A Bag of Bolívares: And Other Indicators From Venezuela : The Indicator from Planet Money Venezuela started 2019 with rolling blackouts, hyperinflation, and crippling food shortages. Things have actually gotten a little better, mostly thanks to the economic innovations of everyday people.
NPR logo

A Bag of Bolívares: And Other Indicators From Venezuela

  • Download
  • <iframe src="https://www.npr.org/player/embed/797409100/797459102" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
A Bag of Bolívares: And Other Indicators From Venezuela

A Bag of Bolívares: And Other Indicators From Venezuela

  • Download
  • <iframe src="https://www.npr.org/player/embed/797409100/797459102" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript




One of the biggest economic stories of 2019 was Venezuela. The year started out with widespread blackouts. There was crippling inflation, attempted political coups, food shortages and one of the worst humanitarian crises in the world. Venezuela has not been getting as much attention lately. News out of Venezuela has died down a little bit. But we checked back in with Gabriela Saade. She is an economist in Venezuela from Caracas, and we spoke with her at the height of the crisis last year. And according to her, things are looking up in Venezuela a little bit, and the reason, she says, has everything to do with how Venezuelans themselves have responded to this crisis.

This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith. Today on the show, how Venezuelans responded to their economy and country collapsing around them and how they made some changes and innovations that have actually helped the situation.

Now, Gabriela, you have been tracking economic indicators in Venezuela since the economic crisis began around 2014. Thank you, by the way, for joining us.


VANEK SMITH: You're here in New York.

SAADE: Actually, I brought you something from Venezuela...

VANEK SMITH: Yes, please.

SAADE: ...If you want to check it out.

VANEK SMITH: I'm very excited. I saw you had a gift bag...

SAADE: Well, yeah, so...

VANEK SMITH: ...With a snowman on it.

SAADE: You can open it...


SAADE: ...For Christmas.

VANEK SMITH: Oh, my gosh. OK. This is like a - it's like a purse. Is this made out of Venezuelan money?

SAADE: Yes. It's made out of bolivares.

VANEK SMITH: Wow. It's beautiful. It's, like, woven.

SAADE: Yeah.

VANEK SMITH: Oh, my gosh.

SAADE: Yeah. You can see them around the city. And people do that because since bolivares are worthless, now they are making, like, art out of it, so you can purchase it. I paid, like, $3 for that.

VANEK SMITH: This purse - this has to have - how many bills do you think this has? Like, hundreds.

SAADE: Yes. I asked the guy. He didn't know exactly the number, but he told me it was above 100. That doesn't - I mean, you need, like, 40,000 bolivares to purchase $1, so...


SAADE: Yeah. This wouldn't even be of worth $1.

VANEK SMITH: I mean, this is the money you grew up with, I imagine.

SAADE: Yeah.

VANEK SMITH: How does it feel to see, like, hundreds and hundreds of dollars, like, woven into a purse?

SAADE: Of bolivares.

VANEK SMITH: Of bolivares - sorry.

SAADE: Yeah, it's OK. It's - I'm an economist, so for me, it's - I mean, on one hand, it's interesting. But on the other hand, it's like - I mean, you can see how bad the situation is. And so I see much more than just bolivares, you know? I think about the people that - you know, how desperate they must be but also, like, how creative Venezuelans are because who would have thought that you could do - you know, that you could make this out of bolivares?

VANEK SMITH: Gabriela says a lot of people have started making crafts and art out of bolivares, maybe the ultimate indicator of so-called hyperinflation. So inflation is when prices go up. There is inflation in a healthy economy. In the U.S., inflation is around 2% a year. Hyperinflation is what is happening in Venezuela. That is when prices start rising and rising out of control. Hyperinflation reached almost inconceivable levels in Venezuela in 2019.

SAADE: In March, hyperinflation was around 1,000,000%.

VANEK SMITH: A million percent inflation - so that means if something cost a dollar at the beginning of the year, it would cost around $10,000 by the end of the year. But Gabriela says later in 2019, the inflation situation did calm down.

SAADE: And now the year ended, and the inflation is 15,000%.

VANEK SMITH: That's much better.

SAADE: Something like that - yes, but still, I mean, that's still a lot.

VANEK SMITH: It's a lot.

SAADE: It's still a lot. And, I mean, according to some estimates, we won't have hyperinflation next year - I mean, well, this year; sorry - 2020.

VANEK SMITH: Yeah. How did that happen?

SAADE: So yeah. Basically, now we have more dollars circulating in the economy.

VANEK SMITH: Like more U.S. dollars.



SAADE: We have $2.7 billion in the economy now.


SAADE: Yeah. So we have a dollarization de facto now in Venezuela. More than half of the transactions that occur in Venezuela are in U.S. dollars.


