When Money Dies: In Venezuela, A Haircut Costs 5 Bananas And 2 Eggs

[Hydrogen]

For Venezuela's economy, the ascent into socialist paradise did not turn out quite as planned: in fact, under the Maduro regime, the country with the world's biggest petroleum reserves somehow reversed course, and crashed through every single circle of economic hell, and now that its hyperinflation has hit levels that would make even Mugabe and Rudy von Havenstein blush, all that's left is barter.

And, as Fabiola Zerpa explains as part of Bloomberg's fascinating "Life in Caracas" series, i.e., watching economic and social collapse in real-time, in Venezuela, a haircut now costs 5 bananas and 2 eggs.

Read on for what really happens when money dies, coming to a banana monetary regime near you in the near future.

In Venezuela, a Haircut Costs 5 Bananas and 2 Eggs

The other day, I made a baguette-for-parking swap. It worked out brilliantly

I had time but, as usual, no bolivars. The attendant at the cash-only lot had some bills but no chance to leave his post during the fleeting moments the bakery nearby put his favorite bread on sale. The deal: He let me leave my car, and I came back with an extra loaf, acquired with my debit card. He reimbursed me—giving me a bonus of spare change for my pocket.

That’s how we make do in our collapsing economy. If somebody has lots of one thing and too little of another, an arrangement can be made. I’ve exchanged corn meal for rice with friends from high school, eggs for cooking oil with my sister-in-law. Street vendors barter, too, taking, say, a kilo of sugar as payment for one of flour. There are Facebook pages and chat-room groups devoted to the swap-ability of everything from toothpaste to baby formula.

A barber in the countryside cuts hair for yuccas, bananas or eggs. Moto-taxi drivers will get you where you need to go for carton of cigarettes. The owners of one of my favorite Mexican restaurants offer a plate of burritos, enchiladas, tamal and tacos in return for a few packages of paper napkins. At a fast-food joint near my office, the guy working the register let me walk away with a carry-out order of chicken, rice and vegetables without paying the other day, relying on my promise to come back with the 800,000 bolivars.

Acting on that kind of trust was unheard of just a few years ago. Charity is also something new. I didn’t grow up with the traditions of canned-food drives and volunteerism that are common in the U.S. Now parents from my kids’ school collect clothes for the poor, and neighbors gather toys for a children’s hospital. My friend Lidia, a property-rights lawyer, delivers homemade soup to the homeless.

I like to think of all of this as a noble expression of solidarity, as evidence of the decency of my fellow caraquenos at a time of mind-numbing shortages of basic goods and exploding inflation. I know that in most cases the motivation is necessity, even desperation. But that’s all right. Handing that freshly baked baguette to the parking lot attendant made both of us smile, even if for just a second.

https://www.zerohedge.com/news/2018-05-05/when-money-dies-venezuela-haircut-costs-5-bananas-and-2-eggs

While the plight of venezuela is tragic, its amazing to think of how they've reverted to a barter system. While this in itself could be deemed a negative. There is a chance that over the long term this could bring people and communities together and unite them. It could encourage people to be more hospitable and treat each other better. There could be positives here in terms of it challenging some of the preconceptions we have about money and the effect it has upon the world.

There could also be an interesting divide between the way barter systems are viewed in classroom academics and facets of real world application. I seem to remember people in this section posting about how a modern world could not exist without fractional reserve banking, fiat currency, inflation and similar modern implementations of economics and finance. Here those claims are being challenged.

In a worst case scenario, when I see things like this happening, I think to myself this could be my future. That the united states could someday end up like venezuela. We too could revert back to a barter system if we do a bad enough job mismanaging our economy.

[Nichao]

barter means that  official money don't perform their main function. It shows the impotence of the government, and it may happen anywhere, if you have no election and no choice in who is the leader, plus when this leader is weak.. poor people, but they cannot do anything right now..

[amishmanish]

--snip--
 There is a chance that over the long term this could bring people and communities together and unite them. It could encourage people to be more hospitable and treat each other better.

It seems hard to understand in our own fast-paced, constantly-pushed lives but it does looks like that poor people are much better at sharing and looking after each other than the rich folks. Though the author himself chooses to not fall for the romanticism of this notion when he says "the motivation is necessity, even desperation".

There could be positives here in terms of it challenging some of the preconceptions we have about money and the effect it has upon the world.

There could also be an interesting divide between the way barter systems are viewed in classroom academics and facets of real world application. I seem to remember people in this section posting about how a modern world could not exist without fractional reserve banking, fiat currency, inflation and similar modern implementations of economics and finance. Here those claims are being challenged.

