Boy oh boy! I’m not kidding when I say that there is never a dull moment in the Bolivarian Republic of Venezuela. These past couple weeks have been quite the nonstop wild ride: A new currency with less zeroes, money continues to be printed at an alarming rate, the government has been engaging in even more controls and regulations, the complete collapse of my beloved Maracaibo’s power grid are but some of the latest happenings in this battered wife of a nation.
Heck, there was even a quake that scared us a couple days ago—thankfully there were no casualties or major damages, but it definitely made up for an interesting afternoon.
And if all that wasn’t enough there is now a massive media push by the government’s narrative apparatus that pretends to downplay or outright deny the sheer amount of people fleeing the country while blaming other countries instead. As if denying the humanitarian and health crisis that we’re going through wasn’t enough hypocrisy on their behalf.
Let’s start with the highly fanfared Economic Recovery Program announced by the Government around a month ago, which according to them will fix everything that’s wrong right now.
The Sovereign Pantomime
After going through some lengthy delays, the new “Sovereign Bolivar” currency was finally implemented on August 20, 2018, replacing our ironically called and short lived “Bolivar Fuerte” (Strong Bolivar) which only lasted a little over ten and a half years.
These Sovereign Bolivares were hailed as the spearhead of a new economic paradigm, at last, after years of an “Economic War” narrative by the government everything will be alright. Originally announced back in March, they were intended to axe three zeroes off our hyperinflated currency; however, during the months where its implementation was delayed hyperinflation got so bad that they had to axe two more zeroes.
Say goodbye to those worthless Bolivar Fuerte notes, cause these big boys are going to fix everything.
As of the time of this post, I’m yet to hold one of these in my hands, just like with their predecessors there simply isn’t enough paper cash to keep up with the demand. ATM lines continue to be too long and I have enough lines as it is with bread lines in all honesty.
In addition to that, Maduro gave every bearer of their ever more forced “ID of the Fatherland” program a bonus of 600 Sovereign Bolivares for free, printing more money in the process, yay!
As a result of this monetary reconversion we’re no longer a nation of millionaires, what a bummer; but hey, it’s alright, because these banknotes mean business, nothing costs millions anymore. Everything has been fixed! Hyperinflation has been defeated!
The new currency scale and the confusion it still generates in people as they adjust to the new pricing scales alongside with the new monthly min wage, and this free money bonus has caused a sort of honeymoon period where the government acts like it has fixed everything, but now the honeymoon is over and the dust has settled, we’re back to reality.
Removing those five zeroes merely masks the hyperinflation without fixing anything, but doesn’t 338.50 look prettier than 33831492.00?
Things continue to increase in price exponentially. Just to use a personal anecdote, at the beginning of September I bought loaves of sandwich bread at 2.1 million per loaf (or 21 Sovereign Bolivares), on Monday Sept 10. I saw the same loaves at 6 million per loaf (60 Sovereign Bolivares)
Another example: On the left you’ll see the leftover package of a regular Mozzarella Cheese (my brother’s favorite), on September 01 a Kilogram would go for 353.00 Sovereign Bolivares. I bought 315 grams of sliced Mozzarella for 111.20 Sovereign Bolivares (or 11,020,000.00)
Seven days later a kilogram of the same cheese was going for 451.90 Sovereign Bolivares, I paid approximately the same for 65 grams less, as pictured on the right.
From a visual standpoint, an increase of 98 Sovereign Bolivares on its price seems less impactful than an increase of 9,800,000 Bolivares, but it is still a substantial increase nonetheless.
And just like that, certain items have doubled—even tripled in price; at the rate things are going we might as well be adding back those zeroes sooner than expected.
A Minimum wage in...Petros?
If all the previous minimum wage raises have shocked you then you might want to sit down for this one.
On August 17, 2018. Just three days before the monetary reconversion, Maduro did one of his customary mandatory broadcasts on National TV, in which he said that we need to stop printing more money, yeah, you heard it right.
Then mere minutes later he goes and announces a new minimum wage raise to go alongside the new currency scale, our monthly minimum wage went from 3,000,000 Bolivares (excluding the food bonus) to 180,000,000.
From 30.00 to 1800.00 in the new Sovereign scale, a whopping 5900% increase, you can imagine the collective shock—especially that of companies and everyone in charge of paying employees when he said that.
