Photo: Roberto White (@robertomayota), retrieved

I’m at a busy street in Unare’s municipal market, waiting to pay for my queso blanco, and I have a gazillion things to do: buy chicken and endure the long line that comes with it, find bread and, most importantly, track down a frickin’ deodorant before the municipal market closes at midday. I probably won’t have enough time, because the line to pay is frozen. The point-of-sale is broken again, and nobody can check out until the fucking thing restarts. You may be a millionaire but, since you have no cash, you’re subjected to the cruel gods of Venezuelan connections. Forget about your other errands, son.

I didn’t bother to ask the price: a line this big means it’s affordable. I have reference, because I just saw this cheese down the street at Bs.150,000 per kilo.

Getting closer to the goal, I ask:

“What’s the price of the cheese?”

“It’s 240, mi amor.

“Wait, really?” she flinches at my immediate shock. “I just saw it at 150,000 around the corner!”

“That’s the the price in cash” she says.

I should have known. One of the easier-to-miss impacts of our hyperinflation is that there’s not enough cash around. The government, as always, is unprepared and its response, wholly inadequate. It printed higher denomination bills too little and too late, and, at any rate, the out-of-control speed at which prices rise means the higher denominations just aren’t big enough. The Bs.100,000 bill (largest denomination there is), is worth less than 50 cents as I write this probably much less by the time you read it.

You’d think people would immediately ditch the slow line and run to the cheaper cash seller. Well, nobody has cash, ever. We’re all shit out of luck.

Gold at these towns is sold in bolivars, cash or dollars. Right now, just a gram is worth Bs. 2,500,000. Five thousand 500 bolivars bills

The cash drought is hitting throughout the country, but it’s worse here in Guayana. In the street markets of San Félix, or Unare, it’s now standard to see products sold with three different prices: cheapest for the new, higher-denomination bills, expensive if you pay with cards, and exploitative for 100 or 50 bills (if they’re accepted at all).

According to the government, there are enough banknotes in circulation, but the border mafias and the private market extract and retain them to sell with a markup. It’s cash bachaqueo, and it’s shocking to see how many people buy the lame excuses chavismo comes up with.

The black market exists (and it’s crazy-big, yes) but truth is that money is scarce, and markets simply adapt. Prices vary a lot between locations following a simple rule: the more useful and scarce the money is, the more valuable it gets.

In big cities like Caracas or Ciudad Guayana, many stores have point-of-sale el punto, in the parlance of our times. Those that don’t, might accept bank transfers. In a big city, the cash drought is an inconvenience, but it’s manageable. You still have banks, and if you spend all week standing in line, you may get some cash the normal way.

It’s down the rural path that reality bites. Many small towns have spotty or no electricity, no internet, no bank branches and, in some cases, not even cell phone service. In rural Venezuela, cash is not an option, it’s the only option.

And if that remote land is a mining town at the south of Bolívar state, where people save in gold (worth hundreds and sometimes thousands of dollars), it’s the perfect storm.

Gold at these towns is sold in bolivars, cash or dollars. Right now, just a gram is worth Bs. 2,500,000. Five thousand 500 bolivars bills and they don’t transact one gram at a time, that’s just a tiny rock.

According to Mr. Castro, a construction worker at El Callao, everyone buys gold. It holds its value, unlike bolivars, and can be sold either in Brazil for dollars, or in Puerto Ordaz for way more profit.

It’s now standard to see products sold with three different prices: cheapest for the new, higher-denomination bills, expensive if you pay with cards, and exploitative for 100 or 50 bills (if they’re accepted at all).

El Callao is one of the most developed mining towns (it even has three banks!), but getting a significant amount of cash is a nightmare. Mr. Castro says that anyone with cash may sell it to you: “Today, January 20th, for a Bs. 100,000 bill you get Bs. 210,000 in bank transfer.”

Cash is so valuable that, even though prices are many times higher than in Ciudad Guayana, it’s ultra cheaper if you pay in cash. A kilo of rice goes for Bs. 200,000 in debit, but only Bs. 40,000 in banknotes.

“You may have money in the bank,” Mr. Castro says “but without cash, you can’t eat that day. I charge my work half in bank transfers and half in cash, gold or silver. That’s how I’ll buy food later.”

El Callao has many puntos, but most don’t work. Mr. Castro suspects the merchants damage them on purpose, so they can sell in cash only.

No wonder people are willing to pay top dollar for their cash. Now that word has spread, cash became the latest thing you can exploit. In Puerto Ordaz’ bus terminal, you can only pay in cash, but who has Bs. 100,000 in a wallet? Drivers tell you where you can go (inside the same terminal, mind you) to get cash at a 100% rate we can all agree that ticket sellers won’t be taking your cards any time soon.

In the city, products that used to be easily affordable are becoming cash-only too. Back in December, sodas disappeared from most stores, to reappear on Christmas Eve at street vendors’ stands that only accepted cash.

The lines at the banks have gone up to eleven, too. Everyone wants to sell the cash, or at least buy cheaper stuff with it, particularly the pensioners, since they’re not working and have a big incentive to spend their whole day at the bank for a bunch of bills that are worth nothing.

Everything is a business. Taking money out of your account is time consuming, and well-connected people at the banks have started to sell cash. Moving those mountains of bills to the mining town, Lilian Tintori’s brother-style, is a business, too. And, of course, so is managing the many guard checkpoints throughout the route.

Chavismo creates problems and leaves us to come up with the solutions. Just how bad you want cash in your wallet?

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31 COMMENTS

    • Zimbabwe’s last banknote before switching to US dollars was 100,000,000,000 Zim dollars. When they converted bank accounts for the currency changeover it was at 35 trillion Zim dollars to the US dollar.

      • Yes, it’s mind boggling. Actually the Z$ exchange rate officially reached 35.000.000.000.000.000 per USD after the third re-denomination. The largest bill was Z$100.000.000.000.000 of which you would need 350 to buy ONE USD. The free rate was higher.

        As in Vz, the numbers became meaningless. The hyperinflation is 100% the product of leftist policy so there’s only one way to fix it.

    • Mining your mine comment? The whole situation is so absurd.

      I’m surprised the mining areas haven’t just gone to a “gold standard”, but can understand the need for bolivares to meet the daily bills.

      How do big purchases even get done anymore, or is everything currently in catharsis? An entire town’s bills would have to be used for even a purchase of the most basic house, car, etc.

      • IMF predicts 13,000% inflation in Venezuela this year. It is beyond imagination the level of hassle and frustration and hardship that will lead to. Maduro must change economic course now; otherwise there is a real risk that Venezuela will become like Zimbabwe.

  1. I wonder if the Maduristas actually thought that limiting the value of the notes would prevent inflation? Probably more like they don’t care, since their stolen loot is in hard assets (gold, real estate outside of the country) or foreign currency in a shady bank

    And, yes, MRubio, this article was already written in the comments by you a few days ago..

    I still don’t understand why the miners deal in bs. The cocaine industry deals in USD, maybe Euros, but no self-respecting “drug lord” wants bs. Or so I understand …

    • “I still don’t understand why the miners deal in bs.”

      I don’t think there’s anything special about “the miners” specifically, I think it has more to do with amount of economic activity in that particular region because of the mining. Money naturally flows towards economic activity. Keep in mind that much of the rest of the country is on life-support as far as the economy goes. The petroleum industry, while still huge, is collapsing and mining gold is most surely one of the few new sources of hard currency for the regime so I image they’re promoting the activity regardless of the environmental damages inflicted.

      Last year, for instance, we sold a lot of coffe in bulk, 100-200 kilos at a time, and when I finally asked the guy where it was headed, he said, “the mines”.

      When it comes to the issue of dollars versus bolivares, keep in mind that while you or I would gladly do business in dollars, many Venezuelans, especially those in very rural areas may not. They’re often afraid of being scammed with counterfeits, or just don’t have the contacts to change them into the local currency when it’s needed.

      As the authors in this article pointed out, there’s a tiered structure for purchasing and selling goods. If one is of a mind to make the maximum gains possible on every transaction, something even die-hard chavistas seem to understand, having cash in hand is the way to go.

      • Thanks, MR, you’ve explained this before. My apologies for repeating the question, and also if this is a repeat: What happens iwhen the B notes are no longer practical, e.g., when it would take 50 kilos of 1000000 B notes to buy a cup of that coffee? The petro? Small gold nuggets? It’s going to happen soon.

        • Don’t know AG.

          We’re not there yet but we’re not far from it either. Lots of negotiation now via barter. The kid who brings coffee from the mountains near Mundo Nuevo has now decided that instead of hauling sacks of cash back up the mountain, he’d rather haul cigarettes, chimo, and motorbike spare parts…..all of which we usually have in quantity.

          Works for us, works for him.

  2. Epale Gringo, remember there is also a shortage of Dollars and Euros here as well. Doubt that planes loaded with Dollars or Euros are flying into Estado Bolivar on a frequent basis. Bet these guys even sell gold in Bitcoin by now.

    Furthermore, you are dealing with illegal mining operations and “unskilled” day laborers (not all, but many). That is why you are dealing with cash. Remeber the riots of over the 100bsf note in 2016, that is what that was all about. Also the day laborers need liquid cash so they can buy cheap rum, drugs and go to the whorehouse after a week of work in the mines, and thus repeat the cycle of poverty…that said, even the putas (prostitutes) work by transfer and punta de venta here anymore lol (if it werent such a tragedy, it would be a very dark comedy here).

    As for elsewhere in Venezuela…well I am stuck home tonight because I have no cash and cant take a taxi without it.

    • I’m sorry to hear it. I did not mean to be flippant “just use dollars”. The lack of economic activity (cant use taxi because no cash) will just add to the downward spiral.

      And, I suppose if I had to work in one of those mines, I would also want some Rum, Drugs and Hookers (good name for 70’s rock cover band) every now and then.

  3. Japanese cryptocurrency exchange loses more than $500 million to hackers

    Hackers stole several hundred million dollars’ worth of a lesser-known cryptocurrency from a major Japanese exchange Friday.

    Coincheck said that around 523 million of the exchange’s NEM coins were sent to another account around 3 a.m. local time (1 p.m. ET Thursday), according to a Google translate of a Japanese transcript of the Friday press conference from Logmi. The exchange has about 6 percent of yen-bitcoin trading, ranking fourth by market share on CryptoCompare.

    The stolen NEM coins were worth about 58 billion yen at the time of detection, or roughly $534.8 million, according to the exchange. Coincheck subsequently restricted withdrawals of all currencies, including yen, and trading of cryptocurrencies other than bitcoin.

    https://www.cnbc.com/2018/01/26/japanese-cryptocurrency-exchange-loses-more-than-500-million-to-hackers.html

  4. As bank transfers are mentioned all the time: how much time it takes in VZ to receive money through bank transfer? If it is a few days or so, is it factored in that the same amount of Bs might be worth less then?

    • “As bank transfers are mentioned all the time: how much time it takes in VZ to receive money through bank transfer?”

      When we discuss bank transfers here, we’re generally talking about moving money from bank to bank within the country, not receiving anything from outside the country.

      Here at the bodega, if a new client wants to pay for merchandise with a wire transfer or requests cash for a wire transfer, we request that they use the same bank with which we deal like Banco Venezuela for example. Such a wire can be confirmed immediately…..while the client waits basically.

      Wires between different banks can take a day or two and sometimes even though the wire shows as successful on the sender’s end…..the funds may end up being rejected for some odd reason by the receiver’s bank. We accept such wires only from people we know well and have done multiple transactions.

      When we accept a wire for merchandise, we don’t charge a fee nor do we adjust the price of the goods. For providing cash, we charge our clients (selected clients generally) a fee of 20% for the transaction. And then there are clients who arrive with cash in hand and want us to transfer the money to their account or perhaps the account of a family member in another city or state. For those transactions we charge 10%.

      In a nutshell, because wire transfers are generally completed within a maximum of a couple of days, we don’t try to factor in inflation.

  5. “but truth is that money is scarce, and markets simply adapt”. This is one reason the regimen cannot recognize inflation or DT, it proves that Keynes was correct and supply and demand control the markets, not the corrupt regimen.

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