Adopt US dollar as your national currency;
Here are all the countries that does it;
http://qz.com/260980/meet-the-countries-that-dont-use-their-...
But no, you can't just make a trivial fix like you said. Venezuela has a dysfunctional government that used to be propped up by oil exports back when oil used to be a highly-priced commodity. After the crash in oil prices, the sorce of income dried up and revealed huge flaws in the country's infrastructure and government inefficiency and corruption.
It being an insufficient fix does not stop it from being trivial and performing its stated goal.
The real idea is not to stop making money, it's to put a lid on the production speed. An armed guard that only allows 5% more production each month than the previous month.
This gives the government an enormous budget that never runs out, and at the same time money will continue to hold its value on a week-to-week basis.
Now tell me: Is this plan doomed because of some economic fact I'm unaware of, or is it doomed because of corruption and politicking?
Unless they do substantial budget cuts (which were are so far assuming that they cannot or will not do) they would be forced to stop paying suppliers and public servants, which would result in even more chaos than there is right now.
Printing this much money would cause less than 5% inflation per month. It would be unpleasant, but you could get a biweekly paycheck and spend it over the next few weeks without having all the value disappear. Supply chains would continue to operate without much trouble. It would be vastly superior to hyperinflation.
Inflation is a tax on people who hold your currency. That's where the money to fund government programs is coming from.
As you said: "The government is printing money to pay expenses". I'm talking about a limit on how much money they print.
> Inflation is a tax on people who hold your currency.
It is. And it goes from bad to disaster when it goes from inflation to hyperinflation.
I want to make it clear that I'm suggesting that they start by printing more than they spent the previous month.
In absolute units of currency? Yes. When you print money like that every unit of currency is worth correspondingly less. It's exponential, which is how you get 480% inflation this year and a projected 1640% next year in Venezuela without a constant dollar increase in spending.
The only way out is a drastic reduction in services.
I don't see how all of the following could be true at the same time: 1. The inflation is caused by the printing of more money. 2. Printing enough money to inflate the supply less than 5% per month. 3. Costs increasing more than 5% per month.
If the government and the economy were both functioning properly there would be no reason to print money - the treasury would be receiving enough money through taxation. Governments don't go into wholesale printing unless that's not happening.
Though to be fair it seems every FR system does at least print around the edges, eventually.
(Or is there a some economic reason this is a terrible idea?)
Adopting another currency makes sense if it's easy to do a lot of trade using it. The closer you are to other $ users then, the closer the real value, because you can easily trade outside of the local bubble.
(It could work of course (and did for some countries)... but you still need to have actual well working trade to make sure the currency has the value you expect)
The point of pegging your currency to a foreign currency is to rebuild trust in your currency by guaranteeing a fixed exchange rate.
But if you do that by pegging to multiple currencies that all have variable exchange rates, how do you handle the relative changes between them ?
The only way would to be adjust it almost daily. Which is the same thing as letting it float.
++ PS: I'm talking about a somehow hard peg here. Most countries tend to use targets and will try to maintain some levels of rate. But they do so by operation on the market rather a peg by fiat.
But only as a transition measure, to rebuild trust.