So to be clear, you're suggesting that these black market operatives are creating localised artificial scarcity of Bolivars in the form of cash. But Venezuela is a fairly modern country with ATMs and electronic payments, along with the associated cash distribution infrastructure all that implies. How are black market operatives successfully doing that, given how easy it is to move funds into an area, or for that matter, bypass the scarcity entirely via electronic payments?
Meanwhile, we have a much more plausible story: Venezuela has been hit hard by the decline in oil prices - their main export - yet has been unable to curtail spending to match. That money needs to come from somewhere.
>"So to be clear, you're suggesting that these black market operatives are creating localised artificial scarcity of Bolivars in the form of cash."
Not necessarily in cash alone, but yes I'm suggesting it's in the interest of black market traders to create scarcity in the local economy.
To give an example of how this is possible, imagine you want to create artificial scarcity, where would you start? I'd suggest starting with the food supply, as there's constant demand no matter the cost. Imagine as a rich outside investor I go in and buy up huge volumes of food staples. What have I done by this? Two things:
1. I've reduced the volume of goods in the local market, increasing scarcity, driving prices up.
2. I've acquired goods that are in demand, which I can then sell on the black market at prices that are favourable to me.
The hoarding of Bolivars comes into play as you want to reduce the chances of other people muscling in on this game.
Is this the whole story? No. I'm sure the government's mismanagement of the economy also plays a large role, but I'm suggesting black market traders are by and large not motivated by altruism, and they have had opportunities to tilt the playing field further in their favour.
The argument of the government is people are hording the Bolivar; hoarding other things isn't relevant to that argument.
You haven't given me any reason to think black market entities would actually be hoarding the Bolivar. Meanwhile, it's quite plausible that part of the aim of this cash confiscation is to take money out of the money supply by any means possible, with political deniability. This reduces inflation, albeit at a high cost, and buys political time by making it look like they're doing something.
> Not necessarily in cash alone, but yes I'm suggesting it's in the interest of black market traders to create scarcity in the local economy.
No, this is just not true. As gus_massa pointed out, with hyperinflation, no one hoards cash, you try to own things that will retain value. The value of money declines upwards of 50% a month in Venezuela and when you get something that loses value 50% a month, you try not to hold on to it for very long. Black Market traders probably hold on to their cash for less than a day and try to convert over to Columbian pesos or US dollars as quickly as they can.
Meanwhile, we have a much more plausible story: Venezuela has been hit hard by the decline in oil prices - their main export - yet has been unable to curtail spending to match. That money needs to come from somewhere.