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posted by janrinok on Wednesday December 14 2016, @12:49AM   Printer-friendly
from the toilet-paper-is-worth-more dept.

The BBC Reports:

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.


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  • (Score: 1) by khallow on Wednesday December 14 2016, @05:02PM

    by khallow (3766) Subscriber Badge on Wednesday December 14 2016, @05:02PM (#441326) Journal
    So the US doesn't actually have those larger currency bills.
  • (Score: 2) by butthurt on Wednesday December 14 2016, @07:32PM

    by butthurt (6141) on Wednesday December 14 2016, @07:32PM (#441396) Journal

    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 However they are being withdrawn from circulation and destroyed when they reach the central bank; they have the status of collector's items.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

      by Anonymous Coward on Wednesday December 14 2016, @07:56PM (#441399)

      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

        by butthurt (6141) on Wednesday December 14 2016, @10:55PM (#441455) Journal

        > 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

          by khallow (3766) Subscriber Badge on Thursday December 15 2016, @07:35AM (#441538) Journal

          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

            by butthurt (6141) on Thursday December 15 2016, @10:24PM (#441818) Journal

            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

              by khallow (3766) Subscriber Badge on Friday December 16 2016, @05:14AM (#441954) Journal

              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

      by khallow (3766) Subscriber Badge on Wednesday December 14 2016, @08:21PM (#441406) Journal

      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

        by Anonymous Coward on Wednesday December 14 2016, @08:32PM (#441408)

        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

        by butthurt (6141) on Wednesday December 14 2016, @11:05PM (#441459) Journal

        > 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.