The reasoning for this astronomical raise in minimum wage? Hold on to your butts: The monthly min. wage (along with the Sovereign Bolivar) is now anchored to the Petro cryptocurrency, the monthly minimum wage will now be ½ of a Petro.
If you need a refresher, the Petro is that cryptocurrency that no one has access to, that no one but the government can mine, that is backed by some of our oil reserves, and that everyone and their mothers have declared to be nothing but a desperate scam. Reuters published a recent article that’s pretty throughout.
Maduro’s government has announced that the value of a single Petro is tied to the price of an oil barrel, which they have estimated to be at $60 per barrel, thus with minimum wage now being half of that then our minimum wage is now $30, one dollar per day (obviously less if you go by the more realistic black market rates).
If you employ the Government’s math which states that 1 Petro = $60 and min wage (Bs.S.1800) is half a petro then one Dollar equals 60 Sovereign Bolivares, or 6,000,000.00 in the old scale. This rate is almost exactly to the black market rates of the week this all was announced.
And with that, the government implicitly validated the black market rates that they always have denounced as “not real” without outright admitting it, that’s just how they always do things.
Again, the government broke everyone’s metaphorical legs and expects you to be submissive and grateful that they’re letting you loan a pair of worn out and duct-taped crutches.
Obviously, not every company can afford a 5900% increase in their payrolls, not with the dire state of our economy, because of that, the government has promised that they’ll cover the difference in wages for three months—as long as you register with their ID of the Fatherland program.
The question every company has asked themselves is “then what?” in light of these announcements there’s been quite the amount of layoffs left and right, because the way things are right now this is not something that can be sustained in the long run.
As for the “Socialist Cesta Ticket”, the complementary food bonus, it was raised to 180 Sovereign Bolivares, as of the first week of September this is roughly enough for one egg per day and a bit of butter.
The whole “anchoring to the Petro” gives them yet another excuse to print money at will, as if they needed a reason to do so in the past…
Choke Holding the market
Because of course, what we need right now is more controls, the government is doing what it does best, to regulate everything that they can even further beyond.
Because you know, holding down the market at gunpoint has definitely worked so well for us in the past.
“Agreed” Prices
Alternatively known as: How to mask hyperinflation (and thinking that you can get away with it)
For the past year or so the government kept mentioning that they would announce a list of “Agreed” prices, which is another way of saying “Regulated prices”.
The first of these lists was published a couple days after the August 20 monetary reconversion, in it you’d find tuna priced at 72 Sovereign Bolivares per can, one kilogram of beef at 90, 30 eggs for 81.50, 1 kilogram of mortadela for 18.
When you consider that the monthly minimum wage is now 1800 Sovereign Bolivares these prices sound great, right? The problem is that less than two weeks after the first list was posted some of these items have increased in price, for example, eggs went from 81,50 to 120, and mortadella is now 180 per kilogram.
The government assumes that you’ll be fine with just buying one kilogram of meat per month, or one bag of beans, and is also fine with the concept of you “not buying everything listed every month”.
When you look at it, even though they’re “regulating” the price they’re just masking—or rather, institutionalizing the hyperinflation, removing those five zeroes off the currency helps them disguise everything up.
Certain items have doubled, even tripled in price, let’s take for instance corn flour, one of the most consumed items here because it’s used to make Arepas, a month ago I bought three for 710,000 Bolivares each, if you check the list it’s at 20 Sovereign Bolivares (from 710k to two million, or from 7.1 to 20 if you fancy the new scale). Detergent has now officially tripled in price from when I last bought it a month ago.
In the case of meat, chicken, and other items in this list, they’ve simply vanished from most supermarkets just like it happened when they tried to regulate them almost a year ago, who’s going to bother selling these at a loss when you have to cover a 5300% increase in minimum wage?
These “Agreed” prices are to be openly displayed on every supermarket or establishment that sells them, and because this is the Venezuelan government of course, they list must show both the price in Sovereign Bolivares and in Petros—even though you can’t get Petros, let alone pay for anything with them.
And of course, the government is making sure everyone complies with these agreed prices—by force. There’s been too many arrests, too many places harassed, sanctioned or forced to close down for days, in the case of the place where I usually get my toiletries from, it was forcefully closed for days and they’ve reopened under “supervised’ sales, which incur in some really long lines.
