Paper currency becomes worthless in Venezuela

Venezuelans have begun to feel as if the cash they carry in their wallets is as valuable as Monopoly money.

The local currency, the bolivar, tumbled even further this week, falling through the threshold of 400 bolivars per dollar, which is double as low as the value of the so-called Marginal System.

That threshold had been established three months ago by the government in an effort to stop the unstoppable rise of the dollar on the black market.

On Thursday, the greenback rose 40 bolivars in a single day and has climbed nearly 130 bolivars in a month. In the crazy Venezuelan exchange rate system, which keeps track of changes since February 2003, two elements calculate every dollar in exchange for 6.30 bolivars, a rate that is reserved for the importation of basic foodstuffs, and 12 bolivars per dollar, for others lower priority items.

Meanwhile, the dollar that circulates in the black market, which is the marker of the replacement cost of items that are not regulated by the government, is followed by Venezuelans over the internet. In an effort to hide the real value of the dollar with respect to the bolivar, the National Telecommunications Commission has blocked some internet domains, but their creators open profiles on social networks to make it known.

President Nicolas Maduro has accused bloggers and other Venezuelans who publish the real value of the currencies as inciters of an “economic war” who seek to distort the rigid price controls established.

The price seems less responsive to a diabolical creation and more likely responds to the inexorable rules of supply and demand, which no government or set of controls can manipulate for too long, because the market always dictates the real price of products, services and even currency value.

The bolivar has depreciated so fast that there are very few people who can deny the coming collapse of the Chavez economic model. Caracas needs a high price of a barrel of oil to continue financing its operation.

In the past, 96% of foreign exchange to the national treasury was accounted for by the commercialization of crude oil, whose revenue paid for the high public expenditures that were the basis for the strong popular support seen during the Chavez era.

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