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from the toilet-paper-is-worth-more dept.
In a surprise announcement, [President Nicolas] Maduro said on Sunday that the 100-bolivar note, worth about 2 US cents (£0.015) on the black market, would be taken out of circulation on Wednesday.
The president said the aim was to tackle transnational gangs which hoard the Venezuelan notes abroad, a move he has in the past described as part of the "economic war" being waged against his government. [...] He said part of the plan was to block any of the 100-bolivar notes from being taken back into the country so the gangs would be unable to exchange their hoarded bills, making them worthless.
"I have given the orders to close all land, maritime and air possibilities so those bills taken out can't be returned and they're stuck with their fraud abroad," he said speaking on television.
Venezuela's currency has fallen dramatically amid skyrocketing inflation.
[...] Analysts say the move is likely to worsen the cash crunch in Venezuela, where people have already been limited in the amount of cash they can take out at automated teller machines. Venezuelans have only been given 10 days to exchange their 100-bolivar notes for new coins and bills ranging from 500 to 20,000 bolivars due to be introduced from 15 December.
(Score: 2) by fishybell on Wednesday December 14 2016, @01:00AM
Isn't India [forbes.com] doing the same thing, with the same results? Copy-pasting economic policies like this doesn't seem like a great idea. Next thing you know, Trump will want to copy Zimbamwe [wikipedia.org] just for kicks.
(Score: 1) by khallow on Wednesday December 14 2016, @01:29AM
Isn't India doing the same thing, with the same results?
And using similar justifications. Venezuelan inflation is even worse which makes the whole justification exercise ludicrous.
(Score: 1) by Francis on Wednesday December 14 2016, @04:56AM
This is mostly just for propaganda purposes. The incompetent and corrupt government is using this to try and cover up their own incompetence. Such as recently when they seized millions of dollars in toys to give to the children because the company was speculating on their future value.
There's no real point in investing in Venezuela as their government will seize all of the proceeds as well as whatever capital was used to create it. It's amazing how much damage the far left has done to the country.
(Score: 1) by khallow on Wednesday December 14 2016, @04:06PM
(Score: 0) by Anonymous Coward on Wednesday December 14 2016, @09:16PM
"Speculating on future value" sounds so smart and business like! Who can fault a business for trying to make profit, I mean that's their job right? /s
Let's put it another way, corporate ag business sees a food shortage coming so it stores as much long shelf life product as it can. Meanwhile food availability goes down, prices steadily go up, and at some point the company's move translates into the starvation of actual people.
Sure this is an extreme scenario, but complaining about the big bad socialist government is just an ideological point that isn't very well thought out. Any sane person will see that 100% government owned countries are bad, but also they will see that corporations need serious checks and balances or they will also be bad. Such a sane individual will realize that human society in the 21st century is best served by a mix of socialist and capitalist systems. Provide the people with the necessary support structures for success, and allow people the freedom to pursue their own endeavors and be rewarded for jobs well done.
The US and Russia are great examples of private ownership run amock. Criminal syndicates take power, the Earth is polluted because its cheaper, human rights go out the window because its inconvenient for people who hire labor, and the wealth disparity sets us on a collision course for civil war, or worse, WW3.
Pure communism has similar problems, just the people in power change their titles around. Mix the two together and you have a recipe for success.
Cling to your ideologies and ignore evidence at your own peril.
(Score: 1) by khallow on Wednesday December 14 2016, @01:53AM
Next thing you know, Trump will want to copy Zimbamwe just for kicks.
It does look like a fad that would attract Trump. Find that one weird trick for fixing all the problems. All the other fruit loops are doing it.
(Score: 2) by butthurt on Wednesday December 14 2016, @02:46AM
If that happens, it won't be the first time Mr. Trump has taken on the mob.
http://www.vice.com/read/a-brief-history-of-donald-trump-and-the-mafia [vice.com]
https://www.washingtonpost.com/politics/former-mafia-linked-figure-describes-association-with-trump/2016/05/17/cec6c2c6-16d3-11e6-aa55-670cabef46e0_story.html [washingtonpost.com]
http://www.politico.com/magazine/story/2016/05/donald-trump-2016-mob-organized-crime-213910 [politico.com]
(Score: 0) by Anonymous Coward on Wednesday December 14 2016, @02:18AM
It was actually proposed by a member of the Obama [washingtonpost.com] administration (here's a fake news [zerohedge.com] source for those so inclined).