Speaking of toiletries, after a list of “Agreed” toiletries prices was published, bar soap has become quite difficult to find, I got lucky and got the last six in a store about two weeks ago; detergent, shampoo, and toilet paper might as well be luxury items now.
Free currency exchange*
*not really
The very same government intellectuals that years ago passed a law banning the use and holding of foreign currencies have now revoked said law. Yay! At last, we can finally have some free currency trade in the country after 15 years of controls—except not really, at least not yet.
While they’ve announced this no further actions have taken place, and it all points to it being heavily monitored by the government. The implicit message is clear: Not even the government wants Bolivares anymore, even though they’re the ones that killed it and gave birth to the black market with their draconian currency control regulations back in 2003.
As for the Black Market, it has become sort of relatively “stable” at ~100 Sovereign Bolivares per dollar (or ten million in the old scale) for now, this is something that has happened in the past with failed currency exchange announcements (DICOM et al), once hyperinflation catches up and the monetary reconversion stupor fades then it’ll start to spike—and sadly it’ll hit us hard.
The Gasoline snafu
Let’s be real about it. Gasoline is so heavily subsidized here that it is virtually free (one bottle of Coca-Cola is worth more than thousands of gas tanks), its price has always been a touchy subject here, and it has been the cause of heavy protests for previous governments.
The government always denounces that heavy amounts of gasoline are smuggled out of our borders, blaming Colombia most of the time for this without ever mentioning the fact that it is the Venezuelan National Guard (which is under the government’s control) that are the ones letting trucks full of gas pass en masse.
Even though our laws say that our National ID card is our rightful identity document within our borders, the government has been pushing their ID of the Fatherland for over a year now, with it they’ve finally found a way to force people into getting it through gas prices.
Throughout August, the government announced a national vehicle registry that is tied to their “Patria” platform, namely, their ID of the Fatherland program which is mostly used to give handouts and inorganic money bonuses.
Those that are registered in this new system will continue to receive the subsidy in gas prices, however, in order to do so, their ID of the Fatherland has to be tied with a specific vehicle, those that refuse to register will have to pay for gas at “International Prices”.
You can see the problem here, in a country were the minimum wage is $30 per month according to the government (and much less if you go by black market), you won’t be able to afford a $30-50 gas tank refill, thus you have no choice but to bend the knee and register through their program.
I understand the need to raise gas prices, but the way they’re doing it is just to avail themselves of an opportunity to force people at gunpoint into signing up for their Patria registry.
Here’s an official video of how this convoluted system will work:
Yes, the government will soon use these machines which will scan the QR core on your ID of the fatherland and read your fingerprint to regulate how much gasoline you can get per month even though the gasoline belongs “to the people”.
Of course, some government higher-up is definitely getting a really nice commission from contracting the chinese supplier of these machines.
Using fingerprints to limit the amount of items you can purchase isn’t a new torture for us, it is something that has been going for a while in supermarkets, but many if not all of these are no longer being used.
This convoluted program is being tested in certain border districts in Venezuela right now, the first pilot tests ran into problems due to power blackouts and internet connectivity, apparently satellite internet is now being considered.
As if gasoline shortages (which are happening more often now, in a country whose only product is gasoline) weren’t enough, imagine doing a huge line to fill your tank only for these machines to lose internet connectivity when it’s your turn.
The gold savings program
Yet another stunt by the government.
Because both you and the government know that the bolivar is worth nothing now you have the chance of buying gold from Venezuela’s reserves, except not really.
You can buy either 1.5 or 2.5 grams of gold but here’s the catch, you don’t get the gold you’re paying for, you don’t get to see it, you don’t get to smell it, you don’t get to kiss it, but it’s totally 100% yours to claim for Bolivares should you need the money.
What you’ll get is a piece of paper, a pseudo bond if you will, that says you own either 1.5 or 2.5 grams of gold. Don’t worry though, that gold you bought is safely in the vaults of the Central Bank’s vaults, trust them. Of course Maduro and his wife respectively have the #1 and #2 certificates.
I don’t know about you guys, maybe it’s just me, but if I’m paying for gold I would very much prefer to have that gold in my hands, I’ll worry about safekeeping it in my own way.
