Editors Note:  The following news report follows the hyperinflation happening in Venezuela today.  Eggs cost $150 US a dozen and dry Milk $100 a pound!  And the effect on its citizens.  Followed by a report of an enterprising IT guy named Ricardo who learned that Bitcoin however volatile Bitcoin is, was better then Bolivian bolivars.
    Which lead the editor to ask: What if a cryptocurrency was designed from the start with a goal of “stability ” of purchasing power worldwide, regardless of governments crazy money printing policies that destroy economies when they panic like Venezuela?
    The answer is yes! There is such a coin in the making  called “.G” pronounced “DOT G” coming soon.
    First published at GLA.NEWS with permission.

    venezuela_food_pricesBy Daisy Luther

    Now, those who are having difficulty finding food in Venezuela have another problem: being able to afford it.  Food costs in Venezuela have soared so high, they’re practically extraterrestrial. Those who didn’t stock up on emergency food  back before the government there made it illegal are now probably fervently wishing they had.

    Here’s a crash course on hyperinflation.

    Hyperinflation is when prices increase to ridiculous amounts very quickly, and it usually happens when a country’s currency becomes worthless due to economic collapse or deficit spending, after the government prints more money that is backed by nothing. Hyperinflation nearly ruined Zimbabwe after the government unrestrainedly printed money to fight a war.  It reached a staggering 2.2 million percent increase.  The most famous case of hyperinflation occurred in the Weimar Republic of Germany in 1922-1923. In these cases, hyperinflation reached  1,000,000,000,000 to 1.  (source)

    Let me repeat one key point: Hyperinflation occurs due to economic collapse and when the government prints too much worthless money.  Sound familiar? *cough*quantitative easing*cough*

    The food costs in Venezuela have reached hyperinflation levels.

    The IMF has predicted that inflation in Venezuela will reach 720% this year, while other experts set that number at 1200%.  The drop in oil prices is partly to blame, as is the irresponsible spending of a socialist government.

    An article in the LA Times sheds some very personal light on the situation there. A reporter interviewed a woman named Maria, a single mother who works as an accounting assistant for the government.

    Her monthly pay, including a food allowance, is 27,000 bolivars.

    That’s $2,700 a month at the official exchange rate of 10 bolivars to the dollar. But Venezuelans have so little faith in their currency — or the government’s ability to fix the country’s deepening economic crisis — that a dollar can fetch upward of 1,000 bolivars on the black market.  At that rate, Linares earns just $27 a month.

    Maria told the reporter that her family subsists on eggs, cassava, cornmeal, and powdered milk.  She said they hadn’t eaten chicken since December.

    She lines up overnight to get to shop in the government-regulated grocery store, but often, by the time she gets in, they are sold out. Then she has to buy her food on the black market.  The last time she managed to purchase food at one government store was 3 months ago.

    The price of eggs at the store is the equivalent of $45 USD. The price that Maria has to pay to the illegal street vendors is…are you sitting down? $150 per dozen. One hundred fifty dollars. For twelve eggs.

    She pays about $20 per pound for cassava and $75-100 per pound for dry milk. Recently, the price of corn flour rose from 95 cents a pound to $9.50 per pound.

    One source disagrees vehemently with the contents of the LA Times article.

    Telesur disputes the claim that eggs cost $150, stating, “International media outlets are continuing to misreport the economic crisis in Venezuela and the effect of high inflation on the cost of living.”

    But, as always, you have to consider the source. Telesur is an English-speaking news source, created to offer a “Latin-American perspective” on world events. But according to the International Business Times, the “news” you’re getting comes straight from the government party line.

    The new initiative, supported by President Nicolás Maduro’s administration and touting a leftist, social-oriented message, brings the TeleSUR network into the same ranks as Al-Jazeera English, China Central Television, Russia Today and France 24 as a government-funded effort to produce English-language news from non-English-speaking countries.

