Here’s something CRAZY that you probably see only once in a lifetime. Venezuela, the crisis ridden country devalued it’s currency by a massive 95%! Yep, you read that right. Currently, one US dollar is equal to almost 6 million bolivars.
The country is launching a new currency “sovereign bolivar” and will be pegged to a crypto currency called “Petro” which is backed by oil.
This has happened in the past in Turkey and Germany. Before most of us were born.
The German episode is particularly infamous. Quoting from this paper in case others are interested.
As a result of the 1919 Versailles Peace Conference, in April 1921, the British oligarchical financier-controlled Allied Reparation Commission fixed the sum of Germany’s reparations at 132 billion gold marks, or roughly $33 billion. Hyperinflation in Three-quarters of this amount was to be paid to France and Britain alone.
Germany couldn’t meet this demand and hence started printing money rapidly
The reader must conceptualize the nightmare that occurred. At the end of 1923, more than 300 paper mills and about 2,000 printing presses worked continuously to supply the public with Reichsbank notes. It actually cost more in paper, color pigments, engineers, printers, and lithographers to make the note, than the note was worth. On Nov 11, 1923, the Reichbank issued a 1-trillion-mark note. At that time, a kilogram loaf of bread cost 428 billion marks, a kilogram of butter more than 5 billion, and it required a wheelbarrow to take enough money to the store.
Quoting from another paper
The publisher Leopold Ullstein wrote: “People just didn’t understand what was happening. All
the economic theory they had been taught didn’t provide for the phenomenon. There was a
feeling of utter dependence on anonymous powers—almost as a primitive people believed in
magic—that somebody must be in the know, and that this small group of ‘somebodies’ must
be a conspiracy.”
When the 1,000-billion Mark note came out, few bothered to collect the change when they
spent it. By November 1923, with one dollar equal to one trillion Marks, the breakdown was
complete. The currency had lost meaning.
I initially thought tou were just joking or made a typo when mentioning 95%. The president must have had a heck of a policy otherwise it will be chaotic. The good thing about this situation is that they are supporting their oil backed Cryptocurrency. I hope that it helps them in their economic stability.
Fiat money…Nothing else.
