Venezuela’s Currency Has Had its Biggest Monthly Collapse
Often on HN&#x27;s you&#x27;ll get someone asking why a company has to continually grow revenues&#x2F;profits.  And the person is usually convinced once someone else comes along and lays out an argument that goes along the lines of....<p>If you consider a market with two companies.<p>Company A that doesn&#x27;t grow revenues or profits and company B that continually grows revenues and profits, which one would you invest in?<p>The answer is obviously once you realize that each company doesn&#x27;t exist in a vacuum but is instead competing with other companies for the same investment dollars.<p>Currencies markets work in a similar manner in that you are never talking about a currency but rather you are explicitly talking about what a currency is worth with respect to another currency, or often implicitly with respect to the US dollar.<p>It&#x27;s actually pretty amazing to think about the currency markets and how they are constantly reweighing each currency with respect to every other currency such that each currency has the correct valuation with respect to all others such that there is no available arbitrage opportunity.<p>So its not that the markets or wall street is being &quot;mean&quot; to Venezuela or punishing it, but rather they are trying to find the right balance of how many Boliviars one should get for each USD.<p>Unfortunately, there is a giant feedback loop that often means once a countries currency gets depressed enough they almost have no choice but to print money just to buy&#x2F;import the essentials required for life.   And this printing of money just has an feedback that increases inflation even more until its impossible to get out from without a bankruptcy, just google &quot;Zimbabwe trillion dollar bill&quot;.