Venezuela Devalues Currency By Almost 50%

Discussion in 'Currencies' started by SilverSale, Feb 9, 2013.

  1. SilverSale

    SilverSale Well-Known Member Silver Stacker

    Joined:
    Sep 25, 2009
    Messages:
    2,284
    Likes Received:
    190
    Trophy Points:
    63
    Location:
    Australia
  2. Mintaka

    Mintaka Active Member

    Joined:
    Dec 12, 2012
    Messages:
    455
    Likes Received:
    101
    Trophy Points:
    43
    Location:
    Australia
  3. errol43

    errol43 New Member Silver Stacker

    Joined:
    Apr 13, 2010
    Messages:
    5,993
    Likes Received:
    15
    Trophy Points:
    3
    Location:
    Bundaberg
    Interesting link this thread...List of ozs held by stackers..

    Is that wise? Maybe just my stack is bigger than your stack!.

    Back on topic. Well I don't think they will be the last country to do this!

    Regards Errol 43
     
  4. Greenman

    Greenman Member Silver Stacker

    Joined:
    Dec 6, 2012
    Messages:
    550
    Likes Received:
    8
    Trophy Points:
    18
    Location:
    Australia
    Hmmm. So how does something like this work its way out with the ordinary folk? Questions:

    1. Are they suddenly paid half of what they were the previous day?
    2. What happens to a $300,000 mortgage?
    3. Is the fiat in their possession untouched?
     
  5. Lovey80

    Lovey80 Well-Known Member

    Joined:
    May 9, 2011
    Messages:
    2,322
    Likes Received:
    94
    Trophy Points:
    63
    Location:
    Sunshine Coast, QLD
    Did they just print 46% of their money supply and throw it into circulation or merely change the fixed exchange rate.
     
  6. lucky luke

    lucky luke Well-Known Member Silver Stacker

    Joined:
    May 15, 2011
    Messages:
    1,909
    Likes Received:
    178
    Trophy Points:
    63
    Location:
    Qld
  7. Matthew 26:14

    Matthew 26:14 New Member

    Joined:
    Sep 3, 2010
    Messages:
    3,305
    Likes Received:
    1
    Trophy Points:
    0
    Location:
    Victoria
    The process of devaluing will be:

    a) "jawbone" the currency down ie. government statements that the currency will be devalued, making scared financiers sell thereby the currency actually dropping.

    b) low interest rates so that there is no incentive for foreign cash to be parked in banks earning bugger all interest.

    c) run budget deficits that are funded by currency printing

    d) enter the foreign exchange markets and with freshly printed currency sell to those looking to buy Venezuelan currency ie, no more buyers of the Venezuelan currency, only sellers (primarily the government)
     
  8. long88

    long88 Member

    Joined:
    Jun 19, 2012
    Messages:
    755
    Likes Received:
    12
    Trophy Points:
    18
    Location:
    Melbourne
    with the indonesian goverment case, when i am still young.

    things just happen overnight, from usd$1 to rp 5000 to usd$1 to rp 10000

    the people holding usd are clear winner, and if you have debt in usd, you are bankrupt overnight (a lot of friends and family become victim)

    food price started to creep up slowly. and stuff are advertised in usd, especially imported stuff.

    interest rate stays really high though, around 30% (still remember my saving calculations). and panic everywhere not to hold rp.

    eventually people now get used to the new rate. and life goes on until today.
     
  9. MacAg

    MacAg Member

    Joined:
    Aug 4, 2011
    Messages:
    91
    Likes Received:
    0
    Trophy Points:
    6
    Location:
    Australia
    New Zealand devalued the NZD by 20% in 1984, this was after a wage, rent and price freeze of 2 years. All I remember is dad swearing a lot about it when I was a teenager. Oh, and not getting any pocket money :/

    http://en.wikipedia.org/wiki/1984_New_Zealand_constitutional_crisis

    Venezuela may be the first in a long line of upcoming devaluations. Who's next?
     
  10. C.H.

    C.H. Active Member Silver Stacker

    Joined:
    Nov 18, 2012
    Messages:
    468
    Likes Received:
    85
    Trophy Points:
    28
    Location:
    Gosford NSW
    1998 Russia has defaulted on Government bonds. Within a month exchange rate dropped four times.
    If you had USD nominated debts - you're screwed. Import becomes extremely expensive.
    Many small banks and businesses - fold.
    Gold and silver (bars/coins) weren't really popular/available to hedge.
     
  11. Greenman

    Greenman Member Silver Stacker

    Joined:
    Dec 6, 2012
    Messages:
    550
    Likes Received:
    8
    Trophy Points:
    18
    Location:
    Australia
    What would happen to the average mortgage?
     
  12. long88

    long88 Member

    Joined:
    Jun 19, 2012
    Messages:
    755
    Likes Received:
    12
    Trophy Points:
    18
    Location:
    Melbourne
    if your debt is hold in local currency, you just wait for rampant inflation to make the debt look really small. you either paid it off by selling half of your inventory, keep half (house prices double every ten years) or use your outside usd income to pay it off.

    i am waiting for both of this happen, i could be dreaming but history have provided some guidance of what is about to happen
     
  13. browski

    browski Member

    Joined:
    Jun 23, 2012
    Messages:
    141
    Likes Received:
    0
    Trophy Points:
    16
    Location:
    Melbourne
    To mitigate their losses, the banks will counter rampant inflation with a rampant increasing of their interest rates.
     
  14. Matthew 26:14

    Matthew 26:14 New Member

    Joined:
    Sep 3, 2010
    Messages:
    3,305
    Likes Received:
    1
    Trophy Points:
    0
    Location:
    Victoria
    Rampant inflation = rampant interest rates.

    Interest rates from 1982 to 1989 ranged between 12% and 16%.... how many could keep the mortgage today paying those kind of rates?
     
  15. Willow

    Willow New Member

    Joined:
    Nov 28, 2010
    Messages:
    474
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Sydney
    fixed interest rate loans if you have loans in my view.
     
  16. long88

    long88 Member

    Joined:
    Jun 19, 2012
    Messages:
    755
    Likes Received:
    12
    Trophy Points:
    18
    Location:
    Melbourne

    as what willow said, fixed rate... 2%-3% in us currently, if you can get one.
     

Share This Page