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| quote: | Originally posted by ams.rld
Im wondering if any of you could answer this.
Let's say a mega billionaire made all his wealth in the market and than decided to put all his money into T-bonds. What would happen to the dollar than? Would it increase in value or decrease? |
Nothing would happen. That billions of dollars would still be in the currency pool. It's just in the form of a T-bill. Maybe if the billionaire took out his entire fortunre and put it in a safe vault. Then his money would be completely outside of the currency pool, thus reducing the cash supply, which could theoretically increase the value of the dollar. But that billionaire would be dumb to just stash money, that's really why they're billionaires. If they wanted to take their money out of stocks or real estate, they'de buy commodities like gold, silver, T-bills, CDs, etc. There are instances though where ultra-rich tycoons have directly affected economies...Check out George Soros...
| quote: | Currency speculation
On Black Wednesday (September 16, 1992), Soros became immediately famous when he sold short more than $10 billion worth of pounds, profiting from the Bank of England's reluctance to either raise its interest rates to levels comparable to those of other European Exchange Rate Mechanism countries or to float its currency.
Finally, the Bank of England was forced to withdraw the currency out of the European Exchange Rate Mechanism and to devalue the pound sterling, and Soros earned an estimated US$ 1.1 billion in the process. He was dubbed "the man who broke the Bank of England."
The Times October 26, 1992, Monday quoted Soros as saying: "Our total position by Black Wednesday had to be worth almost $10 billion. We planned to sell more than that. In fact, when Norman Lamont said just before the devaluation that he would borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell."
According to Steven Drobny,[9] Stanley Druckenmiller, who traded under Soros, originally saw the weakness in the pound. "Soros' contribution was pushing him to take a gigantic position," in accord with Druckenmiller's own research and instincts.
In 1997, during the Asian financial crisis, then Malaysian Prime Minister Mahathir bin Mohamad accused Soros of using the wealth under his control to punish ASEAN for welcoming Myanmar as a member. Later, he called Soros a moron.[10] Thai nationals have called Soros "an economic war criminal" who "sucks the blood from the people". |
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