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

[Fortify]

It's like watching the hyper inflation of Zimbabwe happening again and would be comical if it wasn't causing such a tough situation for all the local people. Ironically the trillion dollar notes that you now find on ebay are worth vastly more as a novelty collectible item than they ever were worth as a tradeable unit of currency when in circulation. Hopefully the people of Venezuela are able to free themselves from the dictatorship as soon as possible and start to reset the economy.

[Abiky]

I'm not really sure if you have heard about digital Bolivar or Petro, supposedly back up by oil and other others like Russia, and it turns out that this is not true. Maduro though try very hard to keep Petro, even pushing it for Venezuelans to used it, but it was really a failure and they used BTC instead, and that help them somewhat to survived in the worst situation.

Venezuela can't seem to revive its economy, no matter what its efforts may be. Its latest attempt of creating a digital currency backed by oil reserves turned out to be a huge failure. They're better off using Bitcoin as a reserve currency to protect the economy. The Venezuelan Bolivar can be backed by Bitcoin directly, instead of printing new bills that would cause hyperinflation. 100k Bolivar bills worth just $0.23 USD shows us how low the Venezuelan economy has declined. If the government doesn't do anything to restore the economy, then I'm afraid chaos will persist in the nation. People will have less spending power over time, leading them to extreme poverty. It's unfortunate how Venezuela's economy turned out to be, after being a rich country some time ago. With US sanctions, it becomes quite challenging for Venezuela to get on its feet back again. Some say that President Maduro's regime has made matters worse. I believe that things were better when President Hugo Chavez was in power.

All in all, Venezuela's situation of hyperinflation might become a reality in other countries as well. With the pandemic sinking the mainstream economy, governments are printing money like crazy. Imagine if most countries experienced hyperinflation. There will be extreme chaos never before seen in the course of human history! I hope that doesn't turn out to be the case, as the economy starts recovering after the demise of COVID-19. As far as Venezuela goes, it seems unlikely that its economy will recover after sinking so low. Only a change in government might save the day. In the meantime, expect the Central Bank of Venezuela to continue printing new denominations of the Bolivar as the economy continues in a downward trend. Just my opinion

[STT]

'Backed up'   This is the nature of all FIAT, of the dollar, the euro or almost any currency you want to talk about.   A zero coupon bond, you believe they will repay some kind of value but in effect you have no claim.    Between nations value might be demanded but eventually the tale for FIAT is that this is a failure and even worse for the people of each nation they never find the repayment of their labour and capital saved is returned properly.   Its very much a common complaint in every country western or failed nations like Venezuela that the working mans wage has fallen for decades and its related to failure deliberately for cheap debt purposes.   It undermines currency, capitalism, freedom and democracy and it makes nobody rich in the end we can be quite certain by the repetition across history.
   There was no link or demand on delivery for the Petro, it was nonsense in effect and even worse the system they designed was centralised.   It failed the basic standards of crypto much like XRP isnt crypto, its digital but its massively undermined for the purposes of those in control.

[South Park]

Without a doubt it is a bad idea but this is just more evidence the average person does not understand basic economic principles, it seems they think that just because governments are bigger than they are they can spend all the money they want and this is not true, governments still need to follow the same principles that any normal family would, they need to spend less than what they get on taxes and keep something for a rainy day as you say, but politicians are nothing more but a reflection of the society that elects them, so if the population does not understand this the politician most likely does not as well or at least does not care and that is how it begins the economic debacle of most countries.

Politicians constantly fail to lead. It's far easier to continue deficit spending than to balance the budget and make the hard decisions that need to be made in order to do so, especially since the only way to do this is to cut spending or raise taxes.  In the US, the budget is so unbalanced that it would take drastic spending cuts and drastic tax increases to balance the budget. The average person is generally too stupid to realize that failure to act now makes the situation worse in the future, and something will eventually give, and politicians are only interested in getting elected, so nobody is going to run on a platform of doing what needs to be done to get our finances in order.

Correct, anyone doing that will commit political suicide and that is because people do not want to listen to the truth, they want to be told that the government can take care of everything and tax the rich if necessary not understanding that if the governments go after the rich too strongly they will just leave the country because they can do so, and not only they leave all the jobs they created leave with them generating unemployment and economic turmoil in the process, and unfortunately there does not seem to be a way out of this without a great deal of suffering during the next decades due to the reckless spending of the governments.

[stompix]

The average person is generally too stupid to realize that failure to act now makes the situation worse in the future, and something will eventually give, and politicians are only interested in getting elected, so nobody is going to run on a platform of doing what needs to be done to get our finances in order.

