SHOCKING: Venezuela doesn’t have enough money… To PRINT MONEY
From Dr. Steve Sjuggerud, Editor, True Wealth:
You know the old joke about the worthless currency, right?
“The guy with the wheelbarrow full of money was robbed. They stole the wheelbarrow and left the money…”
Unfortunately, that’s the type of thing that’s happening in Venezuela today – only the story gets much worse…
I saw this type of thing firsthand when I visited Venezuela years ago…
I went to a bank in the middle of nowhere (Coro) to take out some cash.
It looked like a bus station. There was a long line, and everyone was carrying a duffel bag. I’d never seen anything like it.
It turned out, those duffel bags were full of cash… worthless cash. The duffel bags themselves were worth more than what was in them.
Today, the situation in Venezuela is much worse than when I was there.
Venezuela’s currency is worthless… If you trade one U.S. penny for 10 Venezuelan bolivars, you’re getting the worse end of the deal.
Specifically, right now, one U.S. dollar will get you 1,100 bolivars. (Tomorrow, it might be closer to 1,200 bolivars.)
So if you want to deposit $500 U.S. dollars into the bank today, then you will need 550,000 bolivars.
Amazingly, Venezuela’s largest bill is 100 bolivars – which is less than $0.10 in the U.S.
You would need 5,500 of Venezuela’s largest bills to deposit the equivalent of $500 U.S. dollars in the bank (hence the duffel bags). That’s why the lines are so long – because the banks have to count all those bills.
Because Venezuela’s largest bill is only worth less than $0.10 in the U.S., Venezuela has to print A LOT of bills. And this is where things get REALLY crazy…
Yesterday, Bloomberg reported that Venezuela is “now so broke that it may not have enough money to pay for its money.” (The story is fantastic. You can read it here.)
At this point, the international companies that print money are tired of printing money for Venezuela… They either aren’t getting paid on time, or aren’t getting paid at all.
The money-printer has a dilemma with Venezuela: It’s an order big enough to fill your factory for a year, but do you want to completely expose yourself to a country as risky as Venezuela?
And it’s not just the currency…
Just yesterday, Venezuela announced a two-day workweek for government employees. You start work on Monday, and the weekend starts at the close of business on Tuesday.
Why? Despite the fact that Venezuela has the world’s largest proven oil reserves, its government has to ration out energy.
This is a disaster… and it was all avoidable. I lay the blame squarely on Venezuela’s government – mainly on the socialist rule of President Hugo Chavez from 2002 to 2013. This placed all the power in the hands of the government, and none in the hands of the people. And look what happened.
People think things like this don’t happen in this day and age anymore… but they do.
People also think that things like this can’t happen here… but they can.
The best thing you and I can do to avoid ever being in this situation is to do our best to limit the powers of the government…