Caracas Chronicles: During a rambling speech today, Nicolás Maduro declared all Bs.100 banknotes will cease to be legal tender in 72 hours. The reason? To deal a blow to cash-trafficking mafias in Cúcuta, the Czech Republic, Ukraine, Germany, and Brazil that would be too slow or too scared to exchange their old bills for new ones.
This is way-out-there voodoo nonsense. In what world is hoarding the world’s fastest-depreciating banknotes a cunning business decision? Only in Maduro’s bizarre #TropicalMierda imagination.
It’s true that there is a premium on cash money in Venezuela right now. It’s there because the entire stock of physical bills is worth a pathetic $186 million at the black market rate, or $5.91 per capita. This is way less than a functional economy needs.
The cash premium is yet another crippling economic distortion. It exists because the Central Bank refused to issue new, higher-denomination banknotes for an irresponsibly long time. It has nothing to do with the evil mafias of PSUV’s fevered imagination. If there’s anyone out there hoarding/trading cash, it’s a consequence of the cash shortage, not the cause.
Maduro’s statements were all-over-the-map, but he intends to replace the old banknotesquickly to make the cash-mafias go bust. He floated contradictory 72 hour and 10 day timeframes to replace the bills.
Confuse thy enemy! The element of surprise! Brilliant stuff…
I recall a news story from a few months ago stating that Ven doesn’t print additional money because it cannot afford the printing costs.
http://www.zerohedge.com/news/2016-04-27/
http://www.bloomberg.com/news/articles/2016-04-27/venezuela-faces-its-strangest-shortage-yet-as-inflation-explodes
http://www.forbes.com/sites/timworstall/2016/04/28/congratulations-to-bolivarian-socialism-now-venezuela-cannot-afford-to-pay-for-its-own-money/#1927289c4544
Well, at ten Bolivars to the dollar, that’s the equivalent of outlawing $10 bills. However, that’s the official exchange rate. On Nov. 28, a dollar was worth 3,480 bolivars at the widely-used unofficial black market rate. That makes their currency pretty much interchangeable with toilet paper, in my estimation. Hard to see what they expect to achieve with this move.
some folks just plain need killin’. Maduro is a perfect example.
Damn! What am I gonna do with all my bundles of Bolivars and Zimbabwean Dollars, now?
I was planning on outwitting Soros and capturing the market, but … oh, well …
Those, and my Confederate stash may be worth something if I hold on to em …
izlamo delenda est …
The solution to Venezuela’s monetary ills has been found by its cash-strapped socialist ally, Ecuador. Just don’t print money. Instead, use e-money. Ecuador does not have its own currency. It switched to the US Dollar back in 1998. The Correa government overspent, in the same way as Venezuela, but they cannot print currency to compensate for reduced revenues. Correa also has no cash reserves and he sold all the country’s gold and silver to China, to whom it also owes billions of dollars. Not being able to convince even his rubber-stamp congress to dump the dollar and start printing worthless scrip, he created e-money.
Unlike conventional electronic transactions, Ecaudorian e-money has no backing at all — like writing checks on an account with no funds. It was supposed to be restricted to the central bank, but today the regime has demanded that all banks allow e-money accounts. I don’t think it will take long for Ecuador to be embargoed when it comes to electronic transfers. Physical currency only.
You have to destroy an economy before you can rebuild it into a socialist utopia.
Shit, it took a war to do this in Iraq – good job commies!