Quiz time

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Let’s see what you make of this.

The following is from a right wing (i.e. neoliberal) newspaper in Venezuela called “The Informer.” (It’s in Spanish.)

(Most newspapers worldwide are neoliberal, since most are owned by rich people.)

“Venezuela is so broke that it can’t even print its own money. The Venezuelan Government has an outstanding debt of over $71 million to its own printer.” 

Here’s your quiz question: If a government owes itself money, can’t the government just print the money it is owed?

I mention this in order to draw your attention to a trick that is used to deceive you. When corporate media outlets talk about a country’s “national debt,” they always avoid clarifying whether the “national debt” is in the country’s own currency (which is trivial) or in a foreign currency (which is crucial).

The media outlets do this to make you think the “national debt” in a country’s own currency is a crisis. It isn’t. It can’t be. How can you have a “crisis” if you owe yourself money that you can print?

However, if the corporate media outlets can make you (falsely) think that your nation’s “national debt” (in its own currency) is a “crisis,” then rich people and their puppet politicians can make you submit to poverty, austerity, and inequality. They can make you falsely think that a monetarily sovereign government is the same as a private citizen.

This difference between foreign and domestic currencies does not apply to the USA, since the USA does all its foreign and domestic business in US dollars. However it does apply in every other country, to varying extents. Most nations create their own money out of thin air for domestic use, but they must obtain foreign currencies in order to buy imports.

Euro-zone politicians, of course, gave up their power to create their own currency out of thin air. They gave it to the corrupt bankers. Thus, if they have a trade deficit (like Greece), they must borrow in order to buy imports.

So let’s return to our Venezuela question. If a government’s money-printer is owed money, then can’t the printer just print the money that the printer is owed?

Yes, unless the money-printer is outside the country, and wants to be paid in a foreign currency. And indeed this is the case with Venezuela, whose government can create an infinite amount of bolivares out of thin air, but whose currency notes (the physical bank notes) are printed by a British company called De La Rue.

De La Rue (a private company) prints the currency notes for the U.K. plus 150 other countries, including Venezuela. De La Rue invents the images and designs on the notes, and if the client government likes them, the printing begins. The British firm devises a hundred new banknotes each year for various nations.

(Euro currency notes are printed by a German company called Oberthur Fiduciaire in Munich.)

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(Trivia: Oberthur Fiduciaire in Munich also printed Germany’s banknotes during the Weimar Republic hyperinflation. Today Oberthur Fiduciaire,  and the U.S. Bureau of Printing and Engraving in Washington DC, each print about eight billion bank notes per year.)

De La Rue also prints 15 million passports per year. It also prints various nations’ bonds, bank checks, traveler’s checks, vouchers, tickets, postage stamps, debit cards, credit cards, microchip “smart cards,” plastic payment cards, drivers licenses, and so on. Typically the printed currency notes are delivered to foreign nations’ central banks.

(And here you thought that all money was created by taxes and by banks as loans. Or maybe all money is lent by the Chinese, or by extraterrestrials. Anything to avoid the truth that monetarily sovereign governments create their own domestic spending money out of thin air.)

When the USA decided that Iraq should have a new currency, De La Rue’s plants in Britain, Kenya, Malta, and Sri Lanka printed ninety tons of new Iraqi dinar currency notes, and loaded them onto twenty-seven Boeing 747s, which were flown to the U.S.-controlled “green zone” in Iraq.

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De La Rue is constantly advancing anti-counterfeiting technology, because if you counterfeit currency notes, you are evil. (But if you steal trillions of dollars digitally, then you are worshipped by society, since digital money isn’t “real money,” right? Wrong. Digital money is the only real money. Currency notes merely represent digital money.)

In the De La Rue printing plants, access to sensitive areas is controlled by iris-recognition cameras like those featured in science fiction movies. Most employees only have clearance for their specific work area. Mobile phones are forbidden inside to prevent workers from taking photos or planning heists. The company has printing plants in 30 different countries, and when you apply to work there, the company reviews your bank statements, your mortgage contract, and your previous employment history to make sure you are not living beyond your means, and are therefore not vulnerable to blackmail or temptation.

De La Rue banknotes have many security measures built into them, from an array of watermarks and complicated etchings, to see-through images and markings that only show up under ultraviolet light. Furthermore there are “covert measures” known only to a client nation’s central bank. The battle against counterfeiters goes on constantly (as does the massive theft of digital money by bankers, rich people, and their puppet politicians.)

