Back when it was introduced, in 2008, we all sensed that the “bolivar fuerte” nickname they used in knocking 3-zeroes off of the old bolivar had rich potential to become ironic in due time. And so it has.
Case in point: the 100-Bs. bill, which is still the highest denomination banknote in Venezuela. At prevailing black-market exchange rates, it’s worth a smidgeon of more or less $3. Thanks to rampant inflation, is the only bolivar ‘fuerte’ bill worth using.
This report from El Universal fills out the details:
“At the end of July this year, the 100-Bs. bill represented 27% of all banknotes in circulation in comparison to just 3% when the Bolivar Fuerte was launched (back in 2008)…
“…between July 2012 and July of this year the number of 100-Bs. bills in circulation grew 79%, reaching a total of 566 million banknotes (of this denomination).”
In my experience, it’s become quite rare if an ATM machine gives you something other than brand new 100-Bs. banknotes and let’s not forget about the constant lack of available sencillo (low denomination coins and bills).
An interviewee puts the situation in perspective: “Three years ago, paying with a 100 Bs. bill in the bakery for bread, cheese and milk was a problem for the cashier, as she didn’t have change to give you. Now, that same bill only serves you to pay half of that cheese.”
Caracas Chronicles 
The only place low denomination stuff does its purpose to pay is the ridiculously stupidly low payments in the UCV, which ñangaras defend.
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The coins, at least, have another function. They can instantly enrich anyone who can buy them for face value. http://settysoutham.wordpress.com/2013/08/13/another-1-minute-search-another-venezuela-scandal/
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Amazing.
One could use one single product to show the value loss.
A mobile shouldn’t be the same price, new models can mean, at to a certain level
of complexity and rarity, higher prices…but prices shouldn’t go through the roof.
The Vergatario (c) had a price of 30 Bs. in 2009. Obviously, it was heavily subsidized.
http://www.20minutos.es/noticia/467716/0/vergatario/movil/chavez/
The Vergatario 2.0 had a price of 175 Bs when it was launched in 2011.
The new Vergatario, CEO Akram Makarem said, will cost Bs. 2450 and it should be better than an iPhone (my foot). At official exchange rate it is a very expensive product for international standards. It is probably still subsidized.
In 2009 you would have been able to use one such bank note to buy three Vergatarios.
Now you would need 24.5 such notes to buy one Vergatario.
Chavismo es el vergatario.
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Veeeeerga!
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Its incredible that the country’s biggest denominated bank note is now worth less than $3. When are the Extra/Super Fuertes coming out? Nothing less than a BsEF1,000 would be worth while – at least for a couple of months!
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you can still buy a 6 month long supply of fuel with a 100bs note in venezuela
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lol if only people can eat it, or drink it… nevermind we still have mango trees and bananas
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Zimbabwe had the exact same problem about six years ago, and offered the exact same solution. I foresee a similar result.
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When are the Bs 200, 500 and 1,000 notes coming out?
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So far, the answer is no. The BCV denied in July any possible release of higher currency banknotes. However, there are alleged versions of how new 200 & 500 Bs. bills would look like that can be found online, but they could be just discarded designs which were leaked.
http://www.elmundo.com.ve/noticias/economia/banca/bcv-descarta-emitir-billete-de-500-bolivares.aspx
http://www.noticias24.com/actualidad/noticia/8869/asi-son-los-nuevos-billetes-del-bolivar-fuerte/
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How long until we get Chávez on the bank notes?
Then we will know toilet paper will be more valuable.
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Theres’ something I’ve never quite understood, hopefully someone who knows about economics can help me. Has the increase in prices been proportional to the loss of value of the Bolívar? or rather, if for some weird reason I lived in Venezuela but I was paid in USD, would I have lost purchasing power?
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The possibilities if you pull a US$ salary in Caracas are nearly endless. In particular, if you have diplomatic status, you can trade your dollar salary for bolivars at the parallel rate, buy an apartment, then sell it and, with the deed of sale, trade it for CADIVI rate dollars – i.e., the government will give you back six times the number of dollars it cost you to buy it. Yes, really. Yes, everybody in diplomatic circles knows this. Yes, every single diplomat in Caracas (give or take) is doing it.
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The diplomats always used to sell their tax free cars as well for a tidy profit. Of course now with the bolivarian revolution it’s apartments they’re trading! I love this socialism!
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Chavismo helping the middle class and the lower classes full with sooo much love.
*rolling my eyes*
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Definitely a horrible generalization and there have been cases already where people have been fired by doing this. Loosing not only their job but their reputation.
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That only seems to confirm the practice is more than common.
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The Bolivar’s loss of value is caused directly caused by inflation (the average speed of price increases). But there is a difference between price increase and loss of value or purchasing power.
To illustrate, let’s say that you have 1000 Bs and you wish to acquire a product that is valued 10 Bs. This means that with your 1000 Bs you can buy 100 units of said product (1000 / 10 = 100). Now, let’s imagine that inflation rate is at 50% and that the price of the product in question effectively raised by 50%. That product now costs 15 Bs. With your original 1000 Bs you can only buy 66.67 units of the product (1000 / 15 = 66.67), 33.33 units less; which means that you have lost roughly 33% of your purchasing power.
Considering that cumulative inflation since the Bolivars’ reconversion in 2008 has been 323% up to now. Rough estimates puts that the Bolivar has lost 76% of its value in 5 years. Summed to how the minimum wage has increased in comparison to inflation and you have that the average Venezuelan’s purchasing power has been cut in half.
If you were paid in USD and lived in Venezuela then the situation becomes trickier. If you managed to exchange your dollars in the black market then your purchasing power would likely increase considering that parallel exchange rate has risen roughly 550% in 2013 and with no signs of slowing down. If you change your dollars at official exchange rate then your purchasing power is almost guaranteed to go down.
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Thanks so much for the thorough explanation, it makes a lot of things clearer!
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http://www.aporrea.org/ideologia/a171651.html
this is off topic but please research this. It’s an amazing piece.
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What the article writer is basically saying is that he stands by the same civic standards of Rule of Law as applied to quotidian situations as the rest of us , and that he is coming to the realization that a regime, such as we now have in Venezuela , despite making loud profession of revolutionary principles is no less disorderly and inequitable in its operation as any past regime he came to hate. !!
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There is irony in complaining about government employees and ministers wanting to hide the truth and then going on a rant on how “speculators” are “stealing from them” with high prices in the regular markets.
It’s incredible how the simple supply/demand equation is so hard to grasp for some people.
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I once visited Uzbekistan on business. They had just gone through a round of hyperinflation. As is my normal routine, I changed $100 dollars at the airport so I would have some local currency on me for taxi fare or whatever, before learning the most effective way to change money. I was shocked when the teller started piling stacks of bills in front of me. The largest bill they had was worth about 11 cents, so it made for quite a large pile. I recall thinking “Is this a joke?” Well, it certainly wasn’t funny to the Uzbeks.
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