The collapse of the Venezuelan currency
Here I show a chart of the historical price of the USD in terms of bolivares. The source of the chart is Wikipedia.
In order to have an idea of this collapse I will mention how it is reflected in the paper currency, i.e. the bank notes. The 100 bolivar bank note was issued in January 2008 and it was the highest denomination bank note of the country at that time. Its value was approximately 18.70, using the exchange rate of the parallel market.
In December 2016, the new denomination bank notes were issued by the central bank. They were 500, 1000, 2000, 5000, 10000 and 20000 bolivares, even though they were introduced in the streets in January 2017. The value of the highest denomination note, i.e. 20000Bs, in December 2016 was 6.32USD and at the time of writing this note its value is 2,59USD.
As you can see the inflation and the speed of how the Venezuelan currency loses value, in other words the total collapse of the Venezuelan bolivar.
In this post I am not going to describe in detail the causes of this monetary collapse. However I would like to mention that this tragedy is happening just after having the greatest oil bonanza in Venezuelan history. It is extremely sad, after receiving almost one trillion of dollar in oil revenues, the government did not save resources of the surplus income. In the meantime, during the oil boom, the Venezuelan external debt was increase 7 fold.
I would like to point out that the Venezuelan economic collapse was not caused by the sudden crash in the oil prices. The country had already serious macro-economic problems when the oil prices, were in the neighborhood of 100USD, per barrel. The fall in oil prices was only a catalyst of the economical crisis of the country. No other oil producing country has a economical crisis of the magnitude that Venezuela is suffering. However the official version of the cause of this collapse is the fall in the oil prices.
In the past I had quite a few silver world coins and one of them was Panama's 20 balboas(4 oz of silver approx) with an image of Simon Bolivar whos the same guy that signed venezuelan independence day. I heard on jsnip4 channel that 1 oz of silver can buy you now few months of food in Venezuela. Is that true?
Venezuela has an interesting numismatic.
You wrote: "1 oz of silver can buy you now few months of food in Venezuela". This was true in some extend a couple of years ago. But it is no longer true. The basic food basket, is more than 100USD, per month. The prices of food are in international levels, but in many cases, you do not find the goods, so you have to paid higher prices. The wages are very low. A monthly salary of 50USD, is considered good for the current standards. But it does not cover even the food. This is one aspect of the tragedy that Venezuelans are facing.
The same is happening in every country in the world, just at different rates of destruction. The Venezuela government is just further along the road than others. Cheers
Well. The USD or EUR are a long way to go. Just look the graphic.
In order to keep the prices with the inflation, many goods are priced in USD (but paid in local currency). However the salaries are not. The basic food basket, is more than 100USD, per month. The prices of food are in international levels, but in many cases, you do not find the goods, so you have to paid higher prices. The wages are very low. A monthly salary of 50USD, is considered good for the current standards. But it does not cover even the food. This is one aspect of the tragedy that Venezuelans are facing.
Are you living in Venezuela @nenio?
Yes.
yer i can't believe that a communist state is falling apart............ abit like every other communist state
The main cause of this currency collapse is the communist style policies implement by the government.
yer i know, I wish they would tell everyone that communism doesn't work
but then people would have to work for there money rather then getting hand outs