There’s this nice image in the Venezuelan public imagination about “cranking up the Central Bank banknote printing presses”. You picture some big industrial printing press in Maracay spitting out masses and masses of Bs.100 bills.

Of course, it’s not quite like that.

It’s 2016: even the fast-depreciating banknotes are imported. And imported, it turns out, by the planeload.

Take it away Kejal Vyas,

Millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, arrived here from countries around the world in recent months to service Venezuela’s crippled economy.

But instead of food and medicine, the planes carried another resource that often runs scarce here: bills of Venezuela’s currency, the bolivar.

The shipments were part of the import of at least five billion bank notes that President Nicolás Maduro’s administration authorized over the latter half of 2015 as the government boosts the supply of the country’s increasingly worthless currency, according to seven people familiar with the deals.

And the Venezuelan government isn’t finished. In December, the central bank began secret negotiations to order 10 billion more bills, five of these people said, which would effectively double the amount of cash in circulation. That order alone is well above the eight billion notes the U.S. Federal Reserve and the European Central Bank each print annually—dollars and euros that unlike bolivars are used world-wide. [emphasis added.]

Dear lord.

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  1. I have already seen signs that a defacto dollorization is already occurring in Venezuela. For a very long time now, virtually all significant real estate transactions have been negotiated in dollars. More recently (about the last couple of years) transactions for used cars are now commonly done in dollars. Even more recently, I am now seeing ordinary people carrying some U.S. dollars in their wallets and purses. The dollarization of Zimbabwe did not occur through an intentional act of the government. It happened because people simply stopped accepting the national currency. Eventually, the government bowed to the inevitable and legalized what was already a fait accompli.

      • From the WSJ article: “The bank-note buying spree is costing the cash-strapped leftist government hundreds of millions of dollars, said all seven of the people, who have been briefed on the deals Venezuela has entered with bank-note producers.”
        IMO that money could have been better spent in infrastructure or food.

  2. The only reason Venezuela continues to print 100 Bsf bills and doesn’t switch to higher-order bills is because we still think we are a rich country, and can therefore afford to throw away our precious petro-dollars on printing many bills worth next to nothing.

    Ultimately, the costs of printing a BsF 100 bill are the same as that of printing a Bsf 100,000 bill. A sensible government would print the latter, so that the total cost of printing (and flying it from wherever) is lower. But not ours – we still think we’re rich.

    • That’s our tragedy, we still think we are rich, talk to any emigrant and you can see we see our non-richness when we leave Venezuela as a temporary nuisance, we think that since wealth has always existed around us, is obvious some of it will eventually permeate into our bank accounts.

      Remember that money exists, it’s just not well distributed, Mendoza has too much of it and maybe if we can get some out of his wallet we can pay for more planeloads (or even boatloads if you were a little more ambitious).

      Now take all that intellectual bagage and make it state policy, we are just temporarily a little short in cash, tomorrow oil will shoot up to $200 and we can be back to normal, maybe our uncle will win in los caballos and give us lots of money, misión vivienda will build 10 million houses and we will keep solving our problems a los realazos.

      When migrants finally realize they are not rich anymore, some strive and le echan un camion, some get depressed, some get angry and some go back to Venezuela where they can keep that weath illusion, how will the country react once poverty sets in? It is really hard for me to picture an empobrished country…

      • “Remember that money exists, it’s just not well distributed, Mendoza has too much of it and maybe if we can get some out of his wallet we can pay for more planeloads”

        Yeah right

        Diosdado leave that body!!!

    • I think they just can’t stomach showing that their Bolivar fuerte died. It would be hard to spin such a failure if they have to print bigger bank notes. I think is them trying to cling to their delusional ideas and do everything in their power to avoid recognizing something didn’t work.

    • I do think Venezuela is rich, is a rich country in comparison with our neighbours, as rich as a oil producer country can be.

      Venezuela is a rich country very poorly managed but rich. We do not have enough incomes right now to cover all our expenses but it is not that we are poor it is that we are expending to much and badly.

        • Is Kodak also being managed by a bunch of incompetents that pretend that people is going to bring their dollars back just for sheer patriotism?

          didn’t know.

          • My company after having been royally screwed by the chavernment will not be investing one penny more in Venezuela until long after the ghost of Chavez and every last Chavista like person (Navarro, Giordani, Nicmer, Temir Porras, etc. etc.) is truly eradicated from the government. Even then I would bet my board would insist that we wait several years to make sure that socialism is dead and buried in Venezuela before putting a penny back into that black hole.

          • Actually, yes, Kodak was managed by a bunch of incompetents that failed to understand how digital photography was going to kill film photography.

            Seen any Kodak brand digital cameras in the last 15 years?

            Sacate ese mojon mental de la cabeza, mosquito.

            Venezuela es un pais pobre, y lo seguira siendo hasta que los bolsas que la gobiernan se aparten y dejen a otros gobernar. Basta ya de socialismo y demas bolserias.