There is something inherently strange in believing that the only way to grow and survive is for the middle classes to become small engines driven by a passion to succeed and spend their lives serving corporate world. Though, this is also true that to enable major human accomplishments, you HAVE to push people somehow. Whether with the threat of a common enemy or with the notions of success. What challenges this desire for a slower, at ease world for me is the hard fact that most major innovations in 20th century happened when people were on their toes preparing for war. The kind of technological progress that the Cold War led to may never have been possible without the work forces of the two countries motivated by chauvinism. Sorry for the sidetrack.

In this particular case, yes people will find the way and will to survive in any condition but not before the worst has happened. Especially if a developed society has to face such a situation. Modern economy is a mess of it's own making but then this is hardly a good example to counter it.

[stompix]

While the plight of venezuela is tragic, its amazing to think of how they've reverted to a barter system. While this in itself could be deemed a negative. There is a chance that over the long term this could bring people and communities together and unite them. It could encourage people to be more hospitable and treat each other better. There could be positives here in terms of it challenging some of the preconceptions we have about money and the effect it has upon the world.

Sorry, but looooooooool!.
Have you seen that MadMax style youtube videos when they attack trucks with food?
People when desperate forget about everything, the survival instincts take over they are going to murder, rape, beat people up for a loaf of bread.

It's not going to unite anybody, it's going to destroy what remaining link they had.
You have one example of somebody sharing food with others and 1000 of people stealing food.
Common.....

I seem to remember people in this section posting about how a modern world could not exist without fractional reserve banking, fiat currency, inflation and similar modern implementations of economics and finance. Here those claims are being challenged.

You say Venezuela is still part of the modern world?  
What's still modern about that country?
Rome in the 1st century was way better than this.

In a worst case scenario, when I see things like this happening, I think to myself this could be my future. That the united states could someday end up like Venezuela. We too could revert back to a barter system if we do a bad enough job mismanaging our economy.

Vote for guys promising the moon and the way is getting paved.
Embrace socialism in full mode and it's going to take only a few decades for any country no matter how powerful it is to become a dump.

Later edit:
Oh, so that you won't think I'm pulling those out of ...
Here is an article written by the same Fabiola Zerpa, Leave Right Now or Arm Yourself to the Teeth: Life in Caracas:

[jseverson]

There could also be an interesting divide between the way barter systems are viewed in classroom academics and facets of real world application. I seem to remember people in this section posting about how a modern world could not exist without fractional reserve banking, fiat currency, inflation and similar modern implementations of economics and finance. Here those claims are being challenged.

I'm sorry, but I don't see any divide at all. What we have right now is better than a barter system in most respects. It's seems to be working seamlessly because they're only trading small amounts, but what happens with large purchases? I would guess it's not as efficient. I'm guessing storage of wealth won't be a simple task either. They reverted to this because their economy collapsed, and I'm fairly sure they would choose to have their economy back given the option. We know that such a system worked because that was how things were done in the past, but there's a reason why that stayed there.

I would never wish for any country to go through what Venezuela is going through, but I hope everyone else learns from their mistakes.

[fiulpro]

Thanks for sharing the information .

This system in present world is unheard of it's really real is the big deal, you know in many developing countries you can see people trade with hair or clothes but this is food .
This shows that people don't even have enough to feed for themselves and that's something very big .. I don't know if the farmer is considered to be the richest of them and how people are resorting to any means to get something to eat .
I think if people are having some basic things like the internet and everything they can through Bitcoins earn a little , by getting into signature Campaigns and stuff because government is seemingly useless in this case.

[Hell-raiser]

There could also be an interesting divide between the way barter systems are viewed in classroom academics and facets of real world application. I seem to remember people in this section posting about how a modern world could not exist without fractional reserve banking, fiat currency, inflation and similar modern implementations of economics and finance. Here those claims are being challenged.

The modern economy would implode if it suddenly switched to barter, with millions of people having to die in the streets. Venezuela can live on because it doesn't have a developed economy, and barter doesn't change things much to the worse in this respect. They are already primitive economically, but the things would be different for the developed world. The barter system wouldn't allow today's level of the division of labor. Technically, it means that millions of people will become destitute as the jobs start to disappear.

In a worst case scenario, when I see things like this happening, I think to myself this could be my future. That the united states could someday end up like venezuela. We too could revert back to a barter system if we do a bad enough job mismanaging our economy.

