Caracas Chronicles

As Maduro announced the withdrawal of the Bs.100 bill, I couldn’t stop wondering, “Why now?”

When you try to answer that question, you realize it was not an impulsive decision by Maduro. The government thought about it, identified the best time to do it, and even had time to plan for it. And they botched the execution anyway.

Even if they truly believe their unbelievable excuse – that they wanted to screw some people that were hoarding Bs.100 bills outside Venezuela – it’s an odd time to do it: in the middle of the (admittedly withered and depressed) holiday season, when people spend more.

What’s the rush? Couldn’t it wait until January?

No, it couldn’t wait. Because once the Bs.500 bill was in circulation in mid-December, withdrawing and reneging on the Bs.100 bill in January would be a fool’s errand: those supposedly hoarding bills would by then had the chance to exchange them for the less cumbersome note. January was not an option.

November, or before that, wasn’t an option either, since it would leave the economy without close to half its bills, and 77% of all the value of cash, for at least a month until the new 500Bs bill was ready.

The only logical window to carry out their illogical plan was then just before the 500Bs bill was due hit the streets; the days before December 15.

They timed it just right.

But timing and execution are not the same thing. The process was chaotic and, as the chart below shows, the fact they knew they would kill the Bs.100 bill soon didn’t stop them from wasting money printing new bills.

The number of Bs.100 pieces in circulation increased by 15% in November. In one month, 782 million new Bs.100 notes went into circulation…to withdraw them in December.

A short walk in the outside world, before burning them.

The chart also shows that although the timing was just right for the government’s plans, it was the worst time for everyone else. See those spikes? That’s November of each year, which is typically followed by another good-sized increase in December.

They knew that the end of the year was a terrible time to drain the economy of cash: they know it’s when people use it the most, to the point that they plan for it every year.

They just didn’t care.