One of the core tenets of MMT, or Magic Money Theory, is that a nation which prints its own fiat money can never go broke or be insolvent (unless a political decision to do so is taken). Well, that may be true, but in Venezuela things appears to have taken an unexpected detour into one of the more grotesque circles of economic hell as the hyperinflating country proceeded to print its way out of its endless economic crisis.
So much so that according to Bloomberg, Venezuela is now importing 71 tons of paper from Italian money printer Fedrigioni (majority owned by US Private Equity giant Bain Capital) which it will use to print new bills with the highest, 100,000 new bolivar, denomination yet. In dollar terms: each new banknote is worth about 23 cents, courtesy of the raging hyperinflation that has been sweeping the nation for the past 6 years.
One recurring problem for Venezuela, which as we reported back in 2016 used 36 Boeing 747 cargo planes to deliver a batch of then freshly printed (and shortly thereafter, worthless) currency, is that by the time its currency is printed, it is worth almost nothing.
Sure enough, as Bloomberg notes, the need for ever larger bills and constant devaluations in Venezuela is a direct result of an ever weakening currency and hyperinflation that now runs at over 2,400%, meaning that paying for a cart full of groceries now literally requires a bag of cash. The 100,000 bolivar bill would match the biggest bill ever printed in Venezuela, one made two years ago during the days of the bolivar fuerte (the latest version of the currency is called the sovereign bolivar). The central bank is considering introducing even larger denominations down the line, which will lose their value just as fast.