Venezuela's Money Supply Soars By A Record 200%

Tyler Durden's picture

Two weeks ago, Reuters reported that due to "unexplained" reasons, the Venezuela central bank had stopped publishing its M2, or money supply, data.  The M2 money supply was up by nearly 180% in mid-February from a year earlier, according to the central bank before it halted the release of the weekly data without explanation in February.

 "If they are not publishing, you know it must be skyrocketing," Aurelio Concheso, director of the Caracas-based business consultancy Aspen Consulting, stated the obvious. The central bank and ministry of communications did not respond to a request for comment, Reuters adds.

Fast forward to today when following the international outcry over last Wednesday's failed coup-attempt by Maduro, in which the Supreme Court first withdrew the power of Venezuela's opposition-controlled Congress, and then promptly reversed itself following loud international outcry and after it appeared that Maduro's precarious grip on Venezuela society was about to be lost, when Venezuela's M2 has once again mysteriously reappeared. According to the latest data, the money supply in the crisis-stricken country has surged over 200% in a year, up from 180% as of February, and the fastest rise since records began in 1940, putting it on track for the world's highest inflation.

According to Reuters which first spotted the return of the data, soon after a month-long hiatus from publication, the central bank said late on Friday the total amount of local currency in circulation, M2, as of March 24 was 13.3 trillion bolivars, up 202.9% from a year earlier. By comparison, in the US, M2 rose by 6.4% in the same period.

But while M2 may have returned, official inflation data is still missing, which is probably for the best: Venezuela is in a major economic crisis, with millions struggling with food shortages and hyperinflation inflation in triple digits, if not higher.  Venezuela's opposition-led National Assembly, which correctly accuses the leftist government of destroying the OPEC country's economy, says inflation reached 741 percent in the year to February. It's likely far higher.

The exponential rise in M2, the sum of cash, together with checking, savings and other deposits, means an exponential rise in the amount of currency circulating. Coupled with a decline in the output of goods and services, that has accelerated inflation.

Curiously, never before has Venezuela sunk so low, despite its economy being largely uniform over the years. As Reuters notes, the central bank website shows five separate spreadsheets with money supply data going back to 1940. Back then, as now, Venezuela's primary export was oil.

One thing did change recently, however, roughly around the time the M2 curve started going exponential: that paragon of socialist virtue, Nicolas Maduro took over. The rest is history.

Maduro says right-wing businessmen are hoarding goods to sabotage his administration, and has accused the US of coordinating with other global leaders to remove him from power (that actually may not be too far off, if only the CIA wasn't more focused on destabilizing the domestic US situation in recent months).

Meanwhile, as M2 goes exponential, we have a feeling that the following chart of the Bolivar on the Venezuela black market - which reflects its true lack of value - is about to take its next step function higher... or rather lower as what little value the local currency may have had disintegrates in the coming months.

We can only imagine the awe shared by Western central bankers who watch in dumbfounded amazement as this small country has achieved precisely the final outcome all "developed" currencies will one day soon experience.

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Franklin Mint Chip's picture
Franklin Mint Chip (not verified) Apr 3, 2017 6:00 PM

Wonder what our money supply would look like if you factored in all the black ops, back room deals, colour revolutions, etc?

wee-weed up's picture

Maduro borrowed Janet's printing press?

Richard Chesler's picture

That's one way to give out free shit.

Pairadimes's picture

Everybody is rich! Holy Shit, Mr. Sanders, we've done it!

What could possibly go wrong?

MEFOBILLS's picture

Actually, when a country is in debt denominated in its own money, then printing is a solution.  

If there is depressed demand.. .meaning lack of activity for want of money demand, then that demand can be put into the economy without inflation.

The money then goes on to pay down debts.  In the process of paying down debts, the money disappears.

So, Mr. Sanders was not incorrect (if you are talking about Bernie?)

