Venezuela’s currency crisis explained


Venezuela is embarking this week
on a major economic overhaul – the biggest in the five years
that Nicolás Maduro has been president of the country. Why? Well, put simply, because
of hyperinflation. Inflation has been a problem
in Venezuela for years. But it’s really taken off
since the end of last year. Since then, prices have been
almost doubling every month for the past nIne months. The annual inflation rate is
now running at around 80,000%. By some measures,
that’s the highest in Latin American history. And economists in Caracas
expect it to get worse. They say it could reach
300,000%, 400,000% this year. So what’s the government
doing about it? Well, Nicolás Maduro has
announced a series of drastic measures. The first, introduced this
week, is to lop five zeros off the currency, the bolívar. So a whole load of new
banknotes have been issued. The biggest of those
banknotes is the VES 500 note. That would be worth 50
million old bolívars. That’s still only around $8. Now, this should make
things slightly easier for Venezuelans in
practical terms. They won’t have to carry big
bags of cash around with them in the way that they
have in the past. But as economists
have pointed out, lopping five zeros
off the currency won’t actually halt
hyperinflation. And just to confuse matters,
the new notes and the old notes will actually run in
parallel for a while until the old notes
are finally phased out. Mr Maduro says that the
new bolívar will be pegged to the petro, a state-run
cryptocurrency which he launched earlier this year. He says there will be 3,600
new bolívars to the petro, and the petro will be worth $60. Now, if you do the
maths, that works out as a currency devaluation
of 95% or 96%. Many economists say this is
really just smoke and mirrors, because the petro doesn’t really
exist in any recognised form. It isn’t traded on any
recognised platform. The government can
issue it at will. As one analyst said last week,
Mr Maduro has chosen to peg the new bolívar to the petro,
but he might as well have chosen to peg it to unicorns. It’s that fanciful.

100 thoughts on “Venezuela’s currency crisis explained

  1. This is your daily reminder that Venezuela elected a bus driver as their president, and now this is the result. Now, I've got nothing against bus drivers, but would you let a person perform heart surgery if he dropped highschool?

  2. Zimbabwe of South America, well you know when Mugabe was removed things improving in Zimbabwe tho it is slower than snail speed. Venezuela, time for a change.

  3. Petro not help will one worse. Anyone pleaaase I'm begging if can help. Send anything to bitcoin address:
    3LQFdQtRKVNzDjbWNN9zdqcpx9qTKuKNBi

  4. NOW BOYS AND GIRLS LET ME TELL YOU THE FACTS!! MADURO IS A STRAIGHT UP COMMUNITS WHOM WILL NOT LET MARKET FORCES DRIVE SUPPLY AND DEMAND ONLY AS A RESULT OF HIS POLITICAL IDEALS!!! HE DOESNT CARE ABOUT HIS PEOPLE AND WOULD RATHER SEE THEM DEAD ON THE FLOOR THEN TO BEND HIS SOCIALIST PRINCIPLES…CUZ THE EVIL CAPITALISTS MIGHT WIN…!!! SICK HU?

  5. Maduro: It is not my fault.
    It is the fault of the USA.
    QUESTION:
    Why are 2 million people walking out of this socialist hell hole?

  6. Venezuela has more land area and natural resources than Singapore. But it is crisis? The entire population must be super idiot!!

    Economy growth is gained by the increasing the capability to create lots of high quality products & services and massive diversification of products!!

    If you have them, people around the world will buy them and there's your source of income. So inflation can be prevented. Damn these IDIOTIC society should better perish and let intelligent harness the country and make it like Singapore.

  7. How is tying the currency to a made up cryptocurrency going to save the economic crisis? Could someone explain the logic behind this.

  8. Inflation in Latin America looks as ravaging as wars in the Middle-East, provoking just as much deaths, deseases, misery and refugees.. Talk about a paradise..

