hyperinflation blues

The absurdity of changing money in the world’s stupidest economy

There are only three legitimate reasons you would ever have a heaping pile of cash sitting on your kitchen table: 1) you’re a drug dealer; 2) you’re the rich uncle of Donald Duck; 3) you live in a country with a failing economy.

So when my colleague Manuel recently posted a picture of a teetering mount of bills covering his table, I immediately suspected he was dealing drugs. Then I remembered he’s involved in something even riskier than that: He’s on assignment in Venezuela.

Venezuela is a tough place to be a journalist these days. Actually, Venezuela is a tough place to be anyone these days. But reporters trying to cover the country’s continual unraveling often get stopped by a government that doesn’t want that story told.

Many foreign correspondents don’t even make it into the country. They get spun around in the airport and put right back on the nearest plane. Others get detained while they’re reporting in the field and whisked off to a cheerless, florescent-lit office where they get questioned by humorless apparatchiks until they renounce the evils of yanqui imperialism.

Manuel has reported from Venezuela many times before and knows how to step lightly in troubled lands. But once he tiptoed his way past immigration, he was faced with his first challenge of life in Venezuela: exchanging money in a country with the highest inflation rate in the world.

There’s an inverse relationship between the stability of a country and the thickness of the money wad you get handed when you try to change a fifty dollar bill. If you can’t close your wallet afterwards, the country’s economy is probably in bad shape. But if you need an empty suitcase to complete the transaction, the economy is in ruins.

There’s no surer sign of a failing state than when people use wheelbarrows instead of purses to cart their money to market. Or when a country’s currency has so many zeros on the bills you have to count them with your fingers.

When Manuel visited Venezuela last year, he exchanged $80 for a ludicrous bundled of 27,500 bolivares. Last week he exchanged half that amount ($41) for an ever crazier pile totaling 50,000 bolivares. Ten days later, the exchange rate increased another 40%.

Venezuela’s currency has become so worthless that some people are now using weight scales to determine approximate values of cash piles, rather than counting bills. Absurdity knows no limits under crumbling authoritarian regimes.

Venezuela’s answer? Print larger bills. Venezuela last week announced it is going to start printing currency in meatier denominations of 5,000, 10,000 and 20,000 bolivares. That ought to fix it—just ask Nicaragua 1985.

Nicaragua's 200,000 cordoba bill during hyperinflation in 1985

Nicaragua's 200,000 cordoba bill during hyperinflation in 1985

“Trading dollars in Venezuela is kind of like trying to score weed when visiting a new country,” Manuel explains. “Once you arrive safely in Caracas, you start to ask your friends if they know of anyone— any ‘dealer’— who might want to buy some dollars from you.”

Turns out Manuel knows a dude named Carlos who knows another dude named Xavi from his soccer team. Xavi buys dollars because he’s trying to save up enough greenbacks to leave the country. So Carlos called Xavi and they arranged a price, a time and place to meet.

Long story short, Xavi agreed to buy Manuel’s dollars at an exchange rate of 1,250 bolivars for each dollar, which seems fair to everyone involved, since the going black market rate for the day is 1,380 : 1.

In any event, it’s way better than the highest official exchange rate of 650 bolivares to 1 dollar, which also requires pile of paperwork from the government.

The only problem with Xavi’s exchange rate is what to do with all those bills? The highest monetary denomination in Venezuela right now is 100 bolivars, or about $.08. So changing $100 means trying to stuff 100,000 worth of bills into your clothes.

Manuel, for reasons we won’t go into here, has access to a Venezuelan bank account, so Xavi was able to do most of the exchange through an electronic transfer, and Manuel can use a Venezuelan debit card for most transactions while he’s in the country. Still, he needed some walking around cash, so he exchanged $41 and got back this stack of bolivares.

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“I was freaked out by how many bills Xavi gave me for just $41! When I visited Venezuela in May of last year, the dollar was trading for 330 bolivares, so the amount of cash I got in exchange for $50 was still manageable,” Manuel told me.

Now he needs to carry his money in both a suitcase and a backpack, because one piece of luggage isn’t enough to haul that much loot.

“Xavi had to give me the money in denominations of 50 bolivars, because the bank had run out of 100s, so it came to 10 brick loads of cash for me to carry—too much for me to even count during the exchange,” Manuel says. “That made it challenging when I had to go back through the airport to travel to another city with all that cash. It added like another 4 lbs to my luggage. I had to spread it out between my suitcase and my backpack so I didn’t look like i was a narco carrying all that money in one place.”

But Xavi told Manuel to chill. Absurd scenes have become commonplace in Venezuela. “Relax,” he told me. “Venezuelans are used to seeing people carry that much cash around with them.”

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