18 ms·

Hyperinflation Pushes Venezuela to Print 1M-Bolivar Bills

75 points by wrycoder 6y ago

christophilus 6y ago
Paywall. Some DOM Hackery got me the content. Venezuela said it will introduce new large-denomination bolivar notes as hyperinflation renders most bills worthless, forcing citizens to turn to the U.S. dollar for everyday transactions. The country’s central bank posted a statement on its website Friday saying it would begin circulating the new 200,000, 500,000 and 1,000,000 bills to “fulfill the current economy’s requirements” without providing further details. The 1,000,000 note -- the largest in the nation’s history -- is worth only $0.53 cents. As Venezuela’s economy shrank for a seventh straight year in 2020, the government turned a blind eye to a growing number of dollar transactions, kick-started by rolling power outages that prevented credit and debit card purchases and fostered the use of cash. About 66% of transactions across the country are estimated to be made in foreign currency, according to Ecoanalitica. While the dollar has gained ground, Venezuelans continue to rely on bolivar bills for public transportation and to purchase subsidized fuel. The Caracas subway recently issued an electronic payment system after it routinely stopped charging passengers due to cash shortages. President Nicolas Maduro has said he plans to move to a fully digital economy this year, following three years of hyperinflation that have prompted the nation’s mint to issue higher-denomination notes that are quickly rendered all but useless. Inflation soared 3,000% in the last 12 months, according to Bloomberg News’s Cafe con Leche Index. In October, Venezuela imported banknote paper with plans to issue a 100,000 bill that quickly became outdated. It last issued new bills in 2019, after chopping five zeros of the previous bills in circulation in 2018.
- ruuda 6y ago
  With javascript turned off, there was no paywall.
daenz 6y ago
I don't understand hyperinflation. Doesn't it become obvious that you should stop printing money when the cost of printing the money is higher than the value printed on the notes?
- samuel 6y ago
  But then the government has to default, hasn't it?
- nradov 6y ago
  You are assuming a basic level of competence which doesn't exist in the Venezuelan government.
- ZoomerCretin 6y ago
  If you’re a dictator looking to hold on to power, and you have no ability to borrow money (can’t pay in bolivar because it quickly becomes worthless, can’t pay in foreign currency because your inflation rate effectively makes the loan’s interest rate high), why not print? It may not help your citizens, but you can keep your army fed enough to stay on your side.
  - opnitro 6y ago
    Additionally in the Venezuelan case, their ability to borrow money is also hampered by sanctions.
    - dmingod666 6y ago
      Ofcourse, the countries placing sanctions are never to blame.. Take North Korea for example.. I like to imagine this is how it plays out in the people heads: "like, it's so sad that the people there suffer.. our hearts go out to them.. should we lift sanctions..? Hell no, let them burn to the ground, let them realize who they're messing with.."
  - croes 6y ago
    Has nothing to do with being dictator. If you can't borrow money you have to print it.
    - maneesh 6y ago
      Not many classes of people other than a dictator are able to print fiat currency unilaterally though
KDJohnBrown 6y ago
Essentially Texans stay fat by lobbying to starve Venezuelans.
- KDJohnBrown 6y ago
  -5 points. I forget, it is forbidden here to point out when imperialism causes suffering. Yes it is more politically correct to blame socialism than it is to blame America’s sanctions on Venezuelan oil. So much for free market capitalism?
  - JumpCrisscross 6y ago
    > to blame socialism than it is to blame America’s sanctions on Venezuelan oil Bolivar hyperinflation pre-dates U.S. sanctions [1]. (It also pre-dates Chavez and Madura, though not to its recent degree.) The sanctions don’t help. But China, and to a lesser degree Russia, were for a long time willing to run the sanctions [2]. Even they gave up on Caracas after Maduro’s incompetence led to falling oil production. [1] https://en.m.wikipedia.org/wiki/Hyperinflation_in_Venezuela https://en.m.wikipedia.org/wiki/Hyperinflation_in_Venezuela [2] https://www.reuters.com/article/us-venezuela-oil-deals-specialreport-idUSKBN23J1N1 https://www.reuters.com/article/us-venezuela-oil-deals-speci...
  - bradleyjg 6y ago
