For the second time in a year, Venezuelan President Nicolas Maduro will issue new banknotes. The new currency, in denominations from 10,000 to 50,000 Bolivars, is being printed to keep pace with the country’s hyperinflation issues.
This comes just 8 months after the president slashed five zeros off the currency and prices in an effort to build stability.
The largest of the new notes will have a current value of around $8. Previously, the largest note to date was the 500 Bolivar bill — now less than the cost of a piece of candy. Inflation rates in Venezuela have settled at just over 1.1 million percent.
Venezuela Plays the Blame Game
Maduro is quick to pass the blame of his regime onto the US and the sanctions that have been placed on Venezuela. However, others suggest that Maduro’s penchant for printing currency in huge volumes has led to the troubles.
What’s more, the president has been pilfering the coffers of the nation and selling gold reserves on the black market. As the currency’s support in the central bank dwindles, the value of a single Bolivar continues to plummet.
The populace, however, appears to hold Maduro responsible. After election results showed a dramatic shift in sentiment toward the opposition, Maduro’s hold on Venezuela has only tightened. As inflation has soared, keeping pace with the market to purchase anything has been incredibly difficult.
Inflation and Bitcoin
Interestingly, the US Labor Department recently issued an analysis of inflation in the US, which has appeared chaotic, though not extreme. While under very different regimes, the printing of money appears to be similar.
The answer, according to some analysts, is to move away from government autonomy and control over fiat currencies. While the dollar is certainly more stable than the Bolivar, the corresponding dangers are clear.
For example, US President Donald Trump has actively engaged in trade wars with China and Mexico in recent weeks. Such maneuvering, in concert with dangerous economic times, has led many to suggest that a similar collapse could be on the horizon.
Bitcoin, on the other hand, survives independently of government influence. No wonder then that the populace of Venezuela has turned to the cryptocurrency for stable transactions. If the US follows a similar economic trajectory, it could result in a similar movement into digital and decentralized currency options.
Do you think Bitcoin is the direction of the world economy to deal with impending hyperinflation? Will the US government find a different way to deal with the dangers it faces? Let us know your thoughts in the comments below!