When the shield turned into a sword: El Petro will provoke a new global economic crisis

[Mazda3]

Long ago the president of Venezuela, Nicholas Maduro, was a bus driver who graduated only from high school. Today, the South American country, whose leader it is, threatens to plunge the global economy into a new financial and economic crisis. So, where does this thin line pass, having crossed that shield turns into a sword?
The fact is that many countries with serious economic problems consider crypto-currencies as a means that can accelerate economic growth ... if not as a panacea. And for such a position, there are several significant economic arguments. Undoubtedly, the main one is the anonymity and decentralization of digital assets. Moreover, blocking technologies allow you to transfer huge amounts quickly and without loss of transactions. Financial regulators and politicians do not have power over tokens. Crypto-currency payments are not controlled by special services. And so on.

All this can create the illusion that with the help of such a universal financial tool it is possible to circumvent economic sanctions and revive the market. So it may seem at first glance. For example, following the principle of Occam's razor, which says that "One should not multiply things without necessity," the Venezuelan president chose the most trivial position: he issued a new virtual currency, El Petro, backing it with present and future oil reserves. According to Maduro, ICO El Petro brought about 4 billion dollars in the state treasury.

Let's look into this in more detail. It's not about how much money they managed to get with the release of virtual assets. The problem is deeper. The principle of Occam's razor does not always work in economics. The virtual currency, despite all the advantages that it is attributed to, does not look like system assets. In Venezuela, this is tight. Inflation in 2018 reached a catastrophic level of 24.600%. Prices for food products increased by 40%, for health care - by 20%, fare increased by 25%. And all this according to official data. From prices on the black market in general, the roof is demolishing. The country does not have everything. At the same time, oil production, the country's main asset, declined by 29% over the year.

Why did this happen?
The economy of Venezuela is 95% dependent on exports of black gold. In the era of high prices, the government missed the opportunity to modernize the raw materials complex. Nicholas Maduro got a terrible "legacy" from Hugo Chavez. Decline in the oil industry accelerated international sanctions. Accordingly, oil production fell to a critical level, and even high oil prices could not save the country's economy. In fact, El Petro is getting cheaper every day.

"In fact, most people do not even know how to use them," says Algert Cortes, Java developer at Ogangi, from Merida. "The crisis has changed the people of Venezuela." 70-80% of the population is trying to get gas and electricity for their homes. We do not have time and energy to think about some kind of crypto currency. Unfortunately, there is no trust in the authorities. And I would not invest in a virtual currency controlled by such a government. "
Nicholas Maduro, already a president, acted as the bus driver - he chose the easiest and unkempt way. Which, by the way, can lead to catastrophic consequences for the world market.

Analysts of the Brookings Institution (Washington), one of the largest research centers in the US, explained to the world economic community why it is not worth it to rejoice at the appearance of a new virtual currency, provided with oil.

They believe that El Petro not only will not keep Venezuela "afloat", but will pull the whole world economy to the bottom. The precedent is dangerous by relapse. The governments of other countries - "outcasts" - Iran, North Korea and others will want, or are already trying, to do the same. For a short time, the virtual currency will help circumvent the sanctions. But we must take into account the fact that such currencies will be produced mainly by countries with a sharply deteriorating economy. This will lead to the emergence of toxic digital assets. They, in turn, will "destroy" the excessively volatile crypto-currency market.

Everyone knows the story of the straw that broke the camel's back. When one Bedouin decided to move from one oasis to another. He began to load all his belongings on a camel: carpets, utensils, chests with clothes - and the camel kept it all. Already before starting off, the Bedouin remembered the beautiful blue feather that his father had once given him. He returned behind him and also put a camel on his back. But he suddenly fell and died - the burden was too heavy.

"My camel did not take down the weight of the bird's feather," thought the Bedouin.
The world economy is already on the verge of crisis. The decline in production in China, the endless Middle East war, the collapse of the Iranian program - none of this strengthens the health of the world market. In addition, and in the virtual market, there are such problems, so toxic crypto-currencies. Kriptonok may be small and not as noticeable as global financial and economic processes, but as we recall, the crisis of 2008 began with the collapse of only one American mortgage company.

I would like to think that those who are in power in countries under international sanctions will refuse to hold national ICOs. You can not shoot your own foot when you try to go ahead!
A source: https://medium.com/@bitnewstoday/el-petro-to-force-the-next-global-financial-and-economic-crisis-53b6e25820b8

[Kate]

I wont sweat on this since a single country alone cant do shit