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Venezuela Launches First Nuke In Currency Wars, Devalues Currency By 46%
http://www.zerohedge.com/news/2013-02-08/venezuela-devalues-its-currency-32 ^

Posted on 02/08/2013 3:44:09 PM PST by Orange1998

While the rest of the developed world is scrambling here and there, politely prodding its central bankers to destroy their relative currencies, all the while naming said devaluation assorted names, "quantitative easing" being the most popular, here comes Venezuela and shows the banana republics of the developed world what lobbing a nuclear bomb into a currency war knife fight looks like:

VENEZUELA DEVALUES FROM 4.30 TO 6.30 BOLIVARS VENEZUELA NEW CURRENCY BODY TO MANAGE DOLLAR INFLOWS CARACAS CONSUMER PRICES ROSE 3.3% IN JAN.

And that, ladies and gents of Caracas, is how you just lost 46% of your purchasing power, unless of course your fiat was in gold and silver, which just jumped by about 46%. And, in case there is confusion, this is in process, and coming soon to every "developed world" banana republic near you.

and just as we (and Kyle Bass) have warned - this is what happens to the nominal price of a stock market as currency wars escalate... how do those US investors who flooded Venezuela with cash feel now? bringing back those VEF gains is going to hurt...

The chart above is a free lesson in nominal vs real: the hardest lesson for some 99.9% of the world's population to grasp. One person who certainly knows how to devalue a currency in real terms FDR, whose 70% devaluation of the USD courtesy of executive order 6102, is merely an appetizer of what is about to be unleashed upon the US.



TOPICS: Business/Economy; Foreign Affairs; Government; News/Current Events
KEYWORDS: currency; venezuelacurrency; zerohedgedelendaest
We are so screwed. Every Country is onto Ben B. game....inflate yourself out of debt.

Its way to messy to confiscate the money from your account. Stroke of pen Big Ben takes from the savers and payroll while you sleep and calls it QE.

1 posted on 02/08/2013 3:44:12 PM PST by Orange1998
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To: Orange1998

Venezuela’s exchange rate was ludicrous to the extreme anyway

It will probably still be.


2 posted on 02/08/2013 3:46:11 PM PST by GeronL (http://asspos.blogspot.com)
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To: GeronL

Haven’t heard much about Baraq’s buddy Hugo lately.

Are those renowned Cuban docs keeping him in good health?


3 posted on 02/08/2013 3:48:00 PM PST by nascarnation (Baraq's economic policy: trickle up poverty)
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To: Orange1998

What are the units on the Graph’s Y axis....?


4 posted on 02/08/2013 3:48:24 PM PST by gaijin
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To: Orange1998

They are still selling their oil in dollars.

Until that changes nothing changes bit fake numbers..


5 posted on 02/08/2013 3:52:06 PM PST by montanajoe
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To: nascarnation

um.. no word from him for 2 months.

he could be dead for all we know.

His two buds (Maduro, Cabelo) are trying to amass power in a new rivalry

Its like the last chapter in an Ayn Rand novel, trying to loot the last piece before the collapse


6 posted on 02/08/2013 3:53:51 PM PST by GeronL (http://asspos.blogspot.com)
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To: gaijin

Nominal VS Real.


7 posted on 02/08/2013 3:55:09 PM PST by Orange1998 (DO NOT PRESS CTRL W)
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To: Orange1998

Keep an eye on government salaries their demand for raises while this is going on, while everyone else can’t.


8 posted on 02/08/2013 3:56:17 PM PST by Varsity Flight (Extortion-Care is the Government Work-Camp: Arbeitsziehungslager)
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To: GeronL

I assume if he croaks, there will be a massive state funeral.
It’s the “progressive” thing to do.


9 posted on 02/08/2013 3:57:04 PM PST by nascarnation (Baraq's economic policy: trickle up poverty)
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To: nascarnation

There might be rival state funderals, one by Maduro and one by Cabelo...

