Published On: Thu, Nov 2nd, 2017

Venezuela’s economy is so broken its new highest-value bill is worth just 2 U.S. dollars

Maduro-New-BillCARACAS - The Venezuelan regime can’t hide the utter failure and inefficiency of its economic policies. It has now introduced a new bill of 100,000 bolivars, but to try to disguise the rampant hyperinflation it decided to omit the last three zeros and display its value as 100 MIL

This is the first time that Venezuela has a value expressed with letters.

The value of the new paper money is 1,000 times greater than the 100 bolivar bill, which was previously the largest denomination.

The regime seems to view paper money as its playthings, gleefully introducing new bills, or taking them out of circulation. First, Maduro said that the 100 bolivar bill would go out of circulation – something that never happened – then announced the creation of other bills of a higher denomination, such as the 20,000 bolivar bill, which has practically not been in circulation, and now, overnight, it invents a 100,000 bolivar bill, takes away the three numerical zeros at the end (insulting the intelligence of the Venezuelan people) and says it will be released as of Thursday, November 2.

It was at the end of 2016 that the government put into circulation the new money supply with the 20,000 bolivar bill, which was a 200 fold increase over the previous largest denomination.

Venezuelan hyperinflation has so eroded the value of the nation’s money, that the new 100,000 bolivar bill has a value of USD $2 on the black market.

Venezuelan economists spoke before the announcement and argued that “it does not make sense” to issue a 100,000 bill if the 50,000 bill does not yet exist. They also said that the new creation is a laughingstock, because with this new bill you can only buy two cartons of eggs.

The economics and finance professor, Jesús Casique, said that this is a “worthy recognition of inflation.” Venezuelan deputy and economist José Guerra added that this measure “highlights hyperinflation.”

In addition, Venezuelans are now wondering how they will get their hands on the new bill, since banks have a limited amount of money that can be withdrawn at ATMs, and only 50,000 bolivars per person can be withdrawn.

In September the Maduro regime decided to extend the duration of the 100 bolivar bill for an indefinite period, even though at the end of 2016 Maduro announced that this bill would cease to circulate and be legal.

When Maduro signed the decree, it ushered in a period of chaos in the country. In several states there were riots, and even deaths, due to the prohibition of the use of the bill, which was the most circulated and utilized by the Venezuelan people.

The shortage of paper money has compounded problems for Venezuelans; because ATMs are increasingly lacking in cash, they often only dispense a maximum of 10,000 bolivars which is worth just 25 cents in American money.

The regime argues that the lack of cash is a result of the so-called “economic war” waged against the country by such nations as the United States, Colombia, and Spain; however, regime opponents claim that the economic model has collapsed, because they have not been able to find imports to compensate for the decline in private sector production of goods and services, which has contracted due to price and exchange controls.

With each passing day the money in Venezuela becomes a little more useless. With even the highest denomination bills, little to nothing is bought.

Economic specialists such as Steve Hanke, say it was in December 2016 when Venezuela entered hyperinflation. From there the parallel dollar has increased uncontrollably. The value of said currency changes by the hour.

The South American country met the basic requirements of hyperinflation by maintaining a daily inflation rate in November 2016 that averaged 3.96% over the course of the month; thus maintaining for 30 days, a monthly inflation rate superior to 50%, a situation that can not be controlled and has only worsened.

Hanke, a world-renowned expert in the study of hyperinflation, said that although it is difficult to predict the future behavior of prices in Venezuela, the decision to print new banknotes with higher denominations is a development that normally only accelerates hyperinflation.

By Sabrina Martin

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