Maduro Halts Cash Ban Amid "International Sabotage" Conspiracy Theory; Blames Obama, US Treasury

Tyler Durden's picture

Venezuela President Nicolas Maduro suspended the elimination of the nation’s 100 bolivar bill until Jan. 2 after the government’s decision to pull its largest denomination note out of circulation left the country short of cash, deepening Venezuela's economic crisis, and sparking violent protests and looting.

As Bloomberg reports,

Maduro’s decision to extend use of the most-widely-used bill came as the president said replacement higher-denomination notes were unavailable because three planes transporting them to the country were “victims of  international sabotage.”

 

  • *U.S. TREASURY GAVE ORDERS TO HALT PLANES W/ NEW BILLS: MADURO
  • *ALL VENEZUELAN 100-BOLIVAR BILLS TO FUND FOOD PROGRAM: MADURO
  • *U.S., OBAMA TO BLAME FOR FIN'L ATTACKS ON VENEZUELA: MADURO

 

He did not give details of the alleged sabotage.

 

 

Maduro said at a rally in Caracas on Saturday: "We are victims of an international sabotage so the bills, which are ready, cannot be shipped to Venezuela."

 

Since last Sunday’s shock announcement that almost all 100-bolivar notes were being called in by the government to combat the hoarding of currency so worthless that it needs to be weighed to be spent, the past week’s daily scenes of frustrated people crowding banks and automated teller machines to deposit the bills culminated Friday in utter exasperation following Maduro’s announcement late Thursday that the new money would be late.

This, of course, is not the first scapegoating Maduro has blamed his nation's collapse on; as Global Risk Insights' Jeremy Luedli correctly points out, Venezuela is seeing conspiracy theories behind its inflation worries and suspension from Mercosur, as Caracas becomes increasingly divorced from reality.

It may not have seemed possible, but Venezuela has managed to further torpedo its economy over the course of a single week as the government’s ham-fisted monetary policies wreak havoc. With the country battling shortages, debt, rapid inflation, and economic collapse, the government has become increasingly disconnected from reality. The latest example came on Tuesday when Interior Minister Nestor Reverol announced that the government was removing its 100 bolivar notes from circulation. While similar efforts have recently occurred elsewhere – such as in India – the fact that Caracas only gave the populace a 72-hour notice was shocking.

The risks posed by such a short deadline are compounded by the fact that 100 bolivar notes account for almost half of all notes in circulation, as inflation has rendered smaller denominations worthless. Even so the value of a 100 bolivar note has decreased to just two cents in the informal exchange market. The bolivar has been losing 10% to 20% of its value each month, with the currency witnessing a staggering 55% devaluation in November alone.

Venezuela’s conspiracy theory addiction

This state of affairs begs the question why the government would decide on so drastic a measure. Indeed, this was the thought going through the minds of many Venezuelans as Reverol outlined an elaborate conspiracy theory on live television. Specifically, the minister claimed that some 300 million bills have been siphoned out of the country and are being stored in European warehouses as part of a scheme to undermine the Venezuelan government orchestrated by the U.S Treasury Department. Said organization is, according to Venezuela, working with the mafia and local NGOs to hoard bolivars – prompting Caracas’ rapid demonetization initiative.

This sense of righteous indignation is undermined by the fact that Venezuela increased its oil exports to the U.S by 23% in November, reaching 742,000 bpd. Crippled by the drop in oil prices, Venezuela seems more than willing to trade with Washington while furiously denouncing it at home.

Another, (marginally) more plausible culprit are the illegal Colombian exchange houses which – according to Caracas – are hoarding bolivars. Yet this in turn begs the question why anyone would be hoarding one of the world’s fastest depreciating currencies. Nevertheless, this did not stop Venezuela from shutting its border with Colombia and Brazil for 72 hours from Tuesday until midnight on Thursday, in conjunction with its demonitization efforts. These measures do not address the root causes fueling the crisis, as government critics maintain that strict currency controls and price-fixing on certain goods are to blame.

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Despite claims about fighting criminals, foreign influence, and corruption, ordinary Venezuelans are those most affected by the government’s fiscal whims. Already suffering from inflation that is wiping out the nation’s savings and purchasing power – the IMF calculates that inflation will rise to 470% by the end of the year, and 1,660% in 2017 – ordinary citizens are now forced to scramble to meet the government’s absurdly tight deadline. Moreover, many poor Venezuelans do not have bank accounts, preventing them from depositing their money.

All this has resulted in massive lines outside banks and ATMs as the population races to beat the deadline. Ordinary Venezuelans are sharing their experiences and providing insights into how dysfunctional the country has become. Speaking on the announcement of the 72 hour deadline, Clarissa – a graphic designer from Caracas – lamented that “credit and debit card services collapsed a few weeks ago and the people who spent hours at banks trying to withdraw money to have just in case, are now forced to return to their banks and deposit it all.”

