If you can buy one sandwich for 1 USD or 5 USD, which one would you choose?
I would prefer paying less.
Last week, I came back form a trip to Venezuela and Colombia.
The main objective of my trip was to visit “Angel Falls” in Venezuela, the highest waterfalls in the worlds (about 1000m of hight).
Although it was hard to get to the place to see the falls, it was so impressive.
Besides the falls, I also came across something impressive; it was exchanging US Dollars.
In Venezuela, the government controls the exchange of foreign currency regardless of the global situation or inflation. Therefore, it exists black market which buys USD with better rate.
The official rate: 1 USD = 6 Bolívares
The black market: 1 USD =30 Bolívares
That is, if one sandwich costs 30 Bolívares, depending on with whom you exchange USD, you either pay 1 USD (persons of black market) or 5 USD (bank).
OF course, it is illegal to exchange with black market so that there is no official information on the black market exchange rate.
In Venezuela, however, there are many people who want to buy USD so that it is not something rare nor risky. (You have to be careful though)
Actually, during my 4 days stay in Venezuela, I was asked to sell USD more than 30 times (the rate varied from 25 to 32 Bolívares)
I could not help asking WHY it was happening…
According to the information provided by various people, what’s is going in Venezuela is as follows:
The government require Venezuelan citizens to inform whatever transaction of USD (buying and selling) in and outside of the country. One cannot spend more than 3000 USD (approx.) per year, and the children (minors) are not included within this calculation.
For example, if one couple with two minor kids wants to travel outside of the country, the maximum amount of money that they can spend for 4 people is 6000 USD per year.
Therefore, if they buy USD illegally, they don’t have to inform to the government.
Besides, because of the inflation from which the country suffers now, the value of their currency (Bolívar) is really low.
En consequence, there are many people who want to buy USD in the exchange of a lot of Bolívares.
In this context, if you can buy one sandwich for 1 USD or 5 USD, which one would you choose?
This trip made me think so much about Capitalism and Socialism.