everyone*.

        The problem we have with discussing “socialism” is that too many people simply want “socialism” to mean “whatever we don’t like”. Which isn’t socialism. An idea can be a bad idea without it also being a socialist idea.

        1. (1) Karl Marx was not the only thinker to coin the term “socialism”. It predates him by nearly a hundred years and he wasn’t even its most celebrated theorist in his own time

          (2) The article literally says “”Even as socialists in America assert that “Venezuela wasn’t real socialism,”. I’m just pointing out that this faulty thinking is not confined to “socialists”. It also includes supposed “libertarians” who spouts such retardation

          1. This continued effort to split hairs over command economies where a large segment of the economy is owned by government about whether or not it’s “socialism” use to only be a symptom of the Left. But, now it also seems to be a disease among the cowardly libertarians

        2. So, basically, socialism does not exist.

          I do wish the press would ask people like whatever the whore running for Congress out of NYC means by “socialism”. But reporters are just as idiotic — and, as we have seen, every inch as whorish — as her.

      1. “Libertarian Socialist Caucus”
        If the LP won’t stand for property rights what good is it for?
        That’s like Dave Chappelle in the KKK.

    1. It seems the free shit army has divisions in every political party.

  2. 1 million percent inflation?

    Was pre-nazi germany ever that bad?

    I would guess that people don’t bother using currency any more in Venezuela and have switched to barter.

    1. Weimar Germany maxed out at 29,625% or so.

      Now, Hungary in 1946 hit the impressive inflation rate of 41.9 quadrillion percent.. They fixed that by introducing a new currency with a value of 1 for every 400,000,000,000,000,000,000,000,000,000 of the original currency (the pengo)

      1. I find hyperinflation endlessly fascinating.

        Zimbabwe is harder to track as they introduced new currencies during the inflation. They ALL hyper-inflated, mind you. July 2006, it was about 2,200,000%.

        Introduced a new currency in August.

        July 2008, inflation was about 231 million percent or so.

        Brought out ANOTHER new currency in August.

        They didn’t OFFICIALLY mention inflation rates, but an economist Steve Hanke estimated a rate of 89.7 sextillion percent by November…for the currency that replaced the one with a 231 million percent inflation rate.

  3. “Pat, I’d like to buy a zero.”

  4. Sure, that’s an unorthodox?some might say useless?attempt to combat hyperinflation, but the great Venezuelan experiment with socialism continues apace.

    Already in some parts of Venezuela, many people have turned to Bitcoin, derided as highly unstable in the developed world, for an alternate store of value to the overabundant bolivar.

    Weird how, on the one hand, lopping off zeroes from the currency doesn’t do diddly squat to address structural deficiencies and combat hyperinflation, but capping the absolute unit of currency at 21 million does somehow.

  5. Holy shitballs, these people are walking around with billions of dollars of their currency. They must be the richest people on the planet.

  6. “Venezuelans are billionaires. They also have no trade deficit. Coincidence?”

    – Donald Trump

  7. At present, the highest denomination bill available is 100,000 bolivars. The new bills, set to hit the streets on August 20, will range from two to 500, with each unit representing 100,000 bolivars.

    “I was told the Bolivarian Revolution would require no math”–Venezuelan proletariat.

  8. Hah, I remember at age 8 telling my Dad the government should just add a zero to every piece of money and then we would all be rich. Interesting to see that Venezuela is still taking advice from gradeschoolers.

    1. At age 6 did you think up minimum wage?

  9. Is there really that much difference between Maduro and Trump? Two economic illiterates fucking up trade networks that took decades to build.

    1. Chipper Morning Baculum|7.31.18 @ 11:46AM|#
      “Is there really that much difference between Maduro and Trump?”

      Sarc or stupidity?

      1. Chavez and Maduro were tyrants and Trump can barely get his own party in Congress to support his agenda, but in terms of economics there are a lot of similarities (apart from the tax cuts and deregulation). They both view businesses from a nationalist standpoint; they both treat trade as a winner take all gambit; they both prefer a weak currency, and any time their economic policies undercut growth they both resort to government schemes to prop-up industries.

        Trump’s trade policies are more left-wing oriented than anything else.

        1. They’ve both fired people on TV.

    2. All the analogies to Trump being Mussolini, when it may be more accurate to compare him to a Hugo Chavez type figure. Mind blown

    3. I think there are some broad similarities, sure.

      Both are populist demagogues who want the public to believe that only they are uniquely capable of leading their nation.

      But Maduro is far more authoritarian than Trump.

      1. I’d ask how that is different than any other President in history.

        It’s not like Obama lacked a massive, huge ego that far exceeded his actual legitimate qualifications to possess it.

      2. Both Chavez and Maduro have more entrenched military backing than Trump, mainly because they purged the military and brought in Cuban “advisors”.

        Weirdly, the more “democratic” Venezuela became, the more socialist, until it became no longer democratic but a dictatorship.

  10. I know it’s one of the few federal powers explicitly granted to government in the Constitution, and yet I grow more convinced that states cannot be trusted with controlling the currency. That first-mover advantage seems to reliably encourage officials to think of money as a thing with inherent value of its own.

    “We can’t be broke yet, we still have checks a printing press!”

  11. …Maduro must address the underlying problems leading to Venezuela’s inflation if he has any real intention of alleviating the problems facing his country.

    Destroy the external free markets interfering with his plan?

    1. Maduro actually believes that all the problems facing Venezuela are due to hoarders and wreckers in cahoots with the United States.

  12. Sure, that’s an unorthodox?some might say useless?attempt to combat hyperinflation, but the great Venezuelan experiment with socialism continues apace.

    First, that absolutely is THE orthodox way of disguising inflation. See the Wiemar Republic, Zimbabwe, and countless other examples.
    Second, it’s got nothing to do with combating inflation and everything to do with pretending there is no inflation.

  13. Socialism does eventually run out of other people’s money, but it never seems to run out of zeroes on its currency.

  14. Yeah, this has been tried. Repeatedly.

    It fails pretty badly.

    I remember reading, years ago, that at the very end of its massive hyperinflation, every single piece of currency in circulation in Hungary, combined, was worth one penny US.

  15. Chile abandoned the socialist experiment in 1973

    That’s an interesting definition of “abandoned” you have there.

    1. It was tossed out of a helicopter.

  16. Venezeula has achieved the socialist dream. Destroying the utility of money as a store of value and useful economic tool.

  17. He’s just showing his solidarity with his friend and ally, Kim Fat Ass, the baby god dictator of the Norks.

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  18. a solution is only temporary, and the financial balance is important, he cannot. I will support you but let the people see the results
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