It's JUST.THAT.EASY.[NYT via WRAL.com] Faced with nearly incomprehensible inflation ‐ 32,714 percent as of Wednesday ‐ Venezuelan officials thought they had a solution: They changed the color of the bank notes and increased their denomination. Then they said they would lop off three zeros. And when that didn't seem enough, they announced they would cut off two more.
The tactics have left Venezuelans like Yosmar Nowak, the owner of a coffee shop in Caracas, convinced that there is no solution in sight and that the government cannot even bring down the price of a cup of coffee, an eye-watering 2 million bolivars.
"I imagine if we keep like this we're going to have to do the same thing in December," said Nowak, who has been forced to raise prices in her cafe at least 40 times this year.
Slashing zeros from Venezuela's inflation-cursed currency, the bolivar, is the tent-pole of a set of economic changes by President Nicolás Maduro as he tries to right his country's capsized economy. The five-digit inflation has earned Venezuela comparisons to the hyperinflation of Zimbabwe and Weimar Germany from the International Monetary Fund.
The newly minted currency, which will be known as the "sovereign bolívar," will be rolled out Monday. In addition, the president has ordered measures his United Socialist Party has been loath to consider in the past: An increase in gas prices for some drivers and a modest ease in the currency controls that have made dollars inaccessible to most Venezuelans for years.
Yet these changes haven't been enough to convince economists, who see desperation in Maduro's latest moves and view the new currency as another chapter in the decades of mismanagement that have destroyed the Venezuelan economy.
"It's a cosmetic thing that's happening, the zeros," said Steve Hanke, an applied economics professor at Johns Hopkins University who has advised governments facing hyperinflation. "It means nothing unless you change economic policy."
No shit?