Venezuela Planning New 100,000-Bolivar Bills Worth Just $0.23

[TravelMug]

Venezuela Planning New 100,000-Bolivar Bills Worth Just $0.23

Venezuela has begun to import banknote paper and is mulling plans to print bills with larger denominations as hyperinflation causes shortages of cash, according to six people with knowledge of the matter.

The country has brought in about 71 tons of security paper this year from an Italian printer majority owned by the private equity firm Bain Capital, according to some of the people and data reviewed by Bloomberg from Import Genius, which compiles customs records it obtains through private sources. The central bank is considering new bills starting with 100,000 bolivars, the people said. It would be the highest denomination yet, but still worth only $0.23.

https://www.bloomberg.com/news/articles/2020-10-05/venezuela-planning-new-100-000-bolivar-bills-worth-just-0-23

So spending fiat to produce more fiat, how ironic it is. It's just sad how this rich oil nation turn into another sad story because of the mismanagement from the sitting President.

And what's next $1 million Bolivar Bills just worth a dollar?

And it makes sense the Venezuelan are into bitcoin, with record breaking transactions like everyday.



https://twitter.com/BCV_ORG_VE/status/1314308916143104006

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[JakobFugger]

The more corrupt the country is, the more they need paper money. Corruption is simpler that way, including for government officials. The government flattens employees' salaries to maintain superficial control of inflation and allows for further negotiations, criminal activities. No punishment. Many government officials receive more than their own corrupt wages.

[abhiseshakana]

The money printing strategy to stabilize economic conditions will not work in Venezuela, this is because money printing is not balanced with increased production, money printing is only to increase demand and for consumption.  The economic tragedy in Venezuela was caused by a series of adverse events including the drop in oil prices, a total economic embargo by America and the high level of economic dependence on oil exports and imports for public consumption.  From this, it can be seen that without trade diversification, the level of a country's sovereignty will be lower.

[Lorence.xD]

This is what happens when you invest your country's fund into individual wants of your citizens and not on general welfare or anything that will benefit more in the long run. Add the corruption from the time of Maduro, the irregularities of election. You know that it is a recipe for disaster when the government is paranoid about the security of their leader because even if they do not admit or blatantly deny it, they have secrets that they want to be hidden. Zimbabwe is a good example of what happens when the leader is incapable and corrupt.

[Poker Player]

The money printing strategy to stabilize economic conditions will not work in Venezuela, this is because money printing is not balanced with increased production, money printing is only to increase demand and for consumption.  The economic tragedy in Venezuela was caused by a series of adverse events including the drop in oil prices, a total economic embargo by America and the high level of economic dependence on oil exports and imports for public consumption.  From this, it can be seen that without trade diversification, the level of a country's sovereignty will be lower.

What? The economic tragedy in Venezuela has been caused by the communists who rule the country.

No. It has not been an unfortunate sequence of events. What has happened in all communist countries has happened in Venezuela: that the rulers are increasingly rich, at the cost of killing the population with hunger.

The problem is that the rulers have cut off all private initiative and with this, productive activity has been reduced to a minimum.

[btc_angela]

The money printing strategy to stabilize economic conditions will not work in Venezuela, this is because money printing is not balanced with increased production, money printing is only to increase demand and for consumption.  The economic tragedy in Venezuela was caused by a series of adverse events including the drop in oil prices, a total economic embargo by America and the high level of economic dependence on oil exports and imports for public consumption.  From this, it can be seen that without trade diversification, the level of a country's sovereignty will be lower.

Right, but they didn't learn from past history, they still live on the mentality of a old guard, the last stronghold of communism - Maduro. To be fair, even US has been printing to offset the balance of their economy, unemployment because of the covid-19 pandemic. The economic tragedy was really brought up by the communist regime and as a result, trade embargo from the West was imposed. And yes, Venezuelans is surviving because of bitcoin, Venezuela's Bitcoin Use Soars Amid Hyperinflation: 3rd on Global Crypto Adoption Index.

[Hydrogen]

Venezuela has begun to import banknote paper

The country has brought in about 71 tons of security paper this year from an Italian printer majority owned by the private equity firm Bain Capital

Bolded above highlights some of venezuela's issues.

