Venezuela Throws In The Towel On Hyperinflation: Will Print 200x Higher-Denominated Bills

Tyler Durden's picture

While several years ago it was perhaps debatable in polite society that Venezuela's socialist economy would collapse ultimately unleashing hyperinflation, any doubt was put to rest early this year when the IMF's own inflationary forecast confirmed as much.

However, while the international community had long accepted the inevitable fate of Maduro's socialist paradise, the local government sternly refused to admit reality and to avoid confirming what the local population already knew, it insisted on keeping the highest denomination bill in circulation at 100 bolivars, whose worth is approximately 8 cents on the black market, turning the most basic transactions into logistical nightmares and saddling banks with crippling money-handling costs. Economists and central bank employees say Mr. Maduro didn’t want to acknowledge the country’s inflation problem by printing bigger notes.

This has finally changed, and as the WSJ reports, Venezuela’s government, slammed by hyperinflation has finally thrown in the towel, and is planning to issue new bills in December with larger denominations—up to 200 times higher than the current biggest bill, according to people familiar with the plans. The move marks an implicit acknowledgment by the government that skyrocketing prices have slashed the value of the currency

The new coins and notes will go up to 20,000 bolivars, according to people close to the central bank, the finance ministry, the country’s banks and bill suppliers. This would make the biggest note worth $15 on the black market.

And since by doing so the government will tacitly admit that it has lost control over prices, It will also create a self-fulfilling prophecy of even higher prices, sending the country's hyperinflation into overdrive.

As the WSJ adds, earlier this year, the government began informally allowing shops in the outer provinces to sell food at free market prices, reducing shortages at the cost of higher inflation, which the International Monetary Fund expects to rise above 1,600% next year. Further liberalization followed after the state oil company gradually rolled out higher-priced gasoline at gas stations in the border regions to reduce the cost of subsidizing the cheapest car fuel in the world, according to the company’s executives.

Venezuela's loss, however, is a big gain for the companies contracted to print the money:

In recent weeks, several companies, including U.K.-based De La Rue, the world’s largest commercial printer, won contracts to print the new set of notes, which the government wants in time for the annual December spending spree, according to a person familiar with contract negotiations.


“It’s a very big deal. It’s a big package,” the person said.

Meanwhile, the central bank remains stuck in denial and hasn’t published price statistics for almost two years. Instead, Mr. Maduro has blamed the skyrocketing prices on the “economic war” waged against his government by shopkeepers and financiers. This has forced people to brave one of the world’s highest crime rates by shopping with backpacks full of cash and spend hours lining up outside ATMs, which give out less than $10 per withdrawal. Many provincial banks have reduced daily withdrawals to 30,000 bolivars, which would buy a Venezuelan couple a lunch at a mid-scale restaurant.

Amusingly, as we reported last year, the high demand for nearly worthless currency notes has also presented a financial burden for the cash-strapped government, which also lacks raw materials to print its own money. Since last year, Venezuela has had to pay hundreds of millions of dollars to printing companies to feed its economy with bolivar currency. The shipments arrived to Venezuela from private printing presses around the world on several dozen windowless Boeing 747 jets. Given the crime risks, the air shipments arrive at the Caracas airport at night before the notes are loaded onto armored trucks and transported to the central bank vaults in Caracas, protected on the 18-mile route by soldiers.

Indicatively, a fully stocked ATM is emptied in just three and a half hours on average now, according to the Venezuelan Banking Association.

The good news for the insolvent nation is that all local denominated debts are now just as worthless as the currency, which incidentally is what the BOJ's Kuroda would call: mission accomplished.

Sadly, Venezuela is the canary in the coalmine for what will happen to all currencies in a world where there is now simply too much debt.

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samjam7's picture

It is questionable whether this government is going to make it to December. As things stand selling national gold reserves and running out of all basic staples and food is finally causing the much anticipated upheavel between the people and the military.

