Venezuela doesn’t have enough money to pay for its money

Last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.

“It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s.

…While the cash was still arriving — at times, multiple planeloads a day — authorities set their sights on the year ahead. In late 2015, the central bank more than tripled its original order, offering tenders for some 10.2 billion bank notes, according to industry sources.

But currency companies were worried. According to company documents, De La Rue began experiencing delays in payment as early as June. Similarly, the bank was slow to pay Giesecke & Devrient and Oberthur Fiduciaire. So when the tender was offered, the government only received about 3.3 billion in bids, bank documents show.

That is from Andrew Rosati.  Here is a sad and poignant post on the suicide of Venezuela, by Joel D. Hirst.


Well, the idea of socialism/communism is to make money obsolete. This is one way to go about it.

Bernie-Maduro 2016!

Well I am still hoping for a Trump-Bernie platform. Just to see everyone's head explode. On everything but foreign policy they more or less agree after all.

But failing that, a lot of people have promised to leave America if Trump wins. I think it is worth voting for Trump just to make sure Girls does not run another season. Either way, perhaps the best thing we can do is offer a deal where they all go to Venezuela in the event of a Trump victory. Sean Penn did such a great job in Haiti after all.

It is a win-win because they will learn. Or they won't. In which case they will starve to death.

It's comments like these that remind me of what Scalzi once said: "The failure mode of 'clever' is a-hole".

Maybe, but Scalzi is an a-hole.

And the failure mode of a-hole is mindless stupidity

And Scalzi wins there too!

Putting the rights and wrongs of commenting aside, can I just say I have never seen anyone cite John Scalzi as a source of anything worth emulating before.

They can just film Girls from Canada. Haven't seen it cause it isn't on Netflix yet.

No reason to leave over Trump. He is easy to take on or ignore.

Girls isn't worth watching. Far-left propaganda disguised as entertainment.

People can't honestly think a president they dislike (however intensely) affects their day-to-day life nearly as much as moving to a different country, where you don't know the culture, have few or no contacts/family, and need to find a new job. Even in much more statist societies than the U.S., the president affects your personal life orders of magnitude less than that.

This "moving away if X is elected", whether X be Trump or Obama, is yet another sign that politics is identity, not logic.

More like rhetoric. We've been hearing that baloney from both sides since 2004, how many have actually followed through? I'd be surprised to hear more than three.

Since 2004! Try again people have been saying that since I was away of politics that goes back to LBJ.

@Floccina: fair enough, I just don't remember it being as much of a thing with Clinton, or Reagan, or Bush I

My point stands, everyone says it, no one does it.

Pay attention people. Democrats threaten to move, Republicans threaten to secede. The politics of high faux drama.

Not knowing the culture? It's Canada. It's like moving to New Hampshire.

Not really. Universal healthcare is accepted as a national value and entrenched right in Canada ("fair" is viewed as everyone having roughly equal access to healthcare regardless of income, etc.). Gun lovers are very much a rarity. It is assumed that corporations and unions should have no place in electoral campaigns, and that individual contributions should have a very low threshold. But the accent isn't very different and there are lots of trees in both places ...

Admittedly, easier to move to Canada than, say, Europe, if only for language reasons.

OK Nathan, so it is not moving to New Hampshire, it's like moving to Vermont.

Yes, and I'd suffer from serious culture shock from moving to New Hampshire.

Even in much more statist societies than the U.S., the president affects your personal life orders of magnitude less than that.

I think that Chavez kind of proves that wrong. Venezuela is a lot different to, say, Colombia despite the cultures being otherwise similar.

msgkings - how many people on the Right threatened to move if Obama got elected?

The usual ODS types made offhand comments about it, especially when he got re-elected. This happens every election but because you are such a partisan hack you only see the world as Red always good Blue always bad:

So you can't find a single case and so you are going to try to change the subject?


You can't click on a link provided and instead double down on your typical fatuity? Understood.

Naturally that CNN link does not name a single person from the Right who threatened to move if Obama was elected.

So it is not me that has a problem with clicking a link. Or reading.

There was a dispute over some territory with oil between Guyana and Venezuela. It will get more interesting.

Also, the longer the present situation continues, people that left for other countries will get more comfortable in the new home. What happens if an important fraction of the educated middle-class never comes back?

Most of them left Venezuela so long ago, they were never going to go back anyway.

Well, today the shit hit the more beer for Venezuela. The producer of 80% of beer doesn't have enough malt to continue production

Couldn't they print some extra bills to cover their fee?

They are printing Venezuelan bolivars. But the money printing company wants the fees to be paid in dollars.

So why don't the money printing companies just print dollars for themselves? Hmm - Maybe they are.

Largely because doing that is considered an act of war and you will either get arrested by whatever country you are in, or you get a JDAM through your door.

Say what you will about modern economic theory, but the surest guarantee of your currency strength is the ability to put a JDAM through the door of banknote printers in Essex and get away with it.

The USA has, smartly, retained control not only of its central bank but of its monetary printing presses.

