The US Ban On Venezuela’s Petro Is A Bad, Bad Idea – Let It Fail Alone


The United States has decided to ban – in the form of sanctions – transactions in Venezuela’s new cryptocurrency, the Petro. This is a bad, bad, idea. For it plays right into the hands of the usual idiots who insist that the only reason the socialist revolution has never worked in Latin America is because of the Damn Yanquis. This not actually being the cause, rather, Latin American socialism has always been destined for failure on the grounds that Latin American socialism is never going to work, Damn Yanquis or not. Better to leave well alone and allow them to fall flat on their faces than to intervene and grant yet another excuse:

President Donald Trump on Monday signed an executive order barring any US-based financial transactions involving Venezuela’s new petro cryptocurrency, as American officials warned that it was a “scam” by President Nicolas Maduro’s government to further undermine democracy in the Opec country.

“The ‘petro’ is a desperate effort by a corrupt regime to defraud international investors,” a senior US administration official told reporters, strongly warning that any transactions in the petro digital currency would violate American sanctions.

It could be that the Petro is a desperate attempt by a corrupt regime to defraud investors. I’d certainly agree with two of the descriptions there, desperate and corrupt. Not sure I’d credit them with the ability to actually think through a fraud attempt but still.

The Petro is quite clearly going to fail because it’s just another fiat currency. And we can see how Venezuela, under the Bolivarian Socialists, handles fiat currencies. Inflation is expected to be 18,000 percent this year. Or whatever other vague hand wavey but very large number you care to mention. There’s absolutely nothing about the Petro that indicates it will be different. That supposed link to oil doesn’t exist. It’s not like the Rentenmark was, specifically linked to a revenue stream or asset. It is nothing more than we’ve got oil, our currency is therefore worth something!

Well, maybe, depends how much is issued, doesn’t it?

Note that US sanctions mean a great deal more than that Americans, in America, cannot transact in it. The US claims sovereignty over all dollar transactions worldwide. Bit of a stretch, maybe just about arguable. Then they go further and insist that this sovereignty – perhaps not as a legal matter but people act as if it is true in a de facto manner – means that they’ve control over the other activities of anyone who transacts in dollars. US sanctions on the Petro thus pretty much kill it. At least as a useful financial tool.

As I say, why give everyone that excuse? Just wait 6 months and it’ll fail anyway.