Venezuela accumulates 800,000 percent of devaluation approximately, an extraordinary experience in the world

In the current context, Venezuela's economic problem has no solution because the country suffers an extraordinary situation: Venezuela experiences a cumulative devaluation of about 800,000 per cent between 1983 and 2013.

This figure, which at first seems incredible, is the true reality of the economy.

In Venezuela there is an official price of the currency currently at 6.30 per dollar, which represent the same 6,300 bolivars of the 2008. In that year, 2008, the monetary authorities created a new currency, the bolivar fuerte, (strong bolivar), and removed three zeros; so 1 bolivar of the present really represents 1,000 bolivares of the year 2008. However, there is a secondary market, whose price cannot be disclosed in Venezuela because it is forbidden by a special law on the subject. There are therefore two realities: the official and the street.

If you compare the price of the current unofficial currency - the figure that legally cannot be said - but including its three zeros of 2008 with the price of the currency in 1983 - last year that had a parity of 4.30 per dollar- the devaluation is approximately 800,000 percent. To verify this figure It is sufficient to only apply a simple rule of three: if 4.30 bolivares was 100 percent, 800,000 percent is x.

800,000 percent of devaluation is an extraordinary figure and I do not know if there is a similar experience in the world.

An economy that has reached that level of devaluation has no other alternative than to adopt extraordinary measures also. That is the only way to combat hyperinflation Venezuela suffered for years which has increased lately.

The alternatives for a solution in a case like this are twofold: a) dollarization of the economy or b) to create a new currency. The first alternative has advantages but also disadvantages, one is that a dollarized country loses its monetary sovereignty; the second alternative, if is done in a serious manner, may represent an effective solution.

I have argued for a long time to create a new currency, the bolivar oro,   (bolivar gold ) at par with the dollar, a new currency of free access in the market with enough support in dollars and gold. I think that it would be the solution, because wages and prices would be homologated to those in the nations that use the dollar as its official currency.

Facts have proved and continue to prove that none of the paths followed until now on foreign exchange have yielded positive results. To find the solution would have to find a completely different way to the followed so far.

The devaluation is, essentially, what prevents solving Venezuela's economic problems: inflation, speculation, shortages, low production and unemployment. The other problem is the legal insecurity of investments.

Albert Einstein: "Problems cannot be solved by the same level of thinking that created them."