Why would a country even outsource such a thing in the first place? It seems like a core government function to me, even if you also allow private currencies.

Venezuela hardly produces anything. And it goes way back before Chavez came around. I had a roommate in college from Venezuela, he later was trying to start a business importing things from Venezuela, the only thing he could find that Venezuela produced of good quality at internationally competitive prices were baseballs.

Venezuela has been completely dependent on oil since at least the 50's and politics was which of two bands of thieves got to loot the oil wealth. Until Chavez came in with own group and screwed things beyond repair.

When the money isn't worth the paper it's printed on, stop printing!

I thought they were using toilet paper as money down there.

Obviously, they should print the money on toilet paper. That would set a floor on its value.

Meanwhile, Bank of Japan today announced they might not be able to reach their goal of 2% inflation by mid-2017, so they're pushing the goal back to end-of-year. Heck, at this point just getting inflation to be a positive number would be progress.

About 18 years ago, Mark Falcoff offered an assessment of the Venezuelan situation on Chavez' inauguration. His take was that the problem was cultural: Venezuelans from top to bottom fancied that wealth came from resource endowments and not from skills and innovation. The general public fancied that prosperity could have been theirs had someone not stolen it (a misconception aided by the extraordinary corruption of the political class). Per Falcoff, Venezuelans were just going to have to learn the hard way. If they could learn.

"If they could learn"


Chavistas will never learn. I'm just not sure if they're deliberately lying to themselves, or just delusional.

Just stupid low iq ignorant peasents. They are incapable of avoiding the allure of free stuff. Which is why they should be kept out of the United States.

The ones smart rough to get out are the generally not the ones you need to worry about. In fact, they're the ones you should welcome.

Somewhat understandable given that much of their wealth DOES come from a resource endowment. The extent to which it was stolen is debatable, I think. However, I agree that more focus on skills and innovation would be useful. Difficult in an economy so dominated by the resource sector ("resource curse").

At one point during the 1980s hyperinflation in Bolivia, imports of printed currency were the third largest import item for the nation. Probably the Venezuelans should follow the 1947 Hungarians and just start putting exponents on the numbers on their existing currency. The Hungarians did that twice, raising the values to the sixth power twice, leading to the highest denominated currency note ever issued, the five quintillion pengo note (the pengo soon after being replaced by the forint).

According to Pipes book, during the Russian hyperinflation after the revolution, at one point the only industry showing growth in output was the printing of paper money.

But that would make the holders of currency at the moment of the "appreciation" wealthier (relatively speaking), and we can't be making dirty hoarders richer.

Paging MMT'ers.. :)

Productivity, Weimar style. Without it the sovereign currency will be weak and more susceptible to inflation. About all Venezuela has is oil, and we all know where that value has been heading. Venezuela imports too much, and they are not productive or diversified enough in other areas. They end up too reliant on the USD, not a good thing.

Then you have all the governmental malfeasance. Zimbabwe style...

Venezuela is dying, but according to economists like Marc Weisbrot, it's all America's fault. There is no rock bottom low enough for these people to ever admit that Venezuela brought this upon itself.

The guy's basically a red haze opinion journalist. What's peculiar about him is that all but one of his publications in academic and professional journals over a period of more than 20 years were to be found in International Journal of Health Services, a lower-rung public health journal. He's not a public health maven at all; the only thing that makes sense is that the editor is a personal friend of his. Sage really should not allow its journals to be used this way.

I'd never heard of this guy. He and his sidekick Dean Baker have persuaded quite a run of the usual suspects (Annie E. Casey, Ford, sorosphere) to help them make rent. What they get for their money is a huge mass of op-eds.

"Marc Weisbrot"

An actual idiot.

The capitalist system just can't help autonomously crushing all attempts to defeat it. For some reason.

I disagree. Reality crushes attempts to defeat it. Capitalism commits suicide. Look at Art Deco's comment above. Marc Weisbrot is a leftist who has contributed nothing to society. Yet the Ford Foundation, the Sorosniks, whoever, flood him with money.

What can be more typical of the lemming-like nature of Western capitalism than the foundation set up by Ford giving money to Marxists in order to destroy capitalism?

Some people deserve to be arrested, tortured into confessing they are part of a Trotskyite-Zionist plot and then executed. It is not as if history has not warned them.

LOL at the internet tough guy.

Don't hold back in an attempt to appear moderate, SMFS, tell us what you *really* think.

On some days, I ponder what, if anything, will ever convince socialists that they are wrong.

Suggesting they be tortured and executed will probably work.

Actually Stalin tried this experiment. Actually torturing and executing them did not work.

They still believed.

Chomsky, as a Trot, presumably knows he would be murdered in record time by the Stalinists he has supported over the years. He does anyway. He speaks at Hezbollah rallies despite their open calls for the murder of all Jews. Some people are simply beyond the reach of reason or experience.

And the basic problem is in a modern Western capitalist society those people are not shunned. They are deluged with money.

It hadn't occurred to me that you could run out of other people's money so hard that you would run out of your own money. Oroborous inflation.

