6 ms·

Does anyone know who produced the bills? Last time they were printed by one British, one French and one German company. As there have been rumors Venezuela didn

Does anyone know who produced the bills? Last time they were printed by one British, one French and one German company. As there have been rumors Venezuela didn't pay up last time, are those the same companies this time? (Not many companies can print those in the amount needed)

johansch 10y ago
From last time: http://www.wsj.com/articles/inflation-wrought-venezuela-orders-bank-notes-by-the-planeload-1454538101 http://www.wsj.com/articles/inflation-wrought-venezuela-orde... "Inflation-Racked Venezuela Orders Bank Notes by the Planeload "CARACAS — Millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, ..." "According to the people familiar with the deals, the companies include the U.K.’s De La Rue, the Canadian Bank Note Co., France’s Oberthur Fiduciaire and a subsidiary of Munich-based Giesecke & Devrient, which printed currency in 1920s Weimar Germany, when citizens hauled wheelbarrows of cash to buy bread. More recently, the German technology company was the source of security paper for Zimbabwe when it was stricken in 2008 with a hyperinflation episode in which prices doubled daily. All of the printing firms declined to comment."
- toyg 10y ago
  I wonder at what point these bills stop being literally worth the paper they're printed on. The last thing a country with hyperinflation problems needs, is spiralling costs to buy worthless money. I wonder how much longer the Bolivar can actually exist. I have not seen anyone getting out of hyperinflation without temporarily ditching the currency altogether. If Venezuela eventually ditch the Bolivar and don't want to adopt the hated Yankee dollar, it would be an interesting opportunity for the Euro.
  - jimmywanger 10y ago
    > it would be an interesting opportunity for the Euro. I think Venezuela is much closer politically to China at this point. I could see them moving to the yuan, and that would be a political coup also for Beijing.
    - gnipgnip 10y ago
      That'd be rather unlikely. I mean even Ecuador has adopted USD. Adopting another country's seems completely illogical IMO; I mean, do banks in such countries answer to the Fed. Reserve ?
      - altstar 10y ago
        Nope.
      - jimmywanger 10y ago
        > Adopting another country's seems completely illogical IMO; I mean, do banks in such countries answer to the Fed. Reserve ? Do you know how this works? When you adopt another country's currency, that just means that their money is legal tender in your country. It raises confidence (if you've selected the right currency) that your country's officials in charge of the economy won't do silly things like print more money or devalue your currency. It basically takes away a lot of potential economic tools you have to fix your economy in exchange for instant credibility in that most other foreign businesses will do business with you.
      - mdasen 10y ago
        jimmywanger wrote a good comment, but I kinda wanted to expand on it. In a certain way, it is illogical. There are drawbacks to adopting a foreign currency. You have to have enough trade with the other country to bring in the (in this case) dollars. You lose the ability to cover short-term debts by printing some money that you can take out of circulation a little latter (no harm, no foul). You also lose the ability for benefitting from seigniorage (by printing small amounts of money, you can prevent deflation as the economy expands and increase government purchasing power). By adopting the foreign currency, the foreign government keeps the seigniorage benefits. But when your government is so corrupt that it can't be trusted to manage a stable currency, it can make a lot of sense. Right now, Venezuelans have no reasonable way to conduct commerce. Bolivars lose value so quickly that you never want to invest in enterprises or hold cash. If I have $100 on Jan 1, it's likely worth at least $95 in purchasing power on Dec 31. People expect inflation in Venezuela to be 1,600% next year meaning that $100 on Jan 1 would become $6.25 in purchasing power on Dec 31. People would rather hoard goods than cash - even goods that Americans would see as losing value quite quickly. Cars lose so much value when you drive them off the lot (the adage goes), but that's way better than the amount of value lost in Venezuelan currency over the course of a year. Currency should lose value slower than quickly depreciating goods. When you don't have a stable currency, it's hard to operate economically. In many ways, if you have a good to sell, you don't really want to exchange it for cash until there's something else you want to buy. If there's a week delay between you selling what you own and then you buying the new thing you want, you've lost a lot. By adopting a stable currency like the USD, it would allow them to have a functional economy where people could buy and sell goods and invest in things and make logical choices knowing that the currency has a stable value - rather than running around hoping not to be stuck with notes that are going down in value faster than any good. When