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Chavez orders currency devaluation by by 50% in Venezuela...

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posted on Jan, 9 2010 @ 02:21 PM
I'm clearly not an economist, because I still don't fully understand why Chavez would demand the devaluation. By cutting your currency in half, only devalues your currency and result in increased prices for goods/services.

CARACAS, Jan 9 (Reuters) - Venezuelans rushed to the shops on Saturday, fearful of price rises after a currency devaluation that will let President Hugo Chavez boost government spending ahead of an election but feeds opposition charges of economic mismanagement.

In a bid to jump-start the recession-hit economy of South America's top oil exporter, Chavez on Friday announced a dual system for the fixed rate bolivar.

It devalues the currency to 4.3 and 2.6 against the dollar, from a rate of 2.15 per dollar in place since 2005, giving the better rate for basic goods in an attempt to limit the impact of the measure on consumer prices.

posted on Jan, 9 2010 @ 02:27 PM
It would also make their oil a lot cheaper abroad. But then again oil buyers follow the Dubai/Singapore/London benchmarks.

Maybe he wants to slightly disempower Venezuelans? Slightly enslaving them?

posted on Jan, 9 2010 @ 03:03 PM
I'm not an Economist either but if "The Devil" American leaders keep destroying the economy, devaluing his own currency might help his people to cope in the short term. Venezuela is gonna pay hard later on, but aren't we all!

If he keeps up his non-conformist ways soon enough America and the West are gonna attack his butt! (They'll make it look like an attack from them of course)

[edit on 9-1-2010 by Thermo Klein]

posted on Jan, 9 2010 @ 08:44 PM

1 barrel of oil = 205 bolivars ....... well that's not enough to stimulate the economy when it USED to be 300+ bolivars per barrel...

So slash the currency..

1 barrel of oil = 352(ish) Bolivars!!!

Economy is fixed! YES! Record oil profits! (in Bolivars anyways) ....

Well.. sure, the price of rices, breads, beans and everything else Venezuelan peasants live off of just went through the roof, and yes, the corporate sector of the country actually doesn't have the cash on hand to instantly raise wages in light of recession, basically forcing the entire country into a 50% pay cut.. and ok fine, the Government apparently forgot changing the price of .... everything... in relation to the currency doesn't actually save or cost more.. it's the same, because debt to GDP is based on %, not amount.

It's a number game to fool .... themselves... but #%! the poor over in the process...

It would be funny to watch from afar, except, I feel... well I feel our own leaders are ignorant enough to attempt this themselves.

posted on Jan, 10 2010 @ 06:21 PM
The latest regarding Chavez's threats:

Jan. 10 (Bloomberg) -- Venezuelan President Hugo Chavez said that businesses have no reason to raise prices following the devaluation of the bolivar and that the government will seize any entity that boosts its prices.

Chavez said he’ll create an anti-speculation committee to monitor prices after private businesses said that prices would double and consumers rushed to buy household appliances and televisions. The government is the only authority able to dictate price increases, he said.

“The bourgeois are already talking about how all prices are going to double and they’re closing their businesses to raise prices,” Chavez said in comments on state television during his weekly “Alo Presidente” program. “People, don’t let them rob you, denounce it, and I’m capable of taking over that business.”

posted on Jan, 10 2010 @ 07:10 PM
reply to post by MOFreemason

Jan. 10 (Bloomberg) -- Venezuelan President Hugo Chavez said that businesses have no reason to raise prices following the devaluation of the bolivar and that the government will seize any entity that boosts its prices.

LMFAO .... omg... lol ... I honestly don't even know what to say ...

Economics 101?

Is this guy effing retarded? Devaluing a currency changes EVERYTHING .. the only "upside" is exporting lol. The cost of everything in that country has to increase in line with the devaluing.. it's like Chavez that this was the ultimate plan, the tree that grew money.. what a moron.

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