Enjoy communism (II): Venezuela to cut 6 zeros from its currency

[Poker Player]

As a continuation of the previous thread: Enjoy comunism: Venezuela raises monthly minimum wage to $2.40 today we can continue to see that because communists consider wealth as a cake, rather than as something dynamic that you can create, what they end up doing is distributing misery with simplistic measures:

The Central Bank of Venezuela will launch a CBDC in October alongside a monetary redenomination that will cut six zeros from the currency due to raging inflation.
...
This the second time in three years that Venezuela has readjusted the bolivar after Maduro cut five zeros from the currency in 2018 as inflation hit its peak of 1.8 million percent. In 2020, the annual inflation rate was estimated to be around 2,300%.

Luis Vicente Leon, economist and president of Caracas-based Datanalisis, criticized the move, telling Bloomberg on Aug. 5 that another redenomination of the currency will do nothing to address the underlying issues that are debasing its value:

“Removing those zeros does not solve, at all, the reason that originated the problem. Without resolving the root of the issue, we will have the same problem in months.”

source: https://cointelegraph.com/news/venezuela-to-launch-cbdc-in-october-and-cut-six-zeros-from-its-currency

The bad part of the situation in Venezuela does not seem to have a solution in the short term. It does not appear that Biden is willing to invade the country. Not for a humanitarian issue and not for oil. And the little opposition left in the country is too weakened by hunger to mount a revolution. .

[NeuroticFish]

The Central Bank of Venezuela will launch a CBDC in October alongside a monetary redenomination that will cut six zeros from the currency due to raging inflation.

The title may be misleading.
In my country the "raging inflation" has started after "communism has died and got replaced by democracy"(*).
After some years, when the inflation was not that bad any longer they've cut 4 zeros from our currency.

So it may not be related that much to communism. I don't want (by any mean) to say that communism would be good, just democracies, especially the not 100% working ones, should also be afraid of this kind of scenarios (unless using bitcoin, obviously )


(*) Clarification needed:
Although officially communism has died here (together with Ceausescu), unofficially it still lives even after 30+ years. The democracy is still unbelievably fragile because the important people from the old regime or their descendants are infiltrated directly or indirectly in all the levels of power, from parts and parliament to intelligence and justice, also obviously media and businesses. So yeah, between 1989 and 2005 the democracy was only on paper, the economy was struggling collapsing and so on. Bad times. And in 2005 we got 4 zeros removed from our currency.

[Rainbow-queen]

Venezuela is a famous energy country, and its oil reserves rank first in the world.

However, the Venezuelan government puts its own economy on oil, and a series of events triggered by the plunge in oil prices eventually became the fuse for Venezuelan inflation. At present. , Venezuela’s inflation is very serious, and the main reasons for its increasing inflation are: the government's excessive dependence on the oil economy, the implementation of foreign exchange controls, the government’s excessive currency issuance, and the influence of international factors.

The government’s corruption and incompetence and wrong economic policies make The Venezuelan economy collapsed.

The best way to deal with inflation is to control the money supply, and this is what Bitcoin can do.

[Findingnemo]

Inflation exists on both democratic and communist nations, and these hyper inflation happened due to the utter rate of corruption by the government and poor monetary policies, cutting down the zeros may not bring any effect in the valuation of their currency and introduction of CBDC also is similar to the shit as their fiat. Better if they move to a decentralized asset like bitcoin and accept it as legal tender.

[Obito]

Inflation exists on both democratic and communist nations, and these hyper inflation happened due to the utter rate of corruption by the government and poor monetary policies, cutting down the zeros may not bring any effect in the valuation of their currency and introduction of CBDC also is similar to the shit as their fiat. Better if they move to a decentralized asset like bitcoin and accept it as legal tender.

If everything is state owned, how can it exactly inflate though especially if they have a lot of resources and they don't rely too much on exports? Of course the value of goods increases overtime, I mean that's normal for any economy that has money in it's circulation. If they move to bitcoin, they won't have any control over their people that's why they pursue CBDC.

