See How Socialism is Working in Venezuela:
Every day, the exchange value of the Venezuelan currency drops. Ten years ago, you needed ten local Bolivars for one American dollar. Now, you need almost 50,000 Bolivars for the same amount.
The country has been under the heel of socialists since 1999, and just a few months ago their government gave up on regulating the local currency. Now, the bills themselves are more valuable for insulating the walls than for buying food.
Venezuela was inhabited by indigenous people and was then colonized by Spain in 1522 and the country declared independence in 1811, but this was not finalized until 1830.
Like so many other parts of the country owned by jerks, Venezuela has massive quantities of oil and is one of the biggest oil exporters in the world. Stop me if you’ve heard this one before — but before the country was aware of the black gold underneath their land, they were making only a small amount by exporting crops including coffee and cocoa. Oil prices have created a volatile economy, and when a socialist government was elected in 1999 it had all the money in the world to play with from oil price stabilization.
Collapse into Socialism
The 1980s and 90s saw hundreds of people die in riots and there were two attempted coups of the government in 1992. Hugo Chávez, who had lead one attempt, was pardoned by president Rafael Caldera in 1994. The left-wing Chávez would eventually lead the country. After Hugo died in 2013, Vice President Nicolás Maduro took over as the elected leader of the country with the United Socialist Party of Venezuela.
Last year, government authorities illegally seized a General Motors plant. At the time, GM announced that they would take all legal actions, saying that this seizure will cause damage to not just the company but to the almost 2,700 workers, almost 80 car dealers and all over suppliers. GM had been producing cars in the country for 35 years up to that point. The company said that not only was the plant itself taken by authorities, but also the other assets including vehicles were taken. Car manufacturers have been in a bind, because they were unable to find the American dollars needed to import parts.
Named the bolívar fuerte, or strong currency, the bolivar has been the national currency of Venezuela since its introduction on January 1st, 2008. The currency was a easy fix for Chávez who had started to manipulate the previous currency with controls starting in 2003. Exchange rates and values were government mandated and were different for some goods compared to others; that is, you needed more bolivars for luxury imports and fewer bolivars needed to be exchanged for common goods.
On January 26th of this year, the government gave up on the fixed exchange rate.
By early February, the Central Bank in the country said that the currency had seen a 99.6% devaluation in five years. At the start, you needed 10 BsF for one American dollar. Two months ago, you needed 25,000 BsF for one American dollar.
Country-Wide Weight Loss
Last year, the economic crisis was already severe enough that the average citizen had lost 19 pounds from the food shortages. At the time of the survey, 93% of the nation’s households said that they were not making enough money to cover their food needs.
They’ve even begun breaking into zoos to eat the animals.
Tracking Plunging Currency Daily Struggle
Every day the value of the bolivar dips and it becomes more difficult for financial watchers to accurately translate value. After all, if the bolivar is going to continue to drop, is it really worth what it’s worth today? Would you buy a currency you knew was going to drop in value again tomorrow?
According to DolarToday, an independent exchange site, the worth of the bolivar over five years is now down 99.99%.
DolarToday has been well known to watchers because its tracking of the currency has angered President Maduro on the state’s television channel, and he has preferred other exchanges that give an extra 30% worth of value. Citizens are unable to trust government sources, so choosing the website that makes the President the angriest is a good choice.
And until one of the riots finally breaks into violence against the socialists in charge, Venezuelans will continue to use their bills as confetti.
Sources: The Independent, Bloomberg, Wikipedia