Venezuela In Chaos - Massive 95% Devaluation -new Bolivar pegged to state crypto

[bitmover]

Chaos and confusion erupted across Venezuela, and most stores were shuttered on Saturday, after president Nicolas Maduro announced that the government would enact a massive currency devaluation, implement a new minimum wage, hike taxes, and also raise gasoline prices for most citizens even as the country struggles with the greatest hyperinflation on record, surpassing even that of the Weimar Republic.

As a result of the enacted actions, the new version of the bolivar will be pegged to the value of the state cryptocurrency, the etro, which according to Bloomberg amounts to a 95% devaluation of the official rate, and will trade in line with where the black market was; the government will also raise the minimum wage more than 3,000 percent,  which works out to about $30 a month.

Maduro said the new currency, set to enter circulation on Monday, will be called the "sovereign bolivar" and will be based on the petro, which is valued at $60 or 3,600 sovereign bolivars, after the redenomination planned for August 20 slashes five zeroes off the national currency. The minimum wage will be set at half that, 1,800 sovereign bolivars.  The government would cover the minimum wage increase at small and medium-size companies for 90 days, Maduro added. It was not clear what happens after.

"They've dollarized our prices. I am petrolizing salaries and petrolizing prices," Maduro explained in a Friday televised address. "We are going to convert the petro into the reference that pegs the entire economy's movements."
....
The package of measures combine the necessary with the baffling, Luis Vicente Leon, president of the Caracas-based pollster Datanalisis, said in a Twitter post on Friday.

    “The government has recognized the need to anchor the economy to an external variable outside of its control, such as the international price of oil. A wise decision, but it does so by hiding it in a vehicle that suffers from lack of confidence and viability, such as the Petro,” Leon said.K

After stealing the whole country economy, Maduro will try this plan of using the new currency pegged to Petro (crypto).

I think that the idea to have a currency pegged to oil barrils is interesting. However he has no credibility, I doubt it will work.

I believe that Soon his cryptocurrency will be worthless and this new Bolivar will face high inflation rates as well.

He knows that.

Soon people will be buying it a lot cheaper in the black market, not matter how much he says the new Bolivar is worth.

So he plans includes create a very large exchange network (where government control the rates) .

That's not how economy and free market works. People will always find a way to trade bolivars for dollars or any other currency for their real price rates.

Maduro also said he intends to create a unified exchange rate across the country. The new petro-to-dollar-to-bolivar rate would bring the official price of one US dollar to six million (or 60 post-redenomination), which is about the same as the current black market exchange rate and about 25 times worse than the official rate.
To implement the bizarre plan, information Minister Jorge Rodriguez said Saturday the government will open 300 currency exchange kiosks in hotels, airports and shopping malls as part of a bid to supersede the country’s black market.K

Source: https://www.zerohedge.com/news/2018-08-19/venezuela-chaos-after-maduro-announces-massive-95-devaluation-new-fx-rate-tied

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[bitmover]

Bump


This subject is so interesting and crypto related that I can't believe nobody wants to say anything.
My topic is lost in the spam sea that the economics board became :/

[KingScorpio]

Chaos and confusion erupted across Venezuela, and most stores were shuttered on Saturday, after president Nicolas Maduro announced that the government would enact a massive currency devaluation, implement a new minimum wage, hike taxes, and also raise gasoline prices for most citizens even as the country struggles with the greatest hyperinflation on record, surpassing even that of the Weimar Republic.

As a result of the enacted actions, the new version of the bolivar will be pegged to the value of the state cryptocurrency, the etro, which according to Bloomberg amounts to a 95% devaluation of the official rate, and will trade in line with where the black market was; the government will also raise the minimum wage more than 3,000 percent,  which works out to about $30 a month.

Maduro said the new currency, set to enter circulation on Monday, will be called the "sovereign bolivar" and will be based on the petro, which is valued at $60 or 3,600 sovereign bolivars, after the redenomination planned for August 20 slashes five zeroes off the national currency. The minimum wage will be set at half that, 1,800 sovereign bolivars.  The government would cover the minimum wage increase at small and medium-size companies for 90 days, Maduro added. It was not clear what happens after.

"They've dollarized our prices. I am petrolizing salaries and petrolizing prices," Maduro explained in a Friday televised address. "We are going to convert the petro into the reference that pegs the entire economy's movements."
....
The package of measures combine the necessary with the baffling, Luis Vicente Leon, president of the Caracas-based pollster Datanalisis, said in a Twitter post on Friday.

    “The government has recognized the need to anchor the economy to an external variable outside of its control, such as the international price of oil. A wise decision, but it does so by hiding it in a vehicle that suffers from lack of confidence and viability, such as the Petro,” Leon said.K

After stealing the whole country economy, Maduro will try this plan of using the new currency pegged to Petro (crypto).

