Couldn't possibly allow the possibility that the masses benefit. Give them the illusion to keep them happy, and then extract again. - and repeat - the cycle of capitalist "wealth creation"....
The "Uneducated Economist" has talked about this (YouTube guy) for a while now... it's unreal how uneducated the American people are... this should be "common sense" by now. But they're concerned (or more concerned) about dancing celebrities...
Education doesn’t teach that silly. Respectfully go fuck yourself. This is not just a problem in America. Pointing fingers at one country is no different to me than normies watching dancing celebrities. You are part of the problem.
Whoa, my guy… I live in the United States, am I not allowed to have an opinion about how uneducated people in my own country are?
Education doesn’t teach what, the Cantillon effect?
I’m part of the problem because I’m pointing out people love celebrity culture over learning economic principles that dictate their everyday life?
My guy, I will pray for you. I’m sorry you’re having such a rough go. No one deserves to be so bitter and angry. May g-d help to soften your heart. Have a blessed and meaningful day.
It isn’t the country. Its the entire planet. Stupid is everywhere in the Hierarchical Society; by design. Money would be obsolete if we had real education.
George Soros is one of the most successful and influential investors in history. He is also known for his philanthropic and political activities, as well as his controversial views on various issues. But perhaps his most famous achievement was his role in the 1992 currency crisis that forced the British government to withdraw from the European exchange rate mechanism (ERM) and devalue its currency, the pound sterling.
This event, which occurred on Sept. 16, 1992, is known as Black Wednesday, and it earned Soros the nickname of “the man who broke the Bank of England.”
Andrew Beattie was part of the original editorial team at Investopedia and has spent twenty years writing on a diverse range of financial topics including business, investing, personal finance, and trading.
Learn about our editorial policies
Updated June 19, 2024
Reviewed by Margaret James
Fact checked by Suzanne Kvilhaug
George Soros is one of the most successful and influential investors in history. He is also known for his philanthropic and political activities, as well as his controversial views on various issues. But perhaps his most famous achievement was his role in the 1992 currency crisis that forced the British government to withdraw from the European exchange rate mechanism (ERM) and devalue its currency, the pound sterling.
This event, which occurred on Sept. 16, 1992, is known as Black Wednesday, and it earned Soros the nickname of “the man who broke the Bank of England.”1
Key Takeaways
George Soros is said to have "broken" the Bank of England and precipitated "Black Wednesday" in the U.K. in September 1992 as a result of massive bets he made against the British pound.
Soros became skeptical of the U.K.'s decision to join the European exchange rate mechanism (ERM), which fixed exchange rates to the German mark.
Sept. 16, 1992, known as Black Wednesday, was the day speculators forced the British government to pull the pound from the ERM.
As a consequence, the pound rapidly devalued, leading to an estimated $1 billion profit for Soros and his Quantum Fund.
What Was the ERM?
The European exchange rate mechanism, or ERM, was a monetary system established in 1979 to stabilize the exchange rates of the European currencies and prepare them for the eventual adoption of a common currency, the euro.2
The ERM fixed the exchange rates of the participating currencies to the German mark, which was the strongest and most stable currency in Europe at the time. The ERM allowed for some fluctuations within a certain range, but if a currency reached its upper or lower limit, the central bank of that country had to intervene in the market to keep it within the band.
Britain Joins the ERM
Britain initially declined to join the ERM when it was created, preferring to keep its monetary policy independent and flexible. However, in 1990, under the leadership of Prime Minister Margaret Thatcher, the U.K. decided to join the ERM as part of its commitment to the European integration process. Britain hoped that by joining the ERM, it would benefit from lower interest rates, lower inflation, and a stronger currency.
However, Britain’s decision to join the ERM was not without problems. First of all, it joined at a high exchange rate of 2.95 German marks per pound, which made its exports less competitive and hurt its economic growth.3
Second, Britain’s economy was relatively weaker and its inflation rate was higher than Germany’s, which meant that it had to keep its interest rates high to maintain its exchange rate.
Third, Britain and the Eurozone faced external shocks from Germany’s reunification in 1990, which increased Germany’s inflation and interest rates and put upward pressure on the mark.