To make matters worse, the government’s plan to introduce six new notes ranging from 500 to 20,000 bolivars has been delayed. This means that the most widely circulated note and its replacements are both unavailable. Gabriel, a student from Caracas, pointed out the absurdity of the situation:

“The banks said they have not received [the new notes]. After people changed the notes, they went to ATMs […] they received new 100 notes and had to make the line again to deposit them. This shows a little bit how illogical the situation is.”

As of writing, Venezuelan banks have not received the new notes, with some Banco de Venezuela ATMs still dispensing the now defunct 100 bolivar notes. Moreover, central bank president Nelson Merentes has vaguely stated that the new notes will be distributed in a “progressive manner to banks” – further details are not forthcoming.

Mercosur-bashing and gatecrashing

The degree of Caracas’ disconnect from reality is also being mirrored at the international level, as highlighted by a bizarre incident involving the country’s foreign minister and Mercosur. Venezuela’s Delcy Rodriguez attempted to gatecrash the Mercosur foreign ministers meeting in Argentina, resulting in a confrontation with Argentinian authorities. Rodriguez claimed that she was manhandled by security personnel, with President Maduro claiming Rodriguez was thrown to the ground and broke her collarbone.

These claims were undermined by the foreign minister’s own Twitter tirade which included pictures of a smiling Rodriguez waiting with the Bolivian representative for the arrival of the Mercosur foreign ministers after her gatecrash attempt. When said ministers unsurprisingly did not show up Rodriguez began denouncing them and Mercosur.

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Rodriguez explained her actions by stating that “if they close the door to us we will, as our President Maduro has said, go through the window. Venezuela does not need an invitation because it is for the time being president of Mercosur.”

This claim runs counter to the fact that Venezuela was blocked from becoming president for the second half of 2016 in June. Moreover, Venezuela was suspended from Mercosur on December 2nd after a vote by Paraguay, Uruguay, Brazil, and Argentina citing Caracas’ economic and human rights failings.

In response, Argentinian foreign minister Susanna Malcorra stated that, “no one ever gets into a multilateral meeting without authorization. The minister obviously felt she had the right to attend, but she had been told explicitly, verbally and in writing, that she was not invited.”

Venezuela itself only became a member under somewhat dubious circumstances in 2012. Since then the rise to power of free-market centrist leaders in other Mercosur members has further isolated Venezuela within the organization

As a result, Venezuela has begun referring to Brazil, Argentina and Paraguay as the ‘Triple Alliance’ – imbuing Caracas’ suspension with nefarious and conspiratorial connotations. It is interesting to note that Uruguay has been exempted from this slander, despite voting to suspend Venezuela. This is likely due to Uruguay’s ongoing efforts at mediation and statements praising Venezuela’s ostensible willingness to use consensus-building tools.

The language used by Venezuela to describe Mercosur gives further proof of its detachment from reality and penchant for conspiracy theory thinking. The monicker ‘Triple Alliance’ is a reference to the Triple Alliance of 1865 which comprised Uruguay, Brazil, and Argentina. The Alliance’s devastating war against Paraguay makes for a compelling, if somewhat inaccurate metaphor (i.e. switching out Uruguay for Paraguay).

This choice is also apt, as modern interpretation of the conflict ranges from a fearless struggle by smaller nation to defend its rights against the aggression of larger neighbours to a foolish attempt to fight an unwinnable war that almost destroyed it. That pretty much sums up the disconnect between Venezuela’s depiction of itself and the assessment of the rest of Mercosur.

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NoWayJose's picture

He probably saw that people were bringing in their last wheelbarrows of money and buying pitchforks and torches!

Looney's picture

 

Maduro is 0bama’s hero.   ;-)

Looney

bwh1214's picture

If you understand our monetary history laid out in the video series below you'd understand we're headed down a similar path. Details will change but the general story is the same. Best explanation I've seen yet.

http://www.themonetaryreset.com/search/label/How%20We%20Got%20Here?m=1

darteaus's picture

EVERY major nation (and the EU) is going down that path!

WTFRLY's picture

10 Massive Fake News Stories Western Media Has Been Feeding You On Aleppo
http://thefreethoughtproject.com/10-aleppo-syrian-media-lies/

BaBaBouy's picture

MODee Next ?

Is the whole Rotten "Money Experiment" Crumbling ???

BaBaBouy's picture

"" EVERY major nation (and the EU) is going down that path! ""

Please Line Up here, for your New Forehead Barcode ...