your country is so corrupt and incompetent that no one will trust your leaders for many decades to come, it then starts to make sense to adopt a foreign currency. The people then see that they can rely on the currency because the competent US government is in charge of it - and for all we might complain about the US government, it is competent by global and historical standards. It gives people a stable currency that the Venezuelan government can't offer them. Venezuela wouldn't answer to the Fed or get to print notes. They'd just be exporting things like oil to the US, getting USD in return, and then using that USD locally as a stable currency. Someone else mentioned Brazil. Brazil is one of the few places to really combat hyperinflation. The thing is that it's hard. You can't just say, "we're going to be good starting now. . .trust us". People don't trust you yet. It takes years for people to trust that you won't fuck up a currency after years of having the reputation of fucking up currencies. Let's say that Venezuela stops printing money today and acts like a good government. Hyperinflation continues because people don't truly know they have stopped printing money and don't believe the government when it says it has. So when the government needs to pay for goods and services, it suddenly faces very high prices without the printed money to pay for it. Most likely, the inflation will break the government's plan of not printing money since they would have to shut down the government due to lack of funds faster than people would trust that the government had stopped printing money. Brazil overcame the issue by running two simultaneous currencies - one real paper currency that kept inflating and another non-paper currency called the "real" with stable prices. Stores had to denominate their goods in terms of the new "reals" and each day an exchange rate between the paper currency and the "reals" would be published. So, bread would always be, say, 5 reals, but on monday that might be 10 of the paper currency and on friday 11 of the paper currency. Eventually, people trusted that the "real" was stable, the government took the old paper currency out of circulation in exchange for new paper "reals" and people continued to trust it. But it's hard to fight hyperinflation because when you can't measure and guarantee government actions, it's about trust. Trust is something hard to regain after decades of reasons not to trust.
  - cesarb 10y ago
    > I have not seen anyone getting out of hyperinflation without temporarily ditching the currency altogether. Brazil managed to do it, converting directly from the inflating Cruzeiro Real to the more stable Real.
    - ufo 10y ago
      They did temporarily ditch the currency though. There was a transition period where the currency was pegged to the US Dollar.
      - cesarb 10y ago
        No, they didn't. The "peg" was maintained by the Central Bank buying and selling dollars, trying to keep the exchange rate at its target. This graph (http://www.mises.org.br/images/articles/2012/Maio/7.png http://www.mises.org.br/images/articles/2012/Maio/7.png) from http://www.mises.org.br/Article.aspx?id=1294 http://www.mises.org.br/Article.aspx?id=1294 shows the exchange rate. As can be seen in that graph, the exchange rate was never actually fixed during the transition. There was no moment where the currency was the USD.
        ufo 10y ago
        We are not talking about the same thing here. Your graph starts at July 1994, when the Brazilian currency changed into the Real. The central government did try to keep a stable exchange rate with the US dollar as you said, and that lasted until the late 90s, when they were forced to let the exchange rate float due to the asian financial crisis. But I was talking about the Unidade Real de Valor (URV), which as a temporary meta currency introduced during the Plano Real. In 1993 the currency used everyday on the streets was still the old Cruzeiro Real but all prices and contracts were valued in URV, which was pegged to the US dollar. Every day the government released a table with the conversion rate from Cruzeiro Real to URV. In 1994 they finally converted the URV into an actual currency, which is why that graph you posted starts at 1. https://en.wikipedia.org/wiki/Unidade_real_de_valor https://en.wikipedia.org/wiki/Unidade_real_de_valor
  - dghughes 10y ago
    >I wonder at what point these bills stop being literally worth the paper they're printed on. That's easy it's right now and for all notes in all countries since the value of notes is determined by your government.
    - CyberDildonics 10y ago
      Burn a $100 USD note and post a video.
      - dghughes 10y ago
        No need to be testy. I could burn 51% of a US $100 bill and get reimbursed but I don't live in the USA. Fiat money https://en.wikipedia.org/wiki/Fiat_money https://en.wikipedia.org/wiki/Fiat_money * Any money declared by a government to be legal tender * State-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard. * Intrinsically valueless money used as money because of government decree And no before anyone says it I don't belong to the cult of Bitcoin I like the idea but I'm not an evangelist.
