Lather, Rinse, Repeat
We’ll get started with this week’s Venezuela : Down The Rabbit Hole segment in a bit but first…after five months Nicolas Maduro has announced he’s raising the minimum wage. This is a rarity as since he took power he has averaged raising it over five times a year. Most people think he has avoided doing it so it wouldn’t impact the value of his new bolivar introduced in October, lopping six zeros off the currency. Typically during his tenure whenever he raises the minimum wage the bolivar takes a fall as the government has no money so it just prints bolivars to pay it’s millions of employees and the retirement benefits as well. It’s always the same thing, in one form or another, in varying degrees.
A good example would be when Maduro last created a new currency, The Sovereign Bolivar, and lopped five zeros off the currency.When he announced the new currency it was part of a new economic model (they seem to have a lot of those under 21st Century Bolivarian Socialism) and he raised the minimum wage a spectacular 3,000%. Since it was coming off of a rate of, in real terms, under a dollar a month it jumped them up to about $30. By the time the new minimum wage came into effect the amount had already decreased to $22 due to devaluation and would continue to fall.
I’ve said this many times but I’ll keep repeating it as it borders on the unthinkable. The UN (United Nations) measure of extreme poverty is earning a dollar a day. As you can see, with Maduro’s huge 3,000% increase he raised minimum wage earners UP to the level of extreme poverty. It’s also worth remembering that before Chavismo the minimum wage in Venezuela was about $200 a month, still low but a hell of a lot better than where they are now and have been for years. Maybe that’s what led to the title of an article I saw years ago. It was something like, “Venezuela, Where People Fear An Increase In The Minimum Wage.”
OK, so what did Maduro do this time? Well, just like that 3,000% increase only a few years ago, he made a big move. He increased the minimum wage to 1/2 a Petro, Maduro’s utterly fraudulent cryptocurrency which,in real world terms is worth nothing. It will be paid, as always, in bolivares so after you do the exchange rate conversion it comes out to about $28 a month. So, let’s see if I’ve got this straight, Maduro’s big increase, 18 times the rate when he announced it, still has the average minimum wage earner making less than the UN measurement for extreme poverty! Nice going Nicolas!
As usual, he announced that things would get “even better soon” with an increase to 1 Petro in the near future. If past is prologue by the time it gets to 1 Petro the minimum wage earners will be lucky to be making $28 a month….maybe even hoping for the under $2 a month they’ve been making recently. Remember, at one time it got as low as 60 cents a month. And I still can’t get over the reference to the Petro. As the Brookings Institute put it, “The Petro exists to create foreign currency reserves out of thin air.”
So what does this mean? Well, one of the reasons why Venezuela has been able to recently climb out of it’s hyperinflation spiral was that, due to the rise in oil prices and an increase in production, the Maduro regime had some dollars, you know… real money, to inject into the system to keep them from having to print more bolivares thus stabilizing the currency. That combined with the limited use of the bolivar since more than half of transactions are in dollars now that the Maduro regime allows it have reduced the inflation rate to a mere 686%. That’s the highest in the world but still under the metric for hyperinflation.Here are a couple of things to consider. The Chavistas cannot continue injecting cash into the system indefinitely… they’re effectively broke. The success of the use of dollars in transactions to stem inflation is threatened by Maduro’s new 20% foreign currency (includes cryptocurrency) tax. Now the government will be on the hook for a whole lot more bolivares every month so they will have to create more bolivares which will decrease their value which will ad upward pressure to inflation. It’s hard to see any scenario where hyperinflation doesn’t return. I hope I’m wrong, but if I’m not Maduro can always raise the minimum wage again…lather, rinse, repeat.
Speaking of finances, Maduro has announced that Venezuela doesn’t depend on SWIFT so he’s not concerned with the sanctioning of Russia (hence Venezuela, Cuba, and Nicaragua) by removal of access to the banking system utilized by over 200 countries.
Then we have Fundaredes activists protesting in San Cristobal for their director who’s been in jail for 243 days. Remember him? Security forces arrested three activists from the Fundaredes Human Rights organization and after much international outcry eventually released two of them to house arrest. In keeping with the Chavista M.O. one of the conditions for house arrest is a gag order so nobody’s saying anything, at least not those two.
And the Secretary of Tachira Workers tells us that 486 organizations will participate in the protest scheduled for March 9th. Will they still protest with Maduro’s wage increase (again, still under the UN extreme poverty level)?
And in some potential good news we have the Venezuela Health Minister announcing that 16 tons of medical supplies have arrived from China. The reason I only say ‘potential good news’ is that the Chavistas have a habit of withholding food and medicine for extortion purposes.
Then we have Chile extending the state of emergency for four provinces due to the “unprecedented immigration crisis”.
Let’s head Down The Rabbit Hole shall we?
Chapter 10/ The Card
“Those who surrender freedom for security will not have, nor do they deserve either one.” Benjamin Franklin
And a reprise :
“I’m from the government and I’m here to help.” Ronald Regan
Extort – To exact or wrest from, to get by threat, violence
“The Carnet de la Patria” (the homeland or fatherland card) was launched, ostensibly, as a mechanism to streamline receipt of government payments and or benefits. Sounds quite benevolent huh? Well, only if the issuer has your best interest at heart and not their own. Perhaps a closer look is warranted.
Although the ‘Carnet’ was launched by Maduro in 2016 the foundation was laid by Hugo Chavez. In April,2008 Chavez sent a delegation to China to visit the technology hub of Shenzhen and the home of Chinese tech giant ZTE. China was already at the forefront in utilizing technology to further it’s “Big Brother” pursuits. Chavez billed the visit as an effort to help undocumented Venezuelans who might have difficulty opening bank accounts, voting, etc. Sounds well intended enough. (What was it Grandma used to say? The road to hell is paved with good intentions.)
That’s enough of a teaser for today…more tomorrow….
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