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How do people deal with this in real life? I mean, is there a way to safeguard savings in such a scenario, or have enough money for day to day purchases like fo

How do people deal with this in real life? I mean, is there a way to safeguard savings in such a scenario, or have enough money for day to day purchases like food ?

carlmr 8y ago
Safeguard? Only if you have something like Gold or something to barter with. Purchases? You need to barter.
- dajohnson89 8y ago
  i'm curious how common crypto I over there
  - ciupicri 8y ago
    Maduro launched a crypto currency called petro. https://www.theguardian.com/world/2018/feb/19/venezuelas-new-bitcoin-n-ingenious-plan-or-worthless-cryptocurrency https://www.theguardian.com/world/2018/feb/19/venezuelas-new... https://www.reuters.com/article/us-crypto-currencies-venezuela/venezuela-says-launch-of-petro-cryptocurrency-raised-735-million-idUSKCN1G506F https://www.reuters.com/article/us-crypto-currencies-venezue...
  - ingenieros 8y ago
    Maduro's government launched its own cryptocurrency supposedly backed by Venezuela's oil reserves. Google: "petro" if you want to have a good laugh.
  - Max_Mustermann 8y ago
    Some interesting responses from yesterday: https://www.reddit.com/r/vzla/comments/911mu4/do_venezuelans_actually_use_cryptocurrency/ https://www.reddit.com/r/vzla/comments/911mu4/do_venezuelans...
jamesmcm 8y ago
They use dollars. You can only get so many officially though, and it's hard, so the black market is huge but the rates are very high. Some people earn in dollars, I've spoken to a doctor for example, who now works making machine learning training data on several platforms just to earn in dollars (like tagging images, etc. like MechanicalTurk). It's such a waste of potential.
realusername 8y ago
When the inflation is getting out of control, you have a lot of very bad market effects. People start buying whatever they can because nothing depreciate more than money, a car becomes a store of value instead of a depreciating asset, thus increasing even further the inflation. That's why it becomes difficult to buy anything in Venezuela, nothing is worth selling because money is less valuable than whatever asset you already have.
- EGreg 8y ago
  Great point! People want to get out of money as soon as they get it. The money velocity essentially approaches infinity as its value drops faster. In this case, I think a new money supply is needed or no one will want to sell anything, as they’d be stuck with a much more depreciatimg asset. I have a simple definition of money that I haven’t seen anywhere else: Money is the most liquid asset in an economy. What would that be in Venezuela at the moment? Rice?
  - realusername 8y ago
    > In this case, I think a new money supply is needed or no one will want to sell anything, as they’d be stuck with a much more depreciatimg asset. Yes indeed, that's exactly how they solved this issue in Brazil: https://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil https://www.npr.org/sections/money/2010/10/04/130329523/how-...
    - isolli 8y ago
      Similar approaches were used during the French revolution [0], after the American revolution [1], and by the Nazis before the war [2]. [0] https://en.wikipedia.org/wiki/Assignat https://en.wikipedia.org/wiki/Assignat [1] https://en.wikipedia.org/wiki/Early_American_currency#Continental_currency https://en.wikipedia.org/wiki/Early_American_currency#Contin... [2] https://en.wikipedia.org/wiki/Reichsmark https://en.wikipedia.org/wiki/Reichsmark
  - RugnirViking 8y ago
    People sometimes barter in the short term, but usually end up using another currency. In modern times, it's often dollars.
sebleon 8y ago
Vast majority of people had no safeguards in place, and saw their savings vaporize. This has led to widespread poverty, and reliance on government handouts for survival. There's thousands of people everyday that illegally emigrate on foot to Colombia, Ecuador, Peru, etc. Some people have been able to acquire foreign currency in the black market.
zaarn 8y ago
If it's anything like my grandma told me about what her mom said about how it was back in germany, people will just buy everything they need for a month the moment they get their paycheck. All money that is left over is then used to fire the oven or cover the walls where repairs are needed or even fed to the livestock. The money was essentially worthless within a week, after that it was less useful than the materials it was made of so people used it for that. (Oh and another fun one was always when my grandma tells of the month where the money wans't enough for a month they had to live of their own potatoes exclusively for 2 weeks cutting into their income)
nutjob2 8y ago
They flee. If you earn in the local currency you're toast.
mcjiggerlog 8y ago
If you're lucky enough to be in a position where it's possible, hold other currencies in foreign accounts. For the other 99% of the population, you just can't deal with it. Venezuela is literally a failed state right now. Even well-off people literally cannot afford to buy bread and rice, never mind "luxuries" like medicine. Just to put the 1 million bolivar coffee in perspective - the current monthly minimum wage is just over 5 million bolivars.