  - guard-of-terra 10y ago
    Most of post-Soviet states had hyperinflation. Rouble became ten thousand times less valuable over three years, smaller republics' currencies suffered even more. But they all stabilized without ditching the currency (they slashed a few zeroes off bills later, tho).

johansch 10y ago

From last time: http://www.wsj.com/articles/inflation-wrought-venezuela-orders-bank-notes-by-the-planeload-1454538101 http://www.wsj.com/articles/inflation-wrought-venezuela-orde... "Inflation-Racked Venezuela Orders Bank Notes by the Planeload "CARACAS — Millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, ..." "According to the people familiar with the deals, the companies include the U.K.’s De La Rue, the Canadian Bank Note Co., France’s Oberthur Fiduciaire and a subsidiary of Munich-based Giesecke & Devrient, which printed currency in 1920s Weimar Germany, when citizens hauled wheelbarrows of cash to buy bread. More recently, the German technology company was the source of security paper for Zimbabwe when it was stricken in 2008 with a hyperinflation episode in which prices doubled daily. All of the printing firms declined to comment."

toyg 10y ago
I wonder at what point these bills stop being literally worth the paper they're printed on. The last thing a country with hyperinflation problems needs, is spiralling costs to buy worthless money. I wonder how much longer the Bolivar can actually exist. I have not seen anyone getting out of hyperinflation without temporarily ditching the currency altogether. If Venezuela eventually ditch the Bolivar and don't want to adopt the hated Yankee dollar, it would be an interesting opportunity for the Euro.
- jimmywanger 10y ago
  > it would be an interesting opportunity for the Euro. I think Venezuela is much closer politically to China at this point. I could see them moving to the yuan, and that would be a political coup also for Beijing.
  - gnipgnip 10y ago
    That'd be rather unlikely. I mean even Ecuador has adopted USD. Adopting another country's seems completely illogical IMO; I mean, do banks in such countries answer to the Fed. Reserve ?
    - altstar 10y ago
      Nope.
    - jimmywanger 10y ago
      > Adopting another country's seems completely illogical IMO; I mean, do banks in such countries answer to the Fed. Reserve ? Do you know how this works? When you adopt another country's currency, that just means that their money is legal tender in your country. It raises confidence (if you've selected the right currency) that your country's officials in charge of the economy won't do silly things like print more money or devalue your currency. It basically takes away a lot of potential economic tools you have to fix your economy in exchange for instant credibility in that most other foreign businesses will do business with you.
    - mdasen 10y ago
      jimmywanger wrote a good comment, but I kinda wanted to expand on it. In a certain way, it is illogical. There are drawbacks to adopting a foreign currency. You have to have enough trade with the other country to bring in the (in this case) dollars. You lose the ability to cover short-term debts by printing some money that you can take out of circulation a little latter (no harm, no foul). You also lose the ability for benefitting from seigniorage (by printing small amounts of money, you can prevent deflation as the economy expands and increase government purchasing power). By adopting the foreign currency, the foreign government keeps the seigniorage benefits. But when your government is so corrupt that it can't be trusted to manage a stable currency, it can make a lot of sense. Right now, Venezuelans have no reasonable way to conduct commerce. Bolivars lose value so quickly that you never want to invest in enterprises or hold cash. If I have $100 on Jan 1, it's likely worth at least $95 in purchasing power on Dec 31. People expect inflation in Venezuela to be 1,600% next year meaning that $100 on Jan 1 would become $6.25 in purchasing power on Dec 31. People would rather hoard goods than cash - even goods that Americans would see as losing value quite quickly. Cars lose so much value when you drive them off the lot (the adage goes), but that's way better than the amount of value lost in Venezuelan currency over the course of a year. Currency should lose value slower than quickly depreciating goods. When you don't have a stable currency, it's hard to operate economically. In many ways, if you have a good to sell, you don't really want to exchange it for cash until there's something else you want to buy. If there's a week delay between you selling what you own and then you buying the new thing you want, you've lost a lot. By adopting a stable currency like the USD, it would allow them to have a functional economy where people could buy and sell goods and invest in things and make logical choices knowing that the currency has a stable value - rather than running around hoping not to be stuck with notes that are going down in value faster than any good. When your country is so corrupt and incompetent that no one will trust your leaders for many decades to come, it then starts to make sense to adopt a foreign currency. The people then see that they can rely on the currency