Chavez tries to mask inflation with new currency

Washington Times:

Venezuela is introducing a new currency with the new year, hoping to fight inflation by lopping off three zeros from denominations.

President Hugo Chavez's government says the new currency — dubbed the "strong bolivar" — will make daily transactions easier, contain rising prices and strengthen the economy.

"We're ending a historical cycle of ... instability in prices," Finance Minister Rodrigo Cabezas said yesterday, adding that the change aims to "recover a bolivar that has significant buying capacity."

Prices have risen as Mr. Chavez has pumped more of the country's oil income into social programs, reinforcing his support among the poor and helping to drive 8.4 percent economic growth in 2007.

The Central Bank is promoting the new monetary unit with an ad campaign and the slogan: "A strong economy, a strong bolivar, a strong country."

Officials, however, have yet to articulate their anti-inflationary measures.

Some Venezuelan critics, meanwhile, have dubbed the new currency the "weak bolivar," noting that its predecessor, the bolivar, has seen its purchasing power suffer in an economy where inflation ran about 20 percent in 2007 — the highest in Latin America.

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Chavez is trying to cover up how badly he has botched the economy of Venezuela. It is part of the charade for despots like him. If he did not have the windfall of oil revenues his country would be headed for Zimbabwe like inflation. The man is a mental lightweight who is too arrogant to recognize his limitations. He will make more mistakes which his country will have to pay for.