RAT005's picture

Does this mean that the 100 Venezuella notes that people discarded because they thought they were worthless, are now worth something.  Did lots of people already give up on them?

fbazzrea's picture

thanks for the link--great educational tool for sharing with friends and relatives.

the series should be a required course in our public education system.

thanks again

jmack's picture

I am physically laughing out loud at this headline.  The mind reels at the thought of all those people burning their bolivars.   What an insane shit show that country is.  

 

   I do not say that with any sense of superiority, their methods of conspiracy pandering is the exact same thing the Democrats are executing with the Russia coup meme. And quite frankly, we would be going over the very same waterfall in  20 or 50 years had Bernie gotten elected.  So I view Venezuela as a warning more than anything, which is probably why the US media never covers it in any way that examines the over all root causes, they merely focus on random acute symptoms of the larger issues.

 

    How do you feel if you are that guy that turned in his 20k bolivars for $9. or the ones burning them in the streets?  I know they werent really worth more than the matches used to set them alight, but still, a penny not burned is a penny saved.

 

   I guess going forward, the only question is: Will Maduro, slink out in the dark of night, resign in disgrace, swing from a lamp pole, or get the full Gaddafi treatment?

PrometeyBezkrilov's picture

He who? Did you read the first sentence in the article?

U4 eee aaa's picture

I'm thinking he is a ZH reader and took to heart our predictions of his near future yesterday

Golden Showers's picture

Yeah. I told you about double overtime but I didn't say what I was up to.

I took dem planes. They was worth moar than the money.

That's how I roll.

Skiprrrdog's picture

Rioting and looting Latrinos... there is something you never see on TV...

DirtySanchez's picture

More Russian meddling, I suppose.

darteaus's picture

The same White Supremacists that Comey wrote about hacking into and falsifying Podesta's emails!

Stu Elsample's picture

one well placed bullet will rid the nation of its biggest problem

Farmerz's picture

Helicopter drops of malt liquor and handguns should do the trick.

Stu Elsample's picture

you're thinking of Ferguson...dem niggas want 'social justice'. Venezuelans just want food.

Grandad Grumps's picture

Central banking empire, not the US government.

Vardaman's picture

Well, I mean, the plan was for for swil to be coronated as Emperor for Life and the US to be on the Bolivar by Jan. 21.  Oops...

darteaus's picture

This guy needs to get in sync with the rest of the LIEberals:

"TRUMP'S FAULT!!"

HRH Feant's picture

Incredible. Shit was getting bad so he decided to just lie.

Seasmoke's picture

I was going to mention those people burning those 100s yesterday , might regret doing that. 

gregga777's picture

Burning 100 Bolivar 100 notes cost them a whole US$2! Can't even buy an overpriced cup of StarTrash coffee for $2!

zeroboris's picture

Does Argentina indeed have so awful inflation?

BritBob's picture

Maduro loves his international conspiracies. 

 

Nicolas Maduro has been an avid supporter Falklands claim even speaking in CELAC on behalf of Argentina. What is the strength of the Argentina sovereignty claim? And what about the rights of the islanders? https://www.academia.edu/21721198/Falklands_1833_Usurpation_and_UN_Resolutions

Yes. A fairy tale distraction away from reality.

gregga777's picture

You are a fairy tale distraction from reality. You're giving all Brits a bad name, BritBob.

logicalman's picture

For Fuck's Sake, is your brain so small it can only contain one thought???!!!

I think I know the answer, but can you let me know, just so I can be certain.

 

highly debtful's picture

I suppose it wasn't possible for Maduro to just wait for that oh-so-important consignment of new bills before announcing his move to remove the old 100 Bolivar bills?

What's that? It would mean the conspiracy theory would no gain traction? Right. Silly me. 

bshirley1968's picture

I don't pretend to know the ins and outs of this situation but I do know it wasn't the people of Venezuela that devalued their money.

Who do you think did that? Could it have been their creditors?  Devalued it compared to what?  That's right, the dollar.  We are spanking them and raping their economy.  For what reason?  Several come to mind.  They are no more socialist that we are.  They have the world's 3rd or 4th largest oil and gas reserves.  They have a corrupt leadership,  so do we. 

I think their main problem is a leader that is getting paid off and cares more about himself than his country.  We did the same thing to Russia.  Putin was the difference.  If I were running Venezuela,  I could get food and necessities for my country and wouldn't need banker bullshit fiat to get it done.