Copy-pasting economic policies like this doesn't seem like a great idea.
Note the sources of criticism over the policy and be amazed.
(Score: 0) by Anonymous Coward on Wednesday December 14 2016, @02:49AM
https://www.youtube.com/watch?v=4uMADKWlXt8 [youtube.com]
This just moves Venezuela closer to an alternative economy, and gives credence to ending central banks.
I'd like to think most people would be alarmed by such currency manipulations, but apparently no.
https://www.conservativereview.com/commentary/2016/05/5-times-left-wing-media-felt-the-venezuelan-bern [conservativereview.com]
(Score: 1) by khallow on Wednesday December 14 2016, @04:54AM
Last, but certainly not least, two socialist university professors wrote the following in a 2014 article titled “Austerity/Immiseration Capitalism: What Can We Learn From Venezuelan Socialism?”
Once President Chávez was able to control the oil industry, his government was able to reduce poverty by half and extreme poverty by 70 percent. Public pensions rose from 500,000 to over two million. Chávez helped turn Venezuela from being one of the most unequal countries in Latin America to being the most equal in terms of income after Cuba. Under the naked thrall of neoliberal capitalism, the United States has become one of the most unequal countries in the world.”
That right there is why I take all economics and sociology research with a huge grain of salt. There was no doubt lag in the publication of the article and lag in the data that went into the study. But it's funny how quickly Venezuela went from this alleged utopia to a shithole. Perhaps the metrics given in this quote are quite useless for measuring a healthy country?
(Score: 0) by Anonymous Coward on Wednesday December 14 2016, @02:08PM
He might have been able to do that for a short amount of time. But turns out making everyone equal in the short term destroys your economy in the long term because if you get participation trophy for minimal effort why bother working hard? We can all be winners....
(Score: 1) by khallow on Wednesday December 14 2016, @04:31AM
(Score: 2) by pendorbound on Wednesday December 14 2016, @03:19PM
It's not illegal to make your own currency. It's illegal to counterfeit US currency, but things like Bitcoin and some "wooden nickle" type tokens that some smaller towns have used over the years are legal.
Here's an old (1933) example: http://www.nationalsilverdollarroundtable.org/blaine-washington-emergency-money-and-the-great-depression/ [nationalsilverdollarroundtable.org]
And a few more modern cases: http://globalguerrillas.typepad.com/globalguerrillas/2008/06/the-resilient-c.html [typepad.com]
It's not "legal currency for all debts public and private," so people can refuse to accept it, but to the degree people agree to use it, it's currency.
(Score: 2) by butthurt on Wednesday December 14 2016, @03:05PM
The U.S. has bills in larger denominations, from $500 to $100,000. They were last printed in 1945 and it was announced in 1969 that they would be phased out.
http://mentalfloss.com/article/23692/100000-bill-story-behind-large-denomination-currency [mentalfloss.com]
(Score: 1) by khallow on Wednesday December 14 2016, @05:02PM
(Score: 2) by butthurt on Wednesday December 14 2016, @07:32PM
Sometimes I forget that links are seldom followed. The reason I used the word "has" is that, according to the page I linked, a few are still "in circulation"—they didn't magically vanish when printing stopped or upon the announcement of their phasing out—and their value as currency is still honoured. However they are being withdrawn from circulation and destroyed when they reach the central bank; they have the status of collector's items.
I wanted readers to notice that there was a U.S. example from before the Obama administration; that it didn't involve devaluation, happened over many years, and didn't cause chaos is something that the Indian and Venezuelan governments might have done well to note.
(Score: 0) by Anonymous Coward on Wednesday December 14 2016, @07:56PM
Man, there is reaching, and there is reaching.
Comparing bills that were primarily used for interbank transfers to what Venezuela (or Summers) was proposing is disingenuous in the extreme.
Nothing in removing the $500+ denominations was response to currency manipulation, and from your own damn article was because electronic transfers between banks made the bills obsolete.
That is pretty far removed from the justifications given by Maduro and Summers, which bear a striking similarity to each other, and should make people uneasy about the US monetary system.
I wanted readers to notice that there was a U.S. example from before the Obama administration
More like confuse the issue with an irrelevant example.
(Score: 2) by butthurt on Wednesday December 14 2016, @10:55PM
> Nothing in removing the $500+ denominations was response to currency manipulation [...]
I didn't say or imply it was. I merely mentioned that the largest denominations had been discontinued.
