Today's bomb shell is the demonetization of the 100 tender in Venezuela. Why, oh why?
The governor of Aragua, famed drug trafficker suspect cum links to Hezbollah and what not says it is a conspiracy from the US treasury to steal all of our 100 Bs, bills to provoke economic chaos.
Presidente @NicolasMaduro denuncia operación mafiosa dirigida por el departamento del tesoro de EEUU para robarnos los billetes de 100bs.— Tareck El Aissami (@TareckPSUV) 11 de diciembre de 2016
I, for one, think that the US has much easier ways to achieve this. Actually, the US does not need to do anything, just sitting and watching is enough to implode the regime.
This being said, it is quite possible that there are hoards of 100 bills here and there. After all, not all drug traffic receipts can be stored in USD crisp greenbacks. Black market also takes its share of the 100 notes. But in both cases any hoarding is temporal: drug traffickers, black marketers and Colombian mafias are business people, admittedly in their own sick way. For them it makes no sense to hoard a currency that loses a couple of % value points A DAY!
And then there is that:
Remember the $100s of millions #Venezuela spent importing 100-bolo bills? They're all being taken outa circulation. https://t.co/0p1Ji4xUHp— Kejal પ્રવીણ Vyas (@kejalvyas) 11 de diciembre de 2016
With the amounts of bills the regime has printed how many tons of paper money do you need to hoard to shoot a hit at the Venezuelan economy? Corruption and mafia traffic cannot be an excuse. Unless.... this is being used for some inside chavismo to hit others inside chavismo since chavismo is by itself now no more than a mafia.
Since there is no logical explanation and that the truth will eventually emerge, let's focus on the consequences, dires according to serious economists already on record.
As of tomorrow and as long as the replacing currency is not provided these are the things that will be very difficult to do, because there is not enough low denomination bills (2, 5, 10, 20 and 50 which itself is worth barely a penny) to pay for routine cash stuff. You will need to carry wads of bills, if you can find them, for the following:
- Gas for your car, newspaper, candies, anything that is not attached to a ATM or cash point or whatever accepts your debit card (never mind that these devices have been collapsing recently due to the lack of paper money, by the way).
- Services like the grocery bag boy, your cleaning lady, parking, small tips, etc. are not possible as of tomorrow. Note that the recipients of these cash payments are in the lower economical ranks of the population and are taking a direct hit in their ability to purchase their food....
- You cannot buy in the informal market food items that you cannot buy at the store because either it is out of such sundries, or you were at work and could not take the time for the 1 to 2 hours requirement of standing on line at the grocery store. "bachaqueros" or small time black marketeers sell for cash.
- Never mind that the re-sellers, who make a living out of it, will not be making a living. They will simply hoard whatever they have until the new banknotes arrive. More scarcity, and of course higher prices to compensate their losses when they start selling again.
- You cannot buy bread if you do not have an ATM card, for whatever reason you do not have it. Then again bread is getting scarce these days so the problem may actually be worse than the lack of cash.
- Some businesses will take a direct hit, the more so we are in the holidays season. Folks like the newsstand guy will see sales near zero for days.
- Whole classes of people will be affected and stand to lose money outright. The most vulnerable are retirees that only hold a savings account and who work on cash withdrawals from the bank. Many do not have or cannot operate or are afraid of debit cards that in some case only work for their bank ATM machines I understand (mine works for all but I understand that this is not the case for everyone).
- Never mind the ill informed that will not think about exchanging their 100 bills on time. Outright robbery by the state out of the most vulnerable people.
- Purchasing cheap medicine will become difficult for many people.
- Etc. you get the picture.
In short, the measure to suppress the 100 bill without a mechanism for speedy exchange in an impossible to fulfill timetable is, well, a truly inhumane measure, a gross attack on the human rights of the Venezuelan people. Of course, boligarchs may be somewhat inconvenienced but not affected. El Pueblo? Fuck El Pueblo!
Yours truly is not one for conspiracy theories, but I am starting to think that maybe the regime is seeding chaos on purpose. Let's count: the killing of the recall election, the killing of the dialogue, the inability to replenish shelves for the holiday season, the removal of cash from the hand of people, etc.... The combination of all of this is already turning the country into an administrative chaos. Can this be truly done on purpose? After all chaos is a good excuse for people not to talk about the real issues, and then if they do talk about that chaos may justify repression.
It has not escaped me that India has just done such a scheme with its high currency bills. However the time table to exchange the bills are extended, the low denomination are still serviceable for the basic goods like food and routine medicine and services. So it was a major inconvenience but it did not stop the Indian economy dead on track.
ReplyDeleteThis is not the case here in if any of Maduro circle thought the Indian thing was an interesting precedent we are in for a rude awakening.
Delay what should have been done YEARS AGO, and then expect it to be done in three days- one of which I believe is a bank holiday. Perhaps Daniel's chaos theory is correct.
ReplyDeleteWhat part do the Cuban overlords have in this? I wonder which Cubans are telling Maduro what to do these days. Does Fidel speak to Maduro through a little birdie?
