We’ll get started with our Venezuela : Down The Rabbit Hole Segment in a few but first… My apologies for being MIA yesterday…minor (kinda’ major) technical difficulties. Now, to the news… Reuters reports that Venezuelan authorities have arrested 9 officials from state-owned metals conglomerate CVG including from steel-maker subsidiary Sidor as part of the government’s expanding corruption probe. 42 people have been arrested so far and, as they say, the investigation is ongoing.

 Just so we’re clear, we here at TFT think all the Chavistas should be arrested, tried, convicted, and jailed on a wide range of charges and in case an exact charge may not apply then charge them with conspiracy.They are all complicit in systematic Human Rights violations, hundreds of thousands of deaths, and the forced migration of 7.1 million Venezuelans and counting, not to mention depriving an entire generation of their future due to the Chavistas destruction of every aspect of life and society in Venezuela.

 Then we have Trade Winds telling us that Venezuela’s Attorney General, Tarek Saab, said that the recent arrests in the corruption probe at the state oil company are the result of an anti-corruption drive started in 2017 against a “mafia” that became rooted in PDVSA (Venezuela government-owned oil company) that sought to “embezzle the nation”. 51 people have been detained overall. He declined to say if Tareck El Aissami, the recently resigned Oil Minister, is under investigation.

 Then we have Merco Press telling us that former “interim President” of Venezuela and current candidate in Venezuela’s opposition primary election to decide who will face off against current President (dictator) Nicolas Maduro, Juan Guaido, announced he believes the Maduro regime is planning to issue an arrest warrant for him and possibly other opposition figures.

 He also stated that sanctions are not responsible for Venezuela’s problems (although he has called for them to be removed) and pointed to Maduro’s “confession” of Chavista corruption”, ie; the current government corruption probe (purge?), as confirmation of the real reason behind Venezuela’s problems.

 We here at TFT are pleased to hear Juan Guaido voice what we’ve been saying (and have proven beyond any doubt) for a long time and that is, sanctions are not responsible for Venezuela’s problems.

 The Venezuela situation (crisis) is a self-inflicted wound caused by the Chavistas and 21st Century Bolivarian Socialism. We also have to wonder, regarding the possible arrest of Juan Guaido, why has it taken so long?

 Now, let’s head Down The Rabbit Hole for Chapter 6 “Tales From The Crypto”

 You may think you’ve seen some financial manipulation in the last chapter, if not outright fraud. There is a reason I only briefly mentioned “El Petro” previously. The world has never seen anything like this before, literally. It was heralded as the world’s first cryptocurrency backed by the hard assets of a sovereign government. Yet another Chavista “revolutionary way of the future”. It was going to change everything! To call it a fraud or a scam is an insult to anyone that ever perpetrated a fraud or a scam. And what’s really crazy is they’re still peddling it today! Ladies and gentlemen… I give you… “El Petro”!!!

 The year 2017 was a tough on for Chavismo financially. When Maduro went on his, now annual, trip around the world begging for money and came home empty-handed (again) it must have seemed like the jig was finally up. His last two trips had proven fruitless and China and Russia had let him know that no new money was coming his way. The US sanctions list was growing, adding more and more individuals each time. Oil production was continuing to decline and oil prices had yet to rebound. Then something that had been coming for a long time finally happened. They defaulted on their bonds.

 They needed to come up with some money somehow to continue to buy the loyalty of the military. They could continue to print bolivares but as we saw in the last chapter nobody was interested in bolivares. As all this was happening the financial community was fixated on the rising popularity of blockchain technology and specifically the cryptocurrency Bitcoin. It had skyrocketed from $800 to $20,000 while Chavismo’s financial resources had done the exact opposite. It seemed like the answer to all their problems. Just invent their own “Bitcoin”. The result is what the former bus driver- turned president and his band of financial and economic illiterates came up with.

 On December 4th, 2017 Maduro announced the creation of “El Petro”, the world’s first sovereign government-backed cryptocurrency. The trick would be that cryptocurrencies rely completely on trust, the confidence that people can buy and sell them…you know…use them as the name implies, as a currency. Credibility might be an issue considering that they were broke, had no credit with anyone since they had basically screwed everyone on basically every deal they ever made, and now had defaulted on their bonds, for the first time in history.

 Their concept to solve this problem was actually not that bad an idea. It was common knowledge that Venezuela had the largest proven oil reserves in the world. If they could leverage that as backing for their new “El Petro” maybe they could generate some interest. As with all things Chavismo-related, the devil would be in the details.

 In their first whitepaper, the document containing the concept and goals of the project, El Petro was to be backed by their unmatched oil reserves (to get around that nasty credibility issue). Each Petro coin (they initially issued 100 million coins) would be backed by a barrel of oil and and the price would be the same as said barrel, originally set at $60. Sounds good right? Sort of their version of when sovereign currencies still had the gold standard. Details to follow…?

 The usual suspects created quite a buzz. Supportive governments and individuals were quick to pose the question, “Is this the way of the future?”, just as they had all proclaimed 21st Century Bolivarian Socialism as “the way of the future” and were now desperately reaching for something positive in the debacle that was Chavismo. It wouldn’t take long for reality to set in although Maduro and his supporters would continue to hype it…to this day.

 Reality comes into play when real people have to invest real money in something. The crypto community had a lot of questions for Chavismo. The first was, what does “backed by a barrel of oil” mean? The answer will surprise absolutely nobody. Let’s say you have 100,000 Petros and you want to sell them but there are no buyers. Could you send a tanker to Venezuela and pick up your 100,000 barrels of oil? Well, no. The barrels of oil backing El Petro were designated to come from a couple of blocks in an oilfield that had yet to be developed. It was really a glorified “IOU”.

 More tomorrow….