because the competent US government is in charge of it - and for all we might complain about the US government, it is competent by global and historical standards. It gives people a stable currency that the Venezuelan government can't offer them. Venezuela wouldn't answer to the Fed or get to print notes. They'd just be exporting things like oil to the US, getting USD in return, and then using that USD locally as a stable currency. Someone else mentioned Brazil. Brazil is one of the few places to really combat hyperinflation. The thing is that it's hard. You can't just say, "we're going to be good starting now. . .trust us". People don't trust you yet. It takes years for people to trust that you won't fuck up a currency after years of having the reputation of fucking up currencies. Let's say that Venezuela stops printing money today and acts like a good government. Hyperinflation continues because people don't truly know they have stopped printing money and don't believe the government when it says it has. So when the government needs to pay for goods and services, it suddenly faces very high prices without the printed money to pay for it. Most likely, the inflation will break the government's plan of not printing money since they would have to shut down the government due to lack of funds faster than people would trust that the government had stopped printing money. Brazil overcame the issue by running two simultaneous currencies - one real paper currency that kept inflating and another non-paper currency called the "real" with stable prices. Stores had to denominate their goods in terms of the new "reals" and each day an exchange rate between the paper currency and the "reals" would be published. So, bread would always be, say, 5 reals, but on monday that might be 10 of the paper currency and on friday 11 of the paper currency. Eventually, people trusted that the "real" was stable, the government took the old paper currency out of circulation in exchange for new paper "reals" and people continued to trust it. But it's hard to fight hyperinflation because when you can't measure and guarantee government actions, it's about trust. Trust is something hard to regain after decades of reasons not to trust.
- cesarb 10y ago
  > I have not seen anyone getting out of hyperinflation without temporarily ditching the currency altogether. Brazil managed to do it, converting directly from the inflating Cruzeiro Real to the more stable Real.
  - ufo 10y ago
    They did temporarily ditch the currency though. There was a transition period where the currency was pegged to the US Dollar.
    - cesarb 10y ago
      No, they didn't. The "peg" was maintained by the Central Bank buying and selling dollars, trying to keep the exchange rate at its target. This graph (http://www.mises.org.br/images/articles/2012/Maio/7.png http://www.mises.org.br/images/articles/2012/Maio/7.png) from http://www.mises.org.br/Article.aspx?id=1294 http://www.mises.org.br/Article.aspx?id=1294 shows the exchange rate. As can be seen in that graph, the exchange rate was never actually fixed during the transition. There was no moment where the currency was the USD.
      - ufo 10y ago
        We are not talking about the same thing here. Your graph starts at July 1994, when the Brazilian currency changed into the Real. The central government did try to keep a stable exchange rate with the US dollar as you said, and that lasted until the late 90s, when they were forced to let the exchange rate float due to the asian financial crisis. But I was talking about the Unidade Real de Valor (URV), which as a temporary meta currency introduced during the Plano Real. In 1993 the currency used everyday on the streets was still the old Cruzeiro Real but all prices and contracts were valued in URV, which was pegged to the US dollar. Every day the government released a table with the conversion rate from Cruzeiro Real to URV. In 1994 they finally converted the URV into an actual currency, which is why that graph you posted starts at 1. https://en.wikipedia.org/wiki/Unidade_real_de_valor https://en.wikipedia.org/wiki/Unidade_real_de_valor
- dghughes 10y ago
  >I wonder at what point these bills stop being literally worth the paper they're printed on. That's easy it's right now and for all notes in all countries since the value of notes is determined by your government.
  - CyberDildonics 10y ago
    Burn a $100 USD note and post a video.
    - dghughes 10y ago
      No need to be testy. I could burn 51% of a US $100 bill and get reimbursed but I don't live in the USA. Fiat money https://en.wikipedia.org/wiki/Fiat_money https://en.wikipedia.org/wiki/Fiat_money * Any money declared by a government to be legal tender * State-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard. * Intrinsically valueless money used as money because of government decree And no before anyone says it I don't belong to the cult of Bitcoin I like the idea but I'm not an evangelist.
- guard-of-terra 10y ago
  Most of post-Soviet states had hyperinflation. Rouble became ten thousand times less valuable over three years, smaller republics' currencies suffered even more. But they all stabilized without ditching the currency (they slashed a few zeroes off bills later, tho).