It will be far worse for the United States as it is built of a few very incongruent cultures such as blacks, WASPs, Latin Americans, and whatnot, which are unlikely to live peacefully together unless under a heavy boot of Uncle Sam. An all-out civil unrest turning into a war of all against all is the most likely scenario if things start to develop the Venezuelan way in the US.

[BitcoinPanther]

Amazing ... i'm a bit lost for words reading through your post.

I had to admit, i'm not much into economic news and all (not even a fan of the business section of newspapers, so to say).

But hearing a country revert back to the barter system to sustain it's people's personal economic needs, i'd say there we see a ray of hope.

A loaf of baguette for a parking space, bananas for a hair cut? It seems in times of economic crisis, it's our humanity that will save us.

And i'd be a happy soul to experience that in this lifetime where technology is expensive and the price we pay at times exceed than the fiat currency we hold dear in our hands.

[bering]

when you're live at the country with the highest inflations in the world so having money is not necessary anymore because it's useless if you have money and you can't even spend it and to stay alive barter is the best solutions currently for Venezuelan people however i heard some of Venezuelan citizen has decide to leave Venezuela because they can not take it anymore and Colombia is the next destination for them

[bitmover]

In a worst case scenario, when I see things like this happening, I think to myself this could be my future. That the united states could someday end up like venezuela. We too could revert back to a barter system if we do a bad enough job mismanaging our economy.

Well, it's easier and faster than you imagine.
Make Sanders president 3 times in a row and you will be very close to it. And all will be capitalism fault.

I am from Brazil, and our former president, Lula, now in jail , was a great supporter to Chaves and Maduro, even made tb ads for them.
https://m.youtube.com/watch?v=jf-9BfbDZf4

He tried to do this here. His party is still trying.

At least in Venezuela electricity is very cheap and people can mine bitcoin and other cryptos. Crypto is saving many families there.


Venezuela should b a paradise. They have one of the biggest oil reserves in the world. They have low population. They have the Caribbean and the Amazon Forest. And socialists fucked it up.

[Hell-raiser]

Venezuela should b a paradise. They have one of the biggest oil reserves in the world. They have low population. They have the Caribbean and the Amazon Forest. And socialists fucked it up.

Are you sure it is the Venezuelan socialists' fault? Do you really think that when oil reserves had been in the possession of foreign corporations, people lived a lot better there or would live better if the reserves weren't nationalized?

Note that I'm not defending Maduro and his regime. Just look at Venezuela's neighbors. Do they fare any better? Argentina has been in a state of permanent default since like 1980's. And let us not forget that cheap oil prices don't distinguish between capitalism or socialism, or whatever. If the costs of production are on par with market prices or even exceed them (as was the case for a number of years since 2014), your oil is pretty useless for you as a source of income, though you still have to produce it so as to lose your market share to your competitors.

[tomahawk9]

At least in Venezuela electricity is very cheap and people can mine bitcoin and other cryptos. Crypto is saving many families there.

Not really, there's been a crackdown on miners in Venezuela for quite a while now. Remember that the national security forces can monitor power consumption so if you get caught mining Bitcoin then you're bound to go to jail. If I remember correctly the false charges (I say false because it isn't illegal to mine BTC in that country) would be embezzlement, energy theft, money laundering and many other charges. People do it underground but it looks like it could be a dangerous business.

[bitmover]

Venezuela should b a paradise. They have one of the biggest oil reserves in the world. They have low population. They have the Caribbean and the Amazon Forest. And socialists fucked it up.

Note that I'm not defending Maduro and his regime. Just look at Venezuela's neighbors. Do they fare any better? Argentina has been in a state of permanent default since like 1980's. And let us not forget that cheap oil prices don't distinguish between capitalism or socialism, or whatever. If the costs of production are on par with market prices or even exceed them (as was the case for a number of years since 2014), your oil is pretty useless for you as a source of income, though you still have to produce it so as to lose your market share to your competitors.

Hello Hell-raiser,

I don't know where you are from, But Venezuela situation is not what you think. They have more than 10.000% inflation per year. Last year Brazil's inflation was 2.9%.
Venezuela refugee crisis could be worse than Syria

And Venezuelans are not going to Europe. They are going to Colombia and Brazil.
Venezuela have food shortage, basic hygiene products shortage, even the guardian is talking about it.
Venezuela hopes to wipe out toilet paper shortage by importing 50m rolls



I can agree with you that most Latin America countries are similar, except Venezuela and Haiti and maybe few others. But you cannot generalize like that.

Are you sure it is the Venezuelan socialists' fault? Do you really think that when oil reserves had been in the possession of foreign corporations, people lived a lot better there or would live better if the reserves weren't nationalized?

