Venezuela Braces for Runaway Inflation As Merchants Weigh “Mountains of Cash” Instead Of Counting It
Venezuela is deep into the death spiral, and things are likely to get worse before they get better.
As the South American nation’s paper currency continues to lose value with each passing day, the people of Venezuela are forced to carry piles of cash just to buy basic goods and services – with many merchants now literally weighing the next-to-worthless cash rather than wasting time to count it.
Clearly, this does not bode well.
Venezuela continues to repeat the mistakes of other failed states as its currency comes dangerously close to all-out hyperinflation, as has happened in Zimbabwe and Weimar Republic Germany.
via the UK Independent:
Inflation in Venezuela is expected to reach 720 per cent this year, with the largest bolívar bill now worth just five US cents on the black market.
Some shopkeepers have reportedly taken to weighing rather than counting the wads of cash customers hand them, and standard-size wallets have become all but useless in the socialist South American state. Instead, many people stuff huge volumes of cash into handbags, money belts, or backpacks, in scenes analysts have said are suggestive of “runaway” inflation.
Humberto Gonzalez, who runs a delicatessen in the city, said he uses the same scales to weigh slices of salty white cheese and the stacks of bolívar notes handed over by his customers .
“It’s sad… at this point, I think the cheese is worth more.”
“When they start weighing cash, it’s a sign of runaway inflation,” he said. “But Venezuelans don’t know just how bad it is because the government refuses to publish figures.”
For several years now, President Maduro opted to continue printing more and more cash as a means of dealing with the oil crisis and the collapsing value of the bolívar, and as a result, the money just isn’t worth much at all.
The printing press simply cannot save the country from a death spiral, but it doesn’t mean Maduro is prepared to let go of power. He has maintained that Venezuela’s problems are due to economic warfare being waged by the United States to topple the oil-rich socialist regime.
Bremmer Rodrigues, who runs a bakery on the outskirts of Caracas, said his family are at a loss over what to do with their bags of bills. “It’s a mountain of cash, every day more and more.”
The shrinking value of the currency has meant that withdrawing the equivalent of £5 from an ATM produces a fistful of more than 100 bills. Some ATMs now need to be refilled every three hours, because the machines can only hold so much cash. This means there are often a limited number of functioning ATMs in Caracas, and long queues to withdraw money.
Venezuela is scheduled to reissue the currency at higher denominations, but it is unclear how much that will help the larger problems that the country faces.
Maduro has attempted to stave off collapse and avoid the inevitable by ruling with an iron fist.
As a result, the people have been forced to endure incredibly long lines to buy food rations; everyday life has been disrupted in every way possible, as crime and poverty have taken a toll on the population.
Food shortages and inflated black market prices for staples, meat and other necessities have driven many to poach stray animals for food and take other desperate measures. Malnutrition is becoming a rampant problem, and the health of the society in general is at a very stressed point.
Life in Venezuela now consists of empty grocery stores, record rates of violent crime, and widespread shortages of just about everything. The economic and political conditions have been deteriorating for years, but recent stories coming from this once-rich nation are astonishing. Bars have run out of beer, McDonald’s can’t get buns for their Big Macs, and rolling blackouts are a regular occurrence. The average person spends over 35 hours a month waiting in line to buy their rationed goods, and even basics like toilet paper and toothpaste are strictly regulated.
Jason Marczak, director of the Latin America Economic Growth Initiative, spoke about the crisis:
“When people are literally going hungry and children are dying at birth because there aren’t the right medical supplies … when basic things like Tylenol aren’t even available … this causes a huge amount of angst in the population.”