Friday, February 16, 2007

Does anybody still think Venezuela is a socialist paradise?

The news today is that the star of "Alo Presidente!", President Hugo Chavez, will chop three zeroes from the value of Venezuela's currency by next February. That means that next year the government is going to make it easier for the people of Venezuela to shop. Instead of using 1000 bolivars to buy a loaf of bread, it will only take 1 New Venezuelan bolivar to buy that same loaf of bread. This can't lead to anything good.

I remember in the early 90s listening with disbelief to the stories of Yugoslavian hyper-inflation as the country fell to pieces after the fall of Communism. Here's what the Yugoslavian government did to the dinar with "currency reform" during that period:

1990: 10,000 old dinars = 1 new dinar
1992: 10 old dinars = 1 new dinar
1993: 1,000,000 old dinars = 1 new dinar
1994: 1,000,000,000 old dinars = 1 new dinar
1994: (one month later) 13,000,000 old dinars = 1 new dinar

That's 10,000 x 10 x 1,000,000 x 1,000,000,000 x 13,000,000, or 1,300,000,000,000,000,000,000,000,000 old, pre-1990 dinars for one brand spanking new late-1994 dinar. That's 1.3 octillion dinars. Here's a picture of a 500 billion dinar note printed by the Yugoslav government in 1993:

If dinars are about the thickness of dollar bills, then 1.3 octillion dinars stacked on top of each other would reach into space ... wait for it! ... 15 million light years! Or almost a trillion times the distance from the earth to our sun. That's in a single stack of dinars.

Now, if every one of the approximately 6 billion people on this planet, man, woman, and child, were to start stacking dinars at the rate of 100 dinars every second for 8 hours a day, it would take 14 years to finish stacking those 1.3 octillion dinars ... at which point the 30% of the earth that is solid ground would be covered to a depth of 6,150 miles with dinars!

(UPDATE: I dropped a few decimal points when I calculated the years it would take for 6 billion people working to pile those discarded dinars on the land surface of the earth. I apologize. For those with as twisted a fascination with large numbers as I have, here are the details of the calculation:
  • 1.3 octillion (1.3 x 1027) dinars split up amongst 6 billion people = 2.16667 x 1017 dinars per person -- that's 2162/3 quadrillion dinars per person.
  • 100 dinars per second x 1/3 x 31,557,600 seconds per year (using 365¼ days per year) = 1.052 billion dinars per year, working only 8 hours a day, but with no time off for holidays or weekends. I'm sorry, but we gotta get them dinars stacked, baby!
  • So, 2.16667 x 1017 dinars per person at a rate of 1.052 billion dinars per year ... it would take each man, woman, and child on this planet 206 million years to stack those puppies up.
  • UPDATE: Since the International Brotherhood of Dinar Stackers filed a grievance, I was forced to change the schedule somewhat to allow weekends off, one week of paid vacation the first year, two weeks after two years, three weeks after five years, four weeks after ten years, five weeks after 15 years, six weeks after 25 years, and 10 paid holidays per year: New Year's Day, Martin Luther King Day, Good Friday, Memorial Day, Indpendence Day, Labor Day, Thanksgiving Thursday and Friday, Christmas Eve and Christmas Day – variations on that schedule based on differences in regionally dominant religions and nationalities. We're still wrangling over sick days, health insurance coverage, and company-supplied replacement silicone rubber stacking gloves. That means that it'll take longer than 206 million years. I leave that as an exercise for the student.
By passing on the tradition from father to son, we'll have those dinars stacked up in about the same number of years as it's been since the twilight of the Triassic Period to now.

Those of you that are really swift with the math will also have noticed that my estimate of the land surface of the earth being covered to a depth of 6,150 miles in dinars is a bit misleading. If our glorious, unionized dinar stackers followed instructions and stacked those dinars in perfect vertical piles, then, once those piles got to that height, they'd looked like porcupine quills sticking up all over the earth. At a height of 6,150 miles, the top of each stack of dinars would be between 62/3 and 152/3 inches apart. If we assume that the dinars will actually be laid down such that there won't be any stack gaps – visualize them being dumped and packed into huge vats with vertical sides reaching into space – then the height of that packed stack would actually be a little over 3,000 miles high. My apologies.

That's a lot of dinars. At least a guy doesn't have to carry around all those bills, eh?

Anyway, the point is that Venezuela has now officially started down that path. They've got the sixth largest oil reserves in the world and they've got to devaule their currency by three orders of magnitude. I'll tell ya, that socialism really, really works!

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