Venezuela Launches First Nuke In Currency Wars, Devalues Currency By 46%

Tyler Durden's picture


While the rest of the developed world is scrambling here and there, politely prodding its central bankers to destroy their relative currencies, all the while naming said devaluation assorted names, "quantitative easing" being the most popular, here comes Venezuela and shows the banana republics of the developed world what lobbing a nuclear bomb into a currency war knife fight looks like:


And that, ladies and gents of Caracas, is how you just lost 46% of your purchasing power, unless of course your fiat was in gold and silver, which just jumped by about 46%. And, in case there is confusion, this is in process, and coming soon to every "developed world" banana republic near you.


and just as we (and Kyle Bass) have warned - this is what happens to the nominal price of a stock market as currency wars escalate... how do those US investors who flooded Venezuela with cash feel now? bringing back those VEF gains is going to hurt...

The chart above is a free lesson in nominal vs real: the hardest lesson for some 99.9% of the world's population to grasp. One person who certainly knows how to devalue a currency in real terms FDR, whose 70% devaluation of the USD courtesy of executive order 6102, is merely an appetizer of what is about to be unleashed upon the US.

From Bloomberg:

Venezuela devalued its currency for the fifth time in nine years as ailing President Hugo Chavez seeks to narrow a widening fiscal gap and reduce a shortage of dollars in the economy.


The government will weaken the exchange rate by 32 percent to 6.3 bolivars per dollar, Finance Minister Jorge Giordani told reporters today in Caracas. The government will keep the currency at 4.3 per dollar for some products, he said.


A spending spree that almost tripled the government’s fiscal deficit last year helped Chavez win his third term. Chavez ordered the devaluation from Cuba, where he is recovering from cancer surgery, Giordani said. Venezuela’s fiscal deficit widened to 11 percent of gross domestic product last year from 4 percent in 2011, according to Moody’s Investors Service.


The move can help narrow the budget deficit by increasing the amount of bolivars the government gets from taxes on oil exports. While a weaker currency may fuel annual inflation of 22 percent, it may ease shortages of goods ranging from toilet papers to cars.


In the black market, the bolivar is trading at 18.4 per dollar, according to Lechuga Verde, a website that tracks the rate. Venezuelans use the unregulated credit market because the central bank doesn’t supply enough dollar at the official rates to meet demand.

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Fri, 02/08/2013 - 16:26 | 3226954 Mongo
Mongo's picture

Moar horsemeat!

Fri, 02/08/2013 - 16:30 | 3226975 Say What Again
Say What Again's picture

The peoples of Ven must use some bullshit currency printed every day in a basement somewhere in Caracass.

Meanwhile the Ven government is repatriating all their GOLD.

Actions speak louder than a Bloomberg headline.

Fri, 02/08/2013 - 16:33 | 3226991 trav777
trav777's picture

just be glad you live in a nation founded and built by slave owning evil racist white people so that when we print you don't lose 46% of everything you have overnight

shit like this is why you have to hold gold

Fri, 02/08/2013 - 16:35 | 3226998 Stackers
Stackers's picture

Well at least he is getting a little closer to the current true open market (black market) rate of 10-1. There are limits on how much can be exchanged at the "official" rate.

Fri, 02/08/2013 - 16:50 | 3227072 Pladizow
Pladizow's picture

What Americans will learn the hard way:

Fri, 02/08/2013 - 16:58 | 3227106 The They
The They's picture

"!Soy Inflationista!"


damn i feel sorry for Goldman Sachs...

Fri, 02/08/2013 - 16:59 | 3227125 Big Slick
Big Slick's picture

FDIC reduces recovery limits to $250,000 per person (not per account)

Fri, 02/08/2013 - 17:03 | 3227141 dwdollar
dwdollar's picture

The deflationists are pretty quiet these days...

Fri, 02/08/2013 - 17:06 | 3227143 Manthong
Manthong's picture

But if you have the right kind of soft assets, currency volatility is not a concern and inflation is beneficial..

Ask any hooker in Caracus.

Fri, 02/08/2013 - 17:08 | 3227162 redpill
redpill's picture

Let me guess, Whitney Tilson went long Bolivars last week?

Fri, 02/08/2013 - 18:07 | 3227347 Pladizow
Pladizow's picture

Top of FDIC web site still says, "Each depositor insured to at least $250,000 per insured bank."

