Fun on Friday: Venezuelan President Solves Hyperinflation By Removing Zeros from Currency
I was on vacation last week, so there wasn’t any Fun on Friday. But I am back, and I have some really fantastic news for you – especially if you live in Venezuela. And even if you don’t reside in that South American hell-hole, you’ll want to keep reading because the ramifications here are huugggee!
Venezuela President Nicolas Maduro fixed the country’s hyperinflation problem.
And he did it with the stroke of a pen. This is great news for a country that could be facing 1 million percent inflation by the end of the year.
You read that right.
With the inflation problem solved, people will soon be able to buy food and toilet paper again in no time and a socialist utopia will undoubtedly be realized.
So, how will the brilliant Maduro fix the country’s currency? He’s just going remove five zeros from the bolivar.
That’s it. Lop off some zeros and problem solved. No more inflation!
Now, I don’t want to be critical of Maduro. The guy is clearly an economic genius. But I wouldn’t feel like I’ve done my job as a journalist if I didn’t raise a question.
Why didn’t he think of this sooner?
I mean, I understand this it’s a pretty complex plan. But it’s not like we didn’t see the problem coming. We knew the bolivar was in trouble back in August 2015 when a photo of a man using a 2-bolivar note as a napkin went viral. When the best thing you can do with your currency is to use it as a food-wrapper, there might be a problem.
At that time, the 2-bolivar note (that’s a .000002 bolivar note under the new system) was officially worth about 32 cents. But the official exchange rate is pretty much meaningless. The actual value on the black market was around 1/3 of a cent – that’s .33 cents.
So, you can see the brilliance of Maduro’s plan. By shaving off zeros, he got his currency back line with the dollar. In fact, he made it better than the dollar! That .33 cent bolivar now becomes a 33,000 cent bolivar. That means its worth about $330. Like I said, I’m pretty sure you can expect prosperity to break out at any moment.
This isn’t the first time Maduro flexed his economic acumen to solve a problem. In May 2017, the Venezuelan president raised the minimum wage by 60%. Boom! Prosperity! People had more money in their pockets.
Of course, it was basically like stuffing a bunch of McDonald’s napkins in your pocket, running out the door and claiming you’re rich. And of course, there wasn’t any food on Venezuelan selves to wrap up in makeshift napkins. But now that Maduro has fixed the currency, it’s all good.
So like I said, this has some huge ramifications for you and me. Now that Maduro has proved you can subtract zeros from a currency to fix it, why can’t we take that idea in the other direction? Why not add five zeros to everybody’s bank account. It’s brilliant. We’ll all be rich. Think about the problems this will solve. For instance, there’ll be no more reason to continue this inane minimum wage debate. Everybody will be making at least $725,000 per hour. That should be plenty, right? The $15 per hour people aren’t aiming high enough. If you’re going to do socialism, go all the way! Go big or go home, I say. Maduro has figured it out. Why can’t we?
On a side-note, a couple of people have told me what they have in Venezuela isn’t “real socialism.” If that’s a fact, somebody should tell Maduro to change the name of his party, because right now it’s called the United Socialist Party of Venezuela. Socialism is right in the name. Yeah. I get it. The state doesn’t completely control the means of production in Venezuela. But the government policies are socialist in nature. That’s what counts.
Funny thing. Socialists are always saying failed socialist systems aren’t “real socialism.” I guess you have to do that when it ends in economic chaos and oppression every single time it’s tried. But hey, maybe they’ll get it right eventually. I think Maduro is on the right track here. Taking zeros off the currency is brilliant, after all. I think Venezuela is on its way to socialist utopia. Or something.
Anyway, I still like the idea of adding zeros better. I know it’s pretty much the same net result. It just feels better to add then it does to take away. Think of all the gold you could buy if they added five zeros to your bank account. I know this isn’t going to happen. But hey, there is still a really good deal to be had on Royal Canadian Mint “Call of the Wild” Gold Eagle coins. Check it out. The deal won’t last much longer.
Fun on Friday is a weekly SchiffGold feature. We dig up some of the off-the-wall and off-beat stories relating to precious metals and share them with you – with tongue firmly planted in cheek. Click here to read other posts in this series.
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