#683 – Episode 683: Venezuela’s Crisis, Cashless Challenges, and the Exodus from Illinois

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now I wonder Hello there all you expat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started Now here's some boots on the ground news You're never gonna hear unless you actually live down here Of course, we all know what kind of state Venezuela is in now kind of a fourth world country, right? You might even be aware that there are masses of Venezuelans leaving their country mostly illegally

[00:47] Why because president Maduro doesn't want to let the cows out of the barn It's been said that 95% of Venezuelans who left their country in the last couple years are now in another Adjacent Latin country as illegal aliens either because they snuck in or overstayed their tourist visas Which was the general idea from the start to get the hell out So naturally if most all of them aren't leaving the country illegally They don't have money for plane train or boat fare because the economy is shot and the average person makes the equivalent around 35 US dollars a month. So that means when they finally get out of Venezuela and land generally in an adjacent Latin country They're pretty broke and looking for a job Now Latin citizens living in nearby countries like Colombia Peru Brazil Bolivia

[01:34] Ecuador are naturally a bit miffed by this and the word on the street is that the Venezuelans are no longer welcome Locals are saying they're distorting the job market and lowering wages now Just a few years ago when things weren't so bad in Venezuela and just a few were trickling into adjacent countries They were readily even happily absorbed by the locals But in the last year all that's changed in fact I've heard these days the locals in adjacent countries looked down their noses at Venezuelans Who actually might be much more educated and cultured than they are So they arrived generally with nothing but the shirts on their backs and maybe a couple of bundles or a suitcase Looking for a work. Why cuz they're dead broke, which is a very good reason why the vast majority of them are escaping In fact one Colombian guy, I know says you can easily spot a newly arrived Venezuelan

[02:22] He or she is always dressed quite nicely and they're usually the only person or persons in the group that aren't overweight Yep, my Colombian friends said he could use a bit of that Venezuelan diet himself But the point is the word on the street is that Venezuelans are not welcome Why because when they come they're looking for work and they're always gonna displace a local Turns out it's very much the same kind of logistics and economic problem that plagues the u.s. With all the mostly illegal Mexicans pouring in so their documents aren't in order. They're hungry They're looking for work and will take anything and the local businessmen know They can hire a Venezuelan in a second for half the legislated minimum wage and without any of the benefits for cash Completely off the books doesn't that sound familiar my how the worm turns, huh?

[03:11] Looks like some of these Latin countries are getting some of their own medicine right back at them now You longtime listeners know that I mentioned in the past the same thing is happening between Costa Rica and Nicaragua You see Nicaragua a much poorer country than Costa Rica a country It shares a border with to the south has for the past 20 years or so ever since the big gringo invasion of Costa Rica That situation has been attracting thousands of poor Nicaraguans who sneak in illegally They work the grant jobs in Costa Rica for a lot less than the Costa Rican Regulated minimum wage and without benefits too because well, they're off the books In fact, you know until the recent Venezuelan crisis Costa Rica was the only Latin country that Suffered that fate much as the u.s. Has been suffering an illegal immigration problem for decades now

[03:58] In fact here in Latin America when you talk to Venezuelan refugees newly arrived ones, especially they'll tell you it doesn't take long to figure out A lot of the locals aren't keen on having them there and they give them the bums rush Although most Venezuelans who've escaped will say they are political not economic refugees That's an easier way to get into an adjacent country legally It's still difficult, but they will give you asylum for a certain amount of time in many cases But there are a lot of hoops to jump through But in actuality almost all Venezuelans who are escaping now to other countries are economic refugees Now according to this report that came out last week in a big Colombian newspaper The monthly salary for a working venezuelano in his home country provides just enough funny money boulevards to allow

[04:47] The average family to put food on the table only two weeks out of that month So to eat and survive the rest of that month most venezuelans turn to the black market They get thinner and skinnier as they barter and scrounge all the while hedging plans on how to leave the country Which by the way seems to be prompting new revisionist style op-ed pieces coming from so-called Educated latin journalists who see the venezuelanos pouring in lately If you've been reading these op-ed pieces You'd see those journalists are rethinking the idea of a poor or desperate latin person's unalienable right To seek out the sueno americano the great american dream in this case. You can call it the sueno americano latino

