Why Trading Venezuelan Bolivar For U.S. Dollars Is Dangerous
RACHEL MARTIN, HOST:
Every day, Venezuela's currency, the bolivar, loses value, so people there are trying to trade it for U.S. dollars. Turns out, that's a really dangerous thing to do. Here's Sarah Gonzalez with our Planet Money podcast.
SARAH GONZALEZ, BYLINE: Think of Venezuela's currency as an unwrapped chocolate bar. The minute it touches your hand, it's melting. If you have 12 bolivar bills today, it's worth six in a couple of weeks, then three, then, basically, nothing. Money has become so worthless that you need a ton of it to buy the simplest things, like chocolate.
MILA: If you want a good chocolate, like a - I don't know - Milky Way or something like that, you need a backpack of bills.
GONZALEZ: You need millions. This is Mila (ph). We're not using her last name for reasons that will become clear. What Venezuela's going through right now is sometimes called the wheelbarrow problem, where you literally have to haul your money around in garbage bags or wheelbarrows to buy the tiniest things. Mila says their money is losing value so quickly that Venezuelans are trying to get rid of it the minute it touches their hand, trade it in for anything at all - toilet paper, chicken.
MILA: OK. I have sugar. Who needs sugar?
GONZALEZ: Anything holds its value better than the melting bolivar, so Mila says you spend your whole paycheck on sacks of sugar. And those sacks of sugar are now your savings account. And this young guy in Mexico City thought this was crazy - Ruben Galindo (ph). He was like, why save your money in sacks of sugar when you can save in U.S. dollars?
RUBEN GALINDO: Why should you be tied to any specific type of money if it's not working for you?
GONZALEZ: His website, AirTM, allows everyone in the world to trade currencies. He hires 25 people in Venezuela, including Mila. And then they all get an email.
GALINDO: This is the Ministry of Finance. What you're doing, we don't like it. And you guys should stop because if not, we're going to put you in jail for 10 to 15 years.
GONZALEZ: Venezuela's president, Nicolas Maduro, doesn't want too many people to have U.S. dollars. And economists say this is actually a reasonable fear. If too many people have dollars, they might refuse to use the local money. This happened in Zimbabwe in 2008, and the government was forced to make the U.S. dollar its official currency.
And something really important happens when you adopt another country's currency. You lose your ability to print money when you need to pay your bills. Venezuela's government says they've arrested more than 200 people for exchanging money on the black market, and they are looking for Mila. This is why we're not using her last name.
MILA: The charge is fake exchange rate of the dollar - terrorism financiation (ph).
MILA: (Laughter) Yes.
GONZALEZ: Mila and all the AirTM employees fled the country. Venezuela's government is trying to fix its problem by replacing the current money with new money. The plan is to take five zeros off the bills, so if you have 500,000 bolivares, it would just be five. Economists say this won't help with inflation, but it will make money easy to carry again. Sarah Gonzalez, NPR News, New York.
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