Like I said, I don't know all the facts and the lies are thick but I bet an honest leader who cared about his duty to his country over himself could fix this mess.

gregga777's picture

Overall inflation is always a monetary phenomenon caused by printing fiat currency out of thin air. Venezuela has been printing fiat currency with wild abandon. No one made them do it. No one made them squander their crude oil revenues on free giveaways. No one made them totally neglect reinvestment in their oil fields. They did it entirely to themselves.

jmack's picture

your equivocation displays an ignorance, or mendacious intent, which is breath taking.  The facts you have to ignore to build your little narrative are legion, and well beyond the scope of this reply.  I recommend you seek professional help with your detachment from reality, as it can be benign in many cases, and merely lead to a lower standard of living, or bumping your toe on various coffee tables of reality that you cannot see, but in your case, i think you may think you can fly without technology, or breath underwater, and test that theory to your mortal detriment.

Benjamin123's picture

Look, devaluation is easy. You are in Caracas with a stack of bolivars and go to to a bank or exchange houses to trade them for dollars. Do it by the book, no back alley business. You cant. Such operations are illegal. There are no exchange houses in Caracas.

Make a private arrangement to buy the dollars. The price will be around 4000 bolivars per dollar. The government says the real price is 10 bolivars per dollar but they just wont sell so what does that even mean?

Devaluation is not ordered, it happens every time a private transaction happens at a politically incovenient rate.

The bolivar is not devalued against the dollar. It is devalued against everything. Devalued against plaintains at fruit markets, U need more bolivars to chase the same plaintain and these are all homegrown.

Mr Poopoo Guy's picture

those sound like conspiracy fact not theory

tarabel's picture

 

 

How bad can your government be when a consortium of banana republics elects to kick you out?

Anybody know the name of a good computer exorcist? I swear I only posted this once.

Golden Showers's picture

Venezuela whatever the fuck country.

You didn't make quota. You don't get your BONUS.

FUCK YOU.

Ajax_USB_Port_Repair_Service_'s picture

The idiot Maduro pulled the 100's BEFORE having the higher denomination bills ready for the exchange. It's all his fault.

gregga777's picture

Assuming that they even exist Venezuela doesn't have the foreign currency reserves to even pay for banknote printing.

Conax's picture

They could sell off some gold... er...

too late. Golem Sucks snagged it a while back.

Mineral rights! Get yer Venezuelan mineral rights here!

Mineral rights for food, bring us taters!

tarabel's picture

 

 

How bad can your government be when a consortium of banana republics elects to kick you out?

gregga777's picture

Venezuela even gives Banana Republics a bad name.

Pure Evil's picture

Another eight years of Obama's policies under the Wicked Witch of the East and we'd all be looking like Venezuela.

gregga777's picture

To be fair to Venezuela, and to avoid any impression the US government is conspiring either for or against them, all Venezuelan crude oil imports should be suspended and all CITGO gas stations should be closed. Also, all American NGOs should be withdrawn immediately from Venezuela. We do want to be completely fair to Venezuela and to the Venezuelan government. Right?

smokintoad's picture

Could international sabotage mean the foreign printer demanded payment on delivery?

Skiprrrdog's picture

Weren't Obobo the Clown and Madura lovers once?

MEFOBILLS's picture

 that Venezuela increased its oil exports to the U.S by 23% in November, reaching 742,000 bpd. Crippled by the drop in oil prices

The above means that Venezuela cannot get foreign exchange (FX) to buy imports.  Hence their Bolivar currency comes under exchange rate pressure.

  • *U.S. TREASURY GAVE ORDERS TO HALT PLANES W/ NEW BILLS: MADURO

Why the hell would any country outsource its ability to print money?

 Interior Minister Nestor Reverol announced that the government .was removing its 100 bolivar notes from circulation   - with no replacement.

 Talk about almost complete retardation.  If there is inflation in the Bolivar due to exchange rate pressure, then the exact analog in history is the Weimar experience.  Schacht introduced the Rentenmark ... a new unit.. to combat the inflation.  Rentenmark was issued based on land, and it was limited in what it could trade for.  Schact also used currency controls similar to what what Malyasia did during the 97 Asian crises

If economic history is no longer part of the economic curriculum, then it leads to "tardation" where people become walking zombies.  Oh that right -lets not pay any attention at all to anything relating to Nazi economics - our Jewish money masters want to make sure that era is completely thrown down the memory hole.

In recent times, the Malaysian currency crises (Asian Crises) of 1997 was sucessful, where the convertibility of RMB was suspended - to then control the exchange rate.  Even the IMF had to admit this worked.

Since 1997 the state run Malysian Airlines has had two suspicious flights downed e.g. 370, 17.  Wonder why?

http://michael-hudson.com/2012/08/fireside-on-the-great-theft/

Balance of payments leads to exchange rate pressures.  See Hudson quote below:

So to talk about hyperinflation as if it is a domestic phenomenon is to ignore the fact that never in history has it been domestic. It always is a balance-of-payments phenomenon, associated either with war or a class war, as in Chile’s case.