CARACAS— Venezuelans are rushing to the banks this week in a desperate attempt to protect their savings from the government’s latest spasm of reckless financial policymaking.
On Tuesday morning thousands of people across Venezuela played hooky from work to line-up outside banks and deposit bundles of cash into their savings accounts after the government gave everyone a 72-hour countdown to turn in all their 100 bolivar notes before they’re removed from circulation.
President Nicolas Maduro said that by making his country’s 100 bill illegal, he is “hitting back” against the mafia groups, who he claims have ties to the U.S. State Department, although he’s never offered any solid proof to back his claims.
Economists say another likely reason for Venezuela’s cash shortages is that people are taking their increasingly worthless money to the border to trade it for dollars to buy essential goods. In Cucuta, a city on the Colombian border, hundreds of exchange houses buy bolivares from Venezuelans who cross into the neighboring country looking for shampoo, rice, flour and other goods that have become scarce in Venezuela thanks to the country´s rigid price controls.
The government’s currency withdrawal is being accompanied by a plan to catch up to inflation by introducing a new series of bills in denominations of 5,000, 10,000 and 20,000. Those bills aren’t in circulation yet, but are scheduled to be released on Thursday.
Venezuela is a tough place to be a journalist these days. Actually, Venezuela is a tough place to be anyone these days. But reporters trying to cover the country’s continual unraveling often get stopped by a government that doesn’t want that story told.
Many foreign correspondents don’t even make it into the country. They get spun around in the airport and put right back on the nearest plane. Others get detained while they’re reporting in the field and whisked off to a cheerless, florescent-lit office where they get questioned by humorless apparatchiks until they renounce the evils of yanqui imperialism.
Manuel has reported from Venezuela many times before and knows how to step lightly in troubled lands. But once he tiptoed his way past immigration, he was faced with his first challenge of life in Venezuela: exchanging money in a country with the highest inflation rate in the world.
There’s an inverse relationship between the stability of a country and the thickness of the money wad you get handed when you try to change a fifty dollar bill. If you can’t close your wallet afterwards, the country’s economy is probably in bad shape. But if you need an empty suitcase to complete the transaction, the economy is in ruins.
Maduro’s Christmas Presents to Venezuela: Forced Sales, Stolen Toys
“To Venezuelan socialists,” observed Loyola University Maryland economics professor Thomas DiLorenzo, “nothing says ‘Merry Christmas’ more than armed government goons showing up at your business and ordering you around.”
That is, in fact, precisely what is happening in that oil-rich but increasingly poverty-stricken nation. Having driven his country into penury and hyperinflation by continuing the policies of late president Hugo Chavez, President Nicolas Maduro is now forcing stores to have Christmas sales they cannot afford and even confiscating millions of toys from their distributor so Maduro can play Santa Claus by handing them out to poor children.
Venezuela’s economy has been run into the ground by socialism. Rather than admit its error, the government tried to print its way out of the crisis, leading to the world’s present highest inflation rate: 475 percent by the end of the year, according to International Monetary Fund forecasts. When the surplus cash drove prices through the roof, the government imposed price controls, which, as they always do, produced chronic shortages of even basic necessities such as food and clothing. Venezuelans now spend hours a day waiting in lines to buy groceries, if they can even find them. Scraping together enough cash to purchase Christmas presents is, for most, almost impossible.
The government is going to have local committees distribute the contraband toys “fairly” to children, by which it means as politicians and bureaucrats see fit, and almost certainly with an eye to maintaining Maduro’s grip on the reins of state.
“If this causes the company to close its doors and lay off hundreds of workers, so what?” DiLorenzo blogged.
“It’s more important to ‘buy’ socialist tyrant Maduro a few more weeks in power with a fake Santa Claus routine so that he can finish the job of destroying his country.”
DYI
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