How a few people can change the new economy?
Currency exchange rates are set by governments around the world. But in most capitalist countries, currency exchange rates are posted daily by commodity exchanges. Then, the central banks using those exchange rates set the government rates. The tail wagging the dog, you might say? But it is true. Every month or every other month in some cases, commodities have contracts bought and sold at some unit price. The contracts are fixed price, about $5000/contract. Commodity exchanges never delivered any contracted goods. It is used as an insurance for producers to hedge again price changes or crop damages, etc..
In some commodities, the futures contracts bought and sold are very few. If Salomon Brothers buys 3000 contracts in NY merc; the silver price will go up $0.5/oz. If Fidelity Magellen funds buys 40,000 contracts on bonds; the face value went up, resulting in lowering yields half a percentage point. This gives you some magnitude of how a few people can make our lives miserable. AND, my god, how little money they spend to make our lives miserable, $5000/contract. We must decouple the futures pricing with all government decisions.
When futures currency exchange rates are changed by George Soros' buying or selling a few contracts, Asian economy has the appearance of failing. When you examine the economies, you find few bankruptcies. No government foreign loans. And all private loans are serviceable. Inflation and political instabilities were mere journalists' frenzy. In time, the new economy will take over the world. Job growth and businesses prospering are the bases of stability. |