They will try to top each other, give away goodies to the crowds, free food, maybe arrest and publicly humiliate an opposition politician while saber rattling against the US andd Colombia

you never know


10 posted on 02/08/2013 4:00:08 PM PST by GeronL (http://asspos.blogspot.com)
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To: nascarnation
Haven’t heard much about Baraq’s buddy Hugo lately.

Saw a note on Twitter a few days ago that he's out of the postoperative phase of his recuperation. Haven't seen anything since.

11 posted on 02/08/2013 4:01:05 PM PST by Vroomfondel
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To: Orange1998

I have been thinking about buying some land or something in Argentina. They are going to do this soon too. I’d like to have a mortgage devalue itself by 10-20% a year.


12 posted on 02/08/2013 4:02:14 PM PST by Vince Ferrer
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To: Orange1998

I have been thinking about buying some land or something in Argentina. They are going to do this soon too. I’d like to have a mortgage devalue itself by 10-20% a year.


13 posted on 02/08/2013 4:02:31 PM PST by Vince Ferrer
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To: montanajoe

Venezuela already brought home the Gold and then devalued.

Venezuela holds 365 tons of gold abroad, in the form of around 17,000 standard 400-ounce bars, worth some $20 billion.

http://www.globalpost.com/dispatch/news/regions/americas/venezuela/111128/hugo-chavez-gold-elections-socialism

CARACAS, Venezuela — Venezuela’s Hugo Chavez is going for his gold.

The first shipment of more than 200 tons of Venezuelan gold reserves returned to Caracas last Friday, with Chavez supporters dancing in the streets as tanks rolled in with armed soldiers riding on top of pallets of ingots.

Chavez had said that he planned to recall all of the country’s gold reserves — kept in the United States, Europe, Canada and Switzerland — to Venezuela.

On top of this, the country’s domestic gold trade — a hodgepodge industry that Chavez has said is in the hands of “mafia and smugglers” — is to be nationalized.

The moves shore up Chavez’s plan to end the “dictatorship” of the US dollar, as he calls it, and feed his ongoing war of words and ideology with Washington as elections loom in less than a year.

“The Yankees are broke,” Chavez said from the balcony of his Miraflores presidential palace as he celebrated his birthday in August. “They have no money to pay their debt ... Shall we give Obama a loan?” the president asked the gathered crowd.


14 posted on 02/08/2013 4:04:55 PM PST by Orange1998 (DO NOT PRESS CTRL W)
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To: Orange1998
They are selling their oil in dollars.

What they have in gold reserves is irrelevant.

This “nuke” is nothing more than a fart and no doubt is pushed by the folks peddling gold..

15 posted on 02/08/2013 4:10:58 PM PST by montanajoe
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To: Orange1998

....Coming to a country near you!!!!


16 posted on 02/08/2013 4:13:17 PM PST by catfish1957 (My dream for hope and change is to see the punk POTUS in prison for treason)
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To: Vince Ferrer

Argentina?

They steal the land and you’d never see it again, and don’t think you can just seize a ship or anything

:p


17 posted on 02/08/2013 4:15:24 PM PST by GeronL (http://asspos.blogspot.com)
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To: Vince Ferrer
I have been thinking about buying some land or something in Argentina. They are going to do this soon too.

Any country that will do this will also expropriate [or tax away] foreign holdings at the drop of a sombrero. I'd think twice [or maybe three times] before conducting any affairs in Argentina.

18 posted on 02/08/2013 4:17:26 PM PST by BfloGuy (Money, like chocolate on a hot oven, was melting in the pockets of the people.)
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To: Orange1998

“Venezuela holds 365 tons of gold abroad, in the form of around 17,000 standard 400-ounce bars”

Should check a few to see if they are truly gold and not tungsten


19 posted on 02/08/2013 4:17:26 PM PST by dynachrome (Vertrou in God en die Mauser)
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To: montanajoe
They are selling their oil in dollars.

What they have in gold reserves is irrelevant.

This “nuke” is nothing more than a fart and no doubt is pushed by the folks peddling gold..

It may not be a "nuke" for the rest of the world, but for Venezuelans it certainly is.

