
Venezuela Extends Use of 100-Bolivar Bill Following Protests - sndean
http://www.nytimes.com/aponline/2016/12/17/world/americas/ap-lt-venezuela-currency-chaos.html
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usernam
In countries with such massive inflation, distrust and unstable currency,
doesn't cryptocurrency actually offer a big advantage/escape over the status
quo?

I assume this doesn't happen because network access isn't pervasive enough
across the lower class.

Any insight in why this is not happening?

~~~
phreack
Technology as a whole isn't pervasive enough across the majority of the
population, and they've been burnt so hard by their own currencies that people
mistrust any that's not a global standard according to their governmentally
controlled world view, like the US dollar is, so crypto has a very, very low
chance of catching on.

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_Codemonkeyism
Does anyone know who produced the bills? Last time they were printed by one
British, one French and one German company. As there have been rumors
Venezuela didn't pay up last time, are those the same companies this time?
(Not many companies can print those in the amount needed)

~~~
johansch
From last time:

[http://www.wsj.com/articles/inflation-wrought-venezuela-
orde...](http://www.wsj.com/articles/inflation-wrought-venezuela-orders-bank-
notes-by-the-planeload-1454538101)

"Inflation-Racked Venezuela Orders Bank Notes by the Planeload

"CARACAS — Millions of pounds of provisions, stuffed into three-dozen 747
cargo planes, ..."

"According to the people familiar with the deals, the companies include the
U.K.’s De La Rue, the Canadian Bank Note Co., France’s Oberthur Fiduciaire and
a subsidiary of Munich-based Giesecke & Devrient, which printed currency in
1920s Weimar Germany, when citizens hauled wheelbarrows of cash to buy bread.
More recently, the German technology company was the source of security paper
for Zimbabwe when it was stricken in 2008 with a hyperinflation episode in
which prices doubled daily.

All of the printing firms declined to comment."

~~~
toyg
I wonder at what point these bills stop being literally worth the paper
they're printed on. The last thing a country with hyperinflation problems
needs, is spiralling costs to buy worthless money.

I wonder how much longer the Bolivar can actually exist. I have not seen
anyone getting out of hyperinflation without temporarily ditching the currency
altogether. If Venezuela eventually ditch the Bolivar and don't want to adopt
the hated Yankee dollar, it would be an interesting opportunity for the Euro.

~~~
jimmywanger
> it would be an interesting opportunity for the Euro.

I think Venezuela is much closer politically to China at this point. I could
see them moving to the yuan, and that would be a political coup also for
Beijing.

~~~
gnipgnip
That'd be rather unlikely. I mean even Ecuador has adopted USD.

Adopting another country's seems completely illogical IMO; I mean, do banks in
such countries answer to the Fed. Reserve ?

~~~
mdasen
jimmywanger wrote a good comment, but I kinda wanted to expand on it.

In a certain way, it is illogical. There are drawbacks to adopting a foreign
currency. You have to have enough trade with the other country to bring in the
(in this case) dollars. You lose the ability to cover short-term debts by
printing some money that you can take out of circulation a little latter (no
harm, no foul). You also lose the ability for benefitting from seigniorage (by
printing small amounts of money, you can prevent deflation as the economy
expands and increase government purchasing power). By adopting the foreign
currency, the foreign government keeps the seigniorage benefits.

But when your government is so corrupt that it can't be trusted to manage a
stable currency, it can make a lot of sense. Right now, Venezuelans have no
reasonable way to conduct commerce. Bolivars lose value so quickly that you
never want to invest in enterprises or hold cash. If I have $100 on Jan 1,
it's likely worth at least $95 in purchasing power on Dec 31. People expect
inflation in Venezuela to be 1,600% next year meaning that $100 on Jan 1 would
become $6.25 in purchasing power on Dec 31. People would rather hoard goods
than cash - even goods that Americans would see as losing value quite quickly.
Cars lose so much value when you drive them off the lot (the adage goes), but
that's way better than the amount of value lost in Venezuelan currency over
the course of a year. Currency should lose value slower than quickly
depreciating goods.

When you don't have a stable currency, it's hard to operate economically. In
many ways, if you have a good to sell, you don't really want to exchange it
for cash until there's something else you want to buy. If there's a week delay
between you selling what you own and then you buying the new thing you want,
you've lost a lot.

By adopting a stable currency like the USD, it would allow them to have a
functional economy where people could buy and sell goods and invest in things
and make logical choices knowing that the currency has a stable value - rather
than running around hoping not to be stuck with notes that are going down in
value faster than any good.

