George Soros is a speculator, he won his most lucrative battle in 1992 when he forced the British pound to its knees and consequently cashed in around a billion dollars. But Soros is also social philosopher. From this double perspective he was able to explain why the 'self regulating' forces of the free market don't work. According to his boom bust theory the financial markets don't even think about moving towards the point of equilibrium to it's our logically and inevitably headed. Shares that jump in value result in overly optimistic inventors and attract additional buyers (boom), which consequently cause prices to rise. If the market prices moves too far from the realistic value, there is a price correction leading to a slump (bust).
In the economic theory deviations from the equilibrium are usually sought in terms of pendulum-like balancing process. Both types of movement the pendulum gathering momentum and a slowing down of the pendulum can also be observed in reality. The slowing down of pendulum tends to be connected with the production of commodities, its gathering momentum with the financial markets tend towards excess. They work more like a wrecking ball than a pendulum.
If you want to know what God thinks of money, just look at the people he gave it to. Dorothy Parker
No comments:
Post a Comment