AUG 30 VENEZUELA REMOVES FIVE ZEROS FROM CURRENCY

AUG 30  VENEZUELA REMOVES FIVE ZEROS FROM CURRENCY

Last week, Venezuelan finance minister Nelson Merentes made a most curious announcement. From his office in Caracas, he proclaimed the solution to the nation's crippling economic crisis. Raising petroleum exports? Nope. Another international bailout loan? Wrong again. It seems there is a more simple answer. The Venezuelan government is removing five zeros from the Bolivar. A newly minted 'Sovereign Bolivar' is being rolled out. Best of all? They have new colors!

While this sounds like a nice idea, Johns Hopkins economic prof Steve Hawke calls it a cosmetic solution: "It means nothing unless you change economic policy." He explains the only accomplishment of moving a decimal point in your money is avoiding the dreaded 'Wheelbarrow Problem." This refers to the post-war Weimar Republic. Potatoes cost a billion marks, and Germans needed wheelbarrows to carry that many bills. Anyhow, hyper-inflation is a serious condition that Venezuela cannot solve by putting mascara on a pig.

Sadly, Venezuela's currency change is hardly a new concept. In fact, slashing five zeros isn't even a record. In 2009, beleaguered Zimbabwe introduced the Fourth Dollar, thus removing twelve zeros from their currency. In fact, most developing nations have, at some time, shifted decimals points to deal with runaway inflation. It's seen as a way to simplify matters for people. Recently, Colombia just replaced three zeros with the word 'mil,' on their currency notes as people were already verbally omitting the word thousand.

Most experts worldwide are viewing the move in Venezuela as an act of desperation for President Nicolas Maduro. Let's face it: He's had a difficult month. Earlier in August, he survived a high-tech assassination attempt. At a military parade in Caracas, an explosive-laden drone flew precariously close to El Presidente. Although El Jefe was unhurt, seven of his soldiers were badly burned and injured. It's a toxic environment in Venezuela. Every day, a protester dies, a hundred people flee and everyone is hungry.

But life goes on, and Venezuelans are adjusting to their new currency notes. While it's easier to spend 20 Bolivar...instead of 200,000 Bolivar...for a cup of coffee, people are always weary of a new money. Having familiar bills and coins is a reassuring part of being a citizen. Take the USA for example. Any attempt at change of our money is met with vigorous public disapproval. Remember the Susan B. Anthony dollar coin? Yet perhaps we can learn from Venezuela. Pennies and nickels are worthless and should be removed from circulation. Let's just move over the decimal one place and make the dime the smallest coin!