Fri, 02/08/2013 - 18:52 | 3227411 hedgeless_horseman
hedgeless_horseman's picture



...coming soon to every "developed world" banana republic near you.


Thank goodness we don't have populist leadership willing to lie to the nation about inflation by blaming everyone under the sun but the politicians and the central bankers;  

So happy that this could never happen here in America.


Brothers in Arms.

Fri, 02/08/2013 - 18:54 | 3227444 FEDbuster
FEDbuster's picture

"Ask any hooker in Caracus."

and most of them can turn your "soft asset" into a "hard asset", just sayin.

Fri, 02/08/2013 - 19:32 | 3227547 Hulk
Hulk's picture

many have to take the blue pill first...

Fri, 02/08/2013 - 19:48 | 3227585 Texas Ginslinger
Texas Ginslinger's picture

Let em eat horsemeat........

Love it.....

Fri, 02/08/2013 - 20:24 | 3227683 Muppet Pimp
Muppet Pimp's picture

That pic is priceless HH, you can just feel the love!

Sat, 02/09/2013 - 00:26 | 3228199 jeff montanye
jeff montanye's picture

two thoughts: is it a 32% devaluation (bloomberg above and reuters or a 47% one?  arithmetic (4.3 - 6.3 = -2; -2/4.3 = -.47) and common sense would seem to indicate that the change is measured against the prior circumstance rather than the following one.  a price reduction from 100 to 50 is generally regarded as a 50% discount rather than a 100% one.

also, it is possible that hugo chavez is a populist in deeds.  obama (who is touching chavez as if hugo were radioactive) is one only in words

Sat, 02/09/2013 - 00:50 | 3228223 zaphod
zaphod's picture

Wait, so QE1, QE2, QE3 & QEForever was not an opening move then?!?

The Bernaky must be saying "crap just what do I have to do"

Sat, 02/09/2013 - 02:23 | 3228286 CompassionateFascist
CompassionateFascist's picture

he needs to come out of the closet and quote Chavez: "socalism is love"

Sat, 02/09/2013 - 09:22 | 3228485 GetZeeGold
GetZeeGold's picture



Gold bendecos!!!!!



Sat, 02/09/2013 - 01:14 | 3228243 Muppet Pimp
Muppet Pimp's picture

It is 46% internal deval and 32% deval against the dollar. 

Fri, 02/08/2013 - 18:54 | 3227446 DoChenRollingBearing
DoChenRollingBearing's picture

Two peas in a pod.  Brothers from a different mother?

Fri, 02/08/2013 - 19:11 | 3227450 FEDbuster
FEDbuster's picture

Who knows, could be the same mother (she was known to get around)? Obama Sr. was sewing his seed everywhere, too.

Fri, 02/08/2013 - 19:49 | 3227586 LongSoupLine
LongSoupLine's picture

Great pic HH...


That mushroom cloud was my fucking head.

Fuck you Obama and Bernanke.  Fucking puke ass elitist bank ball licking fucking pricks.  Fuck off.

Fri, 02/08/2013 - 22:30 | 3227997 hooligan2009
hooligan2009's picture

same father, different mother?

Fri, 02/08/2013 - 18:46 | 3227427 DosZap
DosZap's picture

Top of FDIC web site still says, "Each depositor insured to at least $250,000 per insured bank."


Yep stickers are still on all my Banks drive through points, they renewed the limit.

Fri, 02/08/2013 - 17:05 | 3227147 economics9698
economics9698's picture

Stackers some tourist were saying 20-1.

Fri, 02/08/2013 - 20:21 | 3227635 Muppet Pimp
Muppet Pimp's picture

Last I had heard 8-10.  With a 46% official deval, I suspect your 20 is probably pretty damn close now.  Price controls and gas rationing for the plebes is the norm, however, Hugo likes to support the sportfishing industry.  If you run a sportfishing boat the US 50cents per gallon is awfully nice.  Damn shame for his people that they stand in line at stations with rationing limits (8 gallons if you are lucky, and they do run out with folks standing in line), but well heeled sportsmen can fill er on up (500 gallons of diesel at +-.50c per with the customary benji for the commandante; no problemo).  Good Marlin fishing of the Venezuelan coast.

Hugo chavez is to sportfishers as Barack Obama is to crooked bankers.  Nothing new under the sun.