[05:33] Well surprise surprise sounds like some latin americans have what we might call the not in my neighborhood syndrome suddenly So-called educated latins and latino journalists aren't so pro open border and hands-off immigration anymore Except of course when it comes to the u.s. Mexican border go figure, huh? Now you might say there's always been a trickle of illegal refugees from cuba Slipping into the u.s. In various latin countries, but that's never been a big problem Sure cuban refugees always get a lot of press but very very few of them escape compared to the overall population of the island In fact, even in the largest of latin cities, you don't find cuban quarters like you do up in the states Oh and by the way chile with its reputation of being the highest per capita income latin country and the most stable of

[06:23] South american countries they've always had a slight illegal immigration problem with poor uneducated latins sneaking in from adjacent countries like paragua and peru But never in recent history has there been such a huge illegal influx such as there has been the last few years Coming from venezuela and we certainly haven't heard the last word on that. So stay tuned All right changing gears a bit here If you recall in a recent past show I went through some sobering statistics about how much cash latin american people use Versus credit cards and digital fiat money and such It was mentioned that in honduras about half of the adult population have debit cards Not that they use them or even want them and the vast majority use them Just to go to an atm machine and pull out cash

[07:10] So how'd that come about anyway? Well, it's because employers and banks have gotten together to create a system where they can do direct deposit instead of paying their workers with cash in a traditional pay envelope every kincena By the way a kincena is your standard 15 day pay period in english The word kincet means 15 kincena 15 days Yes, nearly all latinos who work on the books get paid every 15 days or kincena Now, of course banks are in business to get more clients and have more deposits and movement of money and such because that's how they Make their commissions, right? So it was easy for banks here in latin america to talk employers into the direct deposit system That way employers didn't have to load up on a bunch of cash every kincena and handle and organize the actual cash payouts

[07:57] in fact latin employers especially the big employers and large companies bought into that system rather quickly because In the past there was always a risk on a cash payday that someone just might get robbed and sometimes they did Hey robbing a payroll truck. We've all seen that movie a million times, huh? Meanwhile, I understand japan and there's talk of china going to an all digital currency And the u.s And certain european countries are definitely on that track too Which is why every time I mention on a show that I don't think it's possible For latin countries to switch to a completely cashless society. I get emails from people saying Yeah, but the rest of the world's going cashless and there's nothing you can do about it All right. All right But apparently people who send me emails like that have never had their boots on the ground here All you have to do is take a walk through one of those big markets. No one accepts plastic

[08:46] It's all cash. You have to wonder what would happen if latin countries suddenly said no more cash We're going strictly to plastic and digital money Well, what would happen in those gigantic mercados that use no plastic or digital money at all with the people there panic Would they riot now? I kind of think what would happen is they'd create their own kind of script Or go back to the barter system. You see him doing some of that now or perhaps silver will make a comeback That would be cool Obviously any government's attempt to create an entirely electronic money system Has everything to do with those fat ass magnetist bus bags wanting to increase their revenue because you know Besides the narcotics and drug business The only golden goose left to pluck is the millions in cash money that changes hands every day in those big markets

[09:32] And with those street vendors that give out no receipts the so-called latin gray market Which makes up in some cases 30 percent of an entire latin economy Meanwhile that big fat goose is walking around and the government wants to pluck it in the worst way They can't do it by force I mean some days you don't see a single cop and never a revenue agent Not on a street with rows and rows of pirate vendors or in one of those big mercados Any government copper agent in a place like that would be there to buy not to enforce the law That would take huge cajones. Otherwise known as huevos, but still For those magnificently corrupt and ever broke latin governments that big old plump golden goose is so tempting

[10:19] Which brings me to an article that came out just today from international living's favorite gringo paradise. Ecuador It's an article entitled Ecuador's new electronic money system should be operational sometime in 2018 It starts by saying the director of ecuador central bank predicts that a rejuvenated version of the country's digital money system will go live in 2018 then it says Unfortunately, the original planned digital currency system rolled out to great fanfare by the government in 2013 Was set up to allow every ecuadorian with a cell phone to use the digital cash system Which was designed to phase out and eventually eliminate cash However, it says it was a resounding failure with the public