    America is one country that has less than a quarter of global gdp. Every country in the world needs oil products and plenty of them don’t care about US sanctions. Venezuela killed the goose that laid the golden eggs by not only nationalizing the oil industry, including Petrobras’ which isn’t exactly a manifestation of American imperialism, but staffing the seized operations with corrupt cronies instead of people that knew anything about the oil industry.
  - leereeves 6y ago
    Maybe blame Venezuela's failure to develop an economy beyond selling oil?
  - lucian1900 6y ago
    HN’s politics tend to range from neoliberal to (crypto)fascist. You’re more likely to get downvoted for criticising imperialism than for praising Milton Friedman or Pinochet. It’s not surprising considering the class composition and overall material position of its audience.
cybert00th 6y ago
Coming to a US state near you too
- christophilus 6y ago
  I'm way over exposed to the US dollar, so I probably should hedge more than I do, but I don't think we'll see this level of inflation in a long while. The dollar is still king, as this article demonstrates. When the world flees to safety, the dollar is almost always the currency it flees into. That said, I really don't know how this current US money-printing episode ends. It's hard to imagine it ends well. I've been DCAing into PSLV, PHYS, and SPPP as a kind of hedge. I'm curious what others are doing?
  - dmingod666 6y ago
    Gold as insurance, if money becomes paper, gold will give you some breathing space..
    - leesalminen 6y ago
      You can't eat gold, can't burn it for heat, nor drink it, nor smoke it. I've always wondered in a global Weimar-type scenario what gold would do for you? It will probably help in 5-10 years as things calm down but it's going to be a bumpy ride for a while and shiny pieces of metal aren't going to keep you alive. Why would anyone trade gold for food when their family is hungry, too?
      - syntaxing 6y ago
        I would guess its not total societal collapse but economical collapse. No matter what, humans must interact and commerce will exist. It’s usually in forms of bartering when the financial system is in crisis and physical gold historically, has been the best medium for bartering.
        ineedasername 6y ago
mlthoughts2018 6y ago
But bitcoin is just a scam of course.
- christophilus 6y ago
  You're downvoted, but I think this is a fair point. If I were in a banana republic, I'd rather have bitcoin than my government's fiat. I'd rather have silver / gold than either, though, or at least some combination of all the above.
  - meowfly 6y ago
    I'm skeptical of crypto but the strongest case certainly seems to be for funding illegal activities and capital flight. If you had to flee your country gold/silver will be far more trouble than BTC.
    - capableweb 6y ago
      > strongest case certainly seems to be for funding illegal activities and capital flight A currency with built-in functionality to track everything, forever and making that data public seems to be good for funding illegal activities? I would like to think just cash in various currencies would be the best for that. Washing cash is not exactly a new thing and sometimes boring technology is best.
      - mannerheim 6y ago
        There are cryptocurrencies with anonymity features (e.g., Monero, Zcash), but I recall reading that users often leak information.
      - meowfly 6y ago
        I should have said "engage in illegal activities" to be more precise. If I wanted to, right now, buy drugs online, engage in illegal online gambling, ransom someone's data, etc it will most likely be done in BTC or maybe Monero.
  - 6y ago
fbn79 6y ago
If crypto has not came out as mainstream for everyday transaction s in this scenario doubt will ever happen
- ZoomerCretin 6y ago
  To be fair, electricity is unreliable there.
  - maxerickson 6y ago
    In addition to operational difficulties, there's a bootstrap problem. You can't pay with with a currency you don't have any of.
    - lucb1e 6y ago
      Why would that be, they can just buy it like anyone else? Buy it for today's exchange rates, hold it for how long you want, and convert then it back to pay the local bakery at any future date. (Just like if they'd buy Euros or USD, I should add. Not as if this is a good reason for Bitcoin to continue existing.)
      - maxerickson 6y ago
        Buy it from who? Is there someone with a big pile of bitcoin (or whichever) and a huge desire for worthless paper?
        kemonocode 6y ago
        You'd be selling crypto at a very beneficial rate for you and if you need to make sizable transactions in "worthless paper" within a fast enough timeframe anyway, it works out.
