Venezuela Devalues Currency By Almost 50%

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
 
SilverSale said:
Those holding their money in gold/silver retain their wealth, the others now have half what they had before...

http://www.silverdoctors.com/venezuela-devalues-bolivar-46/
Click to expand...

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?
 
Did they just print 46% of their money supply and throw it into circulation or merely change the fixed exchange rate.
 
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)
 
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.
 
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.
 
Greenman said:
What would happen to the average mortgage?
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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
 
long88 said:
Greenman said:
What would happen to the average mortgage?
Click to expand...

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
Click to expand...

To mitigate their losses, the banks will counter rampant inflation with a rampant increasing of their interest rates.
 
Greenman said:
What would happen to the average mortgage?
Click to expand...

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?
 
Matthew 26:14 said:
Greenman said:
What would happen to the average mortgage?
Click to expand...

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?
Click to expand...


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