Wednesday, August 29, 2018

Gold in Venezuela

Nicolás Maduro has been talking a lot about gold recently. He announced that part of his economic recovery plan was to get people to save in gold. Well, actually, not gold, but rather a piece of paper from the government saying it is worth gold. In other words, a gold standard. That may or may not be backed by gold at all. You have only Maduro's word for it. But that is, in fact, how he even proposes that businesses play a role in that recovery as an effort to get around ballooning hyperinflation.

This increasingly has a medieval flavor. There are already plenty of stories about the Venezuelan barter economy. The national currency has no value and the government's various efforts to find alternate currencies don't generate any confidence. In such circumstances, it makes sense that people might look to the basic metal that humans have put value into. The point of that, though, is to have the gold in your own possession, not as a promise from the government that has no intention of keeping its promises.


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