    Again…sound familiar?  And I’m not just talking about that scene in The Interview when the dorky news guy discovers that even though it appears that there is food in the grocery stores, it’s all fake food made of plaster.

    Oh…they’re also out of beer.

    If running out of food and toilet paper wasn’t bad enough, the country is also just about out of beer. According to CEO Lorenzo Mendoza, the country’s largest brewery and private food company, Empresas Polar, is no longer allowed to import barley to make beer due to President Maduro’s policy that closed the door on imports.

    Speaking of Maduro, he seems to come up with more bizarre accusations every day about the reason the country is in so much trouble. (SPOILER: In none of his theories is the fault his own, nor does any of the blame get cast upon Socialist policies.)  Here’s the latest:

    But in a bizarre twist, President Nicolás Maduro is trying to pin the crisis on Polar. Government TV spots claim — without evidence — that the company is deliberately scaling back food production and hiding inventories to sabotage the economy.

    In a February speech, Maduro called Polar’s Mendoza “a thief and a traitor,” saying, “If you can’t run your company, turn it over to the people and they will run it.”

    Ah, yes, even now, Maduro believes in Socialism over private enterprise.

    Do you really think the US is safe from this kind of economic disaster?

    There are certainly quite a few similarities between the route Venezuela took to get to this point and the road we’re on right now. It isn’t far-fetched to see how easily it could happen to us. After all, as recently as 1978, Venezuela was one of the 20 wealthiest countries on the planet.  Most likely, they didn’t see this coming either. Most likely, they felt complacent and smug in their abundance, just like we do here in America.
    There’s no time to waste as our government recklessly prints money and becomes increasingly restrictive of our ability to be self-sufficient. What you see in the news from Venezuela could be happening in our streets here in America. You’ll want to be ready.

    Bitcoin: A Refuge from a Collapsing Bolivar

    On any given month, Ricardo saves about half his income, never worrying about the triple-digit inflation all around him. He can buy anything he wants online from anywhere in the world, without a single CADIVI carpeta or worry about the government imposed “control de cambio” or “corralito”. He has zero government contacts, he doesn’t work for a foreign company, he isn’t paid in dollars. In fact, he works as a computer IT specialist at a midsize company. Yet he enjoys a level of economic freedom that is exceptional in Venezuela.

    Why? Because he trades and mines Bitcoins.

    In case you’ve been living under a rock, Bitcoin is a rather new digital currency free from Central Banks and any government control entity. By design, Bitcoin’s supply growth is predictable, capped at 21 Million, and it cannot be manipulated by any central agency. All you need to trade Bitcoin is your brain, fingertips, a stable source of energy, a PC, and a market created by other individuals.

    In Venezuela, where the central bank has irresponsibly financed public spending by simply turning on the printing press and unleashing a vicious cycle of inflation, Bitcoin could be a blessing. It’ precisely the fact that the country flirts with hyperinflation that makes it so well suited for this novel currency. Venezuelans need alternatives to shield themselves from the damage inflicted by a reckless and irresponsible Central Bank. People deserve a choice of currencies and this new tool may provide that freedom of choice.

    All that was missing, until recently, was a market. Not anymore.

    I had the chance to talk to Ricardo on the phone not too long ago. He’s a 20-something year old, skinny, soft-spoken computer geek I’ve known for years.

    The first thing I wanted to ask him is how exactly you go about turning bolivars nobody wants into Bitcoins everyone seems to want.

    “There are brokers where you deposit your Bolivares and you get Bitcoins in your virtual wallet,” he tells me, “I do it through surbitcoin.com. They act as a middleman and trustee for the transaction to happen, and for that they charge a fee.

    But doesn’t he worry that the government will come in and crack down on the trade?

    He says it doesn’t work like that. “My bitcoins are 100% in my control, there are no banks or regulated entities to oversee or ‘take over’. They could try to clamp down on the exchanges from Bs to Bitcoin, but as long as people are willing to trade, it will happen. Even so it would be nearly impossible to stop us from mining, they would have to take down the internet!

