Óscar Alberto Pérez, ex-policeman and Venezuelan rebel leader died on Monday (7 April 1981 – 15 January 2018). Image Source: Newsweek.
This post is a preface to a series of posts in which I will begin to explore how technology and globalization are changing what we call 'currency' in all its forms: from Canada's sale of the country's total gold reserves in 2016, to the ups and downs of Bitcoin and other cryptocurrencies, to the evolution of the Internet into an economy of value (and what that means).
For today, we start with a glance at Venezuela, where President Nicolás Maduro Moros last September planned that his country would abandon the Petro-Dollar and take up the Petro-Yuan. Since 1974, the American dollar has functioned as the de facto global currency because it was the main currency for oil purchases, and thus for all other commodities and trade.
Now that arrangement is changing, under the leadership of Russia, China, and Iran, as oil is being priced in the Chinese Yuan: "This is about the implementation of a huge, new alternative reserve currency zone, bypassing the US dollar." If you believe sources like Russia Today, we are watching the American Petro-Dollar die, and the period from 1974 to the present is dying with it, including its power structure, its key players, and its principles of control. This is the start of a new era.
Maduro anuncia la creación del Petro, la criptomoneda de Venezuela [Maduro announces the creation of Petro, the cryptocurrency of Venezuela] (3 December 2017). Video Source: Youtube.
In December 2017, Maduro announced the creation of a $5.9 billion of an oil-backed cryptocurrency, the 'Petro' or 'Petromoneda' to skirt US sanctions. This week, mainstream media outlets reported that the US Department of Treasury is warning against investing in the Petro (here, here, here and here), claiming it poses a legal risk to American investors. You can see the Reddit discussion (here) on how Maduro's move boosted the Bitcoin price in December. Right now, a Venezuelan delegation is visiting Qatar to persuade the Qataris to back the Petro.
In so doing, Maduro joined other autocrats who are attempting to use cryptocurrencies to circumvent authority in the world's existing financial system. The Business Times was skeptical:
None of this is not lost on the US government, and various events (like this one, this one, and this one) are considered to be threats against the Chinese to back off from their plans for the Petro-Yuan. The Chinese responded by refusing to buy US debt. The Chinese denied this, claiming that such rumours were 'fake news.' But on 17 January 2018, AFP reported that Dagong Global Credit Rating Company has downgraded US debt:"[HONG KONG] Vladimir Putin's finance ministry wants to let cryptocurrencies trade on official Russian exchanges. Kim Jong-un's hackers are stealing digital cash. Nicolas Maduro hopes a cryptocurrency backed by oil will lure investment back to Venezuela.All three leaders are wading into the crypto-craze as their regimes grapple with the same problem: Sanctions curbing their access to the global financial system. But while bitcoin and opaque virtual currencies can provide sources of cash for political pariahs, the market's still too nascent to make a meaningful skirting of a US-led economic blockade possible."
"The Dagong Global Credit Rating Company cited the massive tax cuts backed by President Donald Trump as a concern but it also zeroed in on the US political atmosphere in a report on Tuesday.The firm downgraded both the local and foreign currency sovereign credit ratings of the United States from A- to BBB+ and gave the world's largest economy a 'negative outlook'.'Deficiencies in the current US political ecology make it difficult for the efficient administration of the federal government, so the national economic development derails from the right track,' the agency said.'Under the political ecology which is built by the factional rivalries, factional interests are prioritized, and it is hard for the government to focus on the management of the national economy and social development,' it said.Dagong is recognised as China's foremost credit rating agency and claims to be the only one with joint approval from both the People's Bank of China and the State Economic and Trade Commission."
Podcast from October 2017 on how and why Venezuelans are using US dollars and Bitcoin to combat hyperinflation of the national currency, the bolívar: Junseth's World: Interview With Eduardo Gomez In Venezuela. Some may find the commentary offensive. Source: Soundcloud.
Meanwhile, Venezuela had a horrific week on social media, starting with an unconfirmed, violent NSFW video of starving Venezuelan men stoning a cow to death for food, and reports of shop looting and record inflation, with the country ending December at a 2616% inflation rate.
NYT report: Venezuelan Rebel Leader Oscar Perez Records His Last Stand (16 January 2018). Video Source: Youtube.
Al Jazeera report: Venezuela 🇻🇪: 'Several dead' in operation to capture Perez (16 January 2018). Video Source: Youtube.
Then, on Monday, a rebel Venezuelan ex-policeman, Óscar Pérez, posted smartphone videos to social media (here) showing his entrapment by government forces prior to being killed: “They don’t want us to surrender, they want us dead!” The Venezuelan opposition have been banned from the 2018 presidential election, and they are not strong enough to form an alternative to the present government. A military coup is equally unlikely, meaning the rise of the Petro-Yuan will continue.
"Having failed to dislodge President Nicolás Maduro, the opposition is openly talking of a coup but mutual benefit links the military with the ruling party." Image Source: Guardian.
See my earlier posts on Venezuela, here and here.
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