I think that the idea to have a currency pegged to oil barrils is interesting. However he has no credibility, I doubt it will work.

I believe that Soon his cryptocurrency will be worthless and this new Bolivar will face high inflation rates as well.

He knows that.

Soon people will be buying it a lot cheaper in the black market, not matter how much he says the new Bolivar is worth.

So he plans includes create a very large exchange network (where government control the rates) .

That's not how economy and free market works. People will always find a way to trade bolivars for dollars or any other currency for their real price rates.

Maduro also said he intends to create a unified exchange rate across the country. The new petro-to-dollar-to-bolivar rate would bring the official price of one US dollar to six million (or 60 post-redenomination), which is about the same as the current black market exchange rate and about 25 times worse than the official rate.
To implement the bizarre plan, information Minister Jorge Rodriguez said Saturday the government will open 300 currency exchange kiosks in hotels, airports and shopping malls as part of a bid to supersede the country’s black market.K

Source: https://www.zerohedge.com/news/2018-08-19/venezuela-chaos-after-maduro-announces-massive-95-devaluation-new-fx-rate-tied

maduro is your wizard, he does his hokus pokus tricks so he and his state apparatus can take what they want.

if pedro is indeed exchangable for oil it might be used for oil trade. but oil is increasingly insiginificant with electrocars comming out.

regards

[just_Alice]

Well, the intentions are great, nothing can worsen economical situation in Venezuela already, I guess, but this looks more like a show-off, illusion that the government is implementing something for the good of nation, but for a fact it's just another opportunity to steal even more from the country. What's the point of full-controlling the exchange rates? It's market manipulation in your own country and people will get it very soon and won't buy much of Petro then. Due to this the demand will be minimal and the govs will probably make false prices, which will cause another inflation, you're right. Only IF they really make national currency pegged to oil, which I doubt, there will be some chances to prevent this case scenario.

[DooMAD]

I'm still conflicted on this one.  One the one hand, it's clearly an attempt by Maduro to cling to power.  He's a despot.  I sincerely doubt he cares in the slightest about all the people in his country affected by his total mismanagement of the economy.  I don't think this initiative will do anything to help the average Venezuelan.

On the other hand, I like the fact they're giving the finger to "Team America: World Police".  US foreign policy has pretty much become a blight on humanity at this point.  They are categorically not making the world a safer place.  More countries need to defy their increasingly absurd will.  If state-backed cryptocurrencies become the new norm for doing this, I'm okay with that.

[hatshepsut93]

If state-backed cryptocurrencies become the new norm for doing this, I'm okay with that.

They won't.

Economic pressure is much more than simply cutting a country from banking services, it involves control over all export and import. Companies from countries that impose sanctions won't do business with sanctioned countries like Venezuela because it's not worth the risk of committing a crime. And countries that oppose the US could have created their own alternative payment network long ago, but they probably already have a good way for settlement with each other, so even decentralized cryptocurrencies won't become a revolution here.

Also, Russia is so paranoid that Bitcoin comes from CIA that there's no chance it will be officially recognized in the near future. Maybe other dictators share this feeling towards cryptocurrency.

[Samaaliu]

It is actually good to see a country having interest in cryptocurrency. But pegging an entire economy to it I believe is a much too risk which the government is about to take. What if the price of the crypto crashes badly and not in line with the price of oil? What would the government do?

[Hydrogen]

Venezuela could print lower quantities of fiat currency to stabilize the value of the bolivar.

Why does this not happen? I would be interested to know if there is a good explanation.

Unless Maduro's goal was to deliberately take one of the more prosperous south american nations, devalue its fiat currency and obliterate its economy. Its difficult to imagine how something like this happens. And continues to happen.

Bitcoin gives people hope. It could be the only thing keeping many venezuelans from starvation. Bitcoin is a symbol of hope, solidarity and value.

I don't know that I agree with Maduro taking something which symbolizes hope and associating it with the failure that is his regime.

[tomahawk9]

Unless Maduro's goal was to deliberately take one of the more prosperous south american nations, devalue its fiat currency and obliterate its economy. Its difficult to imagine how something like this happens. And continues to happen.

Looks like that's the main objetive of the leaders (Maduro & co) that are causing such an economic collapse. They know that they'll have more control  and power over the citizens the more chaos they create, the govt knows that by increasing the minimum wage so drastically, many private companies will need to dependant on the govt, I bet that's exactly what the govt wants: to destroy or weaken the private sector so that everyone depends on the state.

Bitcoin gives people hope. It could be the only thing keeping many venezuelans from starvation. Bitcoin is a symbol of hope, solidarity and value.

