More Madness from Venezuela
So the basketcase country of Venezuela decided to do an interesting thing yesterday. The maniacs in charge decided to devalue the currency by 96%. That's horrendous, but expected.
What was interesting is that they also decided to peg the new currency to their government cryptocurrency, the petro. So the exchange rate will be 60 new bolivars to the petro. At least for the next few days.
And that petro will be pegged to the price of oil.
Also I have a bridge for sale that you might be interested in.
There are a couple important take away lessons from this move.
1 - The authoritarians always do these things on the weekends. Fewer people are paying attention and banks are closed. These announcements are timed so that you have no recourse to avoid them. Plan ahead!
2 - A cryptocurrency in the hands of a government is functionally equivalent to a fiat money. The great power of crypto to pull the control of money back to the individual only works if it's in the hands of the individual.
3 - Devaluations and capital controls are always used during the death throes of a government. I wonder why they are so concerned about money when they have the social contract, will of the people, divine right of kings, or whatever.
Is this just making the official rate in line with the de facto rate? See this comment.
Yes for the moment. This is actually fairly new that the official rate has caught up to the black market rate. Historically they kept the difference pretty wide and blamed imperialist capitalists on gouging.
nice i like it
its pretty sad
It is. I know a bunch of Venezuelans and a lot of them just seem resigned to the inevitability of corruption and economic collapse.
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