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Hyperinflation – Venezuela’s Currency Becomes Near Worthless

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The effect of hyperinflation is no longer just what we learn in textbooks. There is a real-world problem of inflation so extreme that you know, it will kill everything. There is one country we all know that is seriously hit by hyperinflation. Venezuela. Socialism has ruined it all.

The Effects of Hyperinflation

The nation of approximately 30 million people is suffered a deepening political and economic crisis. More than 4 million Venezuelans have fled the country in recent years, escaping low wages, broken hospitals, failing basic services and lack of security.

Venezuelans continued their ongoing struggle with the country’s massive hyperinflation crisis today, with motorists reportedly using cigarettes and other goods to purchase gasoline across the socialist nation. The hyperinflation is so bad that it is expected to hit a staggering 200,000% this year. Venezuela’s bolivars shifted a few decimal positions to keep up with inflation but it will not be enough. A 50,000 bolivars would get you only about $1 USD today, in comparison to about 6 bolivars/USD roughly 6 years ago.

Venezuela, which sits atop the world’s largest oil reserves, was once rich. Very rich. But the economy has dived into a sinkhole-ruin because of what has been seen as two decades of corruption and mismanagement under socialist rule.

Bartering for your gasoline

Motorists in the nation had enjoyed the world’s cheapest gasoline, with fuel so heavily subsidized that a full tank these days costs a tiny fraction of a U.S. penny. But the economy is in such shambles that drivers are now paying for fill-ups with a little food, a candy bar or just a cigarette. Imagine that. Bartering at the pump has taken off as hyperinflation makes Venezuela’s bolivars pretty much worthless; and that nobody will accept them.

“You can pay with a cigarette,” said one gas pump customer in Caracas.

Decimal Shifts in Banknotes

President Nicolás Maduro’s power is under challenge from opposition politician Juan Guaidó, who has the backing of the United States and more than 50 other countries that contend Maduro’s re-election in 2018 was crooked.

Maduro has acknowledged that the state-run oil company, PDVSA, loses billions of dollars a year because of the discrepancy between the price of gasoline and the costs of production.

The hyper-inflation crisis prompted Nicolas Maduro’s socialist regime to print high-value bank notes; rendering lower bills near worthless. Banknotes of 10,000, 20,000 and 50,000 bolívars denominations are expected to begin circulation on Thursday to ‘make the payment system more efficient and facilitate commercial transactions’, according to a reported statement from the central bank.

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