No, Bitcoin isn't the only thing keeping them from starvation, the dollar is. People are selling dollars for fiat currency to survive, and from what I've read, those dollars come from Paypal, gift cards, Uphold, Bitcoin, pretty much any type of online payments system that uses the dollar is being used to sell dollars for their worthless Bolivar in the black market.

[davis196]

The oil production in Venezuela decreased a lot and actually Venezuela is importing oil anf gas.That's why the idea of the oil-backed PEDRO currency is doomed to fail.Anyway,why the hell there's no revolution or rebellion against Maduro and the government?It looks like they are still popular amongst 50% of the population of Venezuela despite all the hyperinflation and economic disaster.

[jseverson]

It looks like they are still popular amongst 50% of the population of Venezuela despite all the hyperinflation and economic disaster.

They really aren't. Millions have already fled the country, and there's a lot of discontent. Maduro effectively controls the entire government though, so little is done about his regime. As for why revolutions aren't taking place, well, he's basically buying the military's loyalty, a typical dictator move.

Either way, I'm pretty sure his days at the top are numbered. He's going to run out of band-aids at some point, not that they've exactly been effective up to now.

Bitcoin gives people hope. It could be the only thing keeping many venezuelans from starvation.

Only if they've already stashed some beforehand, and even then that will run out. The same could also be said about USD or EUR. What they earn is barely enough for necessities so it may be smarter for them to prioritize that. Their only real hope is getting the hell out, hopefully with more non-shit money to spare.

[vlad230]

It still amazes me how one man can do so much damage in a countries economy, pushing its people into extreme poverty and nobody being able to do anything about it... It's sad that this is happening to the Venezuelan people.

I see this move to crypto as a desperate attempt to save the economy but he still doesn't get it. The more decentralized they go the worse it will be to the country as no one in their right mind would invest in something started by a dictator.

[Lucius]

The oil production in Venezuela decreased a lot and actually Venezuela is importing oil anf gas.That's why the idea of the oil-backed PEDRO currency is doomed to fail.Anyway,why the hell there's no revolution or rebellion against Maduro and the government?It looks like they are still popular amongst 50% of the population of Venezuela despite all the hyperinflation and economic disaster.

I did not know and makes no sense that Venezuela which has the largest oil_reserves in the world import oil and gas, is there any evidence for that, any link ?

Why there is no revolution is good question, but in country which have dictator like Maduro this is not easy to achieve - any such attempt is crushed at its very beginnings, military and police take care that this does not happen. Also hundreds of thousands have left the country, by some data almost 1 million people emigrated from Venezuela-migration-situation . So a large number of dissatisfied already gone, critical mass has decreased a chance for some serious change is very low.

[markj113]

Venezuela has "heavy oil" that requires significant additonal treatments to make it useable.

Heavy oil usually contains significantly higher contents of asphaltenes

The presence of asphaltenes, chemically altered fragments of organic chemical compounds, in oil can greatly complicate the production process. Subsequently, certain asphaltene elements require that the heavy oil also undergo a special refining process called deasphalting. The chemical composition of asphaltenes can consist of various amounts of sulphur, oxygen, hydrogen, nitrogen, carbon, and the heavy metals nickel and vanadium and are widely recognized as soluble.

[bitmover]

It still amazes me how one man can do so much damage in a countries economy, pushing its people into extreme poverty and nobody being able to do anything about it... It's sad that this is happening to the Venezuelan people.

I see this move to crypto as a desperate attempt to save the economy but he still doesn't get it. The more decentralized they go the worse it will be to the country as no one in their right mind would invest in something started by a dictator.

The population tried to remove him through protests, but they were repressed.
They tried through election, but they were fraudulent.

They tried to kill him with a drone last month, but the attack failed.
https://www.reuters.com/article/us-venezuela-politics/venezuelas-maduro-says-drone-blast-was-bid-to-kill-him-blames-colombia-idUSKBN1KP0SA
Now Venezuelans are refugees in Brazil
http://www.xinhuanet.com/english/2018-07/12/c_137319054.htm (they don't know we are fucked up too lol)

[1Referee]

They tried to kill him with a drone last month, but the attack failed.
https://www.reuters.com/article/us-venezuela-politics/venezuelas-maduro-says-drone-blast-was-bid-to-kill-him-blames-colombia-idUSKBN1KP0SA

It's actually more than questionable since a drone can be accurately tasked to do something, even when it's equiped with whatever explosives making its steering less responsive. With the right amount of training one should be able to overcome that difficulty, especially if the task is getting rid of someone of this nature.