[Ucy]

Things are designed for us to be productive. If you are not productive and solving very useful problems, then don't eat... If you eat without contributing anything, price will definitely rise because there will more demand (and less supply/production), and you are adding to the demand . Some think poor productivity can be solved by involving/enslaving robots to do the job for us... That can't happen without serious consequences.

So, we need to work really hard to produce more so that there will be enough to drive down prices of things and increase the value of our currencies.

[fillippone]

The Central Bank of Venezuela will launch a CBDC in October alongside a monetary redenomination that will cut six zeros from the currency due to raging inflation.

The title may be misleading.
In my country the "raging inflation" has started after "communism has died and got replaced by democracy"(*).

Let's put this way:

Enjoying power groups interfering indebtedly with free markets.

When they do this by design, as in communism, or by "accident" (let's be gentle and put it this way") as in broken democracies, this is recipe for disaster.

[DrBeer]

Show for narrow-minded people, nothing more ... Removed 6 zeros in order to get another 9 zeros ... Stupidity and nonsense, instead of real steps to diversify the economy and solve current problems. They still do not understand that living only on oil is stupid and risky, and freedom, legality, equality, high-quality interaction within the country and with external partners is the way to change the situation. True, now they will have to come to terms with the fact that it is always easier and faster to destroy than to create. That 1 year of destruction = 3 years of restoration, and the more years they destroy, the further away from them restoration and normal life will be. And "reducing" zeros is not a solution to problems, it is just a reduction in the number of zeros, nothing more!

[The Sceptical Chymist]

I'm pretty sure the Venezuelan government knows cutting zeros from their currency isn't a fix for anything other than convenience, i.e, so that people don't have to cart around their cash in wheelbarrows.  So that's kind of a stupid argument by the media, but not a surprising one, since the media is as bad or worse than any government known to man (in my very humble opinion).

The bad part of the situation in Venezuela does not seem to have a solution in the short term.

The cutting of zeros is a short-term "solution", though it's just a Band Aid that doesn't treat the actual problem.  I don't follow Venezuelan politics or even keep up to date on their pitiful situation, but I'd imagine that they'll eventually get help from another country in the form of a loan or some other deal--but that depends on who's in charge in Venezuela, and it doesn't appear that the current leadership is competent or willing to ask for help (or to work on a fix themselves).

It does not appear that Biden is willing to invade the country.

Say what?  Why would the US invade Venezuela?  Why should we?  I don't know about you or anyone else, but I'm tired of the US trying to be the world's moral police.  We're in no position to do that anymore, if we ever were.  Nor am I confident that the US could afford to render aid to Venezuela--we've got our own crises forming here, and it's going to get a hell of a lot worse before it gets better.

[stompix]

The bad part of the situation in Venezuela does not seem to have a solution in the short term. It does not appear that Biden is willing to invade the country. Not for a humanitarian issue and not for oil.

Oh, common, the US has a lot of oil, it has thousands of wells that are stopped because there was simply no demand, there are enormous reserves, why would they invade a country to get the costliest oil in the world? And don't even mention Iraq, the largest fields there, as well as a lot of smaller ones, are usually explored by the Iraq government in partnership with China Petroleum.
The first deal Iraq signed after the fall of Saddam was with China, not the US.

The title may be misleading.
In my country the "raging inflation" has started after "communism has died and got replaced by democracy"(*).
After some years, when the inflation was not that bad any longer they've cut 4 zeros from our currency.

If you suffer from a disease for 30 years do you expect both the operation and the recuperation to be painless?
Every time somebody tells me how hard some countries are trying to narrow the gap to the western world and I look at the map I always have a feeling that the closer you were to Moscow the harder it gets. Hungary>Romania>Moldova>Belarus.

But, back to Venezuela, the first thing that popped into my mind was hearing about denomination, do they afford to print the new notes? Of course, it will be a lot cheaper due to the quantity but they will have to print all the notes, not just a new batch and with the coffers even "emptier" if that is even a word, who is going to do it for them at the risk of never getting paid?

