As if things were not already chaotic enough in the socialist utopia of Venezuela, following President Nicolas Maduro’s decision to follow Indian PM Modi’s playbook and announce that the nation’s largest denomination bill (100-Bolivars – worth around 3c) will be pulled from circulation in 72 hours, he has tonight closed the border to Colombia to crackdown on currency smuggling by so-called “mafias”. As AP reports, President Nicolas Maduro on Monday ordered the closure of Venezuela’s border with Colombia for 72 hours in a crackdown on currency smuggling by what he has called “mafias” trying to destabilize the socialist-run economy. Maduro announced the decision after meeting with top economic aides. Earlier in the day, supporters of Maduro’s socialist party circulated drawings on social media of criminals trying to smuggle cash into Venezuela like drugs. “This is an attack against Venezuela, so this is a necessary, unavoidable measure,” Maduro said in announcing the border closure in a televised address alongside top economic aides. “It’s the first of a series of decisions that we’re going to be taking to defend our bolivar, our economy and our people.
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Tyler Durden considers the following as important: 2014–16 Venezuelan protests, Americas, Australia, Caracas, Colombia's government, Debt and the Fallacies of Paper Money, Economic policy of the Nicolás Maduro government, Economy of Venezuela, Featured, Hugo Chávez, Hyperinflation, India, Money Supply, newsletter, Nicolás Maduro, None, Politics of Venezuela, Reuters, Socialist Party, Switzerland, Ukraine, Venezuela
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As if things were not already chaotic enough in the socialist utopia of Venezuela, following President Nicolas Maduro’s decision to follow Indian PM Modi’s playbook and announce that the nation’s largest denomination bill (100-Bolivars – worth around 3c) will be pulled from circulation in 72 hours, he has tonight closed the border to Colombia to crackdown on currency smuggling by so-called “mafias”.
As AP reports, President Nicolas Maduro on Monday ordered the closure of Venezuela’s border with Colombia for 72 hours in a crackdown on currency smuggling by what he has called “mafias” trying to destabilize the socialist-run economy.
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Maduro has long accused criminal gangs operating along the border of trying to smuggle everything from truckloads of subsidized food to gasoline sold in Venezuela at the world’s cheapest prices.
In closing the border again, Maduro tried to sound conciliatory to Santos, saying the two had discussed the issue previously. He also seemed to acknowledge the seriousness of Venezuela’s cash crunch by announcing a series of measures to stimulate electronic-based transactions. Despite heavy printing of the 100-bolivar bills – 2.3 billion this year alone out of 6.1 billion in total – they are in short supply. |
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Venezuelans rushed to spend their 100-bolivar notes Monday, before the government’s Wednesday deadline for taking the note out of circulation, and there also were logistical concerns about how authorities would remove the more than 6 billion 100-bolivar bills in circulation, and whether replacement bills were ready. Furthermore, as Bloomberg notes, according to a report by Torino Capital, a New York investment bank, the 100-bolivar notes account for more than three quarters of Venezuela’s cash outstanding and 11 percent of the nation’s money supply, making Maduro’s decree a difficult task for a nation in the throes of an economic crisis.
An estimated third of Venezuelans have no bank account and keep their savings in the soon-to-be-worthless bills. Venezuelans are in open revolt… (as Reuters reports)
Chaos, indeed, but just remember this is not the doing of the socialist government…
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Adding to the aggravation, Monday was a bank holiday, meaning there were no tellers.
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A sign that reads ‘We inform our clients that 100 bolivar notes will be accepted until Tuesday 12/13/16. Thank you,’ is displayed at a bakery in the slum of Petare in Caracas.
A 100 bolivar note is seen next to a sign that reads ‘100 bolivar notes are received until today,’ at a store in the slum of Petare in Caracas |
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The big question of course is how long before the new bills become truly worthless?
And remember, as we noted earlier, Venezuela’s inflation has officially become the 57th official, verified episode of hyperinflation and been added to the Hanke-Krus World Hyperinflation Table. With Venezuela’s move, we can now add the insolvent Latin American country to an increasingly large group of countries including India, Sweden, and Australia, which in recent months have been on a quiet crusade to eliminate all forms of paper money. Certainly, Venezuela will not be the last as only full control over a nation’s currency will allow governments to enact global negative rates, something which is inevitable once the current “Trumpflation” euphoria finally ends. |
Venezuela Bolivars per Dollar Black Market FX Rate |
Tags: 2014–16 Venezuelan protests,Americas,Australia,Caracas,Colombia's government,Economic policy of the Nicolás Maduro government,Economy of Venezuela,Featured,Hugo Chávez,hyperinflation,India,Money Supply,newsletter,Nicolás Maduro,None,Politics of Venezuela,Reuters,Socialist Party,Switzerland,Ukraine,Venezuela