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What's Really Behind Venezuela's Vanishing Banknotes

Venezuela is not running out of banknotes due to criminal or speculative hoarding.

Where did the banknotes fly away?
Where did the banknotes fly away?
Farid Kahhat


LIMA — One of the most lucrative businesses in this part of the world is to buy government-subsidized goods from Venezuela and sell them at market prices in Colombia. This includes buying U.S. dollars inside Venezuela to trade outside the country.

The same used to happen in Peru. Under President Juan Velasco in the 1970s, leaving Peru with undeclared dollars was an offense. During the first presidency of Alan García, from 1985 to 1990, government-subsidized goods were bought in Peru and then sold at market prices in Ecuador.

When the Venezuelan government accuses criminal gangs of speculative dealings, it has a point. But many economists suggest that the roots of such speculation lie in state policies that alter economic incentives and thus make criminal transactions more profitable than any legal activity.

The Venezuelan government's allegations that criminal gangs are hoarding 100-bolívar banknotes abroad is unusual. The International Monetary Fund estimates inflation in Venezuela has reached 700% this year. In these conditions, it's logical to acquire U.S. dollars. After all, the Venezuelan currency is losing value everyday. Venezuelan banknotes will soon become just bits of paper with printed drawings.

100 bolívars equal two U.S. cents — Photo: JF Ferrer Paris

If you intend to buy U.S. dollars with your 100-bolívar bill, there's no sense taking it abroad where you will be paid barely anything for it. At current market rates, 100 bolívars equal two U.S. cents. Inside Venezuela, you could get considerably more for your money. If these "mafia gangs' want profit at the end of the day, there's no sense in taking Venezuelan banknotes out of the country!

The accusation that their goal is political destabilization doesn't make sense either. Removing cash from circulation in a country suffering severe inflation — an excess of circulating cash — could actually help reduce prices. But it's true that the situation changes between a very high inflation rate and hyper-inflation. Economists Steve H. Hanke and Charles Bushnell of Johns Hopkins University recently concluded that Venezuela is the seventh Latin American economy to experience hyperinflation.

In that context, the flight of a local currency that's losing value by the hour does broadly explain its scarcity. It's not a case of bills disappearing but the need for a massive, and growing, quantity of banknotes. This has precedent. In 1990, Peruvian novelist and presidential candidate Mario Vargas Llosa removed campaign billboards that promised to print fewer banknotes to tackle hyperinflation.

Another indication that Venezuela's problem is one of economic policy and not mafia gangs is that no other member state of ALBA — the socialist, Venezuela-led trading bloc — is suffering similar attacks by speculators. If this is a case of international sabotage to punish Venezuela for pursuing independent economic policies that harm the interests of foreign capital and local elites, then why is the same not happening in Bolivia and Ecuador?

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How Brazil's Evangelical Surge Threatens Survival Of Native Afro-Brazilian Faith

Followers of the Afro-Brazilian Umbanda religion in four traditional communities in the country’s northeast are resisting pressure to convert to evangelical Christianity.

image of Abel José, an Umbanda priest

Abel José, an Umbanda priest

Agencia Publica
Géssica Amorim

Among a host of images of saints and Afro-Brazilian divinities known as orixás, Abel José, 42, an Umbanda priest, lights some candles, picks up his protective beads and adjusts the straw hat that sits atop his head. He is preparing to treat four people from neighboring villages who have come to his house in search of spiritual help and treatment for health ailments.

The meeting takes place discreetly, in a small room that has been built in the back of the garage of his house. Abel lives in the quilombo of Sítio Bredos, home to 135 families. The community, located in the municipality of Betânia of Brazil’s northeastern state of Pernambuco, is one of the municipality’s four remaining communities that have been certified as quilombos, the word used to refer to communities formed in the colonial era by enslaved Africans and/or their descendents.

In these villages there are almost no residents who still follow traditional Afro-Brazilian religions. Abel, Seu Joaquim Firmo and Dona Maura Maria da Silva are the sole remaining followers of Umbanda in the communities in which they live. A wave of evangelical missionary activity has taken hold of Betânia’s quilombos ever since the first evangelical church belonging to the Assembleia de Deus group was built in the quilombo of Bredos around 20 years ago. Since then, other evangelical, pentecostal, and neo-pentecostal churches and congregations have established themselves in the area. Today there are now nine temples spread among the four communities, home to roughly 900 families.

The temples belong to the Assembleia de Deus, the Seventh-day Adventist Church, and the World Church of God's Power, the latter of which has over 6,000 temples spread across Brazil and was founded by the apostle and televangelist Valdemiro Santiago, who became infamous during the pandemic for trying to sell beans that he had blessed as a Covid-19 cure. Assembleia de Deus alone, who are the largest pentecostal denomination in the world, have built five churches in Betânia’s quilombos.

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