Venezuela was a much better country before socialism. Just like the other neighbors. At least we don't have food and toilet paper shortage and 10.000% inflation a year.

The crisis started when reserves were all nationalized by the corrupted government.
Even the state owned company, PDVSA, is now broke. They just stole all the money from the oil reserves.

Leftists usually say that Maduro and Chaves are not true socialists anymore... So they can try it again somewhere else.

[Jonsnowstark]

Well, really, the barter system was a good way to engage. It is more of giving what someone needs and getting what you need at the same time. I think this sysytem really worked well for people before. But if you think about it, i need 2 bananas and all you have is il1 banana and 1 egg. So i wont be satisfied becausse i dont need eggs. So i wont deal with you. Unlike mo ey, with that piece of paper, i can buy whatever i need

[Koadharber]

Well, really, the barter system was a good way to engage. It is more of giving what someone needs and getting what you need at the same time. I think this sysytem really worked well for people before. But if you think about it, i need 2 bananas and all you have is il1 banana and 1 egg. So i wont be satisfied becausse i dont need eggs. So i wont deal with you. Unlike mo ey, with that piece of paper, i can buy whatever i need

Barter things is only just good when we do talk about medieval times or prehistoric era. There are lots of thing to be considered or mainly affected if a certain country do got already on a state on where it do make use of paper money or fiat and transitioned back into bartering things up then it would really signifies problems. Not all goods would really be needed by each individual which i dont even imagine how a country would able to survive such state.

[joebrook]

barter means that  official money don't perform their main function. It shows the impotence of the government, and it may happen anywhere, if you have no election and no choice in who is the leader, plus when this leader is weak.. poor people, but they cannot do anything right now..

I don’t think we are going to go that backwards and return to that period again where foods and services are exchanged as a means of payment and there is also no way that there will be a global situation where money becomes so useless. A country’s money may become useless but not the entire world.

[green_fish]

When the economy collapsed, they didn't believe in the government's fiat money! Return to primitive society's equivalent exchange!

Venezuela's government can only rely on PETRO to break the economic blockade! PETRO may be just a digital form of government debt!

[ivrynx]

It seems that when fiat has loss its value, people seem to go back to the old ways, and that is the barter system, therr is nothing wrong with their method, since humans learned how to survived using barter exchange before, though it may not be the norm today, this is how we used to be. If Venezuela can pull this off and make petro their own crypto currency, the world will see a crypto currency in andifferent way, this will give hope to all nations who have debts,  I think they should use a lot of their coins into ttading, and exchange it to bitcoin, then cut their ties totally with US and find another super power to ally with and use their allies' fiat to exchange their petro, I am seing in that way, they can pay off their debt and be back on their feet.

[amishmanish]

--snip--
Venezuela was a much better country before socialism. Just like the other neighbors. At least we don't have food and toilet paper shortage and 10.000% inflation a year.

The crisis started when reserves were all nationalized by the corrupted government.
Even the state owned company, PDVSA, is now broke. They just stole all the money from the oil reserves.

Leftists usually say that Maduro and Chaves are not true socialists anymore... So they can try it again somewhere else.

Thanks for the reality check. Governments can only be as good as the checks and measures put on them. Socialist countries that proffer equality turn into dictatorships when no individual is allowed to be influential enough. Capitalist countries stress on property that allows individuals with good intentions to amass wealth too. In a socialist country, only those who are close to power get the monopoly on amassing wealth and in such an unchecked state, they just run away with the purse.

One can only imagine how much money the top officials in Venezuela would have plundered by now. With their plans to come up with their own crypto "Petro", will there be any improvement in the corruption situation? The launch of the currency itself was full of ambiguities as it was shifted to NEM at the last moment. If this is any indication of things to come by, it again looks like a screw up.

The only way out for the people now is probably a revolution or if those at the top have a change of heart.

[bitmover]

One can only imagine how much money the top officials in Venezuela would have plundered by now. With their plans to come up with their own crypto "Petro", will there be any improvement in the corruption situation? The launch of the currency itself was full of ambiguities as it was shifted to NEM at the last moment. If this is any indication of things to come by, it again looks like a screw up.

The only way out for the people now is probably a revolution or if those at the top have a change of heart.

Probably he will use this Petro as a security debt.
He will try to Fung his corrupted activity by Petro, as bolivares (his fiat) are just worthless now.

I didn't knew he shifted it to NEM in the last minute... Well, they are incompetent I hope they will never be able to launch this coin as a working product.