Curiously, Caracas is to Venezuela as Chicago is to the United States (Both disallow guns and both have the big time murder problems, hmmm...)

Barack and Hugo both want their people disarmed for some reason, though I just cannot imagine why that is.  Hmmm...

Maybe once we run Barack off from the US he will have a shot at replacing Hugo?  Michelle would really like Caracas!

Fri, 02/08/2013 - 23:29 | 3228121 wee-weed up
wee-weed up's picture

Zimbabzuela bitchez!

Fri, 02/08/2013 - 17:05 | 3227148 Rustysilver
Rustysilver's picture

Big Slick,

This was on the news about a month ago: CBS, ABC, NBC and of course CNBC ran this story every half hour.  Somebody probably missed it. /sarc

Fri, 02/08/2013 - 19:00 | 3227460 gmrpeabody
gmrpeabody's picture

Say what...?

Fri, 02/08/2013 - 17:22 | 3227224 Rustysilver
Rustysilver's picture

Big Slick,

This was on the news about a month ago: CBS, ABC, NBC and of course CNBC ran this story every half hour.  Somebody probably missed it. /sarc

Fri, 02/08/2013 - 19:07 | 3227476 Long-John-Silver
Long-John-Silver's picture

The TV's that have that crap playing is in airports and bus stations. The only reason people put up with that is due to the sound being turned to zero and closed caption turned on.

Fri, 02/08/2013 - 19:04 | 3227466 Long-John-Silver
Long-John-Silver's picture

I keep all my "money" in my Silver and Gold safe out in the lake where I had a boating accident.

Sat, 02/09/2013 - 00:59 | 3228231 King_of_simpletons
King_of_simpletons's picture

Non-interest bearing account i.e checking account and such.

I don't think this is change is valid for Savings account and other interest bearing accounts. But who knows what BS is due down the pike.

Fri, 02/08/2013 - 17:53 | 3227299 Bangin7GramRocks
Bangin7GramRocks's picture

So I need a ruling here. Is this action by a socialist South American country scary enough for me to descend into my bunker again? Dried meat and powdered milk for everyone!

Fri, 02/08/2013 - 19:13 | 3227488 hoos bin pharteen
hoos bin pharteen's picture

Not unless your savings/pay are in bolivars. They dropped a nuke all right - on top of the Venezuelan people.

Remember the story about the Iranian ex-Minister wh was caught with the ginormous check in Germany? It looks like it was timed in an attempt to convert out of bolivars before the devaluation.

I guess it didn't work.

Fri, 02/08/2013 - 20:55 | 3227776 disabledvet
disabledvet's picture

Interesting. I also find it interesting that "cavorting with Iran 'yields' this." DANGEROUS game taking on Western financial elites. Egypt's currency has gotten clobbered too. I would not be surprised to see a formal "invasion" coming from East to West soon. those who speak of a "worthless dollar" have found something far different so far. with Canadian oil sell at sixty bucks a barrel i would really be wanting to "lay some track" to get the goo moving south. the rail cars are just now arriving in Delaware for processing the North Dakota crude. of course "then there are the wild cat refineries" out in Montana and Wyoming. fuel for 50 cents in the USA coming soon?

Sat, 02/09/2013 - 05:28 | 3228358 toxic8
toxic8's picture

good catch! shows ya the way the world works

Fri, 02/08/2013 - 16:56 | 3227110 francis_sawyer
francis_sawyer's picture

Bolivar Billionaires Bitchez!

Fri, 02/08/2013 - 17:03 | 3227140 SilverTree
SilverTree's picture


Fri, 02/08/2013 - 19:38 | 3227561 Wile-E-Coyote
Wile-E-Coyote's picture

And there ain't a fucking thing we can do about it!!

Fri, 02/08/2013 - 20:26 | 3227687 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

gold + popcorn.gif

Sat, 02/09/2013 - 02:30 | 3228288 CompassionateFascist
CompassionateFascist's picture

just keep turning green into silver, plus some calories & lead. That will increase one's survival chances. 

