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 - 16:41 | 3227030 The Shootist
The Shootist's picture

Yeahz, I hear a lot of the Kennedy coat tail rider spewing state aid radio ads in terms of heating oil for the needy courtesy of Senor Chavez. Praise be!

Fri, 02/08/2013 - 17:39 | 3227267 macholatte
macholatte's picture







"Here's my rule: Ask yourself, "Did this thing happen?" If the answer is yes, then it's historical. Then ask, "Did this thing happen precisely this way?" If the answer is yes, then it's history; if the answer is no, not precisely this way, then it's historical drama."


'Lincoln' screenwriter fires back at Conn. congressman


Fri, 02/08/2013 - 18:42 | 3227416 DosZap
DosZap's picture

Castro too...Spielberg said that meeting Castro was the greatest moment of his life; he was totally awed.

I wonder if he would(as a Jew) be AWED by the numbers of folks murdered at the hands of that death defying whore?

Fri, 02/08/2013 - 20:58 | 3227774 Bandit und Buster
Bandit und Buster's picture

Only if they were Jooos

Since 'they' consider the resr of us a cattle.

"Our race is the Master Race. We are divine gods on this planet. We are as different from the inferior races as they are from insects. In fact, compared to our race, other races are beasts and animals, cattle at best. Other races are considered as human excrement. Our destiny is to rule over the inferior races. Our earthly kingdom will be ruled by our leader with a rod of iron. The masses will lick our feet and serve us as our slaves."
— Israeli Prime Minister Menechem Begin

Fri, 02/08/2013 - 16:39 | 3227025 Al Huxley
Al Huxley's picture

This isn't a new thing for them.   15 or so years ago I worked for a company with a couple of large customers who had business in Venezuela, back then the exchange rate was around 600 Bolivars to the dollar (which rose to over 1000 /USD over the next few years) and interest rates were in the 20% neighborhood if I remember. 


Anyway, lucky thing it can't happen here, there I think the problem was that they were rampantly fiscally irresponsible - giant government debt and deficits and whatnot.

Fri, 02/08/2013 - 16:53 | 3227092 FoeHammer
FoeHammer's picture

Yeah, whew! That was a close one. I thought I might have to start paying attention to currency manipulation here in Good Ole America but I know the gov't has everything under control.


What's on the tee vee tonight?

Fri, 02/08/2013 - 18:12 | 3227358 Oldballplayer
Oldballplayer's picture

No TV it's snowing. In New England. In February. Holy shit, this has not happened, last week.

Fri, 02/08/2013 - 19:29 | 3227535 FoeHammer
FoeHammer's picture

You see the Exec Order that Deval signed banning travel?

Jail or 400 buck fine...


Papers, please.

Sat, 02/09/2013 - 15:45 | 3229047 Cadavre
Cadavre's picture

The NYT said that the snow storm is caused by global warming.

So does that means war is caused by peace? Illness caused by health? Obesity is caused by skinniness?

anybody that takes the time to compare charts of the solar cycle's waxing and waning of sunspots to a climate chart knows al gore's crew timed his song and dance to swoon the shabby shiek Walmart elite into believing humanities only salvation is taxpayer funded "private" carbon bank pig `n a poke was timed perfectly with his daughters bridal grovel into the Schmitt family hive - of course her subsequent divorce out of the vampire queen's slime bucket [also] coincided with old al's argument falling on it's face and the collapse of one of the most obvious innovations in snake oil salesmanship we have had the pleasure of witnessing.

Still GE is suck billions of taxpayer subsidies - the whisper is to move ethanol content from 10% to a lofty electronic fuel injector busting 15% - meaning GE and Virgin Airline Gadfly Big Dog, Sir Dick, will reap a shitload more in US taxpayer treasure to grease what ever that ugly thing they grease is ..,

Fri, 02/08/2013 - 19:45 | 3227579 Wile-E-Coyote
Wile-E-Coyote's picture

Yeah and Argentina is going down the shitter as well.

Fri, 02/08/2013 - 16:31 | 3226978 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

But, the Venezuela stock market was up nearly 300% in 2012?