Of course, currency notes are increasingly disappearing as the world goes increasingly cashless, so that debt-slaves cannot hide any money from their slave owners. Indeed, in December 2015, De La Rue fired 300 employees because the company is phasing out the printing of banknotes to focus on security products, and on identity products such as passports.

For example, De La Rue is working on a means to store passports in mobile phones, so that debt-slaves can be tracked throughout the world. Australia is doing the same. Soon you will have to give your fingerprints if you want to visit Europe. It’s all about controlling the masses, and maintaining the gap between the rich and the rest.

Getting back to Venezuela, because of high inflation, President Nicolás Maduro’s administration ordered many new bank notes from De La Rue over the latter half of 2015. How many bills? According to the Wall Street Journal (which may be lying) President Nicolás Maduro’s administration ordered five billion (billion????) new bank notes over the latter half of 2015, and has ordered ten billion (???) more from the De La Rue company. That sounds like nonsense, since it would mean 485 new currency notes for every man, woman, and child in Venezuela. This would make Venezuela’s inflation rate of 68% (already the world’s highest) even worse.

Anyway the De La Rue company says that Venezuela’s government owes it $262,647,997.00 U.S. dollars in fees for printing money and passports, among other goods. De La Rue Director Ruth Euling sent a letter to José Khan, the head of Venezuela’s central bank, demanding USD $71.421.039 immediately.

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Maduro’s administration may soon switch from De La Rue to some competitor such as the Canadian Bank Note Company in Ottawa, or the Oberthur Fiduciaire Company in Paris, or Giesecke & Devrient in Munich. (These are all private companies, and they all print passports, postage stamps, etc.).

TAKEAWAY POINT

Whenever an article in the corporate media outlets says, “Such-and-such country is in debt,” you must ask, “Is this debt in the country’s own currency, or in a foreign currency?”

Most articles fail to clarify this, and are therefore meaningless.

If a government’s “debt” is in its own currency, then there is no debt crisis, since the government can always create more of its own money.

But if a government’s debt is in a foreign currency, then there can be trouble.

Here’s an example of bullshit from CNN Money:

“Venezuela owes $11 billion in debt payment this year. Some experts see Venezuela defaulting in October, when the country must pay $5 billion.”

Oh? Pay $5 billion to itself, or to foreigners in foreign currencies? Without clarification, this sentence is meaningless. Its purpose is to make you falsely think that sovereign governments are just like private citizens. And when you believe that lie, you will believe all the lies of neoliberalism.

Here’s another example:

Hugo Chávez died having completely depleted the coffers of the Venezuelan treasury.

Is that in bolivares, or in some foreign currency? The article doesn’t say. (They almost never do.) If it’s in bolivares, then the government has no “coffers.”

Hugo Chávez wasted the country’s last reserves in a populist orgy of expenditures such as the world has never seen. For instance, in a country of 30 million residents, 2 million households received free refrigerators from the government, while hundreds of thousands received other free electrical appliances prior to the October 2012 elections.

Didn’t Hugo Chávez understand that governments must only give handouts to the rich?

By the time Nicolás Maduro was declared the winner, Venezuela was almost bankrupt.

More bullshit. How can a country be “bankrupt” when its government can create money out of thin air? Or perhaps the article means bankrupt in foreign currencies. But that’s the thing. The article doesn’t say. (They almost never do.)

Incidentally the price of oil continues to rise. If it keeps rising, then President Maduro will survive.

ADDENDUM

What’s causing Venezuela’s inflation? There are two main factors.

Factor 1: Shortages in consumer goods cause prices to rise. The shortages are caused by the fall in oil prices, plus the hoarding of consumer goods by rich people in Venezuela. Venezuela imports most of its consumer goods, and it pays fort them in dollars, which Venezuela gets by selling oil. This makes Venezuela very vulnerable to the oil market. Somewhere between 92 and 94% of export income in Venezuela comes from oil. The government has tried to build “endogenous development” (i.e. local manufacturing, and self-sufficient agriculture), but these have had little success.  Why would anyone want to go out to work in the fields and sweat over produce that could fail with bad weather, or work in a factory when there is a sure income from oil?

Factor 2: Currency speculation. Venezuela has imposed currency controls to prevent or limit capital flight from the country. This inevitably creates black markets in currency exchange, which subvert the government controls. Currency manipulation is lucrative, and it is a weapon of choice for the United States (and its allies in the local oligarchies) when directed at governments targeted for destruction.

The flood of money has led some sectors of the economy, such as real estate and car sales, to effectively price their goods in U.S. dollars, though they do so on the sly because dealing in foreign currency is illegal.

As shortages cause prices to rise, people cling to their dollars as a hedge against inflation.

What is Maduro doing about it?