Fri, 02/08/2013 - 17:57 | 3227312 Groundhog Day
Groundhog Day's picture

"i wanna a be a billionare so freaking bad, i wanna be on the cover of...forbes magazine"

wasn't their a song that went like that a year or so ago.  Soon they'll want to be trillionaires for it to mean something

Fri, 02/08/2013 - 18:09 | 3227319 Cadavre
Cadavre's picture

We let it happen - we zoned on super bowls super models super cool consumer goods. Knew when de lies premeditating da genocide of Iraq and Afghan the the genetic abominations breeding like adolescent vampires in the blood rut alcoves in the bowels of the War Usury lost the capacity to run anything more than the same old reused over used charade their ancestors had. THis last decade has been a charade that couldn't fool a tick on a gnats nuts.

Are we that stupid - cause for sure the prissy whited shoe dandies are pretty fucking lame. We just let em do it.

The more western compliant Japanese PM (the last one called nine slash `leven a hoax and was in the process of closing US bases, until a rash of merit less accelerator cable fears forced Toyota to recall as Toyota's top dog went buns up and kneeling and sobbed on CSPAN. Did he say "little people"? Of course that event gave cause to Japans bag men to swap Mr. Right, so the world could endure anther bogus skit feigning democracy, for Mr Wrong PM - Mr Japanese War Footing PM. The USD=JPY and EUR=JPY and USD=EUR players have been watching the EUR bleed to  JPY, USD bleed to JPY, but / and / or USD bleed to EUR.

Is Venezuela a reserve standard or a metal standards.

Everybody has to rush to the bottom - and the policies Americans, or Diebold, allowed their political employees to implement is the root of it all - we have been colonized by sub human chum - thats the game US War Usury Inbreds are playing and have forced on the rest of this rock. Goal: Make everything commodity - including sovereign currencies -  human life - and - if you wads big z`nuff - YOU CAN BUY IT AN OWN IT AND DO WHAT YOU PLEASE - too bad Senator Menendez could only rent his kiddies - had he waited - he could have owned it - rutted it out like a devil dog slit it's throat and chunked the dead meat down the garbage disposal - that's what ownership is all about to these guys.

What does the US chaired War Usury have to export. Insurance policies - lunch with Buffet - USDs - that's about it - well except for gasoline. The sanctions have done what was intended - 10 years ago the mantra was "we need to secure mining privileges for our big oil contributors even at the risk of collateral genocide. Cheney's little tea time in the whore house.


Is this oganic (or are the Big 7's HFT boiler rooms rolling trades with FED repo mulch for their FX play. Dey got de dollar carry shindig down to a "T"!

After close, USD climbs

After open, USD declines

Look at all the methods the War Usury employs:

1) Money for nothing and war for free - like Rome before the fall - devalues the commons exchane notes - increases the cost of food and energy.

2) Sanctions

3) Counterfeiting

4) Gambling (it's just monopoly money)!

5) Kiddie Brothel's

6) Pooper packing

David Stockman, the one time Reagan's money geek that me thinking resigned cause he could not sign off on Reagan's Budget (the consortium's poster face job, and one time propaganda film player and snitch), suggests the market is the Berskanki Bear Trap (xRepublic tv)poster Americans were looking at back then - seems like it be using the same old bear trap shtick on inbred CB queens have been running the FED opened it's door.

Whose running or collaborating with the Berskank - he just too low iodine to be de spot that stop the buck!

Ain't scared - but just can't avoid thinking that the bad boy wave of the elliot set is gonna slam real hard - and believe me baby - it gonna hurt.

Suggestion: All Politicos,War Usury Lobbyists, Loin Chum of Dominion Heretics and War Usury Kiddie Brothel Pimp Daddy's - protect yourself - there are too many of us and we do have our bouts of uncontrollable rage death ruts SO HERE'S an alternative confess your sins, your crimes,  turn your self in - turn states evidence - and maybe, just maybe you won't have to worry about pissed off rednecks selling tenderloin filleted fresh from the carcasses of your offspring .

There are a lot worse things than any final pain you may imagine precedes the fantasy of spiritual departure from this world. A lot worse.

Fri, 02/08/2013 - 19:02 | 3227465 gmrpeabody
gmrpeabody's picture

Something's eating at you, I can tell.

Fri, 02/08/2013 - 19:44 | 3227577 11b40
11b40's picture

Yeah. What he said.

Fri, 02/08/2013 - 20:38 | 3227725 ajax
ajax's picture



1000 up votes for you Cadavre!!!

And here I was thinking William S. Burroughs was dead. Not so, not so.


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