The govenment tale that the government wants to sell. From Curadas.com. Source link
A lo has been said about this overhaul, and I don't know if is understandable for you guys out of our country. So, in this post i'll try to explain it the best I can. Here's what's this currency overhaul is about:
The new currency unit is the Sovereign Bolívar (BsS.). One unit of that currency will be worth 100,000.00 units of our actual currency, The "Bolívar" or formerly called Strong Bolívar, currency that was adopted just 10 years ago.
This currency will allegedly be pegged to the cryptocurrency called Petro (PTR). Petro will have a value of $60, equivalent to BsS. 3.600,00.
Monthly Minimum Wage will rise to 0.5 PTR, equivalent of BsS. 1,800.00. So, minimum wage will be $30, from less than a dollar salary that is being paid to date.
Doing the math ------------> $1 = BsS. 60 = 0.0167 PTR.
The Venezuelan Government will cover (pay) the salary differential ($29) of small and medium private business employees for 90 days.
Sales tax increased to 16% from 12%
Monthly income tax from 0.5-2% in advance.
Weekly Sales tax retention.
0 - 2% Monetary transactions Tax.
So well, it's not that bad on paper,
BUT
Just analyze:
- The new currency will be pegged to a new currency that can't be exchanged, because it doesn't really exist. I wrote about that exactly 3 months ago, when I quoted Fedor Bogorodsky, the mastermind behind that:
"Maduro looked in Petro a political propaganda flag. It is not an instrument to solve problems such as inflation. That's why, at that moment, I told Denis 'it seems to me that we can not participate here anymore because it is dangerous' (...) We offered to put together three parts of the project: issue cryptocurrencies, build a payment system, because there has to be a lending, you can not use cryptocurrency on the street, and put together a stock exchange. My opinion is that Venezuela does not have money to put together all that project, and that is why they eliminated the two most important parts, the payment system and the stock exchange. They left only the cryptocurrency issuance part. I do not see any future for this project."
The government will own private businesses de facto with the salary subsidy. That will put pressure on service and goods providers to prevent them to increase the price of their products, when more monetary mass is added to the economy. Hello scarcity!
Again, if Petro doesn't really exist because it cannot be freely exchanged, what will be the currency that will be seen as a stable currency to buy?
Yes, the good ol' USD.
And that is already happening:
Source: AirTM twitter feed
In less than a week, USD price rose to more than double. And I tweeted my prediction:
Petro at $60 - Salary at BsS. 1800=$30.
JM (
Current Monthly Wage = $0,90.
First payment on the 30th.
Guess what will happen to he black market dollar from today to the 30th. I predict $ at BsS. 360 for the end of the month. Yes, BsF. 36.000.000 of today's.) August 18, 2018
Conclusion
This overhaul is intended to enforce social control, by subsiding salaries while trying also to increase taxes and, in fact, erradicate the private sector. The Petro is just a mere formality in documents, simply removing the name of the dollar or the euro, but basically the Sovereign Bolivar will be the actual currency in circulation.
And no, you can't own any oil reserve with that currency. Those reserves have been conceded already to foreign enterprises, or government entities that have invested money already in here. Venezuela debt is almost equivalent to all the cryptocurrencies market cap of the recent days:
More than $180 billion.
And we are in default.
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