Fidel did this early in his dictatorship. Changed the currency, and limited what could be exchanged to I believe $8000 USD. This is slightly different, but it has a Cuban flavor. The OLP extrajudicial killings are a Castro idea, we saw that in the early 60's.
DeleteI have also warned you the idea is to incite a rebellion to shut down the few remaining shreds of freedom you have. If measure A doesn't work go to B, C, D, etc. Maduro's salsa show, Cabello's irrational discourse, everything, is intended to trigger an explosion, which they are ready to suppress using very very harsh methods.
Don't forget the Castro regime sustains itself on two pillars: violence and lies. They mentor and direct Maduro, therefore all you will get is violence and lies. I've never felt you had much of a chance because the Europeans are surrender monkeys and mercenaries, and Obama is a closet commie, so he's going to do his best to sustain Castro and Maduro to the bitter end. Welcome to the community of the dispossessed and the deplorable, and always remember your key enemy is in Havana.
I happen to agree with you, the purpose of this action is to saw further chaos. There are few things that demotivate you from participating in rallies and volunteering in an election campaign than the inability to feed yourself.
ReplyDeleteThe downside of this 'strategy' (if you can call it that) is that it also motivates you to engage in a violent insurrection, much like France went through 227 years ago.
See my comment above. The disctatorship looks forward to an insurrection. A rebellion will get better results if three lonely Venezuelans do a Bonzo in Times Square, Saint Peter's, and the Arc d' Triomphe.
Delete¡Maduro al Hospital Psiquiátrico!
ReplyDeleteIf Maduro is telling the truth about the 100 Bolivars, this problem has been generated by his own fault. Maduro is an inept and corrupt person who has led Venezuela into bankruptcy. Our currency has no value. According to this article, as Bolivars increasingly are worth less Venezuelan paper money has served to falsify currencies of other countries. I found this article from an non- political organization in Venezuela that has been researching about it:
ReplyDeletehttp://observatoriodot.org.ve/cms/index.php/home/sala-de-prensa/noticias-y-eventos/item/176-como-el-contrabando-de-bolivares-se-ha-convertido-en-un-negocio-rentable
It's not just Maduro. He's too dumb to even make dumb decisions.. There are Dozens of crooked people behind these crooked decisions. If not Hundreds.
ReplyDeleteYou see, the levels of corruption in Venezuela are incalculable. But I will guarantee you that many, many, many people are behind these kinds of moves. Maduro is just the dumb, 'tonto util" to cover up all the crooks behind this. Hundreds, at least, including the crooked military.
Daniel, I live in the US and have these images in my head about how horrible must be to be living in Venezuela these days. So when you write "you cannot buy gas for your car, newspapers, candies". Candies? that sounds to me like something you would buy after you have everything else (unless you are a survivor of a plane crash in the Andes) is the situation as bad as the survivors from the Andes? If it it, how are restaurants open, movie theaters, how many people have surplus income to spend in entertainment? Can you elaborate on these kinds of day to day
ReplyDeleteWhat I mean is that these things exist but you do not have a way to buy them. You amy have the means to do so but you do not have the way to do so because there is no small cash for it.
DeleteUnderstand that some of the biggest crooks that were behind the scenes in the early Chavez era are the biggest bond holders of Venezuela bonds. When they financially destroy and bankrupt Venezuela the return on these bonds has gone up and up. Is why they default on everything but them. The biggest holders of them are all crooks reaping billions in payments legally with no objection as is how similiar crooks operate in all the world manipulating stocks and bond returns.
ReplyDeletePlease correct my math but I have read that there are 8 billion 1OO bolivar notes in circulation and a rough population over 15 years of 2O million.
ReplyDelete8,OOO,OOO,OOO / 2O,OOO,OOO = 4OO notes each = 4O,OOO bolivars.
At the current black/real rate of 4,2OO per dollar = $9.5O per person.
I don't see much money that can be underground. Even 8 billion notes is just around 19O million dollars. Maduro doesn't understand nobody hordes bolivars.
jak
Is the target of this action not Columbia and dolartoday? It seems to me that Maburro has long been bothered by Venezuelans crossing into Columbia to buy goods. This action will mean that all the Venezuelan currency currently in Columbia is now worthless unless you can somehow smuggle it back into Venezuela. In the future I would expect that Columbian businesses would no longer accept Venezuelan currency at all. Since no bolivars will be exchanged for real money in Columbia, dolartoday.com will have nothing to report! Problem solved!
ReplyDeleteIt is true that Colombians will lose some, but as good business men I am sure that they would not sit on top of a stack losing value each day. Thus whatever is in Colombia and cannot be brought back is, in the end, only a very small portion of all that Colombia has taken over the years.
DeleteIts Colombia with an o not u but dolartoday long ago had to adapt to hard to find numbers and likely will again. Yiu are correct though that if your not connected to the mafia regime it will be risky to have many bolivars. The elimination of so many 100s will shrink the money supply temporarily driving up the exchange. The real driving force though is the friends/militarty who started the black market as a way to prosperdon't like businessmen stepping in and running competition. This is to make life difficult for them allowing the regime to steal more through the exchange.
ReplyDelete