Fourth, Britain faced political uncertainty from the ratification of the Maastricht Treaty in 1992, which aimed to create a monetary union and a single currency in Europe.1
Britain entered the ERM with hopes of keeping its currency above DEM 2.70 to GBP 1—but this was practically unfeasible, for the reasons described above.1 These existing problems were compounded by speculators, who began scrutinizing the ERM and the inclusion of the pound, which resulted in questions about how long fixed exchange rates could fight natural market forces.
To counter this, the Bank of England hiked its interest rates into the teens in an effort to attract more investors to buy the pound. However, speculators such as George Soros began to heavily short the currency, arguing that this monetary intervention was artificial and unsustainable.4 (A short position involves selling an asset, hoping to buy it back later at a lower price and make a profit.)
The Maastricht Treaty was created as a follow-up to earlier treaties establishing the European communities (EC), which were the EU's first pillars.5
Soros Bets Against the Pound
Soros was critical of the Bank of England's actions, but he wasn't alone in betting against the pound. Although he began betting against the pound quietly at first, accumulating around a $1 billion position, he soon became more outspoken.6
Indeed, many other speculators and investors saw that Britain’s position in the ERM was unsustainable and that it would eventually have to devalue its currency or leave the system altogether. Soros, however, was the most aggressive and influential speculator. He took a huge short position against the pound.
Soros used his hedge fund, Quantum Fund, to borrow billions of pounds from various banks and sell them for other currencies, such as German marks or U.S. dollars.6 This created a huge demand for other currencies and a huge supply of pounds, which drove down the value of the pound in the market. Soros also used derivatives, such as options and futures contracts, to amplify his bets and increase his leverage.
Britain Tries to Defend Its Currency
The British government and the Bank of England tried to stabilize their currency by raising their interest rates and buying back pounds from the market. On Sept. 16, 1992, they announced that they would raise their interest rates to 12% from 10%, and then again to 15%, to attract investors to buy pounds and support their exchange rate.7 They also spent billions of pounds from their foreign exchange reserves to buy back pounds from speculators like Soros.
However, these measures weren't enough to counteract the massive selling pressure from Soros and other shorts. The market, moreover, did not believe that Britain could sustain such high interest rates for long without damaging its domestic economy. Britain’s foreign exchange reserves were limited and running out fast.
Behind the scene, Germany was also trying to help keep the pound in the ERM. German officials made public statements that realignment within the ERM might be possible in mid-September, Yet, in response to these comments by German officials, Soros decided to increase the size of his bet massively. He moved to a massive $10 billion position from $1.5 billion in the middle of September.6
Because of his key role in Black Wednesday, George Soros is known for "breaking the Bank of England."
Black Wednesday
As a result, the pound plunged in value by about 15% against the mark and 25% against the dollar. Soros made about $1 billion in profit as a result of his successful bet against the pound.6
The withdrawal from the ERM was a humiliating defeat for Britain’s government and a major blow to its credibility and reputation. It also caused economic turmoil and social unrest in Britain, as interest rates remained high, inflation rose, unemployment increased, and public spending was cut.7 It also damaged the reputation of British Prime Minister John Major and the Conservative Party for ineffective fiscal management.
Why Did George Soros Bet Against the British Pound in 1992?
Soros bet against the pound in 1992 because he believed that Britain’s position in the ERM was unsustainable and that it would eventually have to devalue its currency or leave the system. He used his Quantum Fund to sell billions of pounds and buy other currencies, creating a huge demand for other currencies and a sizable supply of pounds, which lowered the value of the pound in the market.
There will ALWAYS be a group with more wealth and a group with less wealth. But the membership in those groups is constantly being exchanged. Cantillon effect ignores that fact and only looks at numbers.
Hierarchical Society is trained and thus readily willing to pay taxes, fund welfare and social programs, fund research such as for cancer, childhood diseases, space exploration, national defense, etc before much new money gets to the normies. However this alone is not enough.
By far the most effective way they maintain the percieved value of money versus its volume is KILL OFF THE USERS OF IT. Simply by eliminating the amount of people on the planet that can spend money, they can negate much damage done by overprinting currency. This is now the main reason for wars.
Reminder; messengers like us are not the ones advocating for wars.
Couldn't possibly allow the possibility that the masses benefit. Give them the illusion to keep them happy, and then extract again. - and repeat - the cycle of capitalist "wealth creation"....