          • Can’t understand how a bad managed country and a poor country are the same.

            The sheer amount of incomes of venezuela put it beyond its neighbours.

            “A high-income economy is defined by the World Bank as a country with a gross national income per capita above US$12,746 in 2013, calculated using the Atlas method.”

            Venezuela’s per capita income is 17,759.

            Again, Venezuela it is not a poor country in the same way Qatar is not a poor country.

            Venezuela is mismanaged as hell but not poor.

            Accept the notion of we are poor would justify the beasts that ruling venezuela right now.

            Venezuela’s current crisis is not the product of venezuela being poor is product of venezuela being poorly managed.

          • 17759 USD per capita?? Really?? don’t know from where you got that number, but the IMF thinks otherwise: 4,262.54 USD per capita in 2015 and going down, fighting with El Salvador, Paraguay, Guatemala and Guyana, but proud to be well ahead of Bolivia, Nicaragua, Honduras and Haiti. Strong fifth from last in the Americas! I think you underestimate the consequences of 16 years of socialism and having 98% of the labor force of a country doing ABSOLUTELY NOTHING! only colas and “cumpliendo horario”. Welcome to reality! (

      • The wealth of a country is measured by the competitive level of its mean citizen. That is based mostly on his intellectual capacities.
        Brunei people were very lucky and their government much more responsible. 1 barrel of Brunei oil is exported every day for every four citizens. 1 barrel of much cheaper Venezuelan oil is exported for every 15 Venezuelans.

    • I think we are just simply governed by doofoses, when you speak to everyday Venezuelans in the street they get it, that we need higher bank notes, that the government is printing a lot of money to cover its debts.

    • “Venezuela is not a rich country. The State is very rich, yes. But the country is very poor”. I heard that from Ramon G. Aveledo. He was my professor in a postgraduate course. Other people have said that as well, I know. I heard it from him.

    • We assume the cost is the same to print different denominated bills…

      …until you factor in the couple of billion needed for the creation of a bill and the plates for printing courtesy of Derwick Design Ltd. (Expected completion ca. 2015 to 2044.)

  3. Yesterday waiting in a queue to retrieve some needed cash from a cash dispensing machine I met a young man , The machine was the only one among many still working , you could only take the minimum amount in 20 bs bills, I complained about the bother of having to pay things with such low denomination bills and he explained to me how the value of our bills (and coins) had fallen so much that the US$ cost of their printing /coining represented a very high propportion of their value making their printing coining uneconomical , he said that the golden fringe which our bs coins carry make their coining more costly than the value of the coins themselves. The young man although he spoke well did not appear middle class in origin , but like someone who had recently obtained that status.

    Later we fell to talking and he mentioned calmly that for young people like himself there was no hope of ever being able to improve their lives , that all they could do was survive , he was the father of two toddlers , managed to round up about 50 thousand bs a month which all went to cover his living expenses leaving little or nothing to save for the purchase of a car or home. So as he saw himself he could not hope for a better future and had to spend all his efforts in merely surviving. He wanst bitter about it but evidently unhappy ….

    I found his story and attitude heart rending , this was not how I saw life in my youth , I could then nurture the expectation that steadily I would be able to improve my life and that of my family steadily and securely. We have fallen so much !!

    • Yep, thats the sad reality of the most honest young people in the country day by day, no expectation, no dreams, no self-improvement,etc.
      Just trying to survive day by day without looking towards tomorrow, some adapt, some throw the dice overseas looking for a better quality of life, and some sadly just give up, set the autopilot on and cruise in a lifeless life.

    • Bill, your story is heartbreaking. Also, your experience and those of many other commenters on this site is why I donate to Caracas Chronicles. I don’t have a dog in this hunt other than a heartfelt conviction that Venezuelans need our support to claw their way out of this travesty. So here I sit in my safe home praying for the citizens and applauding those that continue to fight the good fight.

      Hope is what that young guy needs.

  4. Riches are not represented by abundant natural resources , these emblematically represent riches in peoples imagination but true riches are to be found in the capacity of certain people and organizations to be productive in the use of resources , fecund in the creation of wealth and effective in the management and reproductive use of the wealth thus created . From that perspective an organization like Polar represents true riches , if we had 100 Polars then we would be a rich country indeed.

    That’s why the destruction of Pdvsa was so tragic , because a first class organization like that, born from decades of sustained managerial effort by some of the best managed companies in the world , represented the true wealth of Venezuela , the equivalent to at least half its natural oil wealth .

    We must understand that having a Ferrari doenst make us great Formula 1 drivers, that natural riches aren’t worth much if you don’t have the capacity , the expertise , the organizational culture and abilities to make optimally advantageous use of those natural resources.

    That’s what makes companies like Polar so important to Venezuela .

