The whole place is economically dysfunctional. This is what happens when prices are restricted by the government and the totalitarians refuse to let in the light of the market. It’s really that simple fundamentally.
It should be noted also that the Indian government pulled a similar thing a couple of weeks ago and also threw its economy into a spin.
The War on Cash is on.
(From The Washington Post)
The announcement set off panic, as millions of people scrambled to round up their 100-bolivar bills and deposit them in bank accounts ahead of the arbitrary deadline. Everyday life — already disastrously precarious for many — was thrown into complete disarray as everyone from bus drivers to shop owners refused to accept the bills, realizing that there’s no point accumulating banknotes that will be worth nothing by the end of the week.
As a result, Venezuela’s economy, which was already one of the most dysfunctional in the world, virtually stopped altogether this week. The 100-bolivar bill, lest we forget, was only worth about 3 U.S. cents to begin with. Withdrawing it leaves the country relying on the 50-bolivar bill — now worth a penny and a half — as the biggest bill, at least until new 500-bolivar bills come into circulation. That was supposed to happen in the next few days. Surprise, surprise: The 500s are late.