Venezuela’s massive currency devaluation is a ‘scam

Steve Hanke, an applied economics professor at Johns Hopkins University, said that in the absence of a dramatic shift in the country’s economic policy, Maduro’s currency devaluation is meaningless. “Linking (the) new bolivar to the petro is a scam … Appearances change, but, in reality, nothing changes. That’s what’s in store for the bolivar: A facelift,” Hanke said via Twitter on Sunday. The regime of Nicolas Maduro, who replaced Hugo Chavez in 2013, opted to keep the official exchange rate overvalued and tightened the government’s control over access to U.S. dollars — meaning that it became harder for Venezuelans to change their bolivars, the national currency, for the greenback. This further increased the number of bolivars available and provoked a decrease in imported goods. Lower imports boosted domestic prices, thus taking inflation to record levels.. More…