On 5/18/2010 11:39 PM, Natalia wrote:
Help me out. I'm stuck on your second and third paragraphs below. I
don't see the part where you are /clearly explaining /how, just
because it takes two to tango in currency markets, the respective
economies of the currencies gambled upon are not adversely effected.
Zero sum game aside, such gambling is world news, and how the
billionaires play is mimicked, not for true reflection of a currency's
value, but for the fact that big investors set trends.
I wrote that in 1998 when the markets were both *much* smaller and there
were far fewer complex instruments. The leverage and complexity now is
such that poor regulation and enforcement exposes the system to shocks
when things blow up (financially) I did say that exports and imports in
countries were affected by currency values (all relative to each other)
In the 80's and 90s the top traders usually kept quiet when building a
position as the markets were not as liquid as the past decade. It still
is unwise to talk about your intentions unless you are fibbing and want
to stimulate new buying or selling so you can unwind.
If you think about it, the large trading banks are larger than
individual hedge funds in capital and ability to set trends with
marketing tools and media releases.
Market confidence is everything, and we only go by faith regarding
today's currency value.
This has always been true, even in barter days! How did a person know if
a coin was real silver or gold, for example? If coins were alloys?
Most banking systems are incapable of proving there is much value in
their money,
Value in fiat money is strictly what it can purchase TODAY. Belief in
its future value is just educated guessing and superstition.
and if they were to be judged by the same policies by which they judge
others, they would have collapsed long ago.
But they are like churches! Faith and hope...
The Feds that should combat inflation have allowed this devaluation
for their own ends.
They serve politicians and bureaucracies who spend future generations
taxes. Credit itself is eat now, pay later. OK for individuals who are
hungry, but in my view not for pork barrel projects. What is wrong with
the discipline of pay as you go? Don't borrow except for *real*
emergencies...
Also, at your posted site, I grew equally perplexed over this excerpt:
common myth is that speculators, like George Soros, can cause a
national currency crisis. It is important to remember that it is
governments who largely control economic information flows and who are
vulnerable to pressure from the mega-rich. Also, when corrupt regimes
siphon off billions of dollars from their national economies, they
weaken the infrastructure and diminish future productivity. It is the
savvy speculators who perceive aberrations in value, and provide the
necessary information feedback to the world which helps bring about
change.
Could this be interpreted to mean that if the speculator is savvy,
then the truth is being revealed or that the change will be good?
*A* truth is being revealed: that the books are phony (like Greece this
decade) Good is a subjective evaluation.
If Soros short-sells the Cdn dollar, which he could have the other
week, and others hear about it and do likewise because he's the king,
and they win--it fails to affect our economy in /any /way? So the
loser pays, if he's good for the credit, which many often are not, but
the country whose currency was bet against has the task of regaining
market position in an environment of good will gone bad because the
king decided he had a feeling, based on gov't reports, that he would
call tomorrow's actual monetary truth, and could use an extra billion.
It is not so simple. There are always disagreeing "kings" (to use your
word) There are bulls and bears most of the time.
No doubt Soros is savvy, but are he and others playing the same game
right to interfere in the future of any nation's well being?
Policies that do not inspire confidence (like Greece for ex.) is what
induces speculators & indeed *all* portfolio managers (incl pensions,
insurance companies...) to change out of a currency (bonds, shares) into
olther ones. What has gone awry in my opinion, in the oversight and
regulation/control. Those who knowingly peddle junk to the public should
go to jail. Those who get paid to oversee should be up to speed on
modern contracts.
You say that in the zero sum game, no net wealth is created. That
those participating in currency spec are using highly liquid assets as
deposits, like gov't treasury bills, bonds, etc. These may be liquid,
but they aren't exactly real.
Look, no fiat based asset is real unless it is the price of a physical
asset. IOUs are promises.
The value of most currencies hasn't been more than 5-20% real since
the Seventies.
Where did you get that number and date? Buying power of the $US is down
95% in 100 years. Buying power is what is real.
Aside from actual value rules that should be challenged, the currency
speculators often win,
currency speculators lose exactly as much as they win
and duly manage to acquire even more unreal money because that's the
system.
You think it is a special power that some have to always win more than
they lose? The history of investors is littered with losers; they just
aren't usually well known!
They go on to reinvest or speculate vast unreal sums for which they
are given real credit and in turn assets. Actual global wealth is a
small fraction of a point compared to the illusory credit these
speculators are playing with. And the more they are allowed to amass,
the more devaluation world wide occurs.
It is precisely this excess debt based money supply (some will always
have more than others, but the faces change) that is threatening the
system. The huge imbalance in wealth usually leads to instability
(social unrest, revolts...)
>From what I've read, deposits are more typically not so traceable. Up
to one third of HNWI wealth is held off-shore.
On somebodies shore! ;-)
Taxes on cash assets alone are staggering. And it is from these
unregistered tax exempt companies that millionaires and billionaires
most often play their positions. No one has addressed the loss in
taxes on offshore placements, I noticed. And we are discussing just
currency spec. taxes. No one can readily estimate the worth of
offshore tangibles.
Some people will always try to be free riders and to game the system. It
is correct for society to be against that (rational self interest)
Canada handed the Bronfmans a billion dollar free exit I've been told.
Why no successful protest?
Given a two trillion a day in global currency specs estimate, there
seems to be a lot of fictitious money going around, much untaxed, and
very much affecting all economies. It's created out of nothing, yet
because there's so much of it, all deemed to be assets, it affects
real value of the global standards.
Perception and subjective evaluation produces currency value if nothing
solid is backing it. I fully agree. The Fed should be audited (all CBs)
and money creation should cease to be purely loans in my opinion.
(Wasn't always the case!!)
We are definitely adversely affected by the speculative positions of
HNWIs. The funds they play with are unreal, and result in mounting
financial burdens for the less wealthy, whatever way they are invested.
Now you are getting very speculative with causation.
Taxes alone on this market could feed the world
can't eat money
, pay for health care globally,
There are insufficient doctors, medicines, sanitation equipment (money
is power to access what is available) We've had a 400% increase in
demand for food, energy, health in one century.
and be properly invested in revitalizing our natural home. (The
purpose of the Tobin Tax is, to some, a start in the right direction,
but its very function is still condoning and legitimizing a system
which hurts everyone--one that should be dismantled.)
You are entitled to your opinion.
With all this money supposedly being made, I can fully appreciate the
position that billionaires could easily right the many wrongs of this
world (many which they have fashioned), if only they cared. Must be
genetic aberration.
I agree with the last sentence (tail of Bell Curve) I do not think money
can solve the problematique; but things could be better with education,
family planning, end of patriarchy, etc. And much more money could be
allocated there.
I'm taking a rest from posting more today.
Steve
Natalia Kuzmyn
Steve Kurtz wrote:
We have on this list someone who knows how to steal money from those who
have very little of it. That is akin to alchemy.
As I've clearly explained, every currency transaction requires a
willing, profit seeking counterparty. If George Soros (or Buffett, or
Gates, or??) makes a billion dollars from a currency position, others
cumulatively lost it. (zero sum)
If it is claimed (sometimes correctly) that a person can muscle a market
in one direction, the person must be accumulating a large position. The
person *must* reverse that position to achieve a profit. So the same
force in one direction would be applied in the opposite direction.
My informal paper on this and other aspects of currency and commodity
markets is here:
http://www.gold-eagle.com/research/kurtzndx.html
Steve
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