[11:07] Attracting less than 10 percent of the predicted population users The idea originated by ecuador's central bank was to get the entire country on digital money So five years ago, it was a dismal failure However, now that an estimated 95 percent of ecuadorians have a smart or semi-smart phone Officials from ecuador's central bank believe it will be widely adopted Yeah, right. Well see how that works out By the way, that's just one of the reasons why i'd never live in ecuador And you know not saying you can't have a nice peaceful pleasant laid-back life there But every day it seems like i'm getting more and more negative reports about the place. All I can say is thank you international living Then this study pops up from keto-based provincial chamber of tourism

[11:57] Whoa, this ought to drive the final nail into that coffin. Listen to this The study just released shows that ecuador tour agencies hotels and restaurants charge way too much And i'll paraphrase this here It says among specific findings is that five star hotels in keto ecuador Charge almost twice as much as the very same or equivalent hotels in bogota columbia and that tours organized by registered travel agencies in ecuador on average cost 60 percent more than columbia and 25 percent more than get this Costa rica always considered to be one of the highest buck destinations in the past And it says that the price of a meal in a good restaurant in ecuador is generally 40

[12:43] Higher than in neighboring peru. In fact, it says the average price of a tour in ecuador ranks second Only to chili in all of latin america Then it says the average cost of a meal in keto ecuador ranks third highest in all of latin america Behind only buenos ares argentina at number two and lima peru at number one Peru that expensive who to thunk, huh? By the way now and again I get emails from people asking me to highlight peru and i'll be doing that soon. So stay tuned All right, then that same ecuador chamber of tourism studies says that in country air travel was much more expensive than any other latin country And here's what the tourism chambers spokesman says about that He says we are not competitive in the air travel market either blaming the 2014 elimination of the jet fuel

[13:34] Subsidy hmm. Well to me getting rid of any government subsidy is a step in the right direction By the way, did you know that elon musk's company tesla and his solar power company would be totally bankrupt If not for huge government subsidies. In fact, I just read the other day. He loses $13,000 on each tesla sold and guess who finances that? red ink Inflated stock sales and government subsidies, but I digress as usual And you know as much as i'd love to have a tesla Though you can't have one here in latin america with the way the roads and the tumolos are You know those gigantic speed bumps that can tear out the bottom of your car if it rides a little low Anyway, don't you think in business? It should always be the survival of the fittest Not the survival of the biggest corporate campaign donor or government brown nose suck up for subsidies

[14:23] Well, there's more bad news from that equator tourism study It says international tourism there boomed from 2005 to 2013 growing at 20 a year until around 2013 meanwhile tourist agencies hotel owners and restaurants Didn't realize that that rate of expansion was not sustainable. So they overbuilt you've heard the old falsehood build it and they will come That's the same disease that's affecting all latin america now and the driving force behind the huge real estate bubble Let you see almost everywhere All right I'll read on it says back in 2010 when equator first started securing its place as an expat tourism and retirement destination Thanks to publications like international living there came a huge building frenzy of new hotels and restaurants

[15:13] Resulting in such an over capacity that the country's entire tourism sector is taking a big hit It says now in quenca ecuador, for example There's a 30 occupancy rate in hotels and hostels with empty restaurants on practically every quarter all due to over expansion Meanwhile hotel hostel and restaurant owners blame airbnb owners for their problems instead of the poorly thought out expansion Decisions they made early on all right backtracking to venezuela a bit I just got this little blurb from my friend asker Very smart guy came down to my second or third expat insider seminar now. He's down here for good So he just sent me this very interesting little blurb about bitcoin and venezuela By the way at my last expat insider seminar just about a month ago now

[16:02] Bitcoin was at around 2200 and today it's at 3400 Anyway, this article starts by saying and i'll paraphrase a bit here In venezuela Home to some of the worst hyperinflation since the weimar republic a big mac costs about a half month's wages So rather it did until a bread shortage forced the burger off the menu annual inflation rate this year 1600 percent life here looks like an old black and white newsreel from the depression 30s Long lines nothing on the shelves and cashiers weighing stacks of bills to survive though Thousands of venezuelans have taken to minaria bitcoin Mining bitcoin that famous cryptocurrency