This is pretty interesting, I've seen a lot of blaming the politicians that don't have the courage to act because all they care about is to be elected, but they wouldn't be elected in the first place if people wouldn't be convinced they are better with this kind of policy than with a drastic reform, yeah politicians are putting their name on and voting laws but it's the people that put these people in a position of power with their vote.

And like it or not even in Venezuela's case or in many others the current failure of a government still has support, there are still people that even if they are dirt poor they are supporting it and if this nucleus is not broken then nothing will change, with a constant mass of brainwashed devote voters you don't need anything else. I've read numerous topics on how countries in Africa are lagging behind, and everybody is blaming the ruling class, but aren't those also African's, aren't those the same people you have voted for? Yeah, the situation in Venezuela can be blamed right now on Maduro, but it shouldn't be him the only one.

Venezuela can't seem to revive its economy, no matter what its efforts may be. Its latest attempt of creating a digital currency backed by oil reserves turned out to be a huge failure. They're better off using Bitcoin as a reserve currency to protect the economy. The Venezuelan Bolivar can be backed by Bitcoin directly, instead of printing new bills that would cause hyperinflation.

Do you know what that currency backed by oil has failed? Because nobody trusted them even for a moment they will indeed back it with all that oil. Do you think anybody will trust them if they claim they have it backed by bitcoins gold or diamonds? Nope.
Their currency is worthless because of the same thing, people don't trust it for being worth the same next day, there are far poorer countries than Venezuela out there and their currencies look almost flat compared to the bolivar, because as poor as they might be there is still some faith in them, in the bolivar there is none, neither in the word of their leader.

[Sithara007]

Well.. just one small question here. Why can't they just re-denominate their currency? Not saying that it is going to slow down the inflation rate, or keep more money in the treasury.. but having bills of 100,000 or 250,000 sound really weird. If I was the finance minister, then I would re-denominate the currency by a factor of 1 million. So the rate becomes 1 New Bolivar = $2.30. It is not going to last long.. but still, it is worth giving a try.

[SquallLeonhart]

Problem Venezuela has right now is not even at the levels where they should care about their bill or their currency meaning anything at all, it is more humanity related where people are starving to death and that is what they should be focusing on as a whole nation instead of caring about each individual.

Of course in a regular nation without any of these problems you would want people to have rights and chances and opportunities but right now they have hard time having enough simple life stuff like literally food, so they should focus on gathering as much money as possible as a government to use that money to bring in cattles and foods and more stuff from other nations without going even worse and using that to establish a base level to work from.

I believe this new bill deal would allow that to happen for a short period of time, it is not a great move but definitely doesn't look bad neither.

[stompix]

Well.. just one small question here. Why can't they just re-denominate their currency?

Because they tried, and not only once:

The Bolívar fuerte replaced the bolívar on January 1, 2008 at 1 bolívar fuerte for 1000 old bolívares.
On 20 August 2018, the Maduro government launched the new bolívar soberano currency,with one bolívar soberano worth 100,000 bolívares fuertes.

It is not going to last long.. but still, it is worth giving a try.

They tried it didn't last, I assume that right now they don't have the money to even come up with new designs for the notes let alone print them.
Also a funny fact, for a short period of time the coins in Venezuela were actually worth more than their value

There's 125,000 one bolivar coins to a tonne, so 8 million coins is 64 tonnes of coins. But given our rough metals value (and again, is is a rough value) of $7,000 a tonne then that's half a million dollars worth of metal that has been turned into coins. Those coins having a value of perhaps $20,000. Or, if you prefer, that's a net loss to the mint of $480,000 from making coins. Or, in the more technical jargon, that's reverse seigniorage.

Probably Venezuela was for a short time the only country that came close to having again a gold standard but with copper and nickel.  

[ultrloa]

People must act about this since they are the one who will suffer for negligence made by the government and if they keep their mouth shut upon this incident they will encounter more economical problem.

Their idea to create mo bills is so crazy thing what leader could think and I wonder if they have economic adviser advise them on what to do on how things gonna work if they create such decision like this.  And for what I see the intention for creating another bills is just for another corruption purposes only.

[STT]

Sad thing is these are not new troubles, these problems date back thousands of years.   The ancient Roman empire did the same thing, eventually coming close to an enslavement of all citizens who were not soldiers.   That empire destroyed itself because it was better for the people for this to happen.   The worst mistakes are repeated, timelessly and generations suffer for whatever is already known as as a mistake leading to inevitable failure mostly because a few in power benefit.   

