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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

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.
- fallingfrog 6y ago
  Where did I say currency value was entirely out of their hands? Look, I’m not defending Chavez (he was the one who took out the loans) and I’m not defending money printing as a way to pay debts, but that’s what happened. They got huge loans from the IMF, and then when the price of oil tanked unexpectedly they tried to print their way out of it. Then they defaulted on most of those debts, and the USA slapped sanctions on them and tried to coup their government. None of that helped.

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.

fallingfrog 6y ago
Where did I say currency value was entirely out of their hands? Look, I’m not defending Chavez (he was the one who took out the loans) and I’m not defending money printing as a way to pay debts, but that’s what happened. They got huge loans from the IMF, and then when the price of oil tanked unexpectedly they tried to print their way out of it. Then they defaulted on most of those debts, and the USA slapped sanctions on them and tried to coup their government. None of that helped.