Everything you buy that isn't made in Venezuela just doubled in price and you won't be able to buy much anyway because your savings have just been cut in half.

It tells what members of the upper class who remain to leave for Miami today and makes paupers of the middle class who can't afford to.

The devaluation will devastate businesses who must import a large amount of their capital equipment. They simply won't be able to afford it. Their plants will begin to rot from lack of maintenance and productivity will fall as a result.

It's productivity because of capital investment that raises living standards. Chavez has just made sure that living standards will fall.

Hugo the Marxist believes the same economic tripe that motivates Ben Bernanke. He's just providing us an example of what happens when Helicopter-Ben's policies are speeded up by five years or so.

This is a disaster for Venezuela.

20 posted on 02/08/2013 4:38:40 PM PST by BfloGuy (Money, like chocolate on a hot oven, was melting in the pockets of the people.)
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To: montanajoe
What they have in gold reserves is irrelevant.

I truly want to believe you but gold was illegal back in the 30's for a reason.

21 posted on 02/08/2013 4:41:51 PM PST by Orange1998 (DO NOT PRESS CTRL W)
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To: Orange1998

Venezuela lacks the grace to keep its currency more smoothly and stealthily pegged, like those of our major trading “partners.”


22 posted on 02/08/2013 4:47:12 PM PST by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
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To: Orange1998

“VENEZUELA DEVALUES FROM 4.30 TO 6.30 BOLIVARS”

AP (via Drudge): “Venezuela devalues its currency by nearly half”

From the article: “And that, ladies and gents of Caracas, is how you just lost 46% of your purchasing power.”

And if you people want to know why my kids were able to KICK ASS in this country when it came to education, the above says it all. My kids weren’t anything special, but they could do basic math...which is about all that’s needed to get advanced, technical, degrees today (well, more is needed, but the competition still cannot figure out the above, so it’s a cake walk).

So let me answer the above. If your currency is at 4.3 Dingos to the dollar, and you devalue it by half, then it will trade at 8.6 Dingos to the dollar, NOT anything near 6.3 Dingos. It’s not even close...yet virtually NO ONE in the media can even do that calculation anymore - one wire service idiot blows it and everyone runs with it. Why? Because math is haaaaarrrrrddddd.

By the way, the referenced report actually does quote the correct answer further down, from Bloomberg, where they said it was 32% (not 46%, not ‘almost half’) - no wonder Bloomberg is doing so well.


23 posted on 02/08/2013 5:06:54 PM PST by BobL
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To: montanajoe

they have $20 billion in gold... and their GDP is $400b ... 20:1 ratio

the US supposedly has $300b in gold and our GDP is about $15 trillion... a 50:1 ratio

venezuela is in better shape going into such a currency war


24 posted on 02/08/2013 5:09:21 PM PST by sten (fighting tyranny never goes out of style)
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To: Orange1998

I used to have Zerohedge in my twitter feed and they tweeted alot of alarming things. Then they authored an article that the 2012 election didn’t really matter. Maybe there was some truth to it, but I haven’t read an article since. Seems like a bunch of long on gold folks . . .


25 posted on 02/08/2013 5:21:05 PM PST by RushingWater
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To: RushingWater
I used to have Zerohedge in my twitter feed and they tweeted alot of alarming things.

Zerohedge has lots of good information and posts clips from the few good analysts that appear sometimes on CNBC, Bloomberg, etc. Unfortunately ZH is far too bearish and ridiculously alarmist. Also, they are obsessed with fiat currency and tend to view Ron Paul as some kind of God. There is some really good stuff there, but you can't take a lot of the opinion too seriously.

26 posted on 02/08/2013 5:39:35 PM PST by Longbow1969
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To: BobL
two points, 1)if it went from 4.3 to 8.6, that would be 100% devaluation meaning it 2to1 2)it devalued 32% as compared to the US dollar, not itself... it devalued 46% against itself
27 posted on 02/08/2013 6:02:41 PM PST by Chode (Stand UP and Be Counted, or line up and be numbered - *DTOM* -ww- NO Pity for the LAZY)
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To: BobL

6.3 divide 4.3 = 1.46511 USD to Ven is then 46%.


