Did Venezuela’s State-Owned Bank Collapse?

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by J.G. Martinez

Disclaimer: Please note,  every bit of experience shared here is personal, as every situation is, and one should not take this as “financial advice.” 

Recently, the news in Venezuela has been all about the collapse of the IT system of a state-owned bank. State-owned = no responsibility. They own the justice system, and the district attorneys are there to block any initiative to protect the citizens from events like these. So, yes, the situation is much worse than you could imagine. No one knows if their money will be there once the systems are back online. 

“Bank holidays” are common in an economic collapse. About a decade ago this happened in Greece.

Wise people were prepared with the right goods

The features and traits of the Venezuelan collapse are pretty unique, however. Unlike some other countries in similar circumstances, we have not engaged in a full-scale rebellion, nor do most people wish for one.  We are getting by with what we have.

I never trusted in the national monetary policy or the “system” in place, and with good reason. Many people feel the way I do, and those with enough space at home invested in things like used cars, for example, rather than using the system. Venezuela is the only country where a used car gains value over time. Nowadays, this seems reasonable: the big car manufacturers that once provided well-paid jobs and made the country work with their products shut down the assembling plants and threw away the keys. They are not coming back any time soon with the absolute lack of a legal system to guarantee, as a minimum, the return of their investment.

People have handled the collapse creatively. Many invested in small local commercial property for rent, or even in domestic appliances and motorcycles. 

Motorcycles now are being driven by people who NEVER thought they would be paying 1$ per liter of gasoline. Many of them have gotten rid of the huge SUVs they drove and sold them at bargain prices to get those little French or Japanese doll cars that run on a teaspoon of gasoline. All the old Mad Max-like Dodge Chargers, huge Fords, Chevys, and gas-guzzlers, sell at a loss in Venezuela.

Bartering + skills = survival

Back in the 90s, when my father lost his business, all he had left was a pile of “junk.” However, he could repurpose a payload of that junk. Customers knew he was the only person around who could provide refurbished equipment. My father sold these things to clients who would go back to their farms with a smile on their faces.

While it would be pretty difficult to get this sort of investment return with hard currency today, his repair skills are now valued more than ever, and people will trade a variety of goods to keep their equipment running. Skills are imperative in surviving an economic collapse.

If it’s not cash in hand, it’s probably gone

While I knew there would be a price to pay for returning, it’s been a bit more challenging than I expected. For example, I have not been able to open a bank account nor get a debit card. The bank where I used to have my account is now hard to access. I went to check if my account was still active. It was, and I found the bit of money I had left after 15 years of working my backside off in the national oil company was no longer there. Though it’s not pleasant, I was kind of expecting that hyperinflation would have eaten through my retirement fund.

Sooner or later, I will step over these silly obstacles. The good thing is, I already know which banks (private-owned) are doing their job as intended. Do I need to say that I won’t be using state-owned banks? I guess not. Almost everything seized by the government is now a broken shell of what once was a company.

Going cashless is not going to improve the economy

As I’ve written before, the government here wants to become cashless and they launched their own digital currency earlier this month. Maybe it will make it easier to proceed with payments. But in the long run, giving such inept, corrupt politicians the power to increase the money supply with just a few keys and pressing “Enter” is like giving a warehouse filled up to the top with nuclear warheads to the Taliban. This will not heal all the mess that needs solutions. Much less to get the productive apparatus working again.

Why not? Because there is no actual production leverage. This money will only buy heavily taxed imported goods. Therefore, no real advantage other than providing a couple of cm above the water level for a while. The noise around this “digital” currency is the same old fuzz around the “cryptocurrency” backed up with hundreds of thousands of crude oil barrels that are still underground.

Here are two articles with information that some could find useful:

The Stages of the Collapse – The global economic crisis.

This article explicitly says that “banks will close.”

Paperwork becomes much more challenging to deal with in a crisis

To open a bank account, I need a document (which I already have) that works as a tax “registry.” Mind you, taxes in Venezuela have traditionally been something almost nominal. This means the state’s tax revenue, compared to the enormous income as a product of the oil revenues, was negligible, indeed. Therefore, getting such documents was a mere formality. Some of my coworkers with bigger salaries had to pay some taxes. Still, usually, with our family dependence, our tax declaration was under the required levels, and most of us were exempt.