A country that is in debt denominated in a currency not theirs, is in a much different situation.  In that case, any new printing will go through an exchange rate conversion.  The printing will not buy foreign goods, or pay down foreign denominated debt, as the floating exchange rate will be revised upward.  This then makes the local money have less exchange value.

All hyperinflations have been through the exchange rate mechanism.  Except for Rhodesia/Zimbabwe.  That was because the blacks killed the white farmers, which then means goods and services collapsed.

See Perkins "Confessions of an economic hitman."  Oil and resourch rich countries are attacked with full spectrum warfare, which includes cheap dollar loans to the leaders.

Doom Porn Star's picture

Upvoted.   However the argument is flawed.

How did we get here?  Why are one person's claims on productivity more valued than another's?

 

I for one a=m far less interested in bailing out the whole system as in reforming it so that the reconstitution actually solves the design flaw/feature of state grants of usurer/rentier parasitisms.

The rackets must be dismantled before reliquification.   Let's stop bailing out the criminals with our productivity.

Let the parasites perish or let adapt and become productive.

 

Simply declaring that 'debt' which was issued/designed without any directly associated taxation or levies -that is: phony debt that is issued without any actual intentions and revenue source commitments to be repaid- is arguably Odious Debt.

 

I can find not one person who believes that the US Federal Debt is ever going to be repaid.

Not one.

It isn't debt if the whole of the bureaucracy and ciizenry of the country have ZERO intention or plan to repay it.

The theft occurs when the government/financial system emits it's transaction medium while indebting those who are forced to transact in the medium.

FREE THE MONEY FROM THE USURERS.

Nobodys Home's picture

True story. I took a bunch of change to a Coinstar machine yesterday. Kicked out a few unacceptable coins...shitty pennies and a silver pairadimes!

Pairadimes's picture

LOL. Just saw this. I am amazed this still happens. I pick silver out of my winnings at the poker group from time to time (we play small stakes purely for fun). Last one was a 50's era quarter in extra fine condition. In the pot, it looked like a diamond in a pile of dogshit, but no one seemed to notice.

A little while ago I stood behind a woman at Walgreens who paid for her purchase with silver certificates. I asked the clerk if I could have them in my change and broke a hundred just to be sure I'd get them all.

Crazy world.

Sudden Debt's picture

clearly the fault of speculators....

and they're acting as if there's inflation all over the west but it's not real!!

 

AS THE EASTER BUNNY WOULD SAY: EGGCELENT!!!

Bigly's picture

Now they can buy a roll of tp, right?

Right?

Nobodys Home's picture

9 trillion (probably more) missing during Obummer's admin.
With that he wouldn't have increased the debt at all.

edit: Strange that the missing funds equal The same 8 years of national debt. ..There are no coincidences...so WTF?

Bill of Rights's picture

They can do better,to bad they don't have a Glorious Stock market like ours to sop up all that inflation.

silverer's picture

What happened to Santa Claus?

2muchtax's picture

You should call your mother and ask her to come clean about Santa

are we there yet's picture

I hear cat ladies in Caracas are considered rich. Trade one cat for 5 pounds of flour. 2 cats for a basket of papayas.

hxc's picture

3 cats to read a comment like yours

Nobodys Home's picture

I owe you 1/2 a cat for your comment:)

Would you take a guinea pig? They cook up better anyway.

Offthebeach's picture

Stop palming off warf rats as Guinea Pigs.

Nobodys Home's picture

No mang. We doan trade no steenking wharf rats!
Check it out esse! On skewers and evryting!

are we there yet's picture

Now your just being catty.

man from glad's picture

All the cats and dogs have been gone for months. It's lizards and snakes now.

Bill of Rights's picture

All that repatriated gold should fix this right?

Nobodys Home's picture

Sure. If it can be taken out of the fund it's in to pay interest and default payments. So. No.

Being Free's picture

Bernanke just came in Krugmans mouth.

JustPrintMoreDuh's picture

Ha ha ... too bad they dont have a stable & reliable currency like king dollar. 

