Venezuela cuts zeroes from currency in hope of stalling inflation
GATA links to this story:
- -- Venezuela launched a new currency with the new year, lopping off three zeros from denominations in a bid to simplify finances and boost confidence in a money that has been losing value due to high inflation.
President Hugo Chavez's government says the new currency -- dubbed the "strong bolivar" -- will make daily transactions easier and cure some accounting headaches. Officials also say it is part of a broader effort to contain rising prices and strengthen the economy.
"We're ending a historical cycle of ... instability in prices," Finance Minister Rodrigo Cabezas said Monday, adding that the change aims to "recover a bolivar that has significant buying capacity."
Comments (17)
It's funny that these clowns all have the same problems over and over again. I guess they're just unlucky? lol
Published: January 15, 2008 8:57 PM
I’d like to hear the monetarist /socialist Nathyn’s view of why Mr. Chavez has to resort to lopping off the extra zeros from their currency. Gee, it wouldn’t have anything to do with Venezuela’s Central Bank, huh Nathyn?
But let me guess your argument would be that in Venezuela it is different and that our ALL GOOD, OMNIPOTENT, AND OMNISCENT Ben Bernake at the Fed are is the only being who know how to set interest rates? Well, then I suppose our decline in purchasing power has nothing to do with OUR FED, but rather we too should blame Chavez.
Published: January 15, 2008 11:39 PM
How does that old saying go??? "But for the grace of God go I". Look a few years in the future along our current fiscal path here in the US and we'll see our Fed 'cutting off a few zeros" too.
Published: January 16, 2008 2:29 AM
Why didn't we thing about this earlier? ;)
Published: January 16, 2008 8:16 AM
Cross out Venezulea and input USA.
Cross out Hugo Chavez and put in Fed Chairman
Published: January 16, 2008 8:59 AM
Well here (in Venezuela) they are not only cutting down zeroes but they are also limiting us in our use of currency exchange, food supply, personal security and beyond.
We are going nuts here.
if any one wants some old venezuelan bills I can sell them to you....
here is a link to see the new bills. http://www.noticias24.com/actualidad/?p=8869
Published: January 16, 2008 2:46 PM
Maybe this is why that creep Chavez is cozying up to Naomi Campbell: to get some solid pointers from a road-tested tyrant.
Published: January 16, 2008 10:55 PM
Google Atlantis Venezuela
Published: January 17, 2008 4:09 AM
"It's funny that these clowns all have the same problems over and over again."
Gegen Dummheit kämpfen Götter selbst vergebens!
Published: January 17, 2008 4:12 AM
I am forty years old. I've seen this done twice in my country. It wasn't done to stop inflation, it was done because the trailing zeros were ubiquitous and meaningless. Everything costed thousands.
Now think about it. One peso of today is a million pesos of 1974. It makes the Fed look great, doesn't it?
That's probably why everyone here saves and buys houses and cars in dollars. It is legal to charge and invoice in dollars. Of course, banks also issue accounts and chequebooks in dollars.
Of late, some also issue accounts in euros... beware.
Published: January 17, 2008 1:21 PM
This must drive bookkeepers crazy!
Published: January 18, 2008 12:30 AM
This is pretty fashionable here in Brazil too. One "Real" (1994-) is worth 2,75 x 10^15 "Cruzeiros" (1942-1967).
Published: January 18, 2008 11:31 AM
It is surprising but this has actually been done in my home country of Turkey a couple of years ago. Our inflation is down to single digit rates for the first time since my father was born...
Published: January 18, 2008 7:15 PM
The Mexican government did exactly the same thing in 1989, taking out three zeros as if that would stop inflation (it did not). It made accounting more difficult for many, since a lot of accountants were accustomed to the idea of not having to account for cents.
Obviously, the Mexican government inflated the money supply even more after the zero massacre wit the idea that people would not notice a high inflation rate if prices were smaller. Of course it made the consequent recession of 1994-1996 much more damaging than if the peso had maintained its zeros, since people were taking advantage of lower interest rates and seemingly "affordable" houses.
Published: January 19, 2008 12:28 AM
Mehmet:
I must admit that I am not familiar with the Turkish experience, but it seems more likely that inflation slowed down, as you seem to be saying, due to a change in monetary policy rather than striking out a few zeros on bills..
Published: January 21, 2008 11:00 AM
You are absolutely right. Monetary policy changed significantly, while politics also played a big role as people found a new government to be much much more stable than previous ones. I still believe that taking out zeroes played some role, maybe only psychologically... It seems highly unlikely but it would not be in a country like Turkey. Unfortunately, I live in a country where one politician can cause an economic crisis by the mere choice of his words...
Published: January 21, 2008 3:47 PM
As I'm sitting here today, the day after the fed cut 50 basis points, I'm thinking more and more about the injustice of inflation. I feel lucky I'm not in Venezuela, yet I still can't help the anger of being robbed slowly, day by day. I hate my job passionately! But like so many others I'm doing it to save enough to break out of the rat race. Suppose I didn't have a degree in econonomics, or wasn't inclined to pay attention to Mises, Reisman, etc.? - and I worked for twenty years like this, only to find that the hard-won savings were just a pile of paper? While not exactly slavery, it's very close.
Published: January 31, 2008 3:53 PM