        maxerickson 6y ago
        Right, but some transactions being plausible is a different scenario than bootstrapping widespread use.
fallingfrog 6y ago
Generally this kind of inflation happens when a country has extensive debts that must be repaid in a foreign currency. When a country owes debts that must be repaid in its own currency, printing more money reduces the debt and makes it easier to repay. But when the debt is in a foreign currency, printing more money makes it harder to repay, leading to a vicious cycle. That’s what’s going on here. Same as in Weimar Germany. Except we are making the problem much, much worse through sanctions which harm a lot of vulnerable people, including many children. https://www.google.com/amp/s/markets.businessinsider.com/amp/news/venezuela-debt-explodes-to-156-billion-report-2019-3-1028013380 https://www.google.com/amp/s/markets.businessinsider.com/amp...
- legitster 6y ago
  This is MMT nonsense. There's no magical hack that makes printing too much money harmless.
  - fallingfrog 6y ago
    I never said there was, I just said that hyperinflation always (as far as I know) is related to external debts in an external currency. Printing money does cause inflation, proportional to the amount printed. But hyper inflation is caused by money printing to pay external debts.
    - legitster 6y ago
      That is 100% Stephanie Kelton's core assertion in MMT. But it's not not widely supported amongst economists. In Venezuela's case, they haven't even been paying their debt, so it's hard to make the case that it matters here.
- insert_coin 6y ago
  This is what happens when you destroy a productive economy through price fixing, extreme taxation, and extreme redistribution policies which then leave you with no other choice but predatory loans on international markets that of course you cannot repay because you’ve destroyed your economy.
syntaxing 6y ago
Does anyone know if crypto is useful in Venezuela? Essentially, is it a terrible idea to hedge that crypto is better or as good as gold during crisis? I just want to put a safety nest somewhere so my family doesn’t starve when the time comes.
- mannerheim 6y ago
  Supposedly it's being used according to a few articles I've seen, but I've heard the electricity there isn't reliable.
- capableweb 6y ago
  There seems to be trading happening P2P (human-to-human) in Venezuela at least, so one could assume it has at least marginal usefulness. Here is some published data: https://observablehq.com/@coindesk-research/localbitcoins-paxful-activity-map https://observablehq.com/@coindesk-research/localbitcoins-pa...
- aww_dang 6y ago
  https://twitter.com/FundacionNanoVE https://twitter.com/FundacionNanoVE https://nano.org.ve/ https://nano.org.ve/ There is a strong Venezuelan presence in the Nano community. Gold vs. cryptocurrency is somewhat controversial. Gold is stable and has a long history of value. Cryptocurrencies are volatile and speculative in comparison. Gold is secure, but a private key or seed is easier to cross borders with. Both have their advantages. Be wary of absolutists.
- spoonjim 6y ago
  If you don’t want your family to starve in a crisis, invest in non-perishable food.
  - gruez 6y ago
    Food expires, is bulky, and is vulnerable to being stolen (or expropriated) if you have a large hoard
    - 6y ago
snigacookie 6y ago
I can't access this article. Is there another way?
- christophilus 6y ago
  See my other comment (the one that talks about DOM hackery). It's got the full content in it.
chiph 6y ago
Several years ago I bought a couple of the $100 Trillion Zimbabwe bills off eBay and got them framed as a gift for my banker brother-in-law. The owner of the frame shop was concerned about having money of that denomination on the premises, but I pointed out that I was going to pay him more for the frame than the bills were worth.
neonate 6y ago
https://archive.is/GSVyf https://archive.is/GSVyf
legitster 6y ago
Before people rush to defend Venezuela's honor or whatever, government officials aren't even blaming foreign debt or sanctions (which would have been terrible excuses anyway). They've repeatedly reprimanded businesses for raising prices or increasing pay, and have already tried passing weird consumer laws to try to curb prices. These are 19th century understandings of inflation - it's pretty clear that either the powers in charge reject reality or frankly don't care enough about their citizens to even lie believably.
- everybodyknows 6y ago
