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Thread: Forex

  1. #1

    Forex

    From the book "Introduction to the Forex Market by Dirk D Du Troit

    2.5 Early 20th Century foreign exchange developments

    At the end of World War II all countries had introduced foreign exchange control
    measures and international finance was in disarray. Central and Eastern Europe lay
    in ruins and rebuilding (mainly funded by international investments) received high
    priority on industrialized countries’ national agendas.

    After World War II a new agreement was reached between the United States and the
    UK to manage foreign exchange in a manner that would prevent the problems
    caused by the gold standard during the rebuilding of Europe after World War I. It
    was the so-called Bretton Woods agreement.

    The Bretton Woods system differed from the gold exchange standard in three
    important aspects:

    • Exchange rates were fixed and pegged, but the pegs were adjustable in order to
    avoid cycles of devaluation and revaluation.
    • Controls on international capital flows were explicitly allowed.
    • The International Monetary Fund (IMF) was founded to monitor the agreement. It
    was also charged with the responsibility to decide whether exchange rate pegs
    should be changed.

    The IMF had the following objectives:

    • To establish stable exchange rates
    • To eliminate exchange control measures
    • To bring about convertibility of all currencies

    The IMF could also assist countries in keeping rates stable by lending them gold or
    foreign currencies to avert short-term problems and de- or revaluation.

    The Bretton Woods agreement stated that each member of the IMF set a fixed rate of
    its currency relative to either

    • either gold, or
    • the US dollar

    Furthermore each member country would guarantee the chosen rate within (more or
    less) 1 per cent. This would be managed by central bank operations.

    Through many years, until the late 1960s and early 1970s, the gold exchange
    standard served its purpose, but it was beset with the same problems as that of the
    simple gold standard era’s problems. It could not adequately cope with crises of
    devaluation / revaluation and inflation.

    The Bretton Woods system eventually collapsed, and so did the efforts of
    industrialized economies / countries, to manage foreign exchange with fixed rate
    regimes. The collapse of the gold exchange standard quickly opened the doors for a
    completely new dispensation – floating exchange rate regimes.

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  3. #3
    The idea of trading currencies is quite silly. I suppose people who have little to nothing to offer of substance might insist on such things existing as 'currency trading markets'. Money lacking anything to buy or pay for would be worth what?

    Speculative currency trading could only be about wagering on future valuation of the expected productive output of value of men, machines, etc. of any given society associated with the currency (perhaps its World Monetary Districts that are associated with any given scrip?). As for currency rates being based on a 'country's stability'--well what kind of stability can there be but good and civil order and productive output? So the stronger the currency the more sane the government and more productive its people? So does that

    Merchants by definition buy AND sell ANYTHING, they aren't manufacturers. They wheel and deal on production of others--no surprise how immoral merchants could become nuisances to any given society. Canaanites were said to have been merchants.
    Last edited by allodial; 02-20-16 at 05:12 PM.
    All rights reserved. Without prejudice. No liability assumed. No value assured.

    "The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius
    "It is the glory of God to conceal a thing: but the honour of kings is to search out a matter." Proverbs 25:2
    Prove all things; hold fast that which is good. Thess. 5:21.

  4. #4

  5. #5
    Quote Originally Posted by David Merrill View Post
    It is a delight that you are back posting here Shikamaru!


    Public Law 94-564.
    Monetizing of debt works on their being two types of currency: a) reserve currency and b)circulating currency.

    In this system US government bonds acts as reserve currency backing the circulating currency of Federal Reserve Notes.
    Last edited by shikamaru; 02-21-16 at 07:00 PM.

  6. #6
    Quote Originally Posted by allodial View Post
    The idea of trading currencies is quite silly. I suppose people who have little to nothing to offer of substance might insist on such things existing as 'currency trading markets'. Money lacking anything to buy or pay for would be worth what?

    Speculative currency trading could only be about wagering on future valuation of the expected productive output of value of men, machines, etc. of any given society associated with the currency (perhaps its World Monetary Districts that are associated with any given scrip?). As for currency rates being based on a 'country's stability'--well what kind of stability can there be but good and civil order and productive output? So the stronger the currency the more sane the government and more productive its people? So does that

    Merchants by definition buy AND sell ANYTHING, they aren't manufacturers. They wheel and deal on production of others--no surprise how immoral merchants could become nuisances to any given society. Canaanites were said to have been merchants.
    The threshold for any civilization seems to be one transitioning from production to predominantly rent seeking behavior with a health dose of 'three card monte' until its collapse.
    The history of man has essentially been the history of class struggles.

    Only after the largest thieves (states and civilizations) have something substantive that they wish not to lose is morality, treaties, and 'Law of Nations' are spoken of.

    I can see why the 'Canaanite traffikers' were mentioned with such derision on the Bible.

    'The Shetar's effect on English Law' is a definite reminder.

  7. #7
    Quote Originally Posted by allodial View Post
    The idea of trading currencies is quite silly. I suppose people who have little to nothing to offer of substance might insist on such things existing as 'currency trading markets'. Money lacking anything to buy or pay for would be worth what?

    Speculative currency trading could only be about wagering on future valuation of the expected productive output of value of men, machines, etc. of any given society associated with the currency (perhaps its World Monetary Districts that are associated with any given scrip?). As for currency rates being based on a 'country's stability'--well what kind of stability can there be but good and civil order and productive output? So the stronger the currency the more sane the government and more productive its people? So does that

    Merchants by definition buy AND sell ANYTHING, they aren't manufacturers. They wheel and deal on production of others--no surprise how immoral merchants could become nuisances to any given society. Canaanites were said to have been merchants.
    The FOREX market is a global market running 24x5. $4 trillion dollars is the average daily turnover. Upwards of 70% to 90% of the trades in FOREX are speculative. The market is decentralized and OTC (Over-The Counter).

    There is also arbitrage that occurs in the global FOREX market such as the carry trade where differentials in interests rates between nations can be capitalized for profit and gain.

    Markets in general seem to be about drawing people into them by way of greed only to expenditure your time and energy on virtual property and derivatives rather than substance.

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