Reprinted from PeterCEarle.com
…in the knife fight known as the global currency war is Venezuela, which just an hour ago announced that it would devalue its Bolivar Fuerte (looking rather débil today) to 6.30/dollar from 4.30/dollar. In one move, consumer purchasing power has essentially been cut in half.
Things are not going well in Chavez’ interpretation of a “worker’s paradiseâ€, with monthly inflation notching in at just over 3% in January 2013 and surpassing 22% on an annual basis.
The first devaluation in any currency war is a big step, indicating a willingness to vault clean over the comparatively somnolent monetary policies associated with quantitative easing into the realm of unannounced overnight amputations of chunks of individual savings and wealth. But to those Venezuelans – however few there might be - who saw the proverbial writing on the wall (or never quite bought into the idea that any government can be all things to all people) and consequently put their Bolivar into gold, silver, or Bitcoin: congratulations on your one day, 46% return.
I think that analysis is wrong, quite frankly.
Venezuelan export is completely dominated by oil which is paid for in USD. So the devaluation is irrelevant for their exports, it will only make their imports more expensive for earners of local currency. And that would be most prominently their automotive industry. It seems that currency regulations already makes it difficult for them to get the amounts of dollars they need in order to import the car parts which they assemble, so production has fallen. Government seems to refuse them to exchange local currency to dollars, the government has monpoly on currency exchange and wants to hold on to its dollars. Why would it give away valuable dollars for local currency which it can create at will anyway? And this won't make it easier, so I would predict that Venezuelian exports if anything will FALL as a result of this, together with falling imports and falling domestic production and consumption. Official exchange rate is only relevant to larger companies, because those who are able to use the black market certainly do so and discover an exchange rate far lower than the current one, so this devaluation will likely have no direct effect on small businesses and consumers on the black market. It won't affect the MARKET price of the currency much.
(Though I'm no expert on Venezuela! This is only my conjecture from some scetchy facts)
Sure. It's probably filtered anyway. If you've taken the time to read Hanns H Hoppe's "Democracy: The God That Failed" you know just how far this exercise will go. Call me cynical. I'm too old to believe in such nonsense.
Has anyone of the almost 2,000 like minded folks on this Facebook page ever gone to this convenient and unique web page hosted by the "Economics Department" of the Canadian Government ?? Here we have all been given an opportunity to voice our opinions and advisement's and I wonder if we have taken advantage of the open invitation to participate ! !
< ;http://www.fin.gc.ca/prebudget-prebudgetaire/1-eng.asp>
Yep just filled it out.