Saturday, May 23

Venezuela's currency has lost half its value just since the first of this year

I've written half a dozen posts on the ridiculous and worsening situation in socialist Venezuela.  And it seems to be due entirely to the socialist policies of former president Hugo Chavez, and his hand-picked successor, Maduro.

Years ago Venezuela once had the highest per-capita income in South America, due almost entirely to its vast oil reserves--developed by American companies.  But the socialists convinced half the country that their current situation just wasn't fair.  So he nationalized all foreign drilling companies.  And fired employees of the state oil company who weren't strong supporters, replacing them with incompetent supporters.

So here's the latest update:
"Venezuelans look to unload bolivars as currency continues to tumble"
   May 23, 2015

CARACAS, Venezuela (AP) –  Venezuelans are dumping their rapidly-depreciating currency at a quicker pace, leading to a staggering plunge in its free-market value, as the crisis-plagued economy edges closer to an outbreak of hyperinflation.

DolarToday, a popular website that tracks exchanges made near the Colombian border, reported Friday that the bolivar had lost a quarter of its value in the last seven days.

The DolarToday app, which most Venezuelans have, sent out a series of messages announcing the new rates, under the headline "hyperinflation!"

At the start of this year Venezuela's currency was trading at 173 bolivars per dollar.  On Friday it was around 420 bolivars per dollar, according to the site.  Just ten days earlier the rate was 300 bolivars per dollar, meaning the currency has lost 40 percent of its value in ten days.

It's not immediately clear what triggered the latest bout of panic buying and selling. But  many Venezuelans feel buying dollars is the best way to protect themselves from inflation, which was 68 percent last year.  Economists say this year inflation is already
over 100 percent.

A Barclay Capital Inc. report issued Friday pointed to government expansion of the money supply as an underlying cause for inflation. The bank projected the bolivar could fall to 600 to the dollar this year.

"This risk should make Venezuelan authorities reconsider their policies, but we do not see any signal of change from them," the report said.

President Nicolás Maduro's government tightly controls the legal exchange of bolivars with a byzantine three-tier system. The system was intended to subsidize crucial imports, but has led to widespread corruption and speculation.

One official rate is 6.3 bolivars per dollar. The weakest government rate has inched up to 200 bolivars per dollar. The fact that so many people are willing to pay twice that on the black market indicates how much Venezuelans want unload bolivars.

DolarToday is openly hostile to the socialist government and frequently runs articles attacking Maduro's administration. But the site insists its exchange-rate reports are based on actual trades at the border and are not manipulated to undercut the government.

Last month Maduro repeated his assertion that the site's authors, whose identities are not public, are collaborating with the speculators and opposition leaders he blames for the country's problems. He accused them of purposely sowing chaos and promised to have them arrested.

"We're going to put those people at DolarToday who are waging an economic war against Venezuela behind bars sooner rather than later" he said.
Now pay attention:  Did you see the bit about the Barclay Capital report, saying the "underlying cause" of the inflation was "government expansion of the money supply"?

What other government has been expanding its money supply by leaps and bounds?  Why, that's right:  Emperor Barack's regime.  But...but...but if that caused inflation in Vz, wouldn't it do the same thing here too?

Oh NO, citizen.  Couldn't evah happen here.  Because Obama can suspend the laws of economics as easily as he can issue decrees forcing powerplants to close because they emit CO2.  Or ordering his minions not to deport illegal aliens.  Or banning our armed forces from discharging open, flaming homosexuals, as opposed to the far less disruptive policy called Don't Ask, Don't Tell. 

He's just that fabulous.

So...don't worry, citizen.  Everything's just swell.

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