- stupidcar 8y ago
  Right, but there are 31m living in Venezuela. Even presuming a couple of million have fled, there's still a lot of people there. If nobody can afford bread and rice, how are coffee shops still operating? The linked video shows people still looking reasonably well fed and well clothed and walking around. Shouldn't they be literally lying in the streets starving? We often read about these cases of runaway inflation and market collapse, and from the way they're described, it seems logical that the result would be completely antithetical to human survival. And yet, somehow, these societies do seem to stagger along. The question is: how? What is the day-to-day reality for people in these places? How do they get the food and water necessary to stay alive?
  - mcjiggerlog 8y ago
    Venezuelans lost on average 11kg (25lbs) in 2017 and 90% of the population is now living in poverty [1]. Also, this report was from when inflation was a measly 1,000%, never mind the current 1,000,000%. People ARE starving. [1] - https://www.reuters.com/article/us-venezuela-food/venezuelans-report-big-weight-losses-in-2017-as-hunger-hits-idUSKCN1G52HA https://www.reuters.com/article/us-venezuela-food/venezuelan...
    - i_made_a_booboo 8y ago
      They locally refer to it as the Maduro Diet
  - woodandsteel 8y ago
    The linked video shows people still looking reasonably well fed and well clothed and walking around. My guess is they are people with government connections that allow them to buy dollars at a discounted price and then sell them for a huge profit.Or just pay directly in dollars. In any case, the government has the security forces and a huge civilian militia, so it won't starve, no matter what is happening to anyone else.
rm_-rf_slash 8y ago
I can’t find the opinion piece from WaPo I posted here a few months ago, but basically the author had said that in hyperinflation, it’s not that things get more expensive, but that money breaks down. He used an example of buying a can of tuna as soon as you get paid. If you wait you won’t be able to afford that tuna with the same paycheck again and even if you don’t want the tuna now you may need it later, or it could be more useful for bartering than cash. Basically you get rid of your cash in favor of tangible goods ASAP at every opportunity.
isolli 8y ago
Talking to people in Argentina in 2015, I realized that 40% inflation also brings many headaches that we are not used to with a 2% rate.
zorked 8y ago
I grew up in Brazil in the 80's. There was hyper inflation, though not quite up to the 1M percent level that Venezuela is facing. (1M percent is a collapse, something else entirely) Coping mechanisms: - Money in saving accounts gets instantly shifted into more stable financial assets so the "returns" are approximately the inflation rate. - Banks get really good at working fast. We had same-day nation-wide cross-bank settlement of checks. - "Proxy" stable semi-currencies are used. The government would post several daily indexes like UFIR, TR, which could be used to refer to approximately stable values over a period of time. (one of those indexes, URV, eventually became the currency that is used today.) - Products don't have prices stamped on them. For example, monthly magazines would have alphabetic codes that could be converted to their actual cost by looking at a table which was updated every few days. (You can see the remains of this system in used book stores where books are sometimes still stamped with small zodiac signs, though the tables are no longer updated) The basic flow of life is: get paid, _immediately move money to a bank account or you are dead_, get used to the idea that value denominations increment over time. In practice you are constantly thinking in terms of indexes rather than the "real" monetary value.
- toadworrier 8y ago
  > _immediately move money to a bank account or you are dead_ So the "bank account" you are refering to is (or is a practically automatic gateway too) one of those "more stable financial assets" you mention above. The fact that the banks can be trusted to do that is a sign of some kind of orderliness. I wonder if such an option exists in Venezuela right now.
  - zorked 8y ago
    Oh, for sure. Inflation was the result of the government failing to manage its debt. Institutions, businesses and the law still existed. Even the mechanisms for coping with hyperinflation were market innovations (like incredibly fast banking in a gigantic third world country in the 80s, or the financial instruments backing savings accounts). I'm not sure that Venezuela has any of that at the moment.
- flycaliguy 8y ago
tootahe45 8y ago
A ton of them play Oldschool Runescape where they can either do a repetitive task at around 25c usd worth of gold per hour (can do it on 2-3 accounts simultaneously)then sell it at the end of the day for btc/usd. The type of account required for that would take 1 month to create and about $17 usd in membership/items. Others offer services like training your account up. As to how they spend it who knows. I donated my account to one when i quit, it has the levels to make $2 usd per hour.