And, what about the Petro???
The currency that could rival Bitcoin? Backed by true oil reserves?

[NeuroticFish]

If you suffer from a disease for 30 years do you expect both the operation and the recuperation to be painless?
Every time somebody tells me how hard some countries are trying to narrow the gap to the western world and I look at the map I always have a feeling that the closer you were to Moscow the harder it gets. Hungary>Romania>Moldova>Belarus.

Well, after 40 years of disease and quite a surgery, I didn't expect that after more 30 years the healing is far from complete...
The map thing is a very good point though. Sadly.

But, back to Venezuela, the first thing that popped into my mind was hearing about denomination, do they afford to print the new notes? Of course, it will be a lot cheaper due to the quantity but they will have to print all the notes, not just a new batch and with the coffers even "emptier" if that is even a word, who is going to do it for them at the risk of never getting paid?

And, what about the Petro???
The currency that could rival Bitcoin? Backed by true oil reserves?

While Venezuela should not spend extra money on printing new bills, it should not be a big problem, since most probably the process will take years and both currencies will go in parallel for quite a while. So they only have to print a little bit bigger batches, that's all. And Petro... well... LOL...

Oh, common, the US has a lot of oil, it has thousands of wells that are stopped because there was simply no demand, there are enormous reserves

I tend to believe that they keep that oil for later deliberately. And not necessarily for cars and electricity. Keep in mind that half of the fibers in your clothes is probably coming from oil and gas.

[Gozie51]

Inflation exists on both democratic and communist nations, and these hyper inflation happened due to the utter rate of corruption by the government and poor monetary policies, cutting down the zeros may not bring any effect in the valuation of their currency and introduction of CBDC also is similar to the shit as their fiat. Better if they move to a decentralized asset like bitcoin and accept it as legal tender.

Venezuela has to know that cutting down on zeros in there currency would not bring any positive change because that is not the solution. Venezuela is rich in oil just like Nigeria but these two countries are facing heavy corrupt practices. To leave corrupt ways is the solution and not CBDC but to fix corruption. Digital currency has no effect with Fiat and if officials have a way of being manipulative with it, the corruption will increase but I don't see digital currency having any major contribution to the GDP of a country but only for convenience of financial activities but no major effect to the economy.

[kryptqnick]

I remember they already issued a crypto back in 2018 (petro coin). I couldn't even find it listed on coinmarketcap or coingecko, so I guess it went that badly. It didn't seem to help the country's economy in the slightest. After all, the GDP per capita is still dropping year after year, and it's hard to imagine a country that's in a worse state than Venezuela. Another crypto launch is definitely not going to cut it. What they need is a totally different government, a lot of help from other countries and readiness to fight corruption strongly.

[magneto]

Are they delusional?

Removing zeroes does not cure the underlying economic malaise. The best it's going to do is make transacting a bit easier in day to day life, but that's pretty much it.

The same thing happened with Zimbabwe, they revalued their currency multiple times and caused absolutely no change in the fundamentals of their country's economy. Riduculous stuff if you ask me.

[dkbit98]

There is a lot of communism and fascism today (that are not much different at all) even in so called democratic countries, and only difference is in stages.
When people realize they live in communism and dictatorial state it will be too late to change something and blood will be spilled already.
Cutting zeroes from their Venezuelan currency won't help them, and they can check history of all other countries that tried that strategy before, but imagine if they introduce Bitcoin as a legal tender (unlikely to ever happen).

[Leviathan.007]

I know-how is the inflection rising on Venezuela and some people are even using money as a useless piece of paper, in order to buy a chicken to eat you have to pay too much money and some criminals kill people only for 100 bucks or even less. That's what's know from Venezuela, but removing 6 zeros and even 60 zeros won't change anything. So basically, if people were working for 1000000(1m) Bolivar per month and they had to pay 10000000(10m) for food, now they will work for 1 bolivar and they have to pay 10 Bolivar for food. Nothing changes and people's purchasing power is still the same and also the inflection is still rising. Their government just will pay too much funds and resources to print new money papers and this will make everything even worst for them.