  >19th-century understanding They are a late 20-century understanding of inflation, if we take as our pragmatic yardstick actions by the chief executive of the world’s most powerful state: https://www.econlib.org/archives/2016/12/nixons_wage_and.html https://www.econlib.org/archives/2016/12/nixons_wage_and.htm... Edit: >lie believably Thing is, the lies are believed, by many. From link above, Nixon’s Treasury Secretary: >Connally [August 12, 1971]: ”To the average person in this country this wage and price freeze–to him means you mean business. You’re gonna stop this inflation. You’re gonna try to get control of this economy. ...
- cheaprentalyeti 6y ago
  You say 19th century as if most 19th century people didn't understand inflation. They did, they just couldn't win an actual argument with the people causing the inflation. Just like the 21st century in Venezuela. Oh, and a quick followup: I don't think most Venezuelans have been actually voting for this system since 2005 or so, and those that do have basically been blackmailed into it.
- orwin 6y ago
  Hyperinflation has always been caused by a deficit of production. The 1rst cause of this is the reapeated lack of investment in productive industries. I'm not talking about services here, i'm talking about energy production and farming mainly. A drop in production always create inflation, printing money often create some inflation. Printing money while your production drop? Yeah, bad recipe.
girishso 6y ago
Can someone ELI5 why this hyperinflation happened?
- fallingfrog 6y ago
  It’s because Venezuela has external debts, which must be repaid in an external currency. Printing money as a way of paying those debts is ill advised, because since the debts are in an external currency, they become harder and harder to pay. But Venezuela appears to be doing just that, probably out of desperation. They could just default, but they have refused to do so, perhaps because they are worried about even more sanctions or a possible coup. Edit: they are in default on many of those debts, and that’s why the sanctions happened, which caused further damage. And we already tried to coup them. And now confidence in the currency has been lost, causing the death spiral to accelerate. Sorry, had my timeline wrong
  - marcosdumay 6y ago
    Hum... The main use of government money (fresh printed or not) is internal spending. That's true basically everywhere.
    - fallingfrog 6y ago
      That’s silly, their debt payments could be less than 50% of the total government budget and still cause problems.
    - chiph 6y ago
      Generally yes. But if you're a world reserve currency like the US Dollar or the Euro, then a lot of the bills are used outside your borders. In places like Cambodia, it can become an unofficial second national currency. https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar https://en.wikipedia.org/wiki/International_use_of_the_U.S._...
  - legitster 6y ago
    Even if this explanation is correct (fraught), the idea that the value of your currency is entirely out of your hands is really bad. There have been indebted countries with no trading partners being bombed on all sides that have managed to have a stable currency.
Context_free 6y ago
The US is imposing not just US sanctions but a blockade on Venezuela, with one goal to block Covid vaccines from coming in (unless Venezuela bows down to a list of US demands). The US, UK etc. have pilfered Venezuelan money deposited in US and UK banks, also removing funds for vaccine purchase. It's akin to what the US did to Iraq in the 1990s (prior to the two invasions and current occupation of that country). https://venezuelanalysis.com/news/15086 https://venezuelanalysis.com/news/15086
- notahacker 6y ago
  The UK sanctions are against 36 named individuals. If Venezuela is claiming the army chief's personal offshore bank account being frozen is stopping them accessing funds for public healthcare, the problems with its economy obviously start at home...
  - Context_free 6y ago
    When the money was frozen, UK PM Boris Johnson said "we may have to tighten the economic screw on Venezuela". So the Prime Minister of the UK seems to have a different opinion on this.
    - notahacker 6y ago
      Did he mean (a) let's pressurise the Venezuelan government to step down by freezing the personal wealth they've chosen to stash overseas or (b) let's deprive their health service of funds, which are obviously in the UK, for very normal reasons? Well we could always look at the names of the 36 people sanctioned...
deleted 6y ago
[deleted]

