On Feb. 8, the nation of Venezuela became the 8th country to enter into the global currency war as it devalued its currency by 46% in an attempt to halt inflation and rising prices. Venezuela now joins Japan, Germany, the United Kingdom, South Korea, and three others in the race to the bottom in an attempt to push up exports, and fix their recessionary economies.
While the rest of the developed world is scrambling here and there, politely prodding its central bankers to destroy their relative currencies, all the while naming said devaluation assorted names, "quantitative easing" being the most popular, here comes Venezuela and shows the banana republics of the developed world what lobbing a nuclear bomb into a currency war knife fight looks like:
VENEZUELA DEVALUES FROM 4.30 TO 6.30 BOLIVARS
VENEZUELA NEW CURRENCY BODY TO MANAGE DOLLAR INFLOWS
CARACAS CONSUMER PRICES ROSE 3.3% IN JAN. - Zerohedge
Venezuela is unique in the global economy as it is a tightly wound market of price controls and socialistic policies. Since Hugo Chavez took office in 1999, the socialist dictator has nationalized a wide array of industries to include agriculture, oil production, and mining, and starting in 2009, Chavez implemented fierce price controls as inflation and shortages began to lead to civil unrest.
Since the start of 2013, eight countries have introduced new measures to devalue their currencies, and help their nation's economic production and exports. In nearly all of these nations, with the exception of the United Kingdom, their central banks have been amassing gold reserves, or in the cases of Venezuela and Germany, calling back their overseas gold holdings from the Federal Reserve, and French depositories.
With the revelation that China is ready to implement a new Gold Trade Note to bypass the dollar in international trade, and confidence in the U.S. dollar as the world's reserve currency is waning, more nations, like Venezuela, will likely enter into the global currency war to protect their own exports, and stave off economic crisis.