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.
The three zeros he kicked out have just run around the house, and come in through the back door.
Hey, Hugo, they're baaaack!
---hummm-some change--when I was there for six months in 1981, the bolivar was about four to the dollar--and people were complaining about inflation then--
Another Socialist paradise.
Looks like Americans not buying his oil is beginning to take it's toll on nation. When will the "Progressives" ever learn that just because you print money it doesn't mean there is anything to back that money? People that print money without the proper backing are nothing more than counterfeiters.
If these people were stupid enough to re-elect him, they'd probably be blind to this slight of hand. This is exactly what would happen if our leaders told us that that $100 bill in your wallet is now a dime.
Another leftist hero nutjob for the annals of history.
There is a real simple way to cure inflation. In fact, it is the only way: stop borrowing money into circulation. Stop creating money from nothing whether it is by the issue of debt instruments or printing of paper currency. It is all borrowed and it is all from nothing.
It is worth noting that while Venezuela has a large amount of oil, it does not choose to use oil as an asset with which to create a reserve for its currency. In fact, not a single nation on earth has any hard asset that underpins its currency.
I read some place last week that he has also announced that PDVSA (the VZ state oil company) will start paying dividends in dollars. In other words, his currency has lost all credibility.
If you think this is brlilliant, just wait for his five-year plan to end food shortages by growing cherry tomatoes instead of big juicy decadent capitalist beefsteaks. His slogan: "More to go around!"
And then there's the plan to reduce unemployment using the very unique two-hour workweek and mandatory 51 week vacations. More jobs to go around!
"three zeros will be stripped "
Wow! I thought the story was about Pelosi, Clinton and Kennedy!
Man, Scott Ott of Scrappleface nails another one . . . . wait . . . . what's that? . . . . . . this is for real?
. . . . . . . . . . . . .
Never mind.
He should see how many Democrats a dollar will buy.
Oh, wait, he already has...
The bullet with his name on it has already been made.
The largest banknote now in circulation in Chavezland is the 50,000 bolivar note which is about 12 dollars.
You must have read my mind.
He will go the way of all thugs. He will create massive missery until the burden he causes overcomes the fear he can inflict.
His head will end up on a pike with masses cheering on the streets. Probably the very same people that elected him.
--amusing--in the El Callao area where I was , the 20-b bill was the largest in circulation--I am under the impression it was the largest denomination bill at the time--(1981)
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