Venezuela Up for More Inflation? Country Orders Banknotes by the Planeload
Venezuela has allegedly started a program that the government believes would help the country's crippled economy. The program, however, does not necessarily have a good history in helping economically struggling countries get back on their feet for good.
According to sources, who have opted to remain anonymous, the Venezuelan government, under the leadership of President Nicolás Maduro, has ordered billions of banknotes to be printed abroad and shipped to the Latin American country, in order to get more money circulating. In fact, sources stated that the bank notes were so numerous that they filled about three dozen 747 cargo planes, reported The Wall Street Journal.
Billions of banknotes to take a lot of space, after all.
The Venezuelan currency, the Bolivar, has already become one of the world's most worthless currencies as of late. By adding even more money to the country, the government is hoping that the added supply of bank notes would ultimately aid Venezuela's beleaguered economy.
Economists, however, are quite pessimistic about the decision. After all, adding more money to a country with an already weak currency has been known to foster terrifying levels of inflation. As it is, the bolivar is already horribly inflated, with the International Monetary Fund (IMF) recently predicting that Venezuela's inflation rate would hit 720 percent this year, the highest in the world, reported NASDAQ.
In fact, it has been noted that a fairly nice dinner at a mid-class restaurant in the country now costs about a stack of bills. Even basic foodstuffs, such as a corn cake, cost about 1,000 bolivars.
What is interesting is that Venezuela has expressly resisted the production of a larger denomination note. Currently, the country still insists on the 100 bolivar note to be the nation's largest denomination.
With the billions of bank notes that were ordered to be printed, the sources stated that the Venezuelan government asked the printers to print only 100 and 50 bolivar bills, for the very simple and otherwise obvious reason that 20, 10, 5 and 2 bolivar bills are currently valued far below their printing cost.
This, with the corn cake mentioned above, Venezuelans are now dishing out ten of the country's highest denomination bills to buy a piece of cake.
It should be noted that a currency that is inflated rarely benefits from even more inflation. Take Germany during the aftermath of the First World War, for example. By printing too much of its money in an attempt to pay its wartime debts, Germans were reduced to hauling money in wheelbarrows just to buy a loaf of bread.
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