Because they tried, and not only once:

The Russian Rouble is convertible from the old Rouble for 10,000 to one if you should still have some.   In this way they can deny ever defaulting or collapsing.    I see QE programs as a way of doing this also, all debts are repaid but the value never is but you cant argue with a central and military backed system.   

for a short period of time the coins in Venezuela were actually worth more than their value

This is so common I can post up a wiki article relating to it.   Happened in european countries, in UK and USA most recently had silver coins which cannot be issued as the tradable value is far below.   I'll try and find the website for identifying market value exceeding face value.

https://www.investopedia.com/terms/g/greshams-law.asp

https://www.coinflation.com/silver_coin_values.html

Venezuela

The main point is these things happening in this country are obvious to us as leading to poverty but the wider take are these factors are occurring over almost the entire world daily.   There's no way I can afford to look down or dismiss the troubles of the people of Venezuela because its a natural phenomena that will visit us all.   Obviously I hope we do not have a military governance to stop corrections we the people require so that balance can be restored in an economy.

[kotajikikox]

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

What's happening to venezuela as if they are not caring about their economy?do they think that it can uptrend their economic stand with this plans?
this will only brings BS to their country and i don't know who's idea all of these coming from.

People must act about this since they are the one who will suffer for negligence made by the government and if they keep their mouth shut upon this incident they will encounter more economical problem.

Venezuelan government is now making too much foolish decision and desperation,Hoping that their Path will go towards
 development and not for dumping country.

Their idea to create mo bills is so crazy thing what leader could think and I wonder if they have economic adviser advise them on what to do on how things gonna work if they create such decision like this.  And for what I see the intention for creating another bills is just for another corruption purposes only.

he is doing everything that he thinks can help but the truth is?this is making their country drowning more and more.

[bryant.coleman]

Probably Venezuela was for a short time the only country that came close to having again a gold standard but with copper and nickel.  

Well.. this happened around three decades ago, when the former USSR collapsed. Hyperinflation made the smaller denomination coins almost worthless, and therefore people melting them to valuable metals such as copper, aluminium and nickel. Even from India, there were reports of scrap dealers melting the smaller coins, to extract steel (which were then mostly used for manufacturing shaving blades).

[Spacewalker]

Probably Venezuela was for a short time the only country that came close to having again a gold standard but with copper and nickel.  

Well.. this happened around three decades ago, when the former USSR collapsed. Hyperinflation made the smaller denomination coins almost worthless, and therefore people melting them to valuable metals such as copper, aluminium and nickel. Even from India, there were reports of scrap dealers melting the smaller coins, to extract steel (which were then mostly used for manufacturing shaving blades).

Hyperinflation is generally a terrible and frustrating force, and the government has the ability to do this and cannot cope with hyperinflation afterwards. Social populism never gives good results in the end, and no external actions can be justified. The laws of the economy can be canceled only for a while, but they are all equally boomerned afterwards. Capitalism is safe and cruel in its manifestations, but social populism is even worse in the end.

[South Park]

snip

Venezuela can't seem to revive its economy, no matter what its efforts may be. Its latest attempt of creating a digital currency backed by oil reserves turned out to be a huge failure. They're better off using Bitcoin as a reserve currency to protect the economy. The Venezuelan Bolivar can be backed by Bitcoin directly, instead of printing new bills that would cause hyperinflation.

Do you know what that currency backed by oil has failed? Because nobody trusted them even for a moment they will indeed back it with all that oil. Do you think anybody will trust them if they claim they have it backed by bitcoins gold or diamonds? Nope.
Their currency is worthless because of the same thing, people don't trust it for being worth the same next day, there are far poorer countries than Venezuela out there and their currencies look almost flat compared to the bolivar, because as poor as they might be there is still some faith in them, in the bolivar there is none, neither in the word of their leader.

This, at the end this is all a confidence game and it is why the fiat system is still in place despite its huge flaws, people either do not see it or they do not want to acknowledge it, but what will happen once the system collapses? While in theory the same should have to happen to the fiat system than what it is happening to Venezuela and all the empty promises they give I still have my doubts this will happen to it as if things get as bad as some people in the forum speculate people will get desperate and they will be willing to accept anything as long as things go back to some semblance of normality.

[Twentyonepaylots]

Well.. just one small question here. Why can't they just re-denominate their currency? Not saying that it is going to slow down the inflation rate, or keep more money in the treasury.. but having bills of 100,000 or 250,000 sound really weird. If I was the finance minister, then I would re-denominate the currency by a factor of 1 million. So the rate becomes 1 New Bolivar = $2.30. It is not going to last long.. but still, it is worth giving a try.

And would also liven the people's trust over the country's currency. Another factor why the currency is not getting back up is the fact that people don't use it. If your population don't use your coins, it's not gonna be worth anything. This helps them get back the trust that was once lost and help Venezuela come back again in the face of the world economy as a recovering currency, not as a laughingstock

[bryant.coleman]

Probably Venezuela was for a short time the only country that came close to having again a gold standard but with copper and nickel.  