The "Uneducated Economist" has talked about this (YouTube guy) for a while now... it's unreal how uneducated the American people are... this should be "common sense" by now. But they're concerned (or more concerned) about dancing celebrities...
Education doesn’t teach that silly. Respectfully go fuck yourself. This is not just a problem in America. Pointing fingers at one country is no different to me than normies watching dancing celebrities. You are part of the problem.
Whoa, my guy… I live in the United States, am I not allowed to have an opinion about how uneducated people in my own country are?
Education doesn’t teach what, the Cantillon effect?
I’m part of the problem because I’m pointing out people love celebrity culture over learning economic principles that dictate their everyday life?
My guy, I will pray for you. I’m sorry you’re having such a rough go. No one deserves to be so bitter and angry. May g-d help to soften your heart. Have a blessed and meaningful day.
It isn’t the country. Its the entire planet. Stupid is everywhere in the Hierarchical Society; by design. Money would be obsolete if we had real education.
https://odysee.com/@amaterasusolar:8/The-End-of-Entropy:1
https://odysee.com/@amaterasusolar:8/electrogravitics-gravity-control-energy:6
Have you been a complete asshole your entire life or did you just start today?
Love your content and thank you for sharing your knowledge with us each and very day.
Happy Thanksgivening!!
Yeh.....Max Kaiser (BTC ) (whale??) has been screaming about this for close to a decade now....
All they have been doing since 2008 is propping up a failed system.
Pumping new cash in the system may get people to sell-out their Crypt-keeper tokens. And then, they pull the rug out from under you.
The Cantillon effect is at its finest today by design. Very little trickles down unless you wait too long to go to the bathroom.
" The effect? I'll tell you what the effect is. It's passing me off!" Steven Tash Ghostbusters 1984 😂❤
How Did George Soros Break the Bank of England?
George Soros is one of the most successful and influential investors in history. He is also known for his philanthropic and political activities, as well as his controversial views on various issues. But perhaps his most famous achievement was his role in the 1992 currency crisis that forced the British government to withdraw from the European exchange rate mechanism (ERM) and devalue its currency, the pound sterling.
This event, which occurred on Sept. 16, 1992, is known as Black Wednesday, and it earned Soros the nickname of “the man who broke the Bank of England.”
https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp
Come to the plate Bessent
How Did George Soros Break the Bank of England?
By Andrew Beattie
Full Bio
Andrew Beattie was part of the original editorial team at Investopedia and has spent twenty years writing on a diverse range of financial topics including business, investing, personal finance, and trading.
Learn about our editorial policies
Updated June 19, 2024
Reviewed by Margaret James
Fact checked by Suzanne Kvilhaug
George Soros is one of the most successful and influential investors in history. He is also known for his philanthropic and political activities, as well as his controversial views on various issues. But perhaps his most famous achievement was his role in the 1992 currency crisis that forced the British government to withdraw from the European exchange rate mechanism (ERM) and devalue its currency, the pound sterling.
This event, which occurred on Sept. 16, 1992, is known as Black Wednesday, and it earned Soros the nickname of “the man who broke the Bank of England.”1
Key Takeaways
George Soros is said to have "broken" the Bank of England and precipitated "Black Wednesday" in the U.K. in September 1992 as a result of massive bets he made against the British pound.
Soros became skeptical of the U.K.'s decision to join the European exchange rate mechanism (ERM), which fixed exchange rates to the German mark.
Sept. 16, 1992, known as Black Wednesday, was the day speculators forced the British government to pull the pound from the ERM.
As a consequence, the pound rapidly devalued, leading to an estimated $1 billion profit for Soros and his Quantum Fund.
What Was the ERM?
The European exchange rate mechanism, or ERM, was a monetary system established in 1979 to stabilize the exchange rates of the European currencies and prepare them for the eventual adoption of a common currency, the euro.2
The ERM fixed the exchange rates of the participating currencies to the German mark, which was the strongest and most stable currency in Europe at the time. The ERM allowed for some fluctuations within a certain range, but if a currency reached its upper or lower limit, the central bank of that country had to intervene in the market to keep it within the band.
