from Hacker News

Venezuela’s currency is dying

by davidklemke on 11/6/16, 12:03 AM with 184 comments

  • by firekvz on 11/6/16, 3:17 AM

    Venezuelan here, the current problems related to our currency losing 70% of its value in only 3-4 days are directly related to media manipulation.

    Black market was totally stable in the 1000:1 mark for months, until the actions from the gov to stop the presidential referendum made again the rich unhappy and they decided to attack with all they have and this includes the media.

    95% of the imports in Venezuela are made using the official rates and thats a bit complicated to explain, there is 2 rates wich are 1usd:13bsf (a price fully subsided used mostly for food and items that are considered "basic") and 1usd:658 for everything else and then there was the black market dollar wich is now 1usd:1758bsf

    The thing is you can sit here and say the dolar is 1:2000 but it doesn't really mean thats the cost, thats where everyone fails, because neither the venezuelans have the money to pay for it or people want our currency, there is an special case of people doing this kind of trades and are the ones that are fleing the country, emigrating to other places and are desperated in need of USD

    In the other hand, is somehow totally fake that we are paying this prices, in fact, noone imports anymore since gov barely gives USD at subsided price thus this is why we are now under scarcity problems.... so there you go.. offer and demand sets the prices but theres actually not really demand, I mean there is an insane demand but not demand for the 2000:1 price, thats just a political fight.

  • by heartbreak on 11/6/16, 1:32 AM

    There was a solid Planet Money story about the collapse two weeks ago.

    http://www.npr.org/sections/money/2016/10/21/498867764/episo...

  • by M_Grey on 11/6/16, 1:13 AM

    That makes sense, Venezuela's economy, social structure, and political systems are also dying. It would be crazy if currency based on those things were not dying as well. If they were a collapsing star, they'd be rapidly approaching r=2M.

  • by umanwizard on 11/6/16, 1:40 AM

    > Now, there's never been a country that should have been so rich been so poor as Venezuela. Indeed, it has the world's largest oil reserves, but has still managed to have the world's worst-performing economy.

    Is there any actual evidence that natural resource wealth is strongly correlated with level of development?

  • by Laforet on 11/6/16, 2:00 AM

    For those who want an impartial overview on Venezuela's economic woes, I high recommend the podcast below:

    https://www.youtube.com/watch?v=OrfM5UD-Azk

    Hint: It did not begin with Chavismo, but it has got worse since.

  • by edblarney on 11/6/16, 3:25 AM

    It's not the currency that is dying, it's that nobody wants the currency, because the entity that backs it has no integrity.

    So, it's more like 'Venezuelan economy and governance is failing -> nobody wants Venezuelan Bolivars -> currency loses value rapidly

  • by digi_owl on 11/6/16, 2:41 AM

    The problem, afaik, is that the Venezuelan oil is nastier than most and thus few refineries will work with it unless it is worth it. And since the Saudis opened the valves and the price tanked, few refineries have found it thus.

  • by eudox on 11/6/16, 1:24 AM

    >The problem was that the Chavista regime bungled the state-owned oil company so badly that it didn't have enough money even when crude prices were high, and really doesn't now that they're low.

    Naturally, the problem is but a mere implementation detail.

  • by known on 11/6/16, 2:52 PM

  • by JohnyBolivar on 11/6/16, 4:45 AM

    Don't forget that some years ago the gov renamed the currency taking three ceros out and renaming it the Bolivar Fuerte (strong bolivar). So really we are talking about an exchange rate of Bs 2.000.000 = 1 usd at current black market prices...

  • by piotrjurkiewicz on 11/6/16, 3:13 PM

    All comments in which the word 'socialism' appeared, are now [flagged] and [dead], therefore invisible for most users. And you still dare to argue that there is no far left political bias and manipulation on HN?

    EDIT: I posted this comment and immediately refreshed the page. I took no more than 2 seconds, and this comment already had 0 points. No real user would be able to reload a discussion page, recognize a comment as a new, read it and downvote, all of this within 2 seconds after the comment was posted. I bet some bots do this, maybe this is even happening on the server side. Thank you for providing the best evidence for my words!

  • by paulcole on 11/6/16, 1:35 AM

    Seems like the ideal situation to implement a blockchain-based currency.

  • by X86BSD on 11/6/16, 1:33 AM

    It's interesting to me that everyone seems to think all world currencies are not dying.

    The problem is the "currency" the worlds been sold into.

    Case in point... it takes us all about an average of $2.00 dollars for a gallon of gas. On average right now. Probably more on the coasts.

    If I take one of my Morgan silver dollars, and melt it for the silver content I can get as of today roughly 8 gallons and a little more for that one silver dollar.

    2 paper, fiat, federal reserve notes for 1 gallon OR 1 Morgan silver dollar for 8+ gallons.

    The problem is the currency is worthless. And is inflated away each year to lose more and more value.

    So IMO the problem is the currency. It's worthless and bankers are able to devalue it at will.