Tag Archives: Cash

Economy, Featured, International, Technology

Venezuela’s Currency Plunges to One-Seventh the Value of World of Warcraft Gold

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Venezuela’s ongoing, years-long financial crisis has continued to worsen, and the socialist nation’s real-world official currency, the bolívar, has plunged in a state of hyperinflation to around one-seventh the effective trade value of in-game digital gold from the massively-multiplayer online role-playing game World of Warcraft.

According to analysis by Fortune‘s Chris Morris, in terms of trade value in US dollars, World of Warcraft gold is worth 6.8 times more than the bolívar.

“Here’s how the math works out. Per Google, one U.S. dollar is worth 68,915 bolívar. Compare that to the price of WoW tokens, official in-game credits that can be used to extend a player’s play time or buy in-game items. Tokens can be bought with either $20 real world cash or sold for a fluctuating amount of in-game gold. One tracking service lists the current gold price of a token as 203,035 pieces. That works out to about 10,152 gold gaming pieces per USD,” wrote Morris.

It is worth noting that since Morris published his analysis on Monday, the bolívar’s official exchange rate has already dropped further against the dollar. One dollar is as of press time today worth 69,913 bolívar.

However, Venezuela’s government has enacted strict currency controls, limiting the ability of individuals to convert their bolívar into foreign currencies. For situations such as when companies need to import materials from other countries in order to produce goods, limits on currency conversion can hamstring their ability to produce goods, creating a significant demand for foreign currency exchanges on the black market. This causes the value of the bolívar to plunge even further in real-world terms.

Dolar Today, a currency valuation resource that factors black market value in its valuation of Venezuela’s currency, notes that the black market exchange rate for one U.S. dollar is 661,824 bolívar as of press time. At this valuation, World of Warcraft gold is actually worth 65 times more than the Venezuelan currency.

Venezuela has been in an ongoing financial crisis since 2012. Despite the fact that it has the world’s largest documented oil reserves, Forbes notes that Huge Chavez’ 2007 nationalization of the nation’s oil industry correlated with an oil production drop of 20 percent by the start of the 2012 financial crisis.

Reuters notes that 90 percent of Venezuelans currently live in poverty, and the average Venezuelan lost 24 pounds in body weight in 2017 due to hunger. A Miami Herald report found that significant numbers of Venezuelans with professional careers such as doctors and teachers have been crossing the border to Colombia to exchange sexual services for money in order to survive. According to The Washington Post, Venezuelans are applying for asylum to other countries at explosive rates not seen since the Syrian refugee crisis in 2015.

In a recent episode of Reality Check, Ben Swann explained Venezuela launching its own national cryptocurrency, the petro, and the issues arising from digital currency that is rooted in government rather than fully decentralized.

https://www.youtube.com/watch?v=xGkymaMtSPM

 

Business, Economy, Featured, International, Police State, Politics

France Enacts Strict Crackdown on Cash Payments Because Charlie Hebdo Attackers Used Cash

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French Finance Minister Michel Sapin announced last Wednesday that France will be enacting strict limits on the use of cash in the wake of January’s Charlie Hebdo terrorist attack, citing the fact that those responsible used cash to purchase equipment. According to Reuters, starting in September, France’s new cash policies will ban payments of over 1,000 euros in cash for French citizens and expenditures of over 10,000 euros for foreign visitors.

The cash crackdown also includes new monitoring provisions, requiring banks to report cash deposits, transfers, or withdrawals exceeding 10,000 euros to the government, requiring the presentation of identification for currency transfers exceeding 1,000 euros, and requiring banks to add small bank accounts to a national database. The new policies also include restrictions on the use of pre-paid cards.

Sapin said that the controls are necessary to “fight against the use of cash and anonymity in the French economy,” which he says are leading to a form of “low-cost terrorism.” He explained his views further in a press conference on the new rules and said, “It’s a terrorism that is low cost to carry out but has major impact… This low-cost terrorism feeds on fraud, money laundering and petty trafficking.”

Joseph T. Salerno at the Mises Institute wrote a sarcastic critique of the new controls and said, “It was just a matter of time before Western governments used the trumped up ‘War on Terror’ as an excuse to drastically ratchet up the very real war on the use of cash and personal privacy that they are waging against their own citizens… It seems the terrorists involved partially financed these attacks by cash, as well as by consumer loans and the sale of counterfeit goods. What a shockeroo! The terrorists used cash to purchase some of the stuff they needed — no doubt these murderers were also shod and clothed and used cell phones, cars, and public sidewalks during the planning and execution of their mayhem. Why not restrict their use?”