[avikz]

Lol! It seems op has issue with communism only, rather than the actual reasons of hyper inflation in Venezuela. The problem of Hyperinflation started since the current president came to the power in 2013. It took him only 3 years to push the country into Hyperinflation and he was forced to declare an emergency. I frankly don't see any hand of communism in here!

Communism actually ruined former Soviet union and currently ruining North Korea and China to some extent. Another country Zimbabwe is also facing same issues but communism has never taken a step in that country. So honestly I don't see how communism is ruining Venezuela. It's the democratic government that is ruining the country even after sitting on the biggest oil reserve in the whole world.

[Darker45]

With all of what Venezuela has gone through for the past several years, Maduro and his economic team should have already learned a lot of lessons. But it seems they haven't. On the contrary, things seem to become worse. In 2018, Maduro only cut 5 zeros. In 2021, instead of improving, they're now cutting 6 zeros.

It looks as if they miss the whole point. Cutting zeros won't improve the economy. Even shifting to the use of cryptocurrency won't matter much to their crumbling economy. They failed with Petro; there's not enough reason why they won't with a CBDC or a digital bolivar.

Modernizing the monetary system by going digital does not actually revitalize the economy. As a matter of fact, it might only make things worse. Hyperinflation is not addressed by shifting into mobile banking and online payment system. In the first place, substituting hard cash with CBDC is misplaced in a country where smart phone and internet penetrations are rather low. Internet services are not affordable either. 

[paxmao]

As a continuation of the previous thread: Enjoy comunism: Venezuela raises monthly minimum wage to $2.40 today we can continue to see that because communists consider wealth as a cake, rather than as something dynamic that you can create, what they end up doing is distributing misery with simplistic measures:

The Central Bank of Venezuela will launch a CBDC in October alongside a monetary redenomination that will cut six zeros from the currency due to raging inflation.
...
This the second time in three years that Venezuela has readjusted the bolivar after Maduro cut five zeros from the currency in 2018 as inflation hit its peak of 1.8 million percent. In 2020, the annual inflation rate was estimated to be around 2,300%.

Luis Vicente Leon, economist and president of Caracas-based Datanalisis, criticized the move, telling Bloomberg on Aug. 5 that another redenomination of the currency will do nothing to address the underlying issues that are debasing its value:

“Removing those zeros does not solve, at all, the reason that originated the problem. Without resolving the root of the issue, we will have the same problem in months.”

source: https://cointelegraph.com/news/venezuela-to-launch-cbdc-in-october-and-cut-six-zeros-from-its-currency

The bad part of the situation in Venezuela does not seem to have a solution in the short term. It does not appear that Biden is willing to invade the country. Not for a humanitarian issue and not for oil. And the little opposition left in the country is too weakened by hunger to mount a revolution. .

Due some acquittances, I have quite decent information about what is up in Venezuela. One of the things that is happening is that obviously people are ignoring as much as possible the local currency. Whether bitcoin our USD, they are definitely  not getting to use the local coin regularly. The main exception are employees with salaries denominated in bolivars, in which case they have to undertake extra activities to make sure they  get to eat everyday or every other day anyway.

The problem is that this country is going to swing from communist to a ferocious if not dictatorial regime which may solve some issues and create newer ones.

[yhiaali3]

I do not think that the issue is related to communism, because there are many economically successful communist regimes, but the issue is related to mismanagement, corruption and the failed government that did not succeed in solving the basic economic problems and instead resorts to temporary solutions instead of searching for a solution to the problem from its roots.
Removing 6 zeros from the currency is a ridiculous game that will not solve the intractable economic problems in Venezuela. It is already a farce. Inflation will continue because they pump more worthless paper currency and they think that this will solve the problem, but the truth is that this will complicate the problem so that it becomes impossible to solve and the economy collapses .