Bill of Rights's picture

20 trillion soon to be 30 trillion of pure awesomeness.

Conservative Calitopian's picture

King Dollar is in it's supernova stage now. I saw it today when deciding NOT to buy a box of premium 9x3" deck screws.... $5.5 -3 years ago. $9.9 dollars today in Calitopia. Inflation is here, now. Everything you need will cost much more, and everything not important will languish for a buyer.

Evan Wilson's picture

The M2 line is not going straight up, yet; so they should print MOAR!

GatorMcClusky's picture

Shouldn't they all be rich by now?

all-priced-in's picture

Breaking news Hugo Chavez is still dead.

Mazzy's picture

Just got back from the grocery store.  Paid with some Federal Reserve Notes and got some coinage back.  The cashier must've just broken open a roll of new 2017 pennies a couple customers before me.  They look and feel like tiddlywinks.  It's fucking clown money, not much different than what Venezuela has, though they are in a more advanced stage of the Keynesian disease.

Nobodys Home's picture

Hey man. Can you break a Tubman?

Boxed Merlot's picture

Can you break a Tubman?...

Overheard from a bunch of old men in a rural Oklahoma breakfast joint - "Got change for a hunderd?" - "Hunderd?, that IS change."

Doom Porn Star's picture

The $1US golden Sacagawea was awful.

Subways and casinos have better tokens. 

 

There was once a wild and wealthy land where the ordinary people carried Eagles and Half Eagles nested in silver dimes in their coin purses...

 

yogibear's picture

And the Federal Reserve is thinking about giving every household a million dollars. 

Want to see the economy crash after the sugar high?

 

Thinkpad's picture

What about US M2 it was 6.99 trillion in Dec 2006 seasonally adjusted to almost 14 trillion in March 2017 now you know why fed is quacking about inflation looming. Velocity has been leveling of so if it starts accelerating the Fed has a major problem on their hands and they know it. When was the last time a voting Gov said we don't want to get behind the curve I'd say they are. It's gone up by alomost a trillion every year since the crisis and QE.

Piranha's picture

still have room to run

Nobodys Home's picture

Bernie Sandernista would be in heaven. A dictatorship; The congress usurped by the Supreme Court; The military in charge of food distribution; Printing...or paying someone else to print boatloads of worthless cash; The people totally in need....Socialism is Awesome! Let's have that here! It's for the LGBTQXBlackMexicanMuslims! ...and the children!
Hey man..shhhh..2 rolls of toilet paper for a gram of.9999 gold...Good Deal! Cause nothings better than a rewarding shit with a nice wipe!

cheech_wizard's picture

I need a Hanke to dry my tears.

 

cheech_wizard's picture

This Hanke...

https://twitter.com/steve_hanke?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7...

Standard Disclaimer: Yes, the Tyler's have published him before....

 

Nobodys Home's picture

Ok? He seems like one of the good guys, but he's an economist...so there's that.

ali-ali-al-qomfri's picture

'a flamingo in every pot'

Maduro's gotta come up with some trendy line to get the peeps feeling better.

gallistic's picture

Of course, no one mentions or knows about the dual Bolivar situation in Venezuela right now; the MSM and ZH did not tell you about it, because it does not fit the script.

It is reasonable to expect this number to go down fairly fast in the mid-near term.

 

Do not despair... the implosion that has been predicted as imminent for a decade will happen any day now, honest!

 

 

Soushalism!

Baaah! Baaah!

 

 

Nobodys Home's picture

Take $10,000 Us dollars...trade them on the black market, then trade them on the.gov exchange...come back home with many more Us dollars, if you live.

Catahoula's picture

Line of yay yo cost you a kidney down there. Maduro the knifeman

Able Ape's picture

YAY! Moar Money!....

directaction's picture

Simple solution: chop four zeros off and start printing all over again. 
(you can do this until you run out of paper and ink)  

Nobodys Home's picture

Pfffft! You can always use skin and blood!