75 points by wrycoder 6y ago

Paywall. Some DOM Hackery got me the content. Venezuela said it will introduce new large-denomination bolivar notes as hyperinflation renders most bills worthless, forcing citizens to turn to the U.S. dollar for everyday transactions. The country’s central bank posted a statement on its website Friday saying it would begin circulating the new 200,000, 500,000 and 1,000,000 bills to “fulfill the current economy’s requirements” without providing further details. The 1,000,000 note -- the largest in the nation’s history -- is worth only $0.53 cents. As Venezuela’s economy shrank for a seventh straight year in 2020, the government turned a blind eye to a growing number of dollar transactions, kick-started by rolling power outages that prevented credit and debit card purchases and fostered the use of cash. About 66% of transactions across the country are estimated to be made in foreign currency, according to Ecoanalitica. While the dollar has gained ground, Venezuelans continue to rely on bolivar bills for public transportation and to purchase subsidized fuel. The Caracas subway recently issued an electronic payment system after it routinely stopped charging passengers due to cash shortages. President Nicolas Maduro has said he plans to move to a fully digital economy this year, following three years of hyperinflation that have prompted the nation’s mint to issue higher-denomination notes that are quickly rendered all but useless. Inflation soared 3,000% in the last 12 months, according to Bloomberg News’s Cafe con Leche Index. In October, Venezuela imported banknote paper with plans to issue a 100,000 bill that quickly became outdated. It last issued new bills in 2019, after chopping five zeros of the previous bills in circulation in 2018.

ruuda 6y ago
With javascript turned off, there was no paywall.

daenz 6y ago

I don't understand hyperinflation. Doesn't it become obvious that you should stop printing money when the cost of printing the money is higher than the value printed on the notes?

samuel 6y ago
But then the government has to default, hasn't it?
nradov 6y ago
You are assuming a basic level of competence which doesn't exist in the Venezuelan government.
ZoomerCretin 6y ago
If you’re a dictator looking to hold on to power, and you have no ability to borrow money (can’t pay in bolivar because it quickly becomes worthless, can’t pay in foreign currency because your inflation rate effectively makes the loan’s interest rate high), why not print? It may not help your citizens, but you can keep your army fed enough to stay on your side.
- opnitro 6y ago
  Additionally in the Venezuelan case, their ability to borrow money is also hampered by sanctions.
  - dmingod666 6y ago
    Ofcourse, the countries placing sanctions are never to blame.. Take North Korea for example.. I like to imagine this is how it plays out in the people heads: "like, it's so sad that the people there suffer.. our hearts go out to them.. should we lift sanctions..? Hell no, let them burn to the ground, let them realize who they're messing with.."
- croes 6y ago
  Has nothing to do with being dictator. If you can't borrow money you have to print it.
  - maneesh 6y ago
    Not many classes of people other than a dictator are able to print fiat currency unilaterally though

KDJohnBrown 6y ago

Essentially Texans stay fat by lobbying to starve Venezuelans.

KDJohnBrown 6y ago
-5 points. I forget, it is forbidden here to point out when imperialism causes suffering. Yes it is more politically correct to blame socialism than it is to blame America’s sanctions on Venezuelan oil. So much for free market capitalism?
- JumpCrisscross 6y ago
  > to blame socialism than it is to blame America’s sanctions on Venezuelan oil Bolivar hyperinflation pre-dates U.S. sanctions [1]. (It also pre-dates Chavez and Madura, though not to its recent degree.) The sanctions don’t help. But China, and to a lesser degree Russia, were for a long time willing to run the sanctions [2]. Even they gave up on Caracas after Maduro’s incompetence led to falling oil production. [1] https://en.m.wikipedia.org/wiki/Hyperinflation_in_Venezuela https://en.m.wikipedia.org/wiki/Hyperinflation_in_Venezuela [2] https://www.reuters.com/article/us-venezuela-oil-deals-specialreport-idUSKBN23J1N1 https://www.reuters.com/article/us-venezuela-oil-deals-speci...
- bradleyjg 6y ago
  America is one country that has less than a quarter of global gdp. Every country in the world needs oil products and plenty of them don’t care about US sanctions. Venezuela killed the goose that laid the golden eggs by not only nationalizing the oil industry, including Petrobras’ which isn’t exactly a manifestation of American imperialism, but staffing the seized operations with corrupt cronies instead of people that knew anything about the oil industry.
- leereeves 6y ago
  Maybe blame Venezuela's failure to develop an economy beyond selling oil?
- lucian1900 6y ago
  HN’s politics tend to range from neoliberal to (crypto)fascist. You’re more likely to get downvoted for criticising imperialism than for praising Milton Friedman or Pinochet. It’s not surprising considering the class composition and overall material position of its audience.

