Posted on 02/18/2007 7:25:46 AM PST by staytrue
CARACAS, Venezuela - President Hugo Chavez announced Thursday that a new currency will be introduced into Venezuela next year in order to combat inflation.
Chavez said three zeros will be stripped from the bolivar, and banknotes and coins for the "new bolivar" would enter into circulation in early 2008.
Chavez said the measure would help fight inflation and boost the strength of the local currency.
"A strong bolivar, a strong currency," Chavez said on his newly revamped TV show, "Hello, President."
Inflation ended at 17 percent last year the highest rate in Latin America. While the exchange rate of the bolivar has been fixed by the government since 2003 at 2,150 bolivars to $1, its black-market value has tumbled, trading recently at about 4,000 bolivars to the dollar.
Justifying the measure, Chavez argued that the country's strong economic growth of recent years, which has been fueled by high oil prices, has made Venezuela "a world economic power," and that it was psychologically damaging for $1 to be worth so many bolivars.
The new currency would simplify transactions, improve efficiency, generate confidence and rein in inflation, he said.
The Venezuelan leader also announced a gradual 5 percentage point reduction in the value-added tax, currently 14 percent, by July 1 to help combat inflation.
Other countries like Brazil and Argentina have redenominated their currencies in the past to try and rein in hyperinflation, but some economists say such measures have little effect unless it is accompanied by fiscal reforms.
I think his next move will be to cure poverty by raising the minimum wage in Venezula.
It's a real house of cards.
"Chavez takes an Economics 101 class from Mugabe!"
This idea sounds like it came from his pal Jimmah Carter.
So, Monkey boy does understand economics. of course, it is far too late for this to be meaningfull
The Venezuelan leader also announced a gradual 5 percentage point reduction in the value-added tax, currently 14 percent, by July 1 to help combat inflation.
If your inflation rate last year was 17 percent and most certainly going to be a lot more this year, a 5 percent reduction in the value added tax will only stop the flow of blood like a bandage on a 6 inch knife wound
Two words for Hugo:
clue
less
Not sure if this is called 'coloring up' or 'coloring down?' Perhaps a poker player can explain it.
Bush: "YEAH, Yeah, yeah, WHATever... just fill'er up MonkeyBoy!"
And it costs only one US dollar! A bargain.
walks like a duck, talks like a duck...Typical socialist/Communist/RAT/Liberal maneuver, just outlaw inflation and move the decimal point.
Well, the first time I went to Turkey - March 2001, the biggest note they had was 5,000,000 Turkish lira - about $5.00 US at the time.
By 2002 they had a 20,000,000 note... by then only worth about $15.00. The largest denomination note in the world at the time.
Howard Stern made this famous by offering women on his TV show 1,000,000 Turkish Lira to take their tops off on national TV. Many did so... not realizing it was only worth a buck.
I used to go into high schools as a guest lecturer to talk about Turkey... I always took some Turkish currency to talk about the relative value of money. The kids LOVED the million notes....
In 2005 (or 2006) they dropped SIX zero's off their money... it is now called 'New Turkish Lira'.
Wonder how that's worked out for them!!!
This is exactly what would happen if our leaders told us that that $100 bill in your wallet is now a dime.<<<
Shusssh..nobody knows yet....... http://www.westegg.com/inflation/
In fact, not a single nation on earth has any hard asset that underpins its currency.<<
true!...a race to -0- throughout history...ALL fiat goes to zero.....no exceptions
Wonder why Greenspan changed his mind? http://www.321gold.com/fed/greenspan/1966.html
Good post!
[President Hugo Chavez announced Thursday that a new currency will be introduced into Venezuela next year in order to combat inflation. Chavez said three zeros will be stripped from the bolivar, and banknotes and coins for the "new bolivar" would enter into circulation in early 2008.]
It would be easier and take less effort for Chavez to just tell his boys in the legislature to repeal the law of Supply and Demand.
How about having them repeal the law of gravity at the same time?
I was just looking at M-cubed's reference to an inflation counter. It tells me that the nickel I used to buy a loaf of bread or a lot of candy in 1930 is now worth less than a half cent. Or, to put it another way, what cost $87 in 1930 now costs $1000. Inflation is a bitch.
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