So, the IT “system” of the tax department (Senate) sent me a message after trying to log in to renew it that says the document is past due, which is fine. I spent three years abroad, and my income wasn’t enough since 2013 to require me to pay any taxes once the hyperinflation took off. But the website doesn’t give a clue about how to renew it. This likely means having to go to the main office and talk to someone behind a desk. I will do everything I can to solve it online, though.

Yet another annoying byproduct of having fled away at the wrong time: legal paperwork to be renewed. Drivers license, ID documents, mortgages to clear up, all of this paperwork left behind in a hurry. However, there was no money left to fix it up, to be honest. We were merely living day to day, without a car, and in a place where walking was exposing ourselves to an armed robbery with fatal consequences.

What do you suggest for someone in the US in the same situation?

For example, you are in the US with some cash in the banks but jobless and carless. Although my knowledge of the actual economic climate in the US is quite limited, my best advice would be: diversify and protect financial assets. If there are enough cash reserves for old age, it’s wise to distribute that load to a few institutions that safeguard the funds to a certain degree.

Get food on sale with whatever cash you have and install backup systems (solar, wind, or grid-tied). Fill your pantry to the roof. Research and put together whatever equipment you can. The US has excellent advantages in some places where one can generate enough power to shove it back to the grid, and that pays for your equipment. This part of the world is not even close to that advantage, and it’s something some of you could consider an investment.

Something one might consider, too, is investing a portion of that money to get some interests back. If your expenses are ridiculously low because you produce a good amount of the food you consume and pay no rent nor power bills, any income is a win. 

What do you think of precious metals for bartering?

I know many of you are interested in precious metals for bartering and trading. This video may answer a few of those questions. It’s the real deal, filmed by someone who was there. The gold extracted from there is going somewhere. We don’t know where, as it’s part of illegal operations. Turkey? Iran? Russia? The entire area is under the control of uniforms and those with the bigger guns rule. No civilians can get to the places where this extraction is occurring.

I should add that this gold exchange is not happening in most of the country. And no one uses silver because identifying PM is a lost art. It needs some equipment that people don’t have nowadays. And trust in a stranger who wants to buy you a pickup full of ginger with silver coins? It’s not going to happen. Just don’t.

Being a metallurgist, I would take the silver right away, stash it and go to someplace in Caracas to sell it and get paid in greenbacks. But as a currency, silver is seldom used. People don’t know when it’s legit or not anymore. Selco drew similar conclusions during his own experience.

Have you considered what you’d do if the banks closed?

What would you do in the event of a bank collapse? What if you woke up and all your money was just GONE? Have you diversified enough to manage it? Is it something you’ve considered? Let’s discuss it in the comments.

About Jose

Jose is an upper middle class professional. He is a former worker of the oil state company with a Bachelor’s degree from one of the best national Universities. He has an old but in good shape SUV, a good 150 square meters house in a nice neighborhood, in a small but (formerly) prosperous city with two middle size malls. Jose is a prepper and shares his eyewitness accounts and survival stories from the collapse of his beloved Venezuela. Jose and his younger kid are currently back in Venezuela, after the intention of setting up a new life in another country didn’t  go well. The SARSCOV2 re-shaped the labor market and South American economy so he decided to go back to his own land, surrounded by family, friends and acquaintances, and try again.

 Follow Jose on YouTube and gain access to his exclusive content on PatreonDonations: paypal.me/JoseM151 or the BTC address 3QQcFfK9GvZNEmALuVV8D6AUttChTdtReE

J.G. Martinez D

About the Author

J.G. Martinez D

About Jose Jose is an upper middle class professional. He is a former worker of the oil state company with a Bachelor’s degree from one of the best national Universities. He has a small 4 members family, plus two cats and a dog. An old but in good shape SUV, a good 150 square meters house in a nice neighborhood, in a small but (formerly) prosperous city with two middle size malls. Jose is a prepper and shares his eyewitness accounts and survival stories from the collapse of his beloved Venezuela. Thanks to your help Jose has gotten his family out of Venezuela. They are currently setting up a new life in another country. Follow Jose on YouTube and gain access to his exclusive content on Patreon. Donations: paypal.me/JoseM151

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