Britain Joins the ERM
Britain initially declined to join the ERM when it was created, preferring to keep its monetary policy independent and flexible. However, in 1990, under the leadership of Prime Minister Margaret Thatcher, the U.K. decided to join the ERM as part of its commitment to the European integration process. Britain hoped that by joining the ERM, it would benefit from lower interest rates, lower inflation, and a stronger currency.
However, Britain’s decision to join the ERM was not without problems. First of all, it joined at a high exchange rate of 2.95 German marks per pound, which made its exports less competitive and hurt its economic growth.3
Second, Britain’s economy was relatively weaker and its inflation rate was higher than Germany’s, which meant that it had to keep its interest rates high to maintain its exchange rate.
Third, Britain and the Eurozone faced external shocks from Germany’s reunification in 1990, which increased Germany’s inflation and interest rates and put upward pressure on the mark.
Fourth, Britain faced political uncertainty from the ratification of the Maastricht Treaty in 1992, which aimed to create a monetary union and a single currency in Europe.1
Britain entered the ERM with hopes of keeping its currency above DEM 2.70 to GBP 1—but this was practically unfeasible, for the reasons described above.1 These existing problems were compounded by speculators, who began scrutinizing the ERM and the inclusion of the pound, which resulted in questions about how long fixed exchange rates could fight natural market forces.
To counter this, the Bank of England hiked its interest rates into the teens in an effort to attract more investors to buy the pound. However, speculators such as George Soros began to heavily short the currency, arguing that this monetary intervention was artificial and unsustainable.4 (A short position involves selling an asset, hoping to buy it back later at a lower price and make a profit.)
The Maastricht Treaty was created as a follow-up to earlier treaties establishing the European communities (EC), which were the EU's first pillars.5
Soros Bets Against the Pound
Soros was critical of the Bank of England's actions, but he wasn't alone in betting against the pound. Although he began betting against the pound quietly at first, accumulating around a $1 billion position, he soon became more outspoken.6
Indeed, many other speculators and investors saw that Britain’s position in the ERM was unsustainable and that it would eventually have to devalue its currency or leave the system altogether. Soros, however, was the most aggressive and influential speculator. He took a huge short position against the pound.
Soros used his hedge fund, Quantum Fund, to borrow billions of pounds from various banks and sell them for other currencies, such as German marks or U.S. dollars.6 This created a huge demand for other currencies and a huge supply of pounds, which drove down the value of the pound in the market. Soros also used derivatives, such as options and futures contracts, to amplify his bets and increase his leverage.
Britain Tries to Defend Its Currency
The British government and the Bank of England tried to stabilize their currency by raising their interest rates and buying back pounds from the market. On Sept. 16, 1992, they announced that they would raise their interest rates to 12% from 10%, and then again to 15%, to attract investors to buy pounds and support their exchange rate.7 They also spent billions of pounds from their foreign exchange reserves to buy back pounds from speculators like Soros.
However, these measures weren't enough to counteract the massive selling pressure from Soros and other shorts. The market, moreover, did not believe that Britain could sustain such high interest rates for long without damaging its domestic economy. Britain’s foreign exchange reserves were limited and running out fast.
Behind the scene, Germany was also trying to help keep the pound in the ERM. German officials made public statements that realignment within the ERM might be possible in mid-September, Yet, in response to these comments by German officials, Soros decided to increase the size of his bet massively. He moved to a massive $10 billion position from $1.5 billion in the middle of September.6
Because of his key role in Black Wednesday, George Soros is known for "breaking the Bank of England."
Black Wednesday
As a result, the pound plunged in value by about 15% against the mark and 25% against the dollar. Soros made about $1 billion in profit as a result of his successful bet against the pound.6
The withdrawal from the ERM was a humiliating defeat for Britain’s government and a major blow to its credibility and reputation. It also caused economic turmoil and social unrest in Britain, as interest rates remained high, inflation rose, unemployment increased, and public spending was cut.7 It also damaged the reputation of British Prime Minister John Major and the Conservative Party for ineffective fiscal management.
Why Did George Soros Bet Against the British Pound in 1992?
Soros bet against the pound in 1992 because he believed that Britain’s position in the ERM was unsustainable and that it would eventually have to devalue its currency or leave the system. He used his Quantum Fund to sell billions of pounds and buy other currencies, creating a huge demand for other currencies and a sizable supply of pounds, which lowered the value of the pound in the market.
https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp
There will ALