Maduro Announced a New Currency Redenomination: Less Zeros, More Inflation

10 years ago the government took off three 0’s from the bolivar, saying it was a cosmetic fix and would strengthen the economy. Now, they will try to do it again.

Photo: Reuters, retrieved

A few hours ago, president Maduro announced that Venezuelan currency would be reevaluated, basically scratching off those useless zeros that makes buying a cup of coffee and an empanada a millionaire deal.

Not only that, Maduro also announced a demonetizing of all current currency, having it replaced by new banknotes, unironically called “Bolívar Soberano” (Sovereign Bolivar) that, as far as we know, haven’t been printed yet, and that the entire process should be done within a single month, from June 4th to July 4th.

10 years ago, when the Venezuelan government announced these very same measures, it was seen with preoccupation of a financial quagmire with increasingly fewer ways to escape.

The government didn’t spare expenses on selling “the Monetary Revaluation”, as a cosmetic fix with no repercussions. They released picture books and badly-animated PSAs, with a straw-man naysayer, called “Medio Malo”:

Turns out, Medio Malo is better forecasting inflation, hunger and shortages than Francisco Rodríguez. Pretty visionary for 2008.

In fact, seeing how the first revaluation was done amidst an international oil price boom is a sign that: 1) Chavismo’s policies have always been pretty lousy, but we were too rich to notice; 2) Pulling this right now, with the government facing an official 99.6% devaluation, is not easy.

Since Venezuelan currency is a worthless token that keeps increasing in quantity but reducing in value, this could mean more trouble and confusion to avoid taking the necessary measures at fixing our core economic issues.

And seeing the December 2016 disaster, you must wonder how successful (or how big of a mess) this is going to be.

Here are the new banknotes, courtesy of El Nacional:

José González Vargas

Freelance journalist, speculative fiction writer, college professor, political junkie, lover of books and movies and, semi-professional dilettante. José has written for NPR's Latino USA, Americas Quarterly, Into and ViceVersa Magazine.