Bank Controls
In an effort to “Undermine the Colombian black market mafias” the Government has now instructed all banking institutions to block the e-banking accounts of everyone who logs in with a foreign IP.
If you need to travel and you need to manage your Venezuelan bank account from abroad then you must inform your bank of where will you go, for how many days will you be outside, and inform them of any possible extensions in your trip so they won’t block your account. Banks then have to periodically provide the Venezuelan Banking Superintendence with a list of people that have requested access to their bank accounts from abroad, you know, just to keep them in check.
I’ve been told that Germany does this and that it’s not a new thing, but this is certainly a huge inconvenience for people who merely want to pay for utilities or send money to their families from abroad. In the end this is ultimately a “Fuck you” to everyone who left the country but needs or wants to manage their Venezuelan Bolivares account.
Expect a rise in of Venezuelan VPN/Proxies and people getting savvy in the usage of TeamViewer, Remote Desktop, etc.
Migrant crisis? What migrant crisis
Of all the hypocritical things the government has done in almost 20 years of Revolution, this one takes the cake.
For the past years they have fervently and loudly claimed that there is no humanitarian or health crisis here, that everything is fine, and that everything bad you hear about Venezuela are just “excuses to invade the Fatherland”.
It is no secret to anyone that Venezuelans are fleeing this disaster en masse, some are more desperate than others, some are more ill-prepared than others, I would’ve done anything for my mother to get humanitarian aid and proper cancer treatment, I knocked on so many doors to no avail. Now I’m doing anything in my power to migrate legally asap so my brother has a future. No matter the circumstances of each Venezuelan that ultimately decides to leave this country people fleeing en masse is a fact that they can’t cover.
So what do you do when you can’t cover-up this near-exodus of Venezuelans? You grab the two most notorious siblings in the Venezuelan Socialist Government’s politburo, make a press conference where you downplay the whole crisis, say that it is a normal flow of migrants, and say that the crisis is part of a “Social Media narrative”. They even went as far as to cry “muh mentions” on live tv.
It doesn’t stop there, the government announced a “Return to the Fatherland” program for Venezuelans who have been “lied to or have been victims of Xenophobia, racism, violence” etc. to return to this Socialist Paradise where nothing can’t ever go wrong.
The first stunt involved bringing 89 Venezuelans from Peru, yes, a whopping 89 out of the ~400,000 Venezuelans that have currently fled to Peru as of August 2018. As expected, the Government’s media apparatus is going full force on this, saying how other countries are so bad, how things are better here, etc.
As of September 10 the government has announced that a total of 2,780 Venezuelans have returned to the Fatherland through this hastily implemented program, out of which 52 are members of the Yucpa Indigenous race, here’s the statistic they’re throwing out through their official social media accounts:
And now let’s compare that number to the ~2,300,000 Venezuelans who as of 2017 have fled the country according to a chart BBC posted earlier this year using data gathered from United Nations Migration Agency.
The above graphic is only up to 2017, let that sink in for a moment. Once more concrete 2018 statistics are released then prepare to be amazed, remember that the government has completely stopped issuing most statistics since 2014, inflation included.
I do understand and am fully aware that not every Venezuelan who has desperately fled the country has had a happy ending in their journey, migrating is not a subject that can be taken lightly, which is why I’m taking every legal step right now so that both my brother and I get that happy ending; but the government being responsible for the complete collapse of Venezuela, and then bringing 2780 out of the millions that have left, then claiming this it as some sort of victory is just plain and outright bullshit, just like when they claim that there’s no health crisis yet you see so many people dying due to lack of access to proper treatment.
Now that the dust is settling and everyone has spent their newly printed and inorganic Sovereign Bolivares everyone is realizing the cold hard truth: that everything is the same, nothing has changed.
The Venezuelan disaster show goes on as scheduled—the status quo must be preserved at all costs. The shortages continue, and I’m afraid hyperinflation is merely getting its engine all warmed to soar up higher than before.
The Petro cryptocurrency will continue to be forced down our throats as the miracle solution to everything and anything—even though realistically WoW gold and Runescape gold have actual use unlike Petro.
But don’t you ever forget this ladies and gentlemen, if your Socialist government has destroyed your country then all you gotta do is simply axe more zeroes and impose more controls, the 400th time will surely be the charm!
-Kal