Similarly, I knew that countries like Greece which didn't control their own currencies were in trouble, but I had no idea that countries that didn't control their own currency printing presses could have it worse.

In recent memory, Zimbabwe gave up on its currency after suffering through hyperinflation (over 100% inflation in 2001 rising to over 200,000,000% inflation by 2008) and redenominating its currency three times; the last time, they dropped 12 zeroes, i.e. old ZW$1,000,000,000,000 = new ZW$1. Shortly after that, everyone, including the government, accepted various foreign currencies like the US dollar, Euros, South African rand, etc.

They had their own press, but could not pay for ink. Not sure how you could be completely self-sustaining. Costal forest/squid farm?

Obviously with low price of oil, a lot of domino pieces will fall, coincidently or not, most of these domino pieces are from no-so-best-friends of the US...

Ahh, the sweet taste of leftist tears.
Mmmmm. Mmmmmm. Delicious, delicious socialist tears.

This proves nothing other than the Zionist-Rothschild neo-liberal conspiracy to oppress revolutionary countries from rising to challenge the Globalist IMF/World Bank domination and NWO through the hegemonic hegemony of maths!

- Bernie/Trump/Putin/Larouche 2016

Down with the hegemony of mathematical reality.

Down with hegemonic hegemony!

Why doesn't Venezuela just mint a trillion dollar coin made of platinum and save the day.

They should just use bitcoin.

L...O...L Sometimes I crack myself up.

Two - Bit Coin ... ;-)

And then do what with a counterfeit coin?

New Keynesian fiscal policy obviously. Clearly they are suffering from a demand shock and they need the government to spend to get the country spending again.

They have relatively too much demand and not enough production. They need to diversify from oil and ramp up with general internal productivity. Like Russia has been trying to do.

Next stop, legalized theft.
Can't print enough paper bills to pay for goods? Just take them by force.

After that? Slavery. Can't print enough bills to get people to work for you? Put a gun to their head.

You say that like it wasn't obvious where they are headed:

Like the corvée labor that the US Marines imposed on Haiti?

Apparently, Leftists have to go back at least 100 years to find an example of anything to rival the horrors of communism today.

A good blog from VZ is
and another is

Where's Jan, Prior Approval and Nathan when their buddy Chavez needs defending?

It turns out that not everyone left of the extreme 1% right wing is not in fact a raging Marxist.

People laugh at the economic buffoonery of Chavez but his Hydrocarbons Law and Bolivarian Missions weren't that different from Canada's National Energy Program introduced by Trudeau senior in the 80s or the babbling coming from Sanders, who has most of the youth vote.

I can't figure out why so many of us want to throw the modern world away. Maybe capitalism, personal liberty and the free market really sprung from a Protestant sect that had a disproportionate influence on the Netherlands, then the British and finally the USA.

Now that this once radical religion is dying, people are turning to another church - the state - and its promise of heaven here on earth with the payments (with interest) quietly shifted to the next generation.

People are just returning to their natural and normal state of existence: as capucin monkeys.

Someday, in the future, there may be another experiment like America (and its previous iterations). But they too will fail.

Human nature, is, alas....fundamentally corrupt. Gee, I wonder who has been saying that for the last 2,000 years?

The idea that human nature is base and corrupt, and needs to search out loftier things in the heavens, precedes Christianity by quite a bit. Essentially every ancient culture has some version of it. You may want to read up on Plato for a recent-ish, well-developed Western example.

The current version of Christianity (expiation for original sin etc) was put together long after Christ was dead by heavily incorporating Greek philosophy.

I've read CS Lewis too, you know.

I don't know what CS Lewis has to do with this. What I'm saying comes from reading Plato, Aristotle, and Plotinus.

If you know that the "humans are corrupt" idea is FAR from original to Christianity, you shouldn't imply that Christianity has some kind of unique insight into things.

Christians don't claim its their original idea, either.

In fact, that's a given: if something is an "eternal" truth, then clearly it had been recognized by others before 32 AD.

Indeed, isn't that why we need a New Socialist Man?

If they can't buy paper,


Venezuela, worker's paradise. The Revolution brings you a 5 day weekend.

You are saying that socialism is bad and I don't like that..
I didn't pay $55K/year to be exposed to your hatefulness. Up yours, idiot.

Your comment makes me feel unsafe. I will get you banned from this forum.

We know that you didn't pay $55K....someone else did!

1) If Venezuela can't afford to print more money, won't that help them combat inflation?
2) Does this mean that counterfeiting in Venezuela, even if legalized, would be unprofitable?

I'll admit, it has never occurred to me to wonder how hyperinflation affects the counterfeiting business....

I basically renders it moot.

Counterfeiters would be doing the government a service at this point.

Only if the government hires them. However, what counterfeiters there are in Venezuela surely don't counterfeit the Bolivar.

Is there a case for fiscal stimulus when you hit the inflation upper bound?

Threadwinner for Ultimate Snark

They need a productivity stimulus.

That's one way to limit the money supply. Don't pay the printer!

You'd think a socialist government would run their own printing presses rather than use a private contractor...

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