They import 71 tons of security paper, due to their nation lacking the expertise, productive capacity and industry to make it themselves. Their economy is a giant trade deficit where they produce little or nothing. This places them in a disadvantaged position of trade, making them extremely reliant on foreign imports.

This becomes evident by recent history. The hydroelectric dam in caracas which previously generated free electricity many utilized to mine bitcoin has experienced technical issues. No one in the country appears to be up to the task of maintaining or fixing whatever is broken on the dam. And so standard of living inevitably declines. This negative analogy applies across the board to venezuela's previously rich oil industry and all sectors of their economy.

[Darker45]

The money printing strategy to stabilize economic conditions will not work in Venezuela, this is because money printing is not balanced with increased production, money printing is only to increase demand and for consumption.  The economic tragedy in Venezuela was caused by a series of adverse events including the drop in oil prices, a total economic embargo by America and the high level of economic dependence on oil exports and imports for public consumption.  From this, it can be seen that without trade diversification, the level of a country's sovereignty will be lower.

What? The economic tragedy in Venezuela has been caused by the communists who rule the country.

No. It has not been an unfortunate sequence of events. What has happened in all communist countries has happened in Venezuela: that the rulers are increasingly rich, at the cost of killing the population with hunger.

The problem is that the rulers have cut off all private initiative and with this, productive activity has been reduced to a minimum.

There are many factors coming into play that caused Venezuela's downfall. I don't think this is just about the country's leaders nor their political ideology, not even corruption alone.

Of course this is also largely mismanagement as well as their dirty politics, but this oil-rich country is also suffering from the severe decrease in oil's price. And who would discount the economic sanctions harshly imposed on them by the powerful western countries led by the USA?

[TravelMug]

Venezuela has begun to import banknote paper

The country has brought in about 71 tons of security paper this year from an Italian printer majority owned by the private equity firm Bain Capital

Bolded above highlights some of venezuela's issues.

They import 71 tons of security paper, due to their nation lacking the expertise, productive capacity and industry to make it themselves. Their economy is a giant trade deficit where they produce little or nothing. This places them in a disadvantaged position of trade, making them extremely reliant on foreign imports.

This becomes evident by recent history. The hydroelectric dam in caracas which previously generated free electricity many utilized to mine bitcoin has experienced technical issues. No one in the country appears to be up to the task of maintaining or fixing whatever is broken on the dam. And so standard of living inevitably declines. This negative analogy applies across the board to venezuela's previously rich oil industry and all sectors of their economy.

Yeah, but the government has the audacity to import 71 tons of paper just to print paper money that will have no value at all. This should be at least the last resort of Venezuela, but I guess when the country is already in trade deficits and everything in the country is a messed, this will be the only one those sitting in the government thinks that will help their constituent, but it's not.

I'm not from Venezuela, but we have seen the destruction of the country, yes a country rich in oil turn into one of the worst economic downfall we have seen in decades and there not even a sight in the horizon that the country will recover because of the current administration.

[sunsilk]

The paper material that's used for printing their money is probably much costly and valuable than the equivalent of 100,000 Venezuelan Bolivar.

The more corrupt the country is, the more they need paper money. Corruption is simpler that way, including for government officials. The government flattens employees' salaries to maintain superficial control of inflation and allows for further negotiations, criminal activities. No punishment. Many government officials receive more than their own corrupt wages.

The government there is said to be corrupt but that doesn't mean in general that countries who printed more money in this times are also doing it for their personal interest. There were several stimulus that were done and it's needed to sustain the economy. But I agree that for Venezuela, with the existing hyperinflation, this won't do well yet will worsen the situation.

[Upgrade00]

Over dependency on one means of national revenue is a major problem, especially in corrupt countries with natural resources as the government pays little attention to other aspects of the economy.
I checked out top exports from Venezuela in 2019, and natural resources, including oil accounts for majority of it;.

1. Mineral fuels including oil: US$14.8 billion (89.9% of total exports)
2. Organic chemicals: $404.8 million (2.5%)
3. Iron, steel: $238.4 million (1.4%)
4. Fish: $236.7 million (1.4%)
5. Gems, precious metals: $120 million (0.7%)
6. Ores, slag, ash: $111 million (0.7%)
7. Aluminum: $78.1 million (0.5%)
8. Beverages, spirits, vinegar: $76.1 million (0.5%)
9. Copper: $56 million (0.3%)
10. Cocoa: $53.6 million (0.3%)
Source - http://www.worldstopexports.com/venezuelas-top-10-exports/

Ideally, also top on their list of imports for 2019 is mineral fuel (refined oil). We have the same issue in Nigeria where out nation which is one of the largest oil producing states does not have a stable means of refining its mineral fuel due to mismanagement, so we export and import our natural resource.