[16:48] You do that of course by lending your computer's processing power to the block chain You pump in a lot of electricity and you reward it with bitcoins Now whether your bitcoin mining operation is profitable hinges on two main factors Bitcoin's market value, which is quite high In fact it hit a record today And the price of electricity needed to run the chips and the hardware So in a country that's so economically devastated as venezuela, how is that possible? Well Electricity it so happens is the one thing most venezuelans can actually afford because you see under the heavy socialist regime of that little dick tater maduro Power is so heavily subsidized That it's practically free

[17:33] That and gasoline when you can get it In fact unlike the rest of latin america where kilowatt hour rates are some of the highest in the world A venezuelan bitcoin miner with minimal equipment can clear 500 bucks a month That's a small fortune in venezuela today enough to feed a family of foreign purchase vital goods like baby diapers or perhaps Insulin but only online Of course online retailers like amazon or ebay do not ship to venezuela few companies do these days However, there are a few florida drop shipping outfits that will ah, it's me johnny again You heard me mention that many times almost all latin american countries have their florida intermediaries Where you order from amazon or whatever web-based outfit ship it to florida and a land usually about a week later

[18:21] In your latin country of choice. Some of them have a very nice online calculator You can plug in what you bought what it weighs how much paid for it and it'll calculate right there What it'll cost to get it from florida to your latin country of choice So even though venezuela is falling apart at the seams You can still order stuff from amazon and ebay, but not of course with venezuelan bolivars You'll need a credit card in us dollars or some other currency or bitcoin Hmm. Anyway, the article goes on to say that under these strange circumstances a bitcoin miner Looks a lot like an atm machine. In fact professors and college students are starting to mine bitcoin there So have many politicians and police officers

[19:07] It's become a common currency even among non-miners people do know about it. In fact, it says peer-to-peer online Cryptocurrency exchanges allows everyone in venezuela from shopkeepers to housewives to shoeshine boys To pinhead government workers to buy and sell bitcoin Meanwhile that carp-faced maduro has been cracking down on bitcoin operations. He calls them capitalist parasites Yet trading bitcoin is still allowed It's as if maduro realizes that cryptocurrencies like bitcoin are one of the few things holding the country together Even so it says venezuelan police have arrested bitcoin miners on spurious charges Oddly enough actually predictably enough bitcoin rigs are then seized by cops

[19:52] And in many cases rebooted by those same corrupt police for personal profit Even so says one venezuelan bitcoin miner who was actually arrested and his equipment confiscated and of course later Put back into use and not by him. He says people haven't stopped mining They've just gone deeper underground the temptation to make money as a miner is too great to resist Then finally it says a lot of former bitcoin miners have moved into mining ethereum Because you can get the free software and a pc with a video card and start doing it right away Besides he says most pus bag police officers are easily fooled into thinking your ethereum Mining setup is just a regular computer and all of this is only possible because electricity in

[20:42] Venezuela is so heavily subsidized. It's almost free. How ironic, huh? You subsidize electricity you create all these bitcoin miners and basically it's madero shooting himself in the foot Oh, and here's a cool statistic. I came across not so long ago If you were to do a poll on a venezuelan university campus, yes, they have universities there and they're still running Broken windows and no water in the bathrooms, of course But just about a month ago a big newspaper did a poll on a venezuelan university campus one in two college students That's 50 percent of the people polled knew exactly what bitcoin was contrast that to a poll done Just recently at stanford university up in california where only get this one in 20 stanford college students

[21:29] Knew what bitcoin was so what can we conclude from that? What kind of message does that send? Well, it's all good from a first world standpoint Anyway, it says that bitcoin and other cryptocurrencies are at the very beginning stage of universal acceptance Hell if only one in 20, that's five percent of college students even know what it is Imagine the upside when the rest of the laggards find out about it And finally, you know, I get a lot of emails from people living in illinois most of them from chicago My old stomping grounds, but of course, I wouldn't recognize it if I went back. That's what everyone tells me Not to mention i've been told I need a flak jacket and m16 and some night vision goggles to go back to the old neighborhoods I used to hang out in Why mention chicago when this show is called the expat files living in latin america?