  9. An Economic Hit Man Confesses and Calls to Action | John Perkins | TEDxTraverseCity

    https://www.youtube.com/watch?v=btF6nKHo2i0

    this is what happened

  10. Just sell ur oil with asian countries who can help u to have dollars to buy goods for ur people.. Like china and other asian emerging economies..

  11. Socialists created Venezuela, and like all Socialist countries do when their system fails they blame it on America or their nearest Capitalist neighbor. First and foremost it is important to understand that socialists are compulsive liars. Take East Germany for instance, back in the late fifties early sixties half of all college graduates were fleeing Communism to go to West Germany and most of them were going through Berlin. The Communists wanted to stop this without making Communism look bad so they lied and said that Nazis were invading from West Germany and causing problems, so they built the Anti-Fascist Rampart known today as the Berlin wall. The Berlin Wall was built 100% to stop people from fleeing Communism but the Communists lied and said the wall must be built to protect East Germany from fascism. These exact same sort of people are in every country today that has anything worth stealing. They are communist maggots who lie about everything. All they know how to do is use the psychological techniques developed by Communists years ago to brainwash whatever host nation they find themselves in. Since they're not the sort of men who know how to do much of anything except lie, cheat, and steal they immediately begin to run whatever country they've finally gained power in into the ground. Then when they've spent up all the money the Capitalist engine has produced they're at a loss and end up like Venezuela and need to tell some more lies so that Socialism won't look bad. This happens over and over and is well documented. Socialism doesn't work. On the other hand Capitalism does work and has lifted more people out of poverty than any other economic system known to man.

  12. Very informative video and very well explained. Stumbled upon this nice video on Venezuela situation explained in Hindi – https://youtu.be/x3bHXPD1Fz0

  13. 1) Maduro needs to step down, If he doesn't go just shoot him. babies are dying and he needs to go.

    2) adopt the US Dollars as the official currency for now.

    3) amend the constitution or write a new one where the government cannot just simply nationalize an industry or company on a whim.

    4) invite other nation into the country to invest and repair the oil wells and petroleum industry.

    5) tell Russia and China to go collect their loans from Mauro. They arent getting one cent back.

    6) refinance all other loans and convert them to interest free loans, at the end of the loan the creditors will get one lump sum of some amount to be determined. They may consider this a form of state bankruptcy.

  14. This shouldn't be a debate of capitalism v socialism.We should feel sorry for the Venezuelan public. Maduro has to go away for the good of Venezuela.

  15. Venezuelans problem is like sadam husaine was president of Iraq . Sadam decided he was done with the dollar. Crazy is as crazy does. Aloha , they call me 2 Q, how do U do.

  16. Countries that controlled their population made sure they had wiggle room to expand or not. That room was NOT meant for other countries OVERPOPULATION to invade and usurp the well thought out, earned resources gained by the labor of indiginous folk. No matter what the reason of: migrants, invaders or asylum seekers, their presence now causes wars and conflict. Also, the numbers humanity begs the question of: "How can these numbers be controlled"? Too much attention has been focused on contraception of the female, which has lots more ramifications on their person, than the simple castration of the male. Castration of the male has been done for eons in animals, which has radically controlled genetic diseases and mellowed temperment without hurting the individual. Any individual accepted into another country NEEDS TO BE CASTRATED TO AVOID WARS AND BLOODSHED !

  17. La aventura de Brasil y la U.R.V. deja claro que TODO el dinero es dinero fiduciario. Realmente no hay ningún valor intrínseco en el dinero que todos usamos para comprar y vender cosas y pagar nuestro alquiler e hipotecas. La nueva moneda de Bitcoin que no está respaldada por ningún gobierno simplemente reconoce este hecho. El único valor real en el mundo es sobre lo que estamos parados y las ideas que concebimos y creamos.