[bryant.coleman]

Anyone remember this?

The Venezuelan Bolivar will end up like Zimbabwe Dollar. Hardly anyone store their money as Bolivar in Venezuela. In most cases, US Dollar and gold is being used for this purpose. And I heard that Bitcoin usage is also going up there. Venezuela is a perfect example of how socialism can destroy a nation. And the joke is that we still have a lot of people who would still vote for Socialist politicians.

[abhiseshakana]

What? The economic tragedy in Venezuela has been caused by the communists who rule the country.

No. It has not been an unfortunate sequence of events. What has happened in all communist countries has happened in Venezuela: that the rulers are increasingly rich, at the cost of killing the population with hunger.

The problem is that the rulers have cut off all private initiative and with this, productive activity has been reduced to a minimum.

Do you remember the term control oil you control the nation, control the food you control people. Henry Kissinger's philosophy can illustrate what happened in Venezuela. It was foreign interference that caused the social and political situation and conditions in Venezuela to heat up. The US used every economic and diplomatic policy to weaken the regime and build an international coalition against the regime in power

Venezuela under Chavez pursues a policy of redistribution and social justice in a market scheme. Besides inheriting the spirit of communism, Chavez also has many loyal supporters, even in the clashes that occurred in 2014, most of the victims came from the Maduro camp, not the opposition. The main business powers that control Venezuela's private sector are supporting the opposition to sabotage the political agenda.

So the crisis in Venezuela is not due to socialism or communism, but because of the incomplete project of socialism which has made all social reforms fail to produce a change towards the control of a mode of production that can guarantee mutual prosperity. As a result, the social transformation to rid Venezuela from dependence on oil has not been successful. Meanwhile, the anti-Chavismo social forces, which had an economic base from the private sector, took advantage of this crisis to destroy the political project of Socialism.

Right, but they didn't learn from past history, they still live on the mentality of a old guard, the last stronghold of communism - Maduro. To be fair, even US has been printing to offset the balance of their economy, unemployment because of the covid-19 pandemic. The economic tragedy was really brought up by the communist regime and as a result, trade embargo from the West was imposed. And yes, Venezuelans is surviving because of bitcoin, Venezuela's Bitcoin Use Soars Amid Hyperinflation: 3rd on Global Crypto Adoption Index.

Venezuela people adopt bitcoin because of TINA (There is no alternative). They have a high dependence on the dollar and their money printing is not matched by an increase in the production sector which causes hyperinflation. Printing money is used for consumption, buying dollars so that they can import goods.

[Mauser]

This is so sad and will probably not help at all. They should be trying to fix their economy instead of printing new money. Who is actually going to use such a bill? I saw in a documentary about Venezuela that most stores are not accepting bolivar anymore as a means of payment. Most restaurants and stores only accept USD these. Around 70% of the families have atleast one family member living abroad send money, usually USD to Venezuela.

Venezuela has so many natural resources that the country should be flourishing with the right government. They need to eliminate corruption and make new economic reforms to get back on track.

[Poker Player]

So the crisis in Venezuela is not due to socialism or communism, but because of the incomplete project of socialism which has made all social reforms fail to produce a change towards the control of a mode of production that can guarantee mutual prosperity. As a result, the social transformation to rid Venezuela from dependence on oil has not been successful. Meanwhile, the anti-Chavismo social forces, which had an economic base from the private sector, took advantage of this crisis to destroy the political project of Socialism.

It of course is due to communism, which is a nice idea in the theory, but the one of the worst economic systems when you put it into practice.

It is as simple as this. Do you know why the Berlin Wall was built? Because people were escaping en masse from a regime of political and economic repression to a free country. So, the Eastern Bloc politicians decided to build the wall.

How many people tried to escape from West Germany to East Germany by jumping over the wall? 0

How many people tried to escape from East Germany to West Germany by jumping over the wall? Tens of thousands, putting their lives on the line.

How many people try to escape from South Korea and go to North Korea? 0
And the other way around?