    I’m starting to see the appeal of this lifestyle. “But wait,” I wonder, “once you’re sitting on a hoard of bitcoins, what can you do with them?”

    “I buy all the things that you can’t buy in Venezuela, and get them shipped here,” he says. I also save as I’m certain that even though Bitcoin is volatile, it’s not as volatile as bolivars. I’ve even paid back Bolivar denominated debt in Bitcoins. it was a very good business decision as the Bolivar has been losing value.”

    Then came the obvious question: why invest time and money into this instead of the good, old-fashioned currency swap, from bolivars to dollars?

    “It’s riskier. I’d have to pay a bunch of fees for wire transfers and deal with banks. Cash is too risky. But the most important reason is that it is very easy to mine, which is essentially converting Electricity to Bitcoins via software and hardware. Bear in mind that I pay the electricity at Corpoelec rates, with bolivars.”

    He surely raised some good points, being less volatile and less riskier than buying dollars in the black market the most valid of them. But it sounds like you have to be a real techie in order to do all this, right?

    “I think anyone can trade bitcoins if they already know how to purchase things online. I don’t think just anyone could mine. I bought a mining machine for the equivalent of $500 in bitcoins, installed the free software that exists for this, connected it to the internet and I simply keep it running 24/7, as long as there aren’t any blackouts, of course.”

    And his return seems worth the trouble: Ricardo mines about 80 dollars each month, whilst paying about 200 bolivars for the electricity it takes to do so. “After 6 months I am now achieving a “theoretical exchange rate” of 2.5 Bs/$. It varies greatly since the USD to Bitcoin changes. My electric bill, on the other hand, doesn’t.”

    And that’s if you don’t have the brilliant idea of purchasing a power generator that runs on essentially free gasoline, but in Ricardo’s eyes, this is sort of a Plan B: “I envision that this will happen if and when the government tries to clamp down on us OR if they keep destroying our electricity infrastructure.”

    Venezuelans like Ricardo are the early adopters of a technology that is bound to be a widely used. Look at what is happening in Argentina. In a recent ranking of countries best positioned for Bitcoin adoption, Argentina is first on the list and Venezuela second.

    It’s no coincidence that that in all these cases, the Central Banks had enacted foreign exchange controls. In Venezuela and Argentina a parallel exchange system has sprung up to get around strict forex controls while the government uses the central bank to finance deficit spending. The results are predictable: a currency’s value is a function of trust in the institution that issues it.

    Ricardo’s way of conducting business is one of the two ways of doing things: there’s mining, and there’s exchanging your currency per  Digital Markets (surbitcoin.com – registration required).

    Bitcoins can be exchanged into most currencies, check out all exchanges around the world.

    As I write this, you can buy a Bitcoin for BsF 364,000. The value is driven (my hypothesis) by the exchange between USD and Bs in the black market. Once there is a free market of products and services using Bitcoin the true relationship between USD and Bolivares may in fact be reestablished.

    Of course, the dollar will likely remain the first choice for holding hard currency, and that may be true for the few who have access. But here’s the key: Bitcoin’s advantage is the lack of the need for a bank. In other words, Venezuelans who don’t have the means to move outside of its borders to open bank accounts, can trade with a currency that is accepted in any country and is quite literally a click away.

    If this is so great, then why isn’t everybody doing it? The real hurdle is knowledge. The ability to trade in Bitcoin comes with the ability to use the Internet effectively. But given the rise of millennials, especially given Venezuelan demographics, this hurdle is less of a problem by the day.

    We are at the stage, where most of the active people in the market are those who Mine, who in turn are faced with two options:sell their Bitcoins or just hold them hoping for it to go up in value. As more and more people turn to it, the more you will see it shift towards trading goods and services as well. Hopefully in doing so, we can move closer to reestablishing economic freedom for Venezuelans.

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