News of the Bizarre: Venezuelan Central Bank Sues Website for Causing Inflation

Is a US website causing the collapse of the Venezuelan economy? Of course not, that’s impossible. But, that’s what Venezuela’s Central Bank seems to want to prove as it pursues legal action to prove as it pursues legal action to shutdown dolartoday.com. The U.S. District Court of Delaware, where the complaint was filed, dismissed the initial claim last week. But Venezuela will file an amended complaint.

Venezuela is a terrible mess and is obviously looking for targets to blame. According to the Venezuelan central bank, the dolartoday.com website has pushed up the country’s triple-digit inflation lying about exchange-rate data to make the situation seem even worse than it is. Only a central bank could blame a website for monetary and price inflation that would not exist without central bank printing presses.

According to the ridiculous lawsuit, “Defendants are deliberately misrepresenting and effectively manufacturing a market — a phony, distorted market for the exchange of bolivares into dollars and vice-versa, with the aim of lining their pockets with ill-gotten gains.”

Of course, Dolartoday is innocent. The website merely prints the exchange rate being offered in Cucuta, Colombia. But, even if it were publishing some wildly egregious exchange rate, even higher than it currently is, how could it destroy a country’s entire economy? Only a central bank can do that!

The suit alleges the defendants, “conspired to use a form of cyber-terrorism to wreak, and in fact they have wreaked, economic and reputational harm on the Central Bank by impeding its ability to manage the Republic’s economy and foreign exchange system.”

Central bankers never speak the truth when a lie will do. Many countries under currency duress have an official price for their currencies and a street price but Venezuela is one of the worst in this regard.

Seven years ago the price on the street for a dollar was six bolivars and everybody in Venezuela was desperate for dollars. Banks would only give you two. And then two years ago or so, the price for a dollar was FIFTY bolivars. Nowadays, there are predictions that inflation could hit over 700 percent.

Dolartoday publishes the street price of a bolivar but that can’t create inflation. Only the central bank can create inflation by printing bolivars.

And why would the central bank print too much money? Because the government is basically broke. They need to print money to pay the bills and extra for the “pocket” as well. The last president of Venezuela was Hugo Chavez. And he wasn’t a rich man when he came into office. But now his daughter is said to be worth over a billion dollars. Communism is great for those in power.

Chavez was a crook but a brilliant politician. He figured out how to exploit Venezuela’s social divide for himself and his allies. He didn’t really do that much for poor people in the country but he was a great rhetorician. He sounded like he cared a lot.

It wasn’t really hard for Chavez. Venezuela more than most Latin American countries is divided between the very rich and very poor. Drive in from the airport and you’ll see the shanty towns of the poor built on steep hills. Many of the houses don’t even have roofs, let alone running water. Many of the rich live in Caracas, in large houses surrounded by barbed wire with watch towers containing guns.

It was Chavez’s idea that he could build a political base from poor people and he succeeded wildly. The poor people in Venezuela had been ignored and ground down for so long that all Chavez had to do was build some schools and health clinics with stolen money and he was venerated like a God.

Most Latin America countries are basically run by a handful of families while the vast majority of people live meal-to-meal. If they can find one. The US likes this arrangement because when the CIA wants something done (usually an act of theft or terrorism), there are only a few people necessary to talk to. It’s the US that is really responsible for the desperate poverty in Latin America because they provide money and guns to the few at the expense of the many. Latin American countries are deeply authoritarian. Much more efficient, you see.

In Venezuela, Chavez turned this system to his advantage. He polarized society even more than it already was. Chavez continued his polarizing ways right up until the CIA gave him cancer. He apparently died physically months before his public persona was finally killed off.

Nowadays the president is Nicolas Madura. He is like Chavez but without the popularity. Which means more than Chavez, he stays in power via the barrel of the gun… and more than ever those guns are rolling out throughout the country.

Business in Venezuela is nearly nonexistent and few countries will do business with it. Madura keeps putting retailers in jail for trying to raise prices to a break-even level and as a result, the government basically sets the prices for the country and the central bank sets the prices for the government.

Everybody lies about the inflation.

Dolartoday was started by three Venezuelan exiles and has gained a huge following by publishing the accurate bolivar-dollar exchange rate on the “street.” The Venezuelan government started trying to block the website in 2013. Madura himself has called the owners bandits and economic terrorists. He’d put them in jail if he could get his hands on them. Much like Argentine economists were charged for publishing inflation data that did not jive with the government’s propaganda a few years ago.

Central bankers and politicians always blame everyone but the true culprit, themselves, when hyperinflation hits. This happened notably in Zimbabwe.

Zimbabwe’s Central Bank Chief Money Printer, Gideon Gono, with inflation hitting billions of percent per year last decade, rejected what he called “traditional” economics and contended that printing money is actually a form of “sanctions busting.”

During massive hyperinflation caused by obscene money printing, he stated, “I must reiterate that I am going to print and print and sign the money until sanctions are removed and there is balance-of-payments support. It’s a commitment I am ready to be fired for because we need money for infrastructural development.”

Even in the Weimar Republic, one of the most notorious hyperinflations of the 20th century, central bankers and economists insisted throughout the episode that there just wasn’t enough money in circulation.

Weimar Hyperinflation Chart with Quotes

Central banks serve no valid purpose. Well, no valid purpose for the people of a country. They serve the will of the political and financial elites who are enriched by their money printing while the populace is impoverished.

We aren’t at the point yet where there is hyperinflation in places like Europe and the US, but the process is still the same. A process that John Maynard Keynes, the grandfather of central banking and economics today so rightly said, “By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”

Thanks to the internet that number has likely decreased. It is probably closer to one man in 10,000 now. Soon it will be one man in a thousand. And soon after that, as all fiat currencies collapse, hopefully more will understand what is going on… even though, by then, it will be too late for them to protect themselves.

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Originally Appeared At The Dollar Vigilante

One comment on “News of the Bizarre: Venezuelan Central Bank Sues Website for Causing Inflation
  1. Petunia says:

    Miami is bursting with Venezuelans who got out and overstay their visas. Most were smart enough to convert their Bolivars into Miami condos, many of which sit empty, which is still better than Bolivars. The flight out of South American created the Miami skyline, which still continues. They reported that 6000 condos were expected to hit the market in Miami in the first few months of this year.