How many people escape from the United States to Cuba on a raft?
And the other way around?

How many people have escaped from Venezuela?

Venezuela exodus set to top 5 million as long-term needs grow, officials say.

And so on.

[coolcoinz]

Most countries did the same before the collapse of their currencies but what can they do? They want people to be able to pay without having to carry a bag full of money every time.
Unfortunately this is only postponing the inevitable because at some point the process of printing a bill will be worth more than the bill itself.

[NotATether]

The more corrupt the country is, the more they need paper money. Corruption is simpler that way, including for government officials. The government flattens employees' salaries to maintain superficial control of inflation and allows for further negotiations, criminal activities. No punishment. Many government officials receive more than their own corrupt wages.

These autocrats are so dseparate for more cash that they end up evading sanctions to open dubious bank accounts off shore, like the people in the Panama papers, and they also illegally hoard foreign cash in their houses.

This results in the national currency becoming worthless, and they have no intention of floating bonds to save it, because they are living comfortably with only a small amount of the (laundered) foreign cash they stashed for themselves.

Today, the economies who still cling to communist ideology as an economic system, and refuse to embrace capitalist thinking, such as Venezuela and North Korea, are in one of the worst shapes.

Venezuela has so many natural resources that the country should be flourishing with the right government. They need to eliminate corruption and make new economic reforms to get back on track.

Most developing countries with natural reserves are in a gridlock, because they can't process any of them locally. They have large foreign debt they owe developed countries they got in other ways. If you have debt but no capital assets, you can't spend anything on upgrading local infrastructure, paid to and developed by foreign countries, so this leads to a situation where they have to surrender their unusable natural reserves to creditor countries to waive their debts.

Like that the developing countries lose their ability to become bargaining developed powers, who demonstrate their political strength with their vast natural resource exports.

It all boils down to this: If you can export your natural resources en masse, you are taken seriously by bigger world powers. Political strength is fueled (pun not intended) by oil and gas exports.

[ChrisPop]

Inflation at its best.. People know this currency is shit, so they sell it as soon as they get. The important thing is if they are able to exchange it and with what asset. Ask yourself this: who is going to buy bolivars when the rate is so high?

Btw I have just checked on the internet and the inflation rate in Venezuela is like 15000%. That translates to 1 bolivar = 150 bolivar in one year. Crazy isn't it?

[sheenshane]

Buying a secure paper that will be used as a banknote is necessary for every country though the question is what is the purpose of this banknote is it really necessary at this time. We may immediately perceive that it can be used for corruption but if we will take a closer look at the purpose of creating a fiat we could consider that there is a possibility that it serves as a replacement of the old ragged fiat.

Another reason is for creating a higher denomination is that it could be handier and can be easily kept by an individual including using higher denomination in making transactions using cash it can be easier instead of paying with multiple paper bills. Though isn't the best resolution for hyperinflation for there are still online transactions that don't require paper bills like credit card or debit card but despite this modernization, if cryptocurrency will be adopted globally then there will be no issues on creating banknotes for it doesn't require affiliation on any bank system nor government.

Anyway, this How the political situation escalated in the Venezuela crisis. See how their politician leaders managed their country.

[pixie85]

Buying a secure paper that will be used as a banknote is necessary for every country though the question is what is the purpose of this banknote is it really necessary at this time. We may immediately perceive that it can be used for corruption but if we will take a closer look at the purpose of creating a fiat we could consider that there is a possibility that it serves as a replacement of the old ragged fiat.

For corruption? How?
Also, how is that going to improve security? Nobody is going to make fake bills that aren't even worth a dollar when they can make foreign currencies and make 100x more money.

Another reason is for creating a higher denomination is that it could be handier and can be easily kept by an individual including using higher denomination in making transactions using cash it can be easier instead of paying with multiple paper bills. Though isn't the best resolution for hyperinflation for there are still online transactions that don't require paper bills like credit card or debit card but despite this modernization, if cryptocurrency will be adopted globally then there will be no issues on creating banknotes for it doesn't require affiliation on any bank system nor government.

Anyway, this How the political situation escalated in the Venezuela crisis. See how their politician leaders managed their country.

It's handier but what they're doing is not to make storage more convenient. Nobody is going to hold a hyperinflated currency and it doesn't matter if the bills are old or new.
Bolivars are going to be a dead currency soon.