How do people deal with this in real life? I mean, is there a way to safeguard savings in such a scenario, or have enough money for day to day purchases like food ?

carlmr 8y ago

Safeguard? Only if you have something like Gold or something to barter with. Purchases? You need to barter.

dajohnson89 8y ago
i'm curious how common crypto I over there
- ciupicri 8y ago
  Maduro launched a crypto currency called petro. https://www.theguardian.com/world/2018/feb/19/venezuelas-new-bitcoin-n-ingenious-plan-or-worthless-cryptocurrency https://www.theguardian.com/world/2018/feb/19/venezuelas-new... https://www.reuters.com/article/us-crypto-currencies-venezuela/venezuela-says-launch-of-petro-cryptocurrency-raised-735-million-idUSKCN1G506F https://www.reuters.com/article/us-crypto-currencies-venezue...
- ingenieros 8y ago
  Maduro's government launched its own cryptocurrency supposedly backed by Venezuela's oil reserves. Google: "petro" if you want to have a good laugh.
- Max_Mustermann 8y ago
  Some interesting responses from yesterday: https://www.reddit.com/r/vzla/comments/911mu4/do_venezuelans_actually_use_cryptocurrency/ https://www.reddit.com/r/vzla/comments/911mu4/do_venezuelans...

jamesmcm 8y ago

They use dollars. You can only get so many officially though, and it's hard, so the black market is huge but the rates are very high. Some people earn in dollars, I've spoken to a doctor for example, who now works making machine learning training data on several platforms just to earn in dollars (like tagging images, etc. like MechanicalTurk). It's such a waste of potential.

realusername 8y ago

When the inflation is getting out of control, you have a lot of very bad market effects. People start buying whatever they can because nothing depreciate more than money, a car becomes a store of value instead of a depreciating asset, thus increasing even further the inflation. That's why it becomes difficult to buy anything in Venezuela, nothing is worth selling because money is less valuable than whatever asset you already have.

EGreg 8y ago
Great point! People want to get out of money as soon as they get it. The money velocity essentially approaches infinity as its value drops faster. In this case, I think a new money supply is needed or no one will want to sell anything, as they’d be stuck with a much more depreciatimg asset. I have a simple definition of money that I haven’t seen anywhere else: Money is the most liquid asset in an economy. What would that be in Venezuela at the moment? Rice?
- realusername 8y ago
  > In this case, I think a new money supply is needed or no one will want to sell anything, as they’d be stuck with a much more depreciatimg asset. Yes indeed, that's exactly how they solved this issue in Brazil: https://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil https://www.npr.org/sections/money/2010/10/04/130329523/how-...
  - isolli 8y ago
    Similar approaches were used during the French revolution [0], after the American revolution [1], and by the Nazis before the war [2]. [0] https://en.wikipedia.org/wiki/Assignat https://en.wikipedia.org/wiki/Assignat [1] https://en.wikipedia.org/wiki/Early_American_currency#Continental_currency https://en.wikipedia.org/wiki/Early_American_currency#Contin... [2] https://en.wikipedia.org/wiki/Reichsmark https://en.wikipedia.org/wiki/Reichsmark
- RugnirViking 8y ago
  People sometimes barter in the short term, but usually end up using another currency. In modern times, it's often dollars.

sebleon 8y ago

Vast majority of people had no safeguards in place, and saw their savings vaporize. This has led to widespread poverty, and reliance on government handouts for survival. There's thousands of people everyday that illegally emigrate on foot to Colombia, Ecuador, Peru, etc. Some people have been able to acquire foreign currency in the black market.

zaarn 8y ago

If it's anything like my grandma told me about what her mom said about how it was back in germany, people will just buy everything they need for a month the moment they get their paycheck. All money that is left over is then used to fire the oven or cover the walls where repairs are needed or even fed to the livestock. The money was essentially worthless within a week, after that it was less useful than the materials it was made of so people used it for that. (Oh and another fun one was always when my grandma tells of the month where the money wans't enough for a month they had to live of their own potatoes exclusively for 2 weeks cutting into their income)

nutjob2 8y ago

They flee. If you earn in the local currency you're toast.

mcjiggerlog 8y ago

If you're lucky enough to be in a position where it's possible, hold other currencies in foreign accounts. For the other 99% of the population, you just can't deal with it. Venezuela is literally a failed state right now. Even well-off people literally cannot afford to buy bread and rice, never mind "luxuries" like medicine. Just to put the 1 million bolivar coffee in perspective - the current monthly minimum wage is just over 5 million bolivars.