(Score: 1) by khallow on Thursday December 15 2016, @07:35AM
I merely mentioned that the largest denominations had been discontinued.
You failed to mention why or that those denominations weren't used by the general public. In contrast, the Zero Hedge article [zerohedge.com] notes that about three quarters of US currency is the largest denomination, $100 bills.
As the Treasury chart above shows, $100 bills account for for $1.08 trillion of the $1.38 trillion total in circulation.
Discontinuing those large bills didn't have any actual effect on actual bills in circulation by the public. That will be very different from now when most cash would be discontinued.
(Score: 2) by butthurt on Thursday December 15 2016, @10:24PM
Discontinuing those large bills didn't have any actual effect on actual bills in circulation by the public.
According to the page I linked, a few are in circulation, although at this point it would be more accurate to say "in private hands."
That will be very different from now when most cash would be discontinued.
Marx notwithstanding, elites aren't always of one mind. As influential as Mr. Summers is, he (famously) does not direct the Federal Reserve. Nor, for that matter, does Mr. Obama. In his op-ed, Summers acknowledges the initial failure of his advocacy against the €500 note. If the Federal Reserve follows Summers' recommendation like the ECB eventually did, and the president doesn't like that, he/she can direct the U.S. Treasury to issue high-denomination coins (bearing Mr. Trump's visage, perhaps). You put forth the idea that the Indian and Venezuelan governments are intentionally sabotaging their own economies. Do you see the same motivation in the United States' government?
(Score: 1) by khallow on Friday December 16 2016, @05:14AM
You put forth the idea that the Indian and Venezuelan governments are intentionally sabotaging their own economies. Do you see the same motivation in the United States' government?
There's certainly some of that in the current Obama administration which has famously sabotaged (in the political sense) some oil exploitation and pipelines. And the health care stuff has been a mess too. But I wouldn't put it in the same class as the current monkeying with currency.
The current batch of Trump appointees certainly indicate a relatively stable approach to economic and monetary policy. But they might be fired in a year or two just like a number of Trump's campaign management staff has been. And the next batch might be more unstable.
(Score: 1) by khallow on Wednesday December 14 2016, @08:21PM
Sometimes I forget that links are seldom followed.
It's nothing to do with the link. And the AC said this better than I would have.
I wanted readers to notice that there was a U.S. example from before the Obama administration; that it didn't involve devaluation, happened over many years, and didn't cause chaos is something that the Indian and Venezuelan governments might have done well to note.
The problem here is twofold. First, as the AC noted, these old US bank notes weren't generally carried around by people for regular cash expenditures and the change was merely because the bills had become obsolete. So it isn't a US example from before.
,br> Second, the point of the Indian and Venezuelan approaches were to cause unexpected disruption. They wanted to screw over cash holders (like inflation somehow weren't good enough on its own) and you can't do that via bill replacement, if you warn them ahead of time. The shock and awe is a necessary part of the strategy. They just didn't expect and/or care about the blowback.
(Score: 1, Informative) by Anonymous Coward on Wednesday December 14 2016, @08:32PM
Actually, now that I think about it, there was a similar circumstance in the history of the US: Executive Order 6102, which made holding gold illegal, signed by FDR.
(Score: 1) by butthurt on Wednesday December 14 2016, @11:05PM
> It's nothing to do with the link.
I assumed that you wouldn't have made the comment you had, if you had read that page.
> Second, the point of the Indian and Venezuelan approaches were to cause unexpected disruption.
You're probably right about that. I hadn't grasped that that could be the intention.
(Score: 0) by Anonymous Coward on Wednesday December 14 2016, @01:01PM
What he is doing is clear, and the reason is obvious when viewed as a math problem.
I am surprised he blamed external sources hoarding the bolivar note.
If it was the USA, he'd have said pedo-islamafascism that make children abuse kittens and puppies while snorting cocain on the rolled bills as they got filled and distributed via encrypted dark nets.
If it was saudi arabia, they'd perhaps blame some non-state religious extremists for the problem.
And everyone would agree because arguing against it would brand you a traitor that molests children and teaches dogs to bite people of the wrong religion from the persective of those calling you a traitor, etc.
It's not the cause cited, it's the action taken against whatever the blame is. He's changing policy and trying to not be blamed for it. He's trying to alter the financial system in an unpalatable way, and he is blaming external sources so that people don't directly blame him. They already have it hard over there; someone else already mentioned the drop in oil prices