[1] In Jan 2015 he took control of the central bank, thereby enraging the oligarchs.

[2] The government is beginning to give special cards to the lower classes like the EBT cards used by Food Stamp recipients in the USA. This will help to control the black market in currency trading. It will also reduce the tendency of people to buy large quantities of foodstuffs and transporting them to Colombia for sale.

[3] He is continuing to seek economic help from China is exchange for giving cheap oil to China.

[4] He is continuing to push for national self-sufficiency in consumer goods.

[5] He has removed the price controls, such that Venezuela’s currency is now free to “float.”

[6] He is moving toward unifying the various exchange rate programs in Venezuela.

Venezuela is now in a race. The oligarchs want to get rid of Maduro before he can stabilize the economy, and before oil prices can fully recover. If they fail, they will have to ask the USA to blockade Venezuela, using some bullshit excuse such as “human rights violations,” or Venezuela being a “state sponsor of terrorism.”

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And now in the comments section below, we’ll hear from the monkey…

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10 Responses to Quiz time

  1. Narco-Capitalist says:

    ¡PANA! ¡TODO ESTO ES CULPA DEL IMPERIO YANQUI!-said some bird while I was reading this post

    Like

    • Gracias por visitar, pero que estás tratando de decir?

      Like

      • Narco-Capitalist says:

        You don’t remember Nicolas Maduro said that Hugo Chavez had turned into a little bird and had paid him a visit? BTW its “pero que estás tratando de decir” not “pero lo que estás tratando de decir”.

        Like

        • Creo que tienes razón.

          A propósito, Nicolás Maduro nunca dijo que el “habló” con un pájaro. Un mes después de Chávez murió, Maduro dijo que en Barinasun (la ciudad natal de Chávez), que un pájaro entró en una capilla donde Maduro estaba orando, y Maduro sintió el “espíritu” de Chávez.

          Los neoliberales tenían un montón de diversión con eso.

          De todos modos, yo todavía no entiendo su punto. ¿Crees que Maduro es insano?

          Like

          • Narco-Capitalist says:

            Simplemente un poco de humor (I tried to at least).

            Like

          • Narco-Capitalist says:

            Good Spanish BTW, I actually think you write better in Spanish than I do.

            Like

            • I understand.

              I speak fluent Spanish, because my neighborhood is full of Mexicans, and I made an effort to learn it. I spent two years with an English-Spanish dictionary near me at all times. Now when I meet Hispanics on the street, and they ask me why I speak Spanish so well, they never believe me when I tell them I learned Spanish on the street. They think I must have been a Mormon missionary or something.

              I only speak Mexican and Guatemalan Spanish. Other countries have a different kind of Spanish, and I have great difficulty understanding it. I consider Mexican Spanish to be the superior variety, because it is more logical and more clearly pronounced than is Spanish in other nations. I also consider U.S. English to be a superior variety of English. Just my opinion.

              Sometimes I marvel at how well I speak Spanish, only to get another lesson in humility. For example, I was once talking to a Mexican national, and we came upon a guy who said he was from Cuba. If the Mexican national had not translated for me, I could not have understood what the Cuban said.

              Young children easily become bilingual, because their brains are still forming, especially between age zero and eight. Adults have much more difficulty learning foreign languages, because adult brains are already “wired.” And adults (unlike children) will lose a foreign language if they don’t use it every day. I used to be able to speak Russian and Hindi, because I lived in Russia and India. Now it’s all gone. Spanish I picked up later.

              These days I write in English, but I speak Spanish much more often than I speak English, because of the local demographics.

              One time I was walking in a Mexican coastal town and I met a couple (male and female). I don’t remember why I started talking to them, but I learned that they were from France, and that they spoke no English. Since I do not speak French, I was not able to communicate with them. As I prepared to keep walking, I asked if they spoke Spanish. They said yes. It was like a magic key that opened a lock. Even though Spanish was not my first language, it felt like we were all talking in English. The couple had come to that Mexican coastal town to see whales, which were breeding at that time of year.

              One other thing…in “Star Trek” lore, humans and alien species all talk to each other in English, because everyone has a “universal translator.” I am inclined to call that impossible. Faster-then-light travel? Maybe. “Universal translators”? No.

              Like

  2. Narco-Capitalist says:

    I can relate to not understanding other nationalities’ Spanish; I had the same trouble when having a conversation with a couple of Cubans. I personally think its the accent, but I do not know. Also, I think its awesome how you put the effort to learn the language and are now fluent in it. Muy buen trabajo.

    Like

  3. Pingback: Neo-liberal update – The truth about money

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