A meme on the political left that has recently been seeping into mainstream conversation including the BBC is that “sovereign nations can’t go bankrupt”. The theory goes that money can just be borrowed from your own central bank, which can after all just print more money. Hey presto – free cash. Who knew it was all so easy?
This experiment has been tried before in sovereign countries, Weimar Germany, modern Zimabwe, and lately socialist favourite Venezuela – whose currency has lost 99.999% of its value during the last six years of hyperinflation. On Friday last week the Banco Central de Venezuela announced that “three new banknotes will be incorporated into the current Monetary Cone” as early as this week. They will be for 200,000, 500,000, and one million bolivars each. The most valuable of those already being worth around 50 US cents, or 36p in the UK…
Tres nuevos billetes serán incorporados al Cono Monetario vigente, como parte de la ampliación de la actual familia de especies monetarias.#BCV 🇻🇪 pic.twitter.com/HdUDbrrZ5F
— Banco Central de Venezuela (@BCV_ORG_VE) March 5, 2021
The brutal truth of the matter is that sovereign countries can effectively go ‘bankrupt’, the pedantic legal distinction between a default and a 99.999% devaluation making little difference in reality to ordinary citizens. They can enter a sovereign debt crisis, where fears over the ability to service the debt interest payments rise, interest rates rise and money from abroad becomes prohibitively expensive to borrow. This has happened throughout history, with a wave of defaults occurring in the 1980s across Eastern Europe, Africa, and Latin America. Russia defaulted in 1998. Greece came close last decade.
When money is borrowed from a domestic central bank, countries can and do spiral into hyperinflation. Expanding the money supply does not magically create more value. It leads to wheelbarrows of cash, savings obliterated, and million Bolivar notes. Venezuela demonstrates it again this week. Controlling public finances matters…
Following her denial yesterday of Corbyn’s anti-NATO past, Thornberry has now taken it upon herself to start erasing Corbyn’s pro-Maduro history also. During yesterday’s Queen Speech debate, Alok Sharma brought up Corbyn’s pro-Venezuela past, to which Thornberry shouted “bollocks”. Guido thought rather than labouring the point we’d revisit some of Corbyn’s own comments in favour of Maduro and Chavez’s regimes. Watch the video above for Corbyn / Chavez / Maduro highlights.
Maduro actually thanked Corbyn for his support on a live TV phone in…
Jesus Yepez, an architect who lives in Caracas has found John McDonnell’s “money tree” in the street. The tree is made of almost worthless bolívares soberanos, since Venezuela’s hyperinflation means $1 is worth well over 5,000 bolívares soberanos. “Many people commented that that is what our currency has turned into: Monopoly money,” he told Business Insider. “It’s an ingenious protest for the insane inflation we’ve been experiencing.” The money tree is not a protest for John McDonnell, it is a policy…
UPDATE: $1 is actually worth 321,385.39 bolívares soberanos.
Stinging criticism for Jeremy Corbyn from the USA’s most senior diplomat – Secretary of State Mike Pompeo – over his support for murderous Venezuelan dictator Nicolas Maduro. Corbyn will probably wear it as a badge of honour to be insulted by his oldest enemy – the United States…
In Venezuela forces loyal to the corrupt socialist regime have opened fire on protestors. The protesters seen here this morning at La Carlota are fleeing away from the gunfire. How predictable…
The regime is admired by the British far left, who seem silent today as the conflict between the state forces and the people reaches a critical stage. No comment yet from Maduro’s friend Jeremy Corbyn…
While the Commons has been debating the horrors being inflicted on the Venezuelan people by the Maduro regime, this afternoon Labour’s Chris Williamson found himself protesting outside the Bank of England with the Venezuela Solidarity Campaign.
The pro-Maduro protesters were chanting “Bank of England you’ve been told, give Venezuela back its gold” referencing the £1 billion in Venezuelan gold held in the Bank of England. Must be more of that mythical misty-eyed Corbynista support for Maduro…
UPDATE: Williamson was even filmed speaking at the protest, adding that he had to leave soon because he wanted to intervene in the Commons debate. Spoiler: he didn’t make it…
Chris Williamson MP talking in favour of the Venezuelsn government and for dialogue to solve the crisis #Venezuela #VenezuelaSeRespeta pic.twitter.com/d56B4AcbJd
— Carolina Graterol (@Moncaro) February 7, 2019