    • Bill can we say there is an objetive definition or measure of the richness of a country?

      I mean, is there a quantifiable way to deter if a country is rich because what you just said is beatiful and true but not quantifiable.Bill can we say there is an objetive definition or measure of the richness of a country?

      I mean, is there a quantifiable way to stablish if a country is rich because what you just said is beatiful and true but not quantifiable.

      I’m using the GDP (PPP), do you think is there other way?

      Of course i agree with you we need more Polar Enterprises kind of companies in Venezuela and having more and more would be proof of wealth for any country.

      • Quite sure that there is a context where GDP figures can be properly used to quantify the wealth of a country , Im also sure there is another context where using GDP figures may not serve to represent the wealth of a country . Not because the wealth lacks economic value but because there is no easy or exact way to quantify it in monetary terms . For example how much would you say that Harvard University or MIT is worth in monetary terms , can you put a price tag on the Japanese capacity to build first class ocean going vessels beyond the difficult to calculate market value of their shipyards. ??

        I once had an experience working with a team of experts on trying to put a price tag on an oil field , the factors were so variable and numerous and context dependent that it was nearly impossible to come up with an exact figure , all you could do was work with orders of magnitude , a wide range orders of magnitude , still the figures which came out were disappointing because what made the field valuable was not the oil in situ but the investment cost of extracting the crude it contained and them processing it for sale in a particular market (a cost which in itself was very variable and difficult to estimate for the life period of its exploitation ) .

        Take a more telling example , if you buy certain food ingredients for X and give it to an ordinary cook to transform into a dish to be sold in a regular restaurant it will be worth X times 10 , if you give it to a talented chef to transform into a more sophisticated dish to be sold in a famous restaurant it will be worth X times 500 , the purchase cost of the ingredient might be the same in both cases but transformed in to a finished dish it will be worth much much more depending on what you do with those ingredients.

        Do understand that Im not quibbling with using the GDP number in the context which you suggest , but also keeping in mind that maybe there are other contexts where the GDP number may not properly reflect a countrys wealth.

        • I’m pretty sure we could come with a figure for the GDP PPP for the MIT. Certainly we can come with a figure for Japan.

          My point is, is there a quantifiable measure for the wealth of a country, if not GDP then what?, it has to exist something. It is like potential energy. May be it is not developed but is there.

          A quick search throws this:

          “A report released today by MIT underscores the substantial economic impact of the Institute’s alumni entrepreneurs, whose companies have created millions of jobs and generate annual revenues of nearly $2 trillion — a figure greater than the gross domestic product (GDP) of the world’s 10th-largest economy.”

          Venezuela got one trillion in the last decade or so.

          In my opinion, El Salvador is a poor country, Honduras is a poor country, Bangladesh is a poor country, Haiti is a poor country, Iraq is a country destroyed by war but not a poor country, Venezuela is mismanaged but not poor.

          • Well maybe you are right in that GDP is a good economic marker for a countrys wealth , What comes to my mind in comparison is the value of the estate or assets of a person or family , does finding out what its yearly income is tell me how much wealth they have ?? or just how productive they are in using certain of their assets one particular year. GDP is after all just a snapshot of the wealth they produce with the wealth they already have !! Kind of difficult to assess ……. there are some assets which are intangible, which valuation can be a bit subjective or almost impossible to pin down , seen accountants have a hey day figuring out their value …guess that not being able to quantify with precision the value of something is kind of discomfiting …..I share your discomfomfort.!!

  5. National Assembly sends Tributary Unit rate proposal back to SENIAT. Authorities of the Central Bank, CENCOEX and the Ministry of Finance failed to attend hearing before the AN.


    No indication that the Chavistas want to try and negotiate their way out of this.

  6. Man, I really feel for those Venezuelans living day-to-day. Hyperinflation is financial noose around one’s neck that one can’t shake off w/o having access to a stronger currency (dollar/euro).

    At this point I firmly believe that the Chavistas are going to burn the house down because to accept responsibility is not in their plans…I just hope that in the future those responsible for this tragedy face justice for their crimes against the Venezuelan citizens.

  7. Venezuela’s wealth, like that of any country, consisted in its human resources, not its natural resources. 1.5 million of them have left and will not be coming back, they’ve now made their lives elsewhere. My wife is a dentist trained at the UCV, now lives in Australia, and won’t be going back. Her sister is an eye surgeon, now lives in the U.S., and won’t be going back. How much did it cost Vzla to train those two? One day they’ll have to build a museum of Chavismo, and make sure that every school kid visits, that it’s in every school curriculum, so that this monumental disaster can never happen again.

  8. […] The Kejas Vyas’s story on bolivar banknote imports in yesterday’s Wall Street Journal paints a sharp image on the levels of irrationality that suffuse economic decision making in Venezuela today. The stubborn refusal to issue higher denominations bank notes is, at this point, more than just stupid. It’s insane. […]


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