Venezuela's Post-Maduro Government Denies Hiring 'Money Doctor' Steve Hanke, Then Opens Probe Into Lawmaker Who Proposed Dollarization

Venezuela's annual inflation rate is running near 400%, according to estimates from Johns Hopkins economist Steve Hanke cited by Fortune. The government stopped publishing its own inflation data years ago, so outside economists have had to fill the gap with black-market exchange rate tracking and other proxies.

Hanke, who built his reputation advising Montenegro, Ecuador, and Zimbabwe through currency crises, says he's been named Special Adviser on Economic, Monetary, and Energy Affairs to the office of a leader in Venezuela's National Assembly, according to Fortune's Shawn Tully. His prescription is blunt: kill the bolivar, shut down the Central Bank of Venezuela, and adopt the U.S. dollar outright. He told Fortune he puts the odds of passage at 50% to 80%.

The timing matters. This is happening as the country works to rebuild after the January 3rd U.S. Special Forces raid that removed Nicolas Maduro, according to Fortune's reporting. Oil production, the backbone of Venezuela's economy, sits at just 1.1 million barrels per day, about a third of the 3.4 million barrels the country pumped before Hugo Chavez took power in 1998, and only modestly above where it stood when Maduro was ousted.

Guacamaya reported that Hanke has actually drafted a bill alongside opposition deputy and former presidential candidate Antonio Ecarri, aimed at formal dollarization and abolishing the central bank. But according to reporting aggregated by Ground News, National Assembly president Jorge Rodriguez went public on Saturday denying that Hanke had been hired at all, and announced an investigation into Ecarri for proposing the dollarization plan. Rodriguez reportedly moved to remove Ecarri from his post chairing the parliamentary friendship group between Venezuela and the United States.

That's a direct contradiction sitting inside the same news cycle. Fortune's own framing, and the exclusive it ran, says Hanke was named to an advisory post by "a leader" in the National Assembly. Rodriguez, the body's president, says that didn't happen and is instead punishing the lawmaker who floated the idea publicly. This represents an open institutional fight within Venezuela's leadership, not a settled fact about who actually has authority to hire outside advisers or push currency reform through the legislature.

Hanke's core argument, as he laid out to Fortune, is that price stability has to come before anything else. "Taming inflation is the key to restoring stability in Venezuela, and all the other progress flows from that," he said. His argument: dollarization removes the temptation for a government to print bolivars to cover its bills, which is what fed hyperinflation in the first place.

The dollar is already doing most of the work informally. The bolivar has fallen 78% against the dollar over the past year, according to Fortune, and most Venezuelans outside government payrolls or pension programs already transact in dollars. Hanke calls this "spontaneous dollarization" and argues it raises the odds that a formal switch gets approved.

Breitbart's older coverage of Venezuela's inflation crisis, cited here for historical context, pegged the black-market-based inflation estimate at 615% during an earlier collapse under Maduro, when the government had likewise stopped publishing figures. That reporting also detailed shortages of bread, milk, and soap, and noted the government criminalized public lines outside stores to hide the crisis from cameras. The current 400% estimate suggests some improvement from that low point, but it's still the highest inflation rate in the world by Hanke's count.

Dollarization means giving up a central bank as lender of last resort and effectively outsourcing monetary policy to the Federal Reserve. Argentina's Javier Milei campaigned on full dollarization and then backed off once in office, opting instead to slash the budget deficit and subsidies while keeping the peso pegged to the dollar. Even with that peg, regional elections last year battered Milei's party and forced Treasury Secretary Scott Bessent to step in with a currency swap line to defend the peso, according to Fortune.

Hanke's own track record cuts both ways. Zimbabwe dollarized in 2009 under his informal advice and inflation vanished. But a new government abandoned the dollar in 2013, and hyperinflation came roaring back. Hanke's first attempt to sell Venezuela on a currency board in the mid-1990s also failed to win a majority in the National Assembly.

Nothing about dollarization has passed. Rodriguez denies the advisory arrangement exists at all, and Ecarri is now facing an internal investigation for proposing it. Whether the National Assembly ever votes on Hanke's bill, and whether Rodriguez's Chavista-aligned bloc, which still dominates the legislature according to Ground News' sourcing, allows it to reach the floor, remains to be seen.