SomethingSomethingDarkSide's picture

TP is officially worth more than the Paper Fiat used to purchase it!  Ban Cash, quick!!  Where the fuck is Ken Rogoff?!

CaptainObvious's picture

Here, Kenny, Kenny, Kenny!  Here, boy!  Ban the cash!  That's a good boy!

Question:  How many bolivars will it take to buy the wheelbarrow necessary for carting around the bolivars you need to buy a loaf of bread?

Long live Maduro, El Presidente of the Weimarzuela Republic!

eatthebanksters's picture

I have the popcorn ready!  Just waiting for the news to announce the revolt...can't wait to see Maduro against the wall, pleading for his life in front of a makeshift firing squad when one of the shooter gets impatient and fires early and the rest follow with a continuous volley. This loser should go watch some film of the Coucesceu executions...its coming his way soon.

The_Juggernaut's picture

So their largest denomination will be a sixteen dollar bill?  lmfao

rmopf2010's picture

All the Socialist should ask Venezuela asylum such an example how socialism works, freebies for the poor, no racism, no repression, no need for hard work.

What are you socialists waiting to buy a ticket to paradise?

Mr. Bones's picture

Pack your bags, we'll leave tonight.

RockySpears's picture

Her in the UK the largest note is £50, but you will NEVER see them on the street.

  So, in effect, our largest note is the £20, which these days equates to about 30 cents,


Go figure,



English herbsman's picture

The drug dealers use fifties. 

And anyone making big payments for cars ect.


Thats why they want them banned lol

English herbsman's picture

The drug dealers use fifties. 

And anyone making big payments for cars ect.


Thats why they want them banned lol

Zero_Ledge's picture

According to, yesterday's black market rate was 1327.  Today it's 1385.  So 20,000 note will be worth about $14.44.  At this pace they definitely won't make it to December.

Glad to see the depreciation of the Bolivar has finally resumed after months of being stalled...


CaptainObvious's picture

I'm too cynical to believe that.  Maduro and his closest cronies will bail out in a private jet and take up residence in some other turd world nation and live like kings with all the embezzled oil money whilst the rabble snarl and snap over the last few rats and moldy dumpster bits and eventually turn to eating each other.  Until, of course, Uncle Sam steps in, airdrops pink slime nuggets and GMO frankenfoods from the sky, and seizes the oil fields while the few remaining sheep are thus distracted.

GunnerySgtHartman's picture

Oooooh yes!  I remember the Ceausescu executions well.

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) CaptainObvious Oct 27, 2016 12:19 PM

Holy crap!!!  With that kind of money printing they can buy a whole lot of FREE $HIT FOR EVERYBODY!!!  Inflation won't happen.  Just ask Krugman.  EVERYBODY IS RICH!!!

Save_America1st's picture

Toilet Paper and Communism For Everyone!!!  2016


oops....that's actually one of Hitlery's new campaign slogans.

CaptainObvious's picture

You didn't phrase that correctly.  In Hildabeast Speak:  We must tax the rich (except for me and my cronies) so they pay their fair share toward free toilet paper for all, which is a basic human right!

Philo Beddoe's picture

I keep telling my mother in law to move to Venezuela. 

Look, you will be a millionaire! I will even by you a ticket. One way of course. 

BandGap's picture

And that roll is worth 200X more today.

What a clusterf*ck.

CaptainObvious's picture

The clusterfuck happened many months ago.  Weimarzuela has gone wayyyyy beyond clusterfuck territory.  They're now in gangbang land.  See, a clusterfuck is voluntary.  A gangbang, not so much.

BandGap's picture

Thank you for the enlightenment, Captain. I was worried that I might need an invitation to a gangbang. Seeing as it appears to be spontaneous I'll just have to wait for the right time and place.

PTR's picture

Bet you can make a killing smuggling in Charmin to the black market down there.

Jack's Raging Bile Duct's picture

To be paid in what? If there were anybody with gold or silver in that country, they already left.

Yen Cross's picture


 I love coddling my gold bars.

Kagemusho's picture

I recall a lot of 'progressive' Americans disgusted with Bush 2 doing the ex-pat bit and moving to (progressive-trumpeted socialist paradise) Venezuela. I wonder how many of them are still alive.

Michigander's picture

My mother in law has been my financial advisor for the past 40 years. Everything she has told me to do, I've done the opposite and havent been wrong yet.

Temporalist's picture

I feel sorry for many of the people in South America. Just like in the US too many illinformed people vote for a perceived self-interest that is only used against them and never arrives.

CaptainObvious's picture

You feel sorry for a bunch of fuckwits who voted themselves free shit?  Don't feel sorry for them.  This is the time to clear your throat loudly and say "I TOLD YOU SO".

Yen Cross's picture

 Print some fiat and the dictator lives another day--- How he wipes his ass is another question???

medium giraffe's picture

Zimbabwed!  Thanks Saddam Maduro.

Isn't Socialism great?!

Kagemusho's picture

I was just thinking: I wonder if Maduro had called up Mugabe and asked for advice on hyperinflating fiat currency? I doubt Maduro could have called many Weimar Republic-era Germans; not many are stil around...

We may laugh at Venezuelans today, but many Americans who didn't stack will be crying with them tomorrow. And that's almost all of them.

LetThemEatRand's picture

I'll bet those few who were PM stackers in Venezuela are feeling pretty fucking smart right about now.

CaptainObvious's picture

Their PMs are safe only as long as they are far from major population centers like Caracas, the new murder capital of the world.  Of course, being far away from population centers also means you're far from the black market, so how does one exchange their PMs for necessities?  Ye Olde Catch 22.  The lesson to be learned here is that PMs are only valuable for preserving wealth (in an easily transportable and covert form) to someplace that is not turning into Mad Maxville. 

Alberich's picture

This is a bit like saying Venezuelans who stashed away 50,000 in 100USD notes can't exchange for necessities. Reasonable people might disagree.

konadog's picture

Welcome to the US in a few years when all the fiat the Fed has printed comes out from under the mattresses. Buy land, gold, silver - anything tangible.

BandGap's picture

Not land in the US. They will get you with the property taxes. Fuckers.

Latitude25's picture

I'm looking forward to my trillion $ propeety tax bill.  I'll have it framed so I can pass it down to future generations for their entertainment.

Joebloinvestor's picture

Fiat and socialism, a pair made in hell.

buzzsaw99's picture

using the money as tp would be cheaper

Dragon HAwk's picture

Does the Bolivar come in Soft & Fluffy ?

CaptainObvious's picture

It will come to that point in a few weeks, never fear.  What I want to know is, how is the company who is printing up these shiny new 200 Trillion Zimbabwe bux getting paid?!  Surely they are not so stupid as to except any form of paper/digital fiat as payment.

Redhotfill's picture

Me too I am curious about how the printer will be paid?  I bet they wont accept the ability to run off a few billion extra for themselves. I think they will wan't oil, gold, or some other fiat not quite so worthless. 

halcyon's picture

481% yearly inflation is c. 13.5% / mo. That's insane, but a far cry from the official definition of hyperinflation which is min. 60%/mo (28147% annual).

But yeah, by starting to print higher domination bills and giving it away they are guaranteeing hyperinflation.

Hyperinflation is always and in every way a political decision - not a mere central banking act.


BandGap's picture

Wow, an official definition. Well, there's that then.

Money Counterfeiter's picture
Money Counterfeiter (not verified) Oct 27, 2016 11:57 AM

Jew heaven.  Cheap whores, starvation, death, stupid politicians.

Latitude25's picture

Janet please take notes how it's done.

Jason T's picture

what happened to all those free health clinics???

Faust?  Faust where did you go??