cybert00th 6y ago

Coming to a US state near you too

christophilus 6y ago
I'm way over exposed to the US dollar, so I probably should hedge more than I do, but I don't think we'll see this level of inflation in a long while. The dollar is still king, as this article demonstrates. When the world flees to safety, the dollar is almost always the currency it flees into. That said, I really don't know how this current US money-printing episode ends. It's hard to imagine it ends well. I've been DCAing into PSLV, PHYS, and SPPP as a kind of hedge. I'm curious what others are doing?
- dmingod666 6y ago
  Gold as insurance, if money becomes paper, gold will give you some breathing space..
  - leesalminen 6y ago
    You can't eat gold, can't burn it for heat, nor drink it, nor smoke it. I've always wondered in a global Weimar-type scenario what gold would do for you? It will probably help in 5-10 years as things calm down but it's going to be a bumpy ride for a while and shiny pieces of metal aren't going to keep you alive. Why would anyone trade gold for food when their family is hungry, too?
    - syntaxing 6y ago
      I would guess its not total societal collapse but economical collapse. No matter what, humans must interact and commerce will exist. It’s usually in forms of bartering when the financial system is in crisis and physical gold historically, has been the best medium for bartering.
      - ineedasername 6y ago

mlthoughts2018 6y ago

But bitcoin is just a scam of course.

christophilus 6y ago
You're downvoted, but I think this is a fair point. If I were in a banana republic, I'd rather have bitcoin than my government's fiat. I'd rather have silver / gold than either, though, or at least some combination of all the above.
- meowfly 6y ago
  I'm skeptical of crypto but the strongest case certainly seems to be for funding illegal activities and capital flight. If you had to flee your country gold/silver will be far more trouble than BTC.
  - capableweb 6y ago
    > strongest case certainly seems to be for funding illegal activities and capital flight A currency with built-in functionality to track everything, forever and making that data public seems to be good for funding illegal activities? I would like to think just cash in various currencies would be the best for that. Washing cash is not exactly a new thing and sometimes boring technology is best.
    - mannerheim 6y ago
      There are cryptocurrencies with anonymity features (e.g., Monero, Zcash), but I recall reading that users often leak information.
    - meowfly 6y ago
      I should have said "engage in illegal activities" to be more precise. If I wanted to, right now, buy drugs online, engage in illegal online gambling, ransom someone's data, etc it will most likely be done in BTC or maybe Monero.
- 6y ago

fbn79 6y ago

If crypto has not came out as mainstream for everyday transaction s in this scenario doubt will ever happen

ZoomerCretin 6y ago
To be fair, electricity is unreliable there.
- maxerickson 6y ago
  In addition to operational difficulties, there's a bootstrap problem. You can't pay with with a currency you don't have any of.
  - lucb1e 6y ago
    Why would that be, they can just buy it like anyone else? Buy it for today's exchange rates, hold it for how long you want, and convert then it back to pay the local bakery at any future date. (Just like if they'd buy Euros or USD, I should add. Not as if this is a good reason for Bitcoin to continue existing.)
    - maxerickson 6y ago
      Buy it from who? Is there someone with a big pile of bitcoin (or whichever) and a huge desire for worthless paper?
      - kemonocode 6y ago
        You'd be selling crypto at a very beneficial rate for you and if you need to make sizable transactions in "worthless paper" within a fast enough timeframe anyway, it works out.
        maxerickson 6y ago
        Right, but some transactions being plausible is a different scenario than bootstrapping widespread use.

