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I am curious what would happen to Venezuela if they default on their loans and run out of foreign currency. I'm on the other side of the world and this doesn't affect me personally. But every day I get dire news reports about their economic situation exacerbated by Maduro. Could they get rid of their foreign currency and just be dollar based? I know El Salvador, Panama, and Ecuador have done this and Zimbabwe no longer has its own currency.
I am curious what would happen to Venezuela if they default on their loans and run out of foreign currency. I'm on the other side of the world and this doesn't affect me personally. But every day I get dire news reports about their economic situation exacerbated by Maduro. Could they get rid of their foreign currency and just be dollar based? I know El Salvador, Panama, and Ecuador have done this and Zimbabwe no longer has its own currency.
Unless there's a big governmental change, they would never do this...it would be like N. Korea deciding the use the dollar. I'm working in Peru and the girl that sits next to me is from Venezuela and she tells me stories about Maduro...the guy sounds certifiably insane. Her family is working to legally emigrate to the USA.
And of course, many wealthy families in Venezuela hated Chavez and they hate Maduro as well. They are bitter over 15 years of Venezuela's wealth being shared with peasants instead of being siphoned directly to them, as had for so long been the case before Chavez changed the deal.
And of course, many wealthy families in Venezuela hated Chavez and they hate Maduro as well. They are bitter over 15 years of Venezuela's wealth being shared with peasants instead of being siphoned directly to them, as had for so long been the case before Chavez changed the deal.
You missed my point that the current government of Venezuela is hostile to having good relations with the USA and is not going to switch to the dollar as their currency.
But the point is what happens when a country runs out of foreign reserves and defaults on bonds. Zimbabwe is an example - it no longer has a currency and people use the South AFrican Rand, Dollars, and Chinese RMB. Venezuela is so mismanaged under Maduro it will probably go this way.
They are bitter over 15 years of Venezuela's wealth being shared with peasants instead of being siphoned directly to them, as had for so long been the case before Chavez changed the deal.
That's right, MB. A collectivist regime change like Venezuela experienced faces many obstacles, but a huge one is always direct opposition from local and foreign oligarchs who will try to undermine everything they do.
You missed my point that the current government of Venezuela is hostile to having good relations with the USA and is not going to switch to the dollar as their currency.
I agree that a Venezuelan switch to using the US dollar is much more than highly unlikely, but the hostility arrow points in quite the other direction. The Venezuelan government for years sent free home heating oil to hundreds of thousands of low-income Americans in cold weather states. In return, the US government funded efforts to destabilize the country, including the encouragement of armed coups against Venezuela's democratically elected leaders.
But the point is what happens when a country runs out of foreign reserves and defaults on bonds. Zimbabwe is an example - it no longer has a currency and people use the South AFrican Rand, Dollars, and Chinese RMB.
The Zimbabwe dollar became worthless because years of civil war, capital destruction, and the emigration of nearly everyone who could leave left its economy unable to produce a meaningful GDP. The easy availability of exchange into the currencies of nearby countries not suffering from such conditions also contributed. Today in Zimbabwe, it's Spend it if you got it. We don't really care what it is.
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Originally Posted by dmlandis
Venezuela is so mismanaged under Maduro it will probably go this way.
I would tend to doubt that you actually know very much at all about conditions in Venezuela. The US of course would ike to make progress on normalization with Cuba. We have already been told that this will not happen unless there is also a normalization with Venezuela. We'll see how that works out.
That's right, MB. A collectivist regime change like Venezuela experienced faces many obstacles, but a huge one is always direct opposition from local and foreign oligarchs who will try to undermine everything they do.
Yes, unlike here, there actually are (brutal and murderous) oligarchs in Venezuela. They ran the show there for decades (to the extreme detriment of the Venezuelan people) until Hugo Chavez was able to push them out. Chavez then survived a US-supported coup attempt and thereafter repeatedly won democratic elections (certified by international observers) to remain in power until his death two years ago. It remains to be seen whether Nicolas Maduro can carry the load that Chavez did. There are certainly no guarantees of that.
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question on venezuela economy