When your country is so corrupt and incompetent that no one will trust your
leaders for many decades to come, it then starts to make sense to adopt a
foreign currency. The people then see that they can rely on the currency
because the competent US government is in charge of it - and for all we might
complain about the US government, it is competent by global and historical
standards. It gives people a stable currency that the Venezuelan government
can't offer them.

Venezuela wouldn't answer to the Fed or get to print notes. They'd just be
exporting things like oil to the US, getting USD in return, and then using
that USD locally as a stable currency.

Someone else mentioned Brazil. Brazil is one of the few places to really
combat hyperinflation. The thing is that it's hard. You can't just say, "we're
going to be good starting now. . .trust us". People don't trust you yet. It
takes years for people to trust that you won't fuck up a currency after years
of having the reputation of fucking up currencies. Let's say that Venezuela
stops printing money today and acts like a good government. Hyperinflation
continues because people don't truly know they have stopped printing money and
don't believe the government when it says it has. So when the government needs
to pay for goods and services, it suddenly faces very high prices without the
printed money to pay for it. Most likely, the inflation will break the
government's plan of not printing money since they would have to shut down the
government due to lack of funds faster than people would trust that the
government had stopped printing money.

Brazil overcame the issue by running two simultaneous currencies - one real
paper currency that kept inflating and another non-paper currency called the
"real" with stable prices. Stores had to denominate their goods in terms of
the new "reals" and each day an exchange rate between the paper currency and
the "reals" would be published. So, bread would always be, say, 5 reals, but
on monday that might be 10 of the paper currency and on friday 11 of the paper
currency. Eventually, people trusted that the "real" was stable, the
government took the old paper currency out of circulation in exchange for new
paper "reals" and people continued to trust it.

But it's hard to fight hyperinflation because when you can't measure and
guarantee government actions, it's about trust. Trust is something hard to
regain after decades of reasons not to trust.

~~~
gnipgnip
I see - so basically, this is a way for reducing the existing state apparatus
into a symbol, and become a sort of client state.

I'm assuming this means that Banks basically need to operate with 100% reserve
ratio, which makes it really difficult to provide loans esp. when dealing with
a commoditized external currency. Worse yet, unlike Gold, the foreign nation
can issue currency at will (well, essentially), to actors in your state, and
basically run it as they like. It's the perfect state of limbo.

Ecuador's case is interesting to say the least; the current US educated
president, basically made the country's reserve bank answerable to the state,
printed loads of money, had the currency replaced by USD, sold away the
country's gold to Goldman Sachs, and granted Assange asylum. After the strange
events surrounding last months event, it'd appear that Wikileaks itself is
compromised.

Money is really really strange.

~~~
jimmywanger
> Worse yet, unlike Gold, the foreign nation can issue currency at will (well,
> essentially), to actors in your state, and basically run it as they like.

I'm having trouble parsing this statement. What do you mean actors in your
state, and what do you mean run it as they like?

There are two sort of orders of magnitude of money that I can sort of make out
what you're talking about.

One is bribe money, where you can give people money to do stuff that you want
them to do. That's usually on the order of hundreds of thousands to millions,
and it doesn't matter what currency that is. That should be a rounding error
to sovereign government.

The second is trade war money. The sort of thing where you spend lots and lots
of money trying to destabilize an industry or mess with a country's economic
stability. That sort of intervention is measured in the billions to tens of
billions, and that also doesn't matter what currency it's denominated in. If a
foreign country decides to enter into a trade/commodities war with you, for
instance dumping steel to ruin your domestic steel business, that also doesn't
matter what currency they do it in.

> the current US educated president, basically made the country's reserve bank
> answerable to the state, printed loads of money, had the currency replaced
> by USD, sold away the country's gold to Goldman Sachs, and granted Assange
> asylum.

Dollarization happened in 2016. The gold exchange sucre last existed in 1932.
Ecuador seemed to have given up wikileaks in 2016. And what does the fact that
the current president is educated in the US have to do with anything?

You're conflating a bunch of events that happened over a long period of time
and trying to draw a causal relationship out of them. Why?

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cwilkes
I can't figure out the reasoning for this, does he think that the populace is
supposed to feel better after handling larger denominations? It's not like
they can't do math in their heads and figure out that they are in the same
position they were yesterday.

Well maybe not the same position as inflation eats away at that value daily.

Also can't he get the same result by just printing more of the higher end
notes and when the smaller ones come into his banks just don't release them
back into circulation. Geez he can't even do that right (the "plane sabotage"
excuse is a knee slapper).