fallingfrog 6y ago

Generally this kind of inflation happens when a country has extensive debts that must be repaid in a foreign currency. When a country owes debts that must be repaid in its own currency, printing more money reduces the debt and makes it easier to repay. But when the debt is in a foreign currency, printing more money makes it harder to repay, leading to a vicious cycle. That’s what’s going on here. Same as in Weimar Germany. Except we are making the problem much, much worse through sanctions which harm a lot of vulnerable people, including many children. https://www.google.com/amp/s/markets.businessinsider.com/amp/news/venezuela-debt-explodes-to-156-billion-report-2019-3-1028013380 https://www.google.com/amp/s/markets.businessinsider.com/amp...

legitster 6y ago
This is MMT nonsense. There's no magical hack that makes printing too much money harmless.
- fallingfrog 6y ago
  I never said there was, I just said that hyperinflation always (as far as I know) is related to external debts in an external currency. Printing money does cause inflation, proportional to the amount printed. But hyper inflation is caused by money printing to pay external debts.
  - legitster 6y ago
    That is 100% Stephanie Kelton's core assertion in MMT. But it's not not widely supported amongst economists. In Venezuela's case, they haven't even been paying their debt, so it's hard to make the case that it matters here.
insert_coin 6y ago
This is what happens when you destroy a productive economy through price fixing, extreme taxation, and extreme redistribution policies which then leave you with no other choice but predatory loans on international markets that of course you cannot repay because you’ve destroyed your economy.

syntaxing 6y ago

Does anyone know if crypto is useful in Venezuela? Essentially, is it a terrible idea to hedge that crypto is better or as good as gold during crisis? I just want to put a safety nest somewhere so my family doesn’t starve when the time comes.

mannerheim 6y ago
Supposedly it's being used according to a few articles I've seen, but I've heard the electricity there isn't reliable.
capableweb 6y ago
There seems to be trading happening P2P (human-to-human) in Venezuela at least, so one could assume it has at least marginal usefulness. Here is some published data: https://observablehq.com/@coindesk-research/localbitcoins-paxful-activity-map https://observablehq.com/@coindesk-research/localbitcoins-pa...
aww_dang 6y ago
https://twitter.com/FundacionNanoVE https://twitter.com/FundacionNanoVE https://nano.org.ve/ https://nano.org.ve/ There is a strong Venezuelan presence in the Nano community. Gold vs. cryptocurrency is somewhat controversial. Gold is stable and has a long history of value. Cryptocurrencies are volatile and speculative in comparison. Gold is secure, but a private key or seed is easier to cross borders with. Both have their advantages. Be wary of absolutists.
spoonjim 6y ago
If you don’t want your family to starve in a crisis, invest in non-perishable food.
- gruez 6y ago
  Food expires, is bulky, and is vulnerable to being stolen (or expropriated) if you have a large hoard
  - 6y ago

snigacookie 6y ago

I can't access this article. Is there another way?

christophilus 6y ago
See my other comment (the one that talks about DOM hackery). It's got the full content in it.

chiph 6y ago

Several years ago I bought a couple of the $100 Trillion Zimbabwe bills off eBay and got them framed as a gift for my banker brother-in-law. The owner of the frame shop was concerned about having money of that denomination on the premises, but I pointed out that I was going to pay him more for the frame than the bills were worth.

neonate 6y ago

https://archive.is/GSVyf https://archive.is/GSVyf

legitster 6y ago

Before people rush to defend Venezuela's honor or whatever, government officials aren't even blaming foreign debt or sanctions (which would have been terrible excuses anyway). They've repeatedly reprimanded businesses for raising prices or increasing pay, and have already tried passing weird consumer laws to try to curb prices. These are 19th century understandings of inflation - it's pretty clear that either the powers in charge reject reality or frankly don't care enough about their citizens to even lie believably.

