073. Mauricio Di Bartolomeo on Hyperinflation in Venezuela: Is Bitcoin A Solution?
Release Date: 07/09/2019
Mauricio Di Bartolomeo, Co-founder of Ledn, shares his perspective of growing up in Venezuela. We talk about what the culture, and economic and political sentiment was like when Hugo Chavez became president rewrote the constitution, renamed the country, changed the flag and and changed the entire economic landscape that ultimately created the devastating state of hyperinflation that there is today, which, in 2019, is estimated to be 10 million per cent.
We talk about the oil boom instigating outrageous government spending, Chavez’s marathon Sunday propaganda broadcasts of Aló Presidente and his power moves like expropriating property live on national TV under the guise of making life better for the people of Venezuela.
“Authoritarian regimes have been incredibly successful when they place capital controls, in pushing this narrative that it doesn't affect the common person, that it only affects the rich people because they travel. And because they get to buy things from abroad, but that these currency controls don't really affect the actual residents of the country because they don't live in dollars.”
Mauricio explains how hyperinflation effected Venezuelans. And… in doing research for this podcast, I’d read and listened to talks on how hyperinflation was devasting, causing extreme poverty and dire circumstances, which we get into. But I wanted to ask Mauricio about the other side as well, who benefits from hyperinflation? Because it’s not one sided. So he explains from personal experience how he was able to benefit from shorting the Bolivar.
“Personally, I have done better off shorting the bolivar than long Bitcoin. And the way you short the bolivar, in essence, and the way the rich get richer to your point, is when you have assets, you have an asset base, you can borrow against that asset base… So what you do is you take a loan at 30% converted to dollars on spot, wait for inflation to do with thing, three months later, you convert a fraction of the principal back, pay off the entire loan, do it again.
And biggest problem with extreme monetary inflation is how quickly the currency becomes devalued. This is why Mauricio and his family started Bitcoin and why it was the perfect solution… until it wasn’t.
Venezuelan government vs. Mauricio’s brother’s Bitcoin mining operation
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