Fri, 02/08/2013 - 16:34 | 3226996 Winston Churchill
Winston Churchill's picture

Don't knock it.Now its just 150%.

He who rats out first,rats out best.

Fri, 02/08/2013 - 16:48 | 3227059 ebworthen
ebworthen's picture

And with the gains you can buy three eggs.

Fri, 02/08/2013 - 16:51 | 3227087 cynicalskeptic
cynicalskeptic's picture

With the government having all of $217 in the bank, the Zimbabwe stock market is still the 'best' performing in Africa....


In 2007, as the government was on its way  to $Z100 trillion banknotews, the Zimbabwe industrials index was up 600% in the first four months of the year - and 12,000% over the previous 12 months....


meanwhile any able bodied citizen is panning for gold - a pinch of gold dust buys enough food for a day.


Fri, 02/08/2013 - 19:01 | 3227462 viahj
viahj's picture

man, i should go there with a container of Twinkies for Gold!....oh wait.

Fri, 02/08/2013 - 16:32 | 3226984 joego1
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I think that they had to pay for Chavez's cancer treatment.

Fri, 02/08/2013 - 17:17 | 3227204 Mike in GA
Mike in GA's picture

Pay?  For Chavez' treatment?  No no no!  No PAY in Castro's Cuba!  Health care is FREE, just like in Obamacare!

Cuba don't need no stinkin' money!

Obama don't need no stinkin...oh, wait.



Moar taxes, rich people.  (Soon EVERYBODY rich!)

Fri, 02/08/2013 - 16:32 | 3226985 Seize Mars
Seize Mars's picture

It's not like it's unpredictable.

Every where, every time. From FDR to Hugo Chavez and everywhere inbetween.

Devalue the currency. Bit by bit, or all at once, they don't really care that much. Surveillance state.

Then comes the mass extermination camps, and the war - war - war.

Always. Every. Single. Time.

The only solution is getting the government out of the money creation business. Trade with each other in weights of whatever commodity you like.

Bang! Freedom, and with real freedom comes prosperity.

Fri, 02/08/2013 - 16:50 | 3227071 Meat Hammer
Meat Hammer's picture

As I read that:

Golf clap....steady applause....crescendo.....fuck yeah!

Fri, 02/08/2013 - 21:09 | 3227801 Bandit und Buster
Bandit und Buster's picture

Wouldn't have anything to do with the fact the all the banksters mostly stem from the same gene pool would it?  Nah! silly thought....

Fri, 02/08/2013 - 16:34 | 3226993 Son of Loki
Son of Loki's picture

Carumba !

Fri, 02/08/2013 - 16:34 | 3226994 q99x2
q99x2's picture

That's quick. Wish the US owned some gold.

Fri, 02/08/2013 - 17:57 | 3227310 Anusocracy
Anusocracy's picture

The US is golden and reputation is all that matters.

Fri, 02/08/2013 - 16:34 | 3226995 Kaiser Sousa
Kaiser Sousa's picture

thats my man Chavez....first got his gold back and now goin out with a -


we can all play now mother fuckers....SILVER BITCHEZZZZZZZZZZZ.....


Fri, 02/08/2013 - 16:35 | 3227002 DaveyJones
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we beat them to the punch by devaluing our politicians

Fri, 02/08/2013 - 16:56 | 3227112 cossack55
cossack55's picture

When, exactly, did our politicos have enough value to justify a devaluation?

Fri, 02/08/2013 - 16:35 | 3227003 fonzannoon
fonzannoon's picture

85 bil/mo and we are pikers....whocodoknown

Fri, 02/08/2013 - 16:35 | 3227005 Itch
Itch's picture

Nice one, cheaper bananas.

Fri, 02/08/2013 - 16:36 | 3227009 Albertarocks
Albertarocks's picture

Wow!  We knew it was possible that somebody would toss a bomb but it's still a bit of a spine-tingler when it actually happens.  This surely isn't the last one.

Fri, 02/08/2013 - 16:36 | 3227010 Central Wanker
Central Wanker's picture

Pathetic! To win the currency war, you need to do much more.