[22:15] I will listen to this excerpt from an article someone just sent me it starts out over 3 000 millionaires have fled chicago in recent months. This is the largest outflow of wealthy people from any us city It's also one of the largest outflows of wealthy people in the world So where are they going? Do you think so people are leaving in droves, but not just millionaires A recent poll states that 47 percent of people in illinois want to leave and over half million have done so in the last decade Then it says people who leave are better educated more skilled and earn more money than those who stay In fact entire towns of affluent illinois refugees are sprouting up in florida. Arizona and other places The fact is wealthy intelligent people are often the first to leave a bad situation

[23:02] They have the means to get up and go And when they do they take their money and their businesses with them Then it says most of these people are leaving for one simple reason rising taxes Illinois's tax and spend politicians continue to increase all sorts of taxes Which were already high in the first place and now illinois has just passed a 32 percent income tax hike Which is why illinois is about to become america's first banana republic its first failed state The sad fact is illinois does not have the money to pay its lottery winners nor Can it afford food for its prisoners and forget about future state pension liabilities? Analysts say no tax increase will be enough to take illinois out of the red

[23:49] It's already got the worst credit rating of any us state And analysts are saying that by january 2018 It's a mathematical certainty that illinois will default on its obligations Bad news for pensioners state contractors and pretty much everyone living there Question is will the welfare checks keep rolling in of course because they're federal Worse yet like a number of other distressed states politicians have amended their state constitutions to prohibit Reducing state pension payments. That means taxpayers are on the hook to retired state employees forever And then right now they take up 25 cents of every textile they're collected So there's a financial time bomb happening throughout america the next state to go will be california This inevitable explosion is now imminent and it's going to devastate america

[24:39] No wonder so many people mostly wealthy people and people with means are fleeing the sinking ship Taxpayers can vote with their feet you see and they're starting to do so and record numbers So where are they going? Well to lower tax jurisdictions, of course, is that going to help? Well, it's certainly not going to help. Illinois, but for the taxpayer voting with his feet He'll get some temporary relief elsewhere in the us But that won't last either You must know by now that you have to get all or at least a big part of your assets Out of the us and onto foreign soil outside the us's jurisdiction If you've been paying attention over the last months and years You know that the us government can use any excuse to confiscate your assets

[25:24] And they don't even have to go to court to do it and uncle sam's a hungry desperate broke monster And some people are saying it's almost too late to get your ass and your assets out So how do you get that plan b going? Where do you start? Who do you trust? There are so many so-called Experts and gurus out there. I say trust no one but get some boots on the ground first It's the only way you're really going to see how to live the life of riley here in latin. America on a crappy social security check I'll tell you the american dream is dead. But for us expats the latin american dream is alive and well However, the clock is ticking and uncle sam slowly closing that barn door There's still a window of opportunity But you got to take advantage of it now and the best way to do that Well, you could go to one of those impersonal cattle call international living seminars

[26:12] Well, you're stuck with 200 or so people in a lecture hall with a speaker filing up every half hour or so Trying to sell you something. Nope your best bet by far Select me and the expat insider staff hold your hand and walk you through the good the bad the ugly and the great At my january 2018 expat insider seminar Yep again We'll be way off the gringo tourist trail in and around guatemala central america To get on my early bird discount waiting list shoot me an email the expat files at gmail.com And if you just can't swing making it down to the seminar or get it boots on the ground yourself The next best way to get your ducks lined up on that plan b is to take my expat essentials course Check it out. You won't be disappointed Go to www.expatplanb.com

[27:01] You'll see what I mean And for those of you who are stumbling or may have hit a roadblock in your plan b If you need some help, you can always schedule a phone or a skype consult with me Just go to www that the new expat.com Download my phone questionnaire is free. No obligation and we'll take it from there Bottom line. I don't have to tell you that up where you live the train's heading towards the cliff We're way past that time when it could have been fixed I know this sounds harsh, but you either go down with a titanic or you vote with your feet south of the border This is the expat files living in latin america If you want me to help you out with your own plan b just schedule a one-on-one consult Send me an email the expat files at gmail.com And if you want to learn how to move forward with your own plan b from right up there in the states

[27:50] Go to www.expatplanb.com and check out my three videos. See ya nos vemos