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  • What do you think when you hear the name George Soros?

  • Ah, lot of conspiracy say yes eliminates the new World order Rothschilds, even though he has absolutely nothing to do with that.

  • His active life in the political scene made him the target off many conspiracies.

  • Soros is progressive and liberal.

  • He deeply believes that ordinary people should be represented in the highest levels of government and fought viciously for equality before the law.

  • The guy is a self made man, but being born in a Jewish family in Hungary in the mid 19 thirties makes him the perfect conspiracy theory.

  • Regardless of what you think of him, he's one of the greatest minds in the world of finance.

  • He rose from ashes to build a multi billion dollar empire and donated over $30 billion to various charity foundations over the course of his life.

  • One of his best moves was when he fooled the Bank of England and made 1.2 billion dollars overnight.

  • Many might criticize him for his actions, but he took advantage of the opportunity that was in front of him, and his strategy was way more genius.

  • That money heist could possibly come up with.

  • But to understand how one man food an entire nation, we have to understand what led the Bank of England to make such a horrible mistake.

  • Back in the days the euro wasn't even a thing, it didn't exist.

  • Creating a single currency for multiple countries isn't easy, if not impossible, since most of these countries are not economically equal.

  • Take Germany, for example.

  • It's a highly advanced country that has a strong manufacturing industry, and it's a dominant player on the world stage.

  • On the other side, you have grease.

  • That highly depends on tourism.

  • Germany's GDP per capita is twice larger than Greece's one.

  • That's one of the reasons why these countries haven't completely recovered from the 2008 financial crisis.

  • So before the euro, Europe tried to connect its economies through ah fixed exchange rate or e r m European exchange rate mechanism.

  • When currencies fluctuate too much, it makes it difficult to trade between the nations because that volatility creates uncertainty.

  • Imagine exporting a ship full of BMW's from Germany to the United Kingdom.

  • Let's say one deutschmark, which was Germany's currency before the euro equals toe £1 and let's say hypothetically.

  • A BMW car costs AH 1000 deutschmark to manufacture Deutsche A company ships BMWs to Britain and sells it for £1500 which is the average price for such a car in Britain.

  • But what if by the time the BMW reaches British soil, the exchange rate changes where the pound drops in value by half when one mark equals to to British bounds.

  • Now, BMW can no longer sell the car for £1500.

  • Because £1 is equal 2.5 marks.

  • They have to sell it for a least 2000 marks to break even.

  • To prevent that and assure investors that when they ship their products to the neighboring country, they can expect the exact same exchange rate.

  • Because all currencies are fixed through E.

  • R M.

  • Suppose there is a shortage of the British pound in the market.

  • In that case, the Bank of England will supply the market with British pounds by selling more British pounds.

  • In contrast, if there is an oversupply of the currency in the market, the Bank of England will buy them all to keep the exchange rate fixed.

  • Simple right.

  • But not everything is sunshine and rainbows.

  • Every country is different.

  • If a country is experiencing high inflation, it might need to raise interest rates, or vice versa.

  • But when it has to artificially be hedged against other currencies, that makes it difficult and can ruin up the entire economy.

  • That's why Britain declined to join the E.

  • R M.

  • When it was created back in 1979.

  • But due to rising pro European politicians, the UK ended up joining the E.

  • R.

  • In October 1990.

  • But the problem was Britain was in a recession.

  • It was doing terribly economically, enjoying the E.

  • R M men that it had to adjust its interest rates on artificially keep the pound strong enough to be part of the E.

  • R M.

  • That meant that the pound should not fluctuate by more than 6% which was quite impossible for Britain if it wanted to get out of the recession.

  • In 1989 the U.

  • K had inflation three times the rate of Germany, higher interest rates at 15% and much lower labor productivity than France and Germany, which indicated that the U.

  • K.

  • Was in a much worse economic situation.

  • In comparison toe other E R M countries and that's what Soros realized.

  • He understood that sooner or later the British pound will have to devalue and the Bank of England's won't be able to keep it strong artificially, which is why he began building ah huge short position.

  • He simply borrowed huge sums of pounds from various financial institutions, including the banks, and sold them in foreign exchange market for German marks so that when the British pounds devalues, he will use that cash to buy the British pounds back at a lower price and return them to the Bank of England.

  • Britain raised interest rates to 10% and spent billions buying British pound in the forex market to keep it strong.

  • These measures failed to prevent the pound from falling below its minimum level in the RM.

  • At this point, many speculators lost faith in the British pound and began selling massively, including sorrows.

  • The exchange rate mechanism required the Bank of England to accept any offers to sell the pound.

  • However, the Bank of England Onley accepted orders during the day when the market opens in London the next morning, the Bank of England began their attempt to defend their currency.

  • They bought a billion dollars worth of pounds but had zero effect.

  • The British pound raised interest rates from an already high 10% to 12% toe attempt speculators toe by the pound, but that didn't work out.

  • In fact, it only made the Bank of England look more desperate.

  • Despite the government announcing that they will raise interest rates to 15% Dealers kept selling pounds, convinced that the government would not keep its promise.

  • By the end of the day, the Bank of England purchased almost $30 billion worth of pounds and announced British would leave the E.

  • R M on interest rates would remain at the new level of 12%.

  • However, on the next day the interest rates were back to 10%.

  • The British pound significantly was devalued against other currencies and as much as 25% against the US dollar, for example, and sorrows profited over a billion dollars by shorting $10 billion of the British pound.

  • This shows that the man is a genius when it comes to forex traits.

  • If there is one person who can teach you how to really profit in the forex market, then it's George sorrows.

  • But if you want to learn how the forex market works, we have made entire video explaining how it works.

  • Which link?

  • I will live in the description.

  • But it wasn't all bad for Britain.

  • Inflation was reduced to around 2% on the economy started growing again.

  • So everyone want, in some ways that the end of the day the E.

  • R M system eventually was turned into the euro, a den of the century.

  • After such a disastrous experience, Britain probably would never give up control over its currency again.

  • But the experience put George Soros on the map.

  • Short selling is extremely dangerous, and you need iron both to put out something like that.

  • And in such a huge volume, it's also a lesson that when every crisis comes an opportunity and whoever is ready to take that opportunity can end up profiting enormously.

  • And now it's your turn.

  • Do you think Soros is a financial genius or he's simply full the entire nation?

  • Let's try to keep the comments section free of conspiracy theories.

  • Anyways, it's time to give this video a thumbs up if you have enjoyed it and smash that subscribe button and the bell.

What do you think when you hear the name George Soros?

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B1 INT pound british bank exchange rate england soros

How I Made $1.2 Billion Dollars Using Debt - George Soros

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    Summer   posted on 2020/11/13
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