Fixing Venezuela's economy #1: Dollarization

The Devil's Excrement, via VCrisis.com ^ | Dec. 1, 2004 | Miguel Octavio

[Kitten Festival]

01.12.04 | Things have been hectic, I want to write about the muzzle bill (also known as the media Bill), I want to write about the mortgage bill, a tribute to financial stupidity and I want to write about the new bond, but there has been so much going on that I have not had time to do any of it. Moreover, last weekend I wrote my list of “fixes” for the Venezuelan economy but have not had time to talk about them and I don’t want to delay staring that thread, so here is the first installment.

First I will clarify: I am not an economist nor trained in economics, but the last twelve years of my professional life have been in the finance sector where I have become an amateur practitioner of a field that I was always interested in. I will start with dollarization; a measure that I believe will have a wide and very positive impact on the Venezuelan economy, benefiting everyone. But let’s start at the beginning.

I am not advocating for a currency board by which a central authority will decide how many bolivars to have outstanding based on how many dollars are in the Central Bank. I am advocating doing away with the Bolívar and making the US dollar the official currency of circulation in Venezuela.

First of all, I choose the US dollar for practical reasons. Venezuela imports more from the US than any other country and exports to that country more than to any other country.

[Kitten Festival]

A fantastic essay on the only known way to clean up Venezuela economically following the Chavez mess. Read it for the excellent, articulate reasons, they are written in language a baby could understand.