An Update on the Venezuelan Economy - Gold from World of Warcraft is now much worth more than their money · 12:25am May 11th, 2018
A couple years ago, I wrote a blog post about how the value of Venezuelan currency was dependent on a guy who works at Home Depot. At that point, the Bolivar Fuerte - the official currency of Venezuela - was worth approximately 1/4000th of an American dollar.
Things have gotten worse, but to give a bit of a reference point, let's talk about Venezula's present currency.
The Bolívar fuerte was put into production in 2008, after over a century of inflation on the original Bolívar had led to the point where they had a 1,000 Bolívar coin.
The Bolívar fuerte was designed to fix the ridiculous numbers on the Bolívar; worth 1,000 Bolívars (as in, you could trade in 1,000 of the old Bolívars to get 1 Bolívar fuerte), at the time it was originally issued in 2008, it was worth about $0.12. They actually (very optimistically) broke it up into centimes, or cents in Eaglespeak, meaning that there were the equivalent of *pennies*, valued at 1/100th of a Bolívar fuerte. The bills were issued in denominations of 2, 5, 10, 20, 50, and 100 Bolívar fuerte (they have since printed a 500 Bolívar fuerte bill).
Venezuela promised to be responsible this time.
It wasn't.
Undergoing a period of hyperinflation, the Bolívar fuerte's value entered freefall. The government tried to pretend like it wasn't, but a huge black market sprung up, exchanging the Bolívar fuerte at the real rate, rather than the government rate. Prices soared.
By late 2016, 4000 Bolívar fuerte were worth $1 US Dollar, meaning that you'd need 40 of those 100 Bolívar fuerte bills to be worth $1. But hyperinflation didn't stop there.
Late last year, the Bolívar fuerte fell below the value of World of Warcraft gold. Today, the exchange rate is now officially just under 7 Bolívar fuerte per 1 gold in World of Warcraft.
Now, most people don't have a reference for this, but gold in World of Warcraft is not worth very much - it is dropped by virtual monsters in practically infinite quantities, so it isn't all that hard to come by, and World of Warcraft has gradually undergone its own inflation, leaving gold worth very little indeed.
10,152 World of Warcraft gold is worth about $1 USD.
68,915 Bolívar fuertes are worth about $1 USD, officially.
But it gets even worse than that.
Our friend at Home Depot says that the true rate - the black market rate - is much, much worse than that. According to his website, 697,211 Bolívar fuerte are worth about $1 USD. That would suggest that virtual gold in Azeroth is worth 68 times more per unit that the official currency of the country of Venezuela.
It's okay though! President Maduro of Venezuela totally has it under control. You see, now he's having banks start mining the Petro, a form of Venezulan cryptocurrency which is supposedly worth $60 each, which is designed to launder dirty money out of Venezula to avoid international sanctions totally not a scam and definitely won't devalue like their last currency.
You all might remember another country that had problems with hyperinflation a few years ago - Zimbabwe, which printed 100 trillion dollar bills which almost immediately became worthless.
Zimbabwe has since solved this problem by simply not printing their own currency at all. The official currency of Zimbabwe is now the US Dollar.
Not something pegged to the US dollar, mind you; no one would trust that. It's just the US Dollar.
Largely bereft of such alternatives, Venezuelans are apparently at this point resorting to a barter economy. But some Venezuelans have a better idea.
Though they are playing Runescape, not WoW, as it is much more economically efficient. I mean, it's not like they'd want to engage with another currency system that undergoes hyperinflation.
I've noticed that ponies don't seem to have any idea what bit coins are actually worth . . . somebody who's actually good with economics really needs to write a comedy where the value of the bit is whatever two ponies think it is.
Also, after reading your blog I decided to spend my EFNW winnings on ten billion dollars, Zimbabwe. Only $6.50 on Amazon!
Wow
Huh. Who knew one of Pinkie's imaginary friends was such an important figure in Zimbabwe?
In all seriousness, I do feel bad for the people who have to muddle through such a mismanaged economy.
4857710
That would be a fun story actually.
4857729
I'd write it, but I'm disinclined to do all the research necessary to explain economics.
And I say this after having read (nearly) the entire Bible for research in one story.
4857730
Don't worry, it already is. Luna and Celestia define the value of the Bit... but not nearly as responsible as you'd believe. It involves a dart board, screeching economists being used as ammunition, and a demonic duck of some sort
Flutters is really worried about the duckie
4857747
I was thinking not just changing on a day to day basis, but more of on a market stall to market stall basis. Like, one cherry is fifty bits but at the next stall over a carriage is only one bit.
I feel that Runescape should be in the tags.
Is this a good or bad time to mention that I have a couple million WoW gold kicking around?
4857758 Me too. I've never really found anything worthwile to spend it on except maybe WOW tokens.
4857779
I've been spending it on T3 pieces for my alt.
4857721
Oh man, I'm halfway tempted to write a story about that.
I really need to publish something. Been eying up a few of my stories that are near complete and just need me to do a second pass of editing work on them.
4857751
I could give you all the economics behind it, but suffice it to say, all the ponies would throw as much money into the good deals as possible (in your example, buying up all the carriages). The carriage makers would notice the high demand and raise their prices, while the cherry sellers et al. would lower their prices until people started buying. Iterate a few times, and eventually you'd find the "correct" price for each good/service. (This is the "invisible hand of the market" you may have heard about.)
(Here's another reason why this wouldn't happen. The carriage makers had to buy wood to make their carriages, no? And they also need to make enough money from their sales to afford food. If wood costs 3 bits per unit, and it takes 50 units of wood to make a carriage, the minimum the carriage makers could sell their carriages for is 150 bits. And if they want to eat three cherries per carriage made--that's laughably small, by the way--that's another 150 bits on top of the price. In other words, ignore the bits for a moment. The price of carriages must be greater than the price of cherries, because the carriage sellers need to make enough money from selling the carriages to afford the cherries to eat.)
4858319
Well, yeah. And we could add in normal complications like how many carriages are on the market vs. how many ponies want them, which could potentially drive the price down, or the carriage-maker buying all the local supplies of wood to build them which could drive the price of standard wagons up or other things that are built with that same wood. Likewise, whether cherries are in season or not and how good ponies are at preserving them for later would change the value.
How much the carriage-maker needs to live is another question. If she's got her own sawmill, woodlot, and likes to eat grass her living expenses could be quite lot. Maybe she builds carriages for fun and sells them at a loss.
But I was thinking more along the terms of the ponies literally not understanding the value of bits, thus the prices are entirely arbitrary. Maybe they're just coming out of a barter economy, and while everypony knows that two cherries is worth one apple, nopony has the slightest idea what these silly golden discs that they're supposed to use to buy things are actually worth.
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(The gem market is also presumably really weird in Equestria)
Who says writers don't make money?
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