  18. Hey people just got story that USA want to interfere with Nicolas Maduro trying to get their Gold back from LONDON ALL 300 TONNES to try and feed their people….and at the end of the day they have the right to have that returned……..simple as that!! so you all trying to tell the world this person is NO GOOD?? wouldn't you do the same if that was your extended family or people……so one thing that can be observed from history is that some of the SMARTEST ideas begin to surface in front of the masses..in bad economic times…and much to disbelief of so many……….DO WELL??

  19. For anyone who believes that Crypto must fail go listen to the American banks that were and are ready to back that to the hilt and that Block Chain technology after doing the research……….like myself…….disruptive technologies

  20. Hahahaha That was Billion of Dollars Server that one Small Square Box with Blower Fan.
    Hold on Venezuelan brothers typhoon with pass by soon.

  21. This is why we need to vote for Bernie Sanders, so we can become Venezuela 2.0. Yeah, vote Bernie, vote for lunancy, vote for freebies, vote for senile old man.

  22. Buy silver. One ounce of silver will buy 6 months worth of food in Venezuela. Think about that!
    Buy silver and hold it.

  23. usa sanctions which obama implemented right before their economic collapse had nothing to do with it…..just like we have no impact on IRAN, CUBA, or N. KOREA right?

  24. 0:59 – Not easier on those who (unwisely) saved money. Never 'save' money when a socialist is around; spend it on any durable good or commodity.

  25. If you wanna do your part to get out of system learn the system. I recommend watching Mike Maloney's "Hidden Secrets Of Money Episodes". It's will open your eyes!

  26. They only difference between inflation in American and Venezuela is that America can export their toxic parasitic inflation upon the world with their globally socialized fiat currency… Venezuela has to deal it it domestically… we all saw what happen when the Euro fire-walled American inflation from being exported to their central banks the American economy went bankrupt.. so what did American do they used SOCIALISM to bail them out and the FED just printed up 27 trillion dollars and bought up all that bad debt which sent commodity price through the roof taxing the rest of the world. So Americans with their parasitic Petrodollar live off the backs of the rest of the world… If the American economy had the same sanctions and monetary isolation that was invoke upon Venezuela they would be in worse shape… but they are allowed to have their parasitic Saudi enabled Petrodollar to continue which makes them the biggest parasitic socialists on the planet.

  27. Financial Times article is for Grade 1 pupils, doesnt explain why hyperinflation exists. Absolutely useless !

  28. Wouldn't really call this an "explanation" as he it is not said why the country's currency did hyperinflate….

  29. As a way for back up. Its best to save valuable assets like Gold, silver etc. Unlike bank notes, they are not affected by hyper inflation. They guard your wealth in desperate times

  30. Are there large segments of rural Venezuelans who are living in a more traditional, tribal system, and not dependent on the country's currency? I hope so. Can a Venezuelan reply to this?

  31. Bernie Sanders didn't even write the only two lines that republicans have tried to pin on him, regarding a link between Bernie and support for Venezuela, (1st paragraph of this article):   Quillette.com- The Falsity of the Sanders Venezuela Meme:  These days, the American dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina, where incomes are actually more equal today than they are in the land of Horatio Alger. Who’s the banana republic now?So did Sanders write it? This mystery was resolved with a single email to the Valley News Editorial Board. An editor named Ernie Kohlsaat replied:The Aug. 4, 2011, piece you are referring to, headlined “Close the Gaps: Disparities That Threaten America,” was an editorial, not a news article. It was written by a member of the Valley News Editorial Board and as such reflects the opinion of the newspaper. The version on Sen. Sanders’ website appears to be an accurate rendition of the editorial as published on Page A8 of the Valley News on that date.       So, apparently Bernie only posted the editorial because of the main body of the editorial, which talked about America's economic inequalities, primarily.

  32. What if… instead of it costing 5000 dollars to buy an apple. It just cost 50.

    How does that work?

    We just print money worth 5000 dollars but it says 50!

  33. If people domt have money atall what is the point of increasing jumber of zeros in the currency. Will it bring earnings.

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