These days, if you’re looking for reasons to be alarmed about Venezuela you’re spoilt for choice. But if I had to pick one, just one signal that’s freaking me the hell out right now, it has to be the government’s dogged refusal to issue larger denomination bank notes.
Lots has been written about the insanity of having the highest denomination bill in your country be worth less than a nickel-and-dime. It is, on its face, a purely self-destructive decision: chavismo in self-harm mode.
In a country where a lot of operations are still cash based, the Central Bank literally can’t print Bs.100 bills fast enough to satisfy demand. In Zulia, they’ve had to cap the amount of cash you can withdraw with a check at one go. These aren’t capital controls, mind you, just a pragmatic patch on the problem of not-having-enough-banknotes-on-hand.
It’s ridiculous. The last few foreign tourists intrepid enough to risk the trip to our country get a kick out of taking selfies with the bank-notes they get in return for a single Ben Franklin.
The government’s refusal to deal with this insane situation is troubling, and not for the usual reasons. It’s not that they’re blinded by ideology or horribly incompetent at macroeconomic management or somehow profiting illegally from the distortions inaction creates.
The normal ways we’ve learned to make sense of government irrationality won’t cut it when it comes to the refusal to issue a Bs.500 bill, or a Bs.1,000 bill, like we used to have back before we decided to lop off three zeroes from the currency because things had gotten ungainly…
Something else is at play.
It’s not that issuing higher denominated bank notes would solve any of our macroeconomic problems. It wouldn’t. The deficit would stay the same, inflation would stay the same, nothing that matters would change that much.
It’s that printing higher denominated bills would make coping the day-to-day practicalities of the macroeconomic shit show slightly less aggravating for everyone at basically no cost to anyone.
The government’s refusal to do even that much says volumes about its steely determination never to capitulate to reality.
It speaks to the absolute collapse in its capacity to make even marginally reasonable decisions, decisions that cost it nothing, harm no one and relieve some part of the burden of living day to day amid the economic chaos its policies have created.
In other words: it’s the catatonia, stupid.
Bad government? Old story.
Criminal government? We’re used to that!
But catatonic government? That…that’s new.