28 posted on 02/08/2013 6:14:52 PM PST by Orange1998 (DO NOT PRESS CTRL W)
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To: Orange1998

Gold was illegal in the U.S. so FDR and his buddies could steal the true wealth of Americans.

FDR didn’t save the nation,but he sure fooled a lot of people.


29 posted on 02/08/2013 6:31:15 PM PST by hoosierham (Freedom isn't free)
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To: Chode

“two points, 1)if it went from 4.3 to 8.6, that would be 100% devaluation

I see your humor in trying imitate the idiocy of the media types - not bad. Obviously, a 100% devaluation would mean that the currency is worthless - i.e., from 4.3 per dollar to infinity per dollar.

But good one anyway.


30 posted on 02/08/2013 6:52:16 PM PST by BobL
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To: Orange1998

“6.3 divide 4.3 = 1.46511 USD to Ven is then 46%.”

So, if it were 8.6 instead of 6.3, you would get 2.000, which would then mean a 100% devaluation.

Of course if it were then 12.9 instead of of 6.3 , then you would get: 12.9 divide 4.3 = 3.0000 to Ven that is 200%.

I understand what a 100% devaluation means - that means that all value is GONE. But what exactly is a 200% devaluation?


31 posted on 02/08/2013 6:55:52 PM PST by BobL
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To: BobL
no, going from 4.3 to 8.6 would simply mean your buying power has been cut in half and it now takes two dollars to buy what one did before because it has been devalued, not worthless/worth nothing but 1/2 as much
32 posted on 02/08/2013 7:35:12 PM PST by Chode (Stand UP and Be Counted, or line up and be numbered - *DTOM* -ww- NO Pity for the LAZY)
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To: Chode

even with the new rate, their currency is STILL artificially propped up, the real exchange rate is probably about twice that


33 posted on 02/08/2013 7:38:40 PM PST by GeronL (http://asspos.blogspot.com)
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To: BobL

Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. ‘Devaluation’ means official lowering of the value of a country’s currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. In contrast, depreciation is used to describe a decrease in a currency’s value (relative to other major currency benchmarks) due to market forces, not government or central bank policy actions. Under the second system central banks maintain the rates up or down by buying or selling foreign currency, usually USD. The opposite of devaluation is called revaluation.

Depreciation and devaluation are sometimes incorrectly used interchangeably, but they always refer to values in terms of other currencies. Inflation, on the other hand, refers to the value of the currency in goods and services (related to its purchasing power). Altering the face value of a currency without reducing its exchange rate is a redenomination, not a devaluation or revaluation.


34 posted on 02/08/2013 7:45:44 PM PST by Chode (Stand UP and Be Counted, or line up and be numbered - *DTOM* -ww- NO Pity for the LAZY)
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To: Chode

Except that your formula gives a 100% devaluation when going from 4.3 to 8.6. Look around the web, you’ll see that I’m right (other than the idiot AP reporter).


35 posted on 02/08/2013 7:49:54 PM PST by BobL
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To: BobL
100% devaluation doe not mean worthless... and 200% devaluation simply means it would take four dollars to buy what one did in the past

100% DEPRECATION on the other hand, would mean worthless

see post #34, and devaluation and inflation aren't the same thing either

36 posted on 02/08/2013 8:00:09 PM PST by Chode (Stand UP and Be Counted, or line up and be numbered - *DTOM* -ww- NO Pity for the LAZY)
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To: Chode

Oh well, I guess you’re from the school that says going from 99 to 33 means “three times less”.

I can’t really argue with that, except to recommend not using that approach for taking standardized tests, like SATs.