I strongly believe it's just Maduro himself that orchestrated this whole "attack" to justify his military spending and whatnot. The response of the guards quickly protecting Maduro after the explosions is just as questionable. It's not human's nature to react like that, regardless of how trained you are. They probably knew it wasn't an actual attack as well.

[omfg.xekcep]

The main idea is interesting especially if the new cryptocurrency will be bound with crude oil to reflect its price in some proportion based on a formula as, for example, 80% WTI or Brent. I guess this idea can help Venezuela to attract investor's money quite rapidly because there are lots traders who trade oil forwards and futures so they could be interested on buying the new asset which is based on crude oil. By the way everybody may make sure that crude oil is a superb asset for speculators because the most part of time crude oil is in a trend. I would like to caveat retail investors that in the current moment of time investing in crude oil is quite risky because crude oil has doubled its price from about 40$ to about 80$ (I mean Brent as an example) since this year and there will be probably a correction in this asset so be careful when investing in oil based assets.

[audaciousbeing]

It still amazes me how one man can do so much damage in a countries economy, pushing its people into extreme poverty and nobody being able to do anything about it... It's sad that this is happening to the Venezuelan people.

It's most times not about one man that is trying frantically to pull his country down. Its a function of either the economic status of the country and managers of that country. For a country that is import dependent throwing tantrums to several world power countries or a country that is oil dependent without any back up plan, the crash of oil price below their projected revenue couple with problem with world powers above, there is bound to be a problem. While there is need to apportion blame to the political head, most of the time they are helpless against the forces against them.

I see this move to crypto as a desperate attempt to save the economy but he still doesn't get it. The more decentralized they go the worse it will be to the country as no one in their right mind would invest in something started by a dictator.

Desperate times like they say calls for desperate measures and that is the case of what they are doing as they are trying frantically to stay above waters which is about to drown them the moment public outcry is added to the whatever they are facing currently. The result of this move might be counterproductive but to them, its the best course of action at the moment.

[pitiflin]

On the other hand, I like the fact they're giving the finger to "Team America: World Police".  US foreign policy has pretty much become a blight on humanity at this point.  They are categorically not making the world a safer place.  More countries need to defy their increasingly absurd will.  If state-backed cryptocurrencies become the new norm for doing this, I'm okay with that.

They never were making the World a better or a safer place.

Petro is going to be a big fail, there was not really much thought put into it, Venezuela is in a bad state, it always was, but things are only getting worse. The Government is outright thrash. They don't know how to do things, or how to control the public.

It's most times not about one man that is trying frantically to pull his country down. started by a dictator.

Trying? He already has pulled his country down, look how bad the state of Venezuela is.

It's actually more than questionable since a drone can be accurately tasked to do something, even when it's equiped with whatever explosives making its steering less responsive. With the right amount of training one should be able to overcome that difficulty, especially if the task is getting rid of someone of this nature.

I strongly believe it's just Maduro himself that orchestrated this whole "attack" to justify his military spending and whatnot. The response of the guards quickly protecting Maduro after the explosions is just as questionable. It's not human's nature to react like that, regardless of how trained you are. They probably knew it wasn't an actual attack as well.

The ISIS terrorists groups own a lot of these drones and have tested them, there are drones specially designed for these purposes.

As much as I would like to believe that Maduro orchestrated this attack,he probably didn't. A whole economy hates him, he's a total jerk. There are way too many motives to kill that one guy.

Looks like that's the main objetive of the leaders (Maduro & co) that are causing such an economic collapse. They know that they'll have more control  and power over the citizens the more chaos they create, the govt knows that by increasing the minimum wage so drastically, many private companies will need to dependant on the govt, I bet that's exactly what the govt wants: to destroy or weaken the private sector so that everyone depends on the state.

This is gonna fuck things up for him  in the future,is all I can say. I still have to read a little more on this topic than commenting any further.

[robbietobby]

"One likely outcome is that inflation, which already was forecast to reach 1 million percent this year, will get fresh fuel from the measures. Prices are currently rising at an annualized rate of 108,000 percent, according to Bloomberg’s Café con Leche index. A massive exodus of Venezuelans fleeing the crisis to neighboring countries will likely increase and with it, tensions and restrictions like the ones seen over the past few days."


-----> That is very intriguing. I've seen a lot of sacrifices in people and now the devaluation of money. What will now happen to the people living with their life and wants to live their own lifestyle. We are married to our own happiness and now this happen? It is suspected that the ISIS terrorists groups own a lot of these drones and have tested them, there are drones specially designed for these purposes. The population tried to remove through protests, but they were repressed. They tried through election, but they were fraudulent. How crucial that there is these belongings of Venezuelan immigrants burnt by residents of the Brazilian border town of Pacaraima.