Fri, 02/08/2013 - 16:37 | 3227012 davidsmith
davidsmith's picture

CIA overthrow is next, for "destabilizing the region."  Earth to Lyndon Obama: bombs away!

Fri, 02/08/2013 - 16:53 | 3227096 css1971
css1971's picture

They've been giving Chavez cancer so he'll be out of the way fairly soon.

Fri, 02/08/2013 - 19:50 | 3227587 Wile-E-Coyote
Wile-E-Coyote's picture

Yeah real smart give a man a chance for revenge.

Fri, 02/08/2013 - 16:38 | 3227018 Inthemix96
Inthemix96's picture

Now thats what I'm talking about.

Balls in your court shalom, what you gonna do?


Fri, 02/08/2013 - 17:53 | 3227297 francis_sawyer
francis_sawyer's picture

He'll do what any good little jew would do... PRINT MOAR!

Fri, 02/08/2013 - 16:38 | 3227020 scatterbrains
scatterbrains's picture

Don't be a little pussy Ben show him who swinging the biggest dick. You can do it Ben ramp that printer up and show em how it's done..  it's too late to act like a little pussy now. getterdone

Fri, 02/08/2013 - 18:26 | 3227392 toothpicker
toothpicker's picture

Print money with one hand, suppress PMs with the other. Don't screw up now Ben! Push faster, harder!!

Fri, 02/08/2013 - 16:38 | 3227022 LawsofPhysics
LawsofPhysics's picture

Expect more venezualian elites to bring suitcases full of cash to America and Canada to exchange for dollars - fuck you bernanke!

Fri, 02/08/2013 - 16:57 | 3227116 Bunga Bunga
Bunga Bunga's picture

Currency war and Ben is loosing it.

Fri, 02/08/2013 - 16:40 | 3227029 SheepDog-One
SheepDog-One's picture


Now what, Ben? You just been pimp slapped by yo bottom bitch!!

Fri, 02/08/2013 - 16:47 | 3227055 SilverTree
SilverTree's picture

Friday - You just got knocked the fuck out!

Fri, 02/08/2013 - 20:04 | 3227634 Snoopy the Economist
Snoopy the Economist's picture

Sheep: I can't stop laughing at that one.

Fri, 02/08/2013 - 16:45 | 3227033 sessinpo
sessinpo's picture

Article: "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 what happens to you as a local when you convert your gold and silver back to fiat to pay your bills?


No, I am not against PMs as I have a small portion invested in PMs. My point is that as long as the population is forced into fiat, they are subject to fiat and all the bad things that come with fiat. Devaluation, inflating - these are just methods they use to manipulate THEIR currency. When you HAVE to convert back to pay your utilities, your food, you are back under their rules.

Fri, 02/08/2013 - 16:46 | 3227052 Iconoclast
Iconoclast's picture


Fri, 02/08/2013 - 16:58 | 3227114 Kaiser Sousa
Kaiser Sousa's picture

"And what happens to you as a local when you convert your gold and silver back to fiat to pay your bills?"

oh, i dont know...what did they do back over the last 5,000 years with real money???

and, even if u have to convert back...let me see...wouldnt you get a lot more worthless peices of shit tahn you would otherwise if u didnt have any real money to start with?????

just asking.....




not really........



Fri, 02/08/2013 - 17:00 | 3227130 Strange-Currencies
Strange-Currencies's picture

Who cares how?  Would you trade contemporary lifestyle for any obe life style from the past?  I doubt it.

Fri, 02/08/2013 - 16:58 | 3227119 cossack55
cossack55's picture

How do you say "black market" in Spanish? 

Fri, 02/08/2013 - 18:28 | 3227396 toothpicker
toothpicker's picture

muerte rápida

Fri, 02/08/2013 - 18:44 | 3227426 ParkAveFlasher
ParkAveFlasher's picture

Somos amigos, no?

Fri, 02/08/2013 - 21:14 | 3227813 WmMcK
WmMcK's picture

Mercado Negro, but I prefer Negra Modelo.

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