everybodyknows 6y ago
>19th-century understanding They are a late 20-century understanding of inflation, if we take as our pragmatic yardstick actions by the chief executive of the world’s most powerful state: https://www.econlib.org/archives/2016/12/nixons_wage_and.html https://www.econlib.org/archives/2016/12/nixons_wage_and.htm... Edit: >lie believably Thing is, the lies are believed, by many. From link above, Nixon’s Treasury Secretary: >Connally [August 12, 1971]: ”To the average person in this country this wage and price freeze–to him means you mean business. You’re gonna stop this inflation. You’re gonna try to get control of this economy. ...
cheaprentalyeti 6y ago
You say 19th century as if most 19th century people didn't understand inflation. They did, they just couldn't win an actual argument with the people causing the inflation. Just like the 21st century in Venezuela. Oh, and a quick followup: I don't think most Venezuelans have been actually voting for this system since 2005 or so, and those that do have basically been blackmailed into it.
orwin 6y ago
Hyperinflation has always been caused by a deficit of production. The 1rst cause of this is the reapeated lack of investment in productive industries. I'm not talking about services here, i'm talking about energy production and farming mainly. A drop in production always create inflation, printing money often create some inflation. Printing money while your production drop? Yeah, bad recipe.

girishso 6y ago

Can someone ELI5 why this hyperinflation happened?

fallingfrog 6y ago
It’s because Venezuela has external debts, which must be repaid in an external currency. Printing money as a way of paying those debts is ill advised, because since the debts are in an external currency, they become harder and harder to pay. But Venezuela appears to be doing just that, probably out of desperation. They could just default, but they have refused to do so, perhaps because they are worried about even more sanctions or a possible coup. Edit: they are in default on many of those debts, and that’s why the sanctions happened, which caused further damage. And we already tried to coup them. And now confidence in the currency has been lost, causing the death spiral to accelerate. Sorry, had my timeline wrong
- marcosdumay 6y ago
  Hum... The main use of government money (fresh printed or not) is internal spending. That's true basically everywhere.
  - fallingfrog 6y ago
    That’s silly, their debt payments could be less than 50% of the total government budget and still cause problems.
  - chiph 6y ago
    Generally yes. But if you're a world reserve currency like the US Dollar or the Euro, then a lot of the bills are used outside your borders. In places like Cambodia, it can become an unofficial second national currency. https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar https://en.wikipedia.org/wiki/International_use_of_the_U.S._...
- legitster 6y ago
  Even if this explanation is correct (fraught), the idea that the value of your currency is entirely out of your hands is really bad. There have been indebted countries with no trading partners being bombed on all sides that have managed to have a stable currency.

Context_free 6y ago

The US is imposing not just US sanctions but a blockade on Venezuela, with one goal to block Covid vaccines from coming in (unless Venezuela bows down to a list of US demands). The US, UK etc. have pilfered Venezuelan money deposited in US and UK banks, also removing funds for vaccine purchase. It's akin to what the US did to Iraq in the 1990s (prior to the two invasions and current occupation of that country). https://venezuelanalysis.com/news/15086 https://venezuelanalysis.com/news/15086

notahacker 6y ago
The UK sanctions are against 36 named individuals. If Venezuela is claiming the army chief's personal offshore bank account being frozen is stopping them accessing funds for public healthcare, the problems with its economy obviously start at home...
- Context_free 6y ago
  When the money was frozen, UK PM Boris Johnson said "we may have to tighten the economic screw on Venezuela". So the Prime Minister of the UK seems to have a different opinion on this.
  - notahacker 6y ago
    Did he mean (a) let's pressurise the Venezuelan government to step down by freezing the personal wealth they've chosen to stash overseas or (b) let's deprive their health service of funds, which are obviously in the UK, for very normal reasons? Well we could always look at the names of the 36 people sanctioned...

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