SAADE: Yes. It was funny because before, you wouldn't even think of paying in dollars - like, showing your dollars to someone - because it was even illegal to carry U.S. dollars with you. But now that has changed.

VANEK SMITH: So it always risky to show someone a dollar.

SAADE: Yes. So now, like, I would go to a grocery store, and I would pay with my dollars, and it wasn't a problem. They would - they even had change, even coins sometimes.


SAADE: Yes. Like, quarters - they would have them.

VANEK SMITH: All those U.S. dollars helped stabilize the Venezuelan economy. There was a way to pay for things again. Stores could have stable prices. Gabriela says that has been a game-changer for Venezuela. Even Venezuelan President Nicolas Maduro, who has consistently railed against the U.S. and the U.S. dollar, said all the dollars circulating in Venezuela were a great thing. He said it in a televised speech. He actually said, thank God for dollarization.



VANEK SMITH: Gabriela says when he said that, she could not believe it. And also, all of those U.S. dollars circulating in the economy has also led to another innovation which is helping to address Venezuela's ongoing food shortage. More on that after the break.

So you might remember in the beginning of 2019, Venezuela experienced massive food shortages. So as the economic crisis in the country worsened, local farms failed, factories closed, foreign companies left, and Venezuela was not making enough food to sustain its population. Also, Venezuela was not big on importing. The country had really, really high tariffs in place. And that coupled with U.S. sanctions forbidding most trade with Venezuela and the crazy hyperinflation meant store shelves were often bare.

Gabriela says she could see everyone getting skinnier and skinnier. After all, a carton of milk would cost more than most people earned in a month, and even if you had that money, a lot of stores would not have any milk to sell. But that, says Gabriela, has changed, and that's thanks to another thing that happened to 2019 - the rise of the bodega.

SAADE: Suddenly, you start seeing all these stores - we call them bodegones - where you can see all these imported goods from the U.S. It's...

VANEK SMITH: Like what kind of things?

SAADE: We call them mini Costcos. Like, well, they have Nutellas that they bring...

VANEK SMITH: Nutellas?

SAADE: Yeah.


SAADE: I know.

VANEK SMITH: It's good to have the basics.

SAADE: Yeah, of course - cereal, milk, pancakes mix - I mean, yeah, all sort of things. And you start to see them, you know - for example, I would take my car to this place to get it fixed, and they would have a bodegon there with all imported goods. Even, like, in a salon, in a beauty salon, they would have a little bodega there.

VANEK SMITH: You can, like, buy some pancake mix...

SAADE: Yeah.

VANEK SMITH: ...And Nutella if you want.

SAADE: Yes. So now - yeah. Some people call Venezuela Bodegonzuela (ph), like, as a joke.

VANEK SMITH: So a few things happened that caused the rise of the bodega. First, Maduro basically stopped policing and taxing imports into the country. And also, the private sector found a loophole. Gabriela says the bodega owners she's talked to say they're getting most of their stuff from Florida, and that is because Venezuelan expats have set up businesses that buy things like Pringles and Oreos and Cocoa Pebbles and bread directly from places like Costco and Wal-Mart in the U.S. and then ship them right to Venezuela.

And as a result of the influx of imported food into the country and all of the competing bodegas, prices of food have dropped in Venezuela, in some cases in half. And food is now everywhere. Also, says Gabriela, the bodegas typically only take U.S. dollars or U.S. bank cards, and this means the stores mainly cater to wealthy Venezuelans, which is not most people. About 90% of Venezuelans live below the poverty line. A lot of people have just given up on the country entirely and fled, and Gabriela says that is the final change she noticed in 2019.

SAADE: I have many friends in Venezuela. Like, most of my friends were there. Now I have more friends in Spain and the United States than in Venezuela. Like, 90% of my friends easily have left the country.

VANEK SMITH: Like, everyone who could leave has left.

SAADE: Yeah, exactly.

VANEK SMITH: Gabriela herself left last year. She's currently living in Chicago, getting a degree in public policy. But most of her family is still in Caracas. They all just spent the holidays apart. But she said that is the new normal for her Venezuelan friends and family.

SAADE: Yeah. Those are - like, Christmas for Venezuelans nowadays - like, you are just separated from your family. That's how it is. So we are learning to become a diaspora.

VANEK SMITH: This year, Venezuela is expected to rival Syria as the country with the worst refugee crisis in the world. More than 6 million Venezuelans are expected to be living outside the country by the end of the year.

This episode of THE INDICATOR was produced by Darius Rafieyan. Our editor is Paddy Hirsch. Our intern and fact-checker is Brittany Cronin, and THE INDICATOR is a production of NPR.


Copyright © 2020 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.