Well.. this happened around three decades ago, when the former USSR collapsed. Hyperinflation made the smaller denomination coins almost worthless, and therefore people melting them to valuable metals such as copper, aluminium and nickel. Even from India, there were reports of scrap dealers melting the smaller coins, to extract steel (which were then mostly used for manufacturing shaving blades).

Hyperinflation is generally a terrible and frustrating force, and the government has the ability to do this and cannot cope with hyperinflation afterwards. Social populism never gives good results in the end, and no external actions can be justified. The laws of the economy can be canceled only for a while, but they are all equally boomerned afterwards. Capitalism is safe and cruel in its manifestations, but social populism is even worse in the end.

The gulf states (such as Saudi Arabia and Kuwait) had many decades of extreme social populism, and look at what they have achieved. A large part of the Saudi population still remains poor, without adequate education or skill level. Now they are being forced to phase out the populist measures, as the oil prices are plunging. But the population got too used to it, and they are facing a lot of issues without the freebies.

[barbara44]

During the history of the world people did had this type of melting and making coins type of deal in all of history as well from all those nations that went down. Most famously when Constantinople was under siege, the king of eastern roman empire had basically no money left at all, there was no coins and there weren't all that many soldiers neither, so they had to hire soldiers from other nations, mainly Genoese soldiers with a famous captain.

When you need to pay mercenaries but have no money, what do you do? King ordered all of churches in the city to be raided by soldiers and everything valuable to be picked and brought to castle and melted in order to turn to copper, churches famously had everything gold during that period. So melting is not something new, it is old as it gets.

[South Park]

Well.. just one small question here. Why can't they just re-denominate their currency? Not saying that it is going to slow down the inflation rate, or keep more money in the treasury.. but having bills of 100,000 or 250,000 sound really weird. If I was the finance minister, then I would re-denominate the currency by a factor of 1 million. So the rate becomes 1 New Bolivar = $2.30. It is not going to last long.. but still, it is worth giving a try.

At this point it does not really matter, if inflation keeps being this high then sooner or later they will go back to the high denomination again, besides this will mean getting all of those notes out of circulation and that takes time and money, the measure you are proposing only makes sense once the period of hyperinflation is over and some sort of stability is reached, once that happens then they could redenominate their currency, but this seems like nothing but a dream right now as things will not improve until the current government is out of Venezuela.

[Abiky]

Do you know what that currency backed by oil has failed? Because nobody trusted them even for a moment they will indeed back it with all that oil. Do you think anybody will trust them if they claim they have it backed by bitcoins gold or diamonds? Nope.
Their currency is worthless because of the same thing, people don't trust it for being worth the same next day, there are far poorer countries than Venezuela out there and their currencies look almost flat compared to the bolivar, because as poor as they might be there is still some faith in them, in the bolivar there is none, neither in the word of their leader.

Yes I'm aware. Without trust in the government, any currency issued by the central bank will be deemed worthless. It's sad how the Venezuelan economy went down the drain after being vibrant a couple of years ago. Citizens will be obliged to use foreign currencies or even crypto to stay afloat. The Venezuelan government will continue to print money like there's no tomorrow. This will continue to plunge the value of the Bolivar in the mainstream world. I'd imagine a foreigner would become rich in Venezuela with US dollars. If $0.23 USD are worth 100k Bolivars, then with just $20 USD you'll become a millionaire (getting 8m Bolivars in return).

Anyhow, Venezuela's hyperinflation shows us that Fiat cannot be trusted. This could happen in other countries' economies if central banks continue to print money like crazy during pandemic times. Ultimately, people will trust precious metals (like Gold and Silver) and crypto more than Fiat currencies themselves. This is good as it decentralizes the mainstream economy. Time will tell us what will lie ahead with the future of the Venezuela with President Nicolas Maduro in power. My guess is that things will get worse until the demise of Maduro's regime. Let's hope Venezuela becomes democratic again so that it can get its economy back on track. Just my thoughts

[tyz]

Well.. just one small question here. Why can't they just re-denominate their currency? Not saying that it is going to slow down the inflation rate, or keep more money in the treasury.. but having bills of 100,000 or 250,000 sound really weird. If I was the finance minister, then I would re-denominate the currency by a factor of 1 million. So the rate becomes 1 New Bolivar = $2.30. It is not going to last long.. but still, it is worth giving a try.

This is happening when inflation is going out of control. In the end of the 1920s in Germany, there were bills which were worth 10 trillions. A year before such a bill was worth 100. The 10 trillion bill was enough to buy one bread. Next day, bread cost 50 trillions. Same happened a few years ago in Zimbabwe. Now in Venezuela, even though at slower pace.