stupidcar 8y ago
Right, but there are 31m living in Venezuela. Even presuming a couple of million have fled, there's still a lot of people there. If nobody can afford bread and rice, how are coffee shops still operating? The linked video shows people still looking reasonably well fed and well clothed and walking around. Shouldn't they be literally lying in the streets starving? We often read about these cases of runaway inflation and market collapse, and from the way they're described, it seems logical that the result would be completely antithetical to human survival. And yet, somehow, these societies do seem to stagger along. The question is: how? What is the day-to-day reality for people in these places? How do they get the food and water necessary to stay alive?
- mcjiggerlog 8y ago
  Venezuelans lost on average 11kg (25lbs) in 2017 and 90% of the population is now living in poverty [1]. Also, this report was from when inflation was a measly 1,000%, never mind the current 1,000,000%. People ARE starving. [1] - https://www.reuters.com/article/us-venezuela-food/venezuelans-report-big-weight-losses-in-2017-as-hunger-hits-idUSKCN1G52HA https://www.reuters.com/article/us-venezuela-food/venezuelan...
  - i_made_a_booboo 8y ago
    They locally refer to it as the Maduro Diet
- woodandsteel 8y ago
  The linked video shows people still looking reasonably well fed and well clothed and walking around. My guess is they are people with government connections that allow them to buy dollars at a discounted price and then sell them for a huge profit.Or just pay directly in dollars. In any case, the government has the security forces and a huge civilian militia, so it won't starve, no matter what is happening to anyone else.

rm_-rf_slash 8y ago

I can’t find the opinion piece from WaPo I posted here a few months ago, but basically the author had said that in hyperinflation, it’s not that things get more expensive, but that money breaks down. He used an example of buying a can of tuna as soon as you get paid. If you wait you won’t be able to afford that tuna with the same paycheck again and even if you don’t want the tuna now you may need it later, or it could be more useful for bartering than cash. Basically you get rid of your cash in favor of tangible goods ASAP at every opportunity.

isolli 8y ago

Talking to people in Argentina in 2015, I realized that 40% inflation also brings many headaches that we are not used to with a 2% rate.

zorked 8y ago

I grew up in Brazil in the 80's. There was hyper inflation, though not quite up to the 1M percent level that Venezuela is facing. (1M percent is a collapse, something else entirely) Coping mechanisms: - Money in saving accounts gets instantly shifted into more stable financial assets so the "returns" are approximately the inflation rate. - Banks get really good at working fast. We had same-day nation-wide cross-bank settlement of checks. - "Proxy" stable semi-currencies are used. The government would post several daily indexes like UFIR, TR, which could be used to refer to approximately stable values over a period of time. (one of those indexes, URV, eventually became the currency that is used today.) - Products don't have prices stamped on them. For example, monthly magazines would have alphabetic codes that could be converted to their actual cost by looking at a table which was updated every few days. (You can see the remains of this system in used book stores where books are sometimes still stamped with small zodiac signs, though the tables are no longer updated) The basic flow of life is: get paid, _immediately move money to a bank account or you are dead_, get used to the idea that value denominations increment over time. In practice you are constantly thinking in terms of indexes rather than the "real" monetary value.

toadworrier 8y ago
> _immediately move money to a bank account or you are dead_ So the "bank account" you are refering to is (or is a practically automatic gateway too) one of those "more stable financial assets" you mention above. The fact that the banks can be trusted to do that is a sign of some kind of orderliness. I wonder if such an option exists in Venezuela right now.
- zorked 8y ago
  Oh, for sure. Inflation was the result of the government failing to manage its debt. Institutions, businesses and the law still existed. Even the mechanisms for coping with hyperinflation were market innovations (like incredibly fast banking in a gigantic third world country in the 80s, or the financial instruments backing savings accounts). I'm not sure that Venezuela has any of that at the moment.
flycaliguy 8y ago

tootahe45 8y ago

A ton of them play Oldschool Runescape where they can either do a repetitive task at around 25c usd worth of gold per hour (can do it on 2-3 accounts simultaneously)then sell it at the end of the day for btc/usd. The type of account required for that would take 1 month to create and about $17 usd in membership/items. Others offer services like training your account up. As to how they spend it who knows. I donated my account to one when i quit, it has the levels to make $2 usd per hour.