37 posted on 02/08/2013 8:46:27 PM PST by BobL
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To: BobL
i took and passed them 40+ years ago, and if you didn't read post#34 or don't understand it and don't know the difference between devaluation and deprecation i can't help you

google devaluation vs deprecation or just have your kids explain it to you and get back to me

and no, i'm not trying to be a smart ass, i really want you to learn the difference

38 posted on 02/08/2013 8:59:00 PM PST by Chode (Stand UP and Be Counted, or line up and be numbered - *DTOM* -ww- NO Pity for the LAZY)
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To: Chode

I give up. Don’t take it personal, but I’ll stick with trusting:

Bloomberg
NY Times
Reuters
Business Week
Financial Times
Wall Street Journal

The one AP reporter messed up, and that caused many of the smaller operations to repeat it verbatim.

You can find the links, but here’s the WSJ, for example:
http://online.wsj.com/article/BT-CO-20130208-714434.html


39 posted on 02/08/2013 9:10:13 PM PST by BobL
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To: BobL

“But what exactly is a 200% devaluation?”

Easy Answer.....

As the old Saturday Night Live skit said, “Think of inflation as your friend. Wouldn’t you like to wear $1,000 suits and smoke $100 cigars”. I know I would.

http://www.forbes.com/2008/12/09/dollar-devaluation-gold-pf-ii-in_fb_1209soapbox_inl.html

Dollar Devaluation To Fix The Great Recession
Frank Beck, 12.09.08, 01:00 PM EST
A quick dollar devaluation would work wonders for submerged borrowers. Don’t kid yourself: It could happen.

Currency devaluation proved effective in ending the Great Depression. In 1930, Australia was the first to leave the gold standard, immediately devaluing the aussie by more than 40%, and the economy quickly recovered. New Zealand and Japan followed suit in 1931, each with the same result. By 1933, at least nine major economies had enacted a devaluation of their currency by removing it from the gold standard, all of whom emerged from depression.

In 1933, through a series of gold-related acts, culminating in the Gold Reserve Act of 1934, America realized a dollar devaluation of 41% when the price of gold was adjusted from $20.67 per ounce of gold to $35 per ounce. America, like the others before, had its economy bottom and recover as a result. Of the larger economies, only the French and Italians continued to adhere to the gold standard, and their economies remained depressed until finally, in 1936, they allowed their currencies to devalue, and their economies then recovered.


40 posted on 02/08/2013 9:19:49 PM PST by Orange1998 (No matter how far down the wrong road you've gone, turn back.)
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To: sten
I'm sorry you are buying into the gold peddlers theme of the week...

Venezuela's export is oil

Oil is sold on the world market in US dollars

Listen to the gold peddlers or listen to your on common sense ...

Gold is not a viable alternative here..but as always YMMV

41 posted on 02/08/2013 9:48:08 PM PST by montanajoe
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To: montanajoe

yea... do you want the dilutable currency or something that cannot be diluted?

keep spreading your FUD about ‘gold peddlers’.... gold’s only been the standard for 2000-4000 years.


42 posted on 02/08/2013 9:55:46 PM PST by sten (fighting tyranny never goes out of style)
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To: Orange1998

Well, if you haven’t seen it before, it’s time once again for one of my favorite videos...

http://www.youtube.com/watch?v=EoS52fVtVQM


43 posted on 02/08/2013 10:23:41 PM PST by Pining_4_TX (All those who were appointed to eternal life believed. Acts 13:48)
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To: Pining_4_TX

Even the Rappers understand.


44 posted on 02/08/2013 11:12:13 PM PST by Orange1998 (No matter how far down the wrong road you've gone, turn back.)
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; ColdOne; Convert from ECUSA; ...

Thanks Orange1998. This is one result of both The Obama Recession (which has had an impact on the world’s economies) and US fracking.


45 posted on 02/09/2013 6:02:25 AM PST by SunkenCiv (Romney would have been worse, if you're a dumb ass.)
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To: BfloGuy

Great points and this will only increase the demand for dollars and American RE.


46 posted on 02/09/2013 6:34:47 AM PST by 1010RD (First, Do No Harm)
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To: GeronL
yup, and when old hugo reaches room temperature(if he hasn't already) it'll prolly get even worse
47 posted on 02/09/2013 8:38:01 AM PST by Chode (Stand UP and Be Counted, or line up and be numbered - *DTOM* -ww- NO Pity for the LAZY)
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