Why I love numbers in economics (and explaining Venezuela's economic troubles with inflation)

Since my elementary school days, I have been highly devoted in studying mathematics. With my interest in numbers, I started taking math-related courses in college.

Especially since 2017, I have been watching the value of currencies fall in relation to the U.S. dollar, like what economist Steve Hanke does every day. I track the countries worst affected by inflation during the past year. In July 2017, I started looking at Venezuela's currency, the bolivar. While the official exchange rate was maintained by the government at 10 bolivars per dollar at the time, the black market value of the U.S. dollar was estimated at over 8000 bolivars (not a typo!), and the money supply was in the tens of trillions of bolivars. This shows that price controls in a multiple exchange rate regime causes serious problems for the economy. Just three months later, the price of $1 has reached 40,000 bolivars, and by the end of 2017, it was over 100,000 bolivars along with the continued, exorbitant growth of the money supply in bolivars. 

The Venezuelan government eliminated the fixed exchange rate system in January 2018. However, Venezuelan currency continued to lose value, with the price of $1 reaching the millions of bolivars (3,000,000 bolivars as of July 2018), and the money supply grew into the quadrillions of bolivars. The currency was redenominated in August 2018, turning 100,000 bolivars into one.

Venezuela has experienced one of the worst economic catastrophes in the world. The Spanish-speaking, oil-loving country in northern South America was once a good-functioning economy, with a GDP per capita higher than South Korea until the late 1980s, when Venezuela's economy contracted due to the oil glut.

I continue to track Venezuela's inflation to this day (despite having slowed since 2019). I also track Zimbabwe, Argentina, Syria, and Lebanon, where their currencies have been losing value rapidly as well.

Black market currency exchanges emerge when exchanges take place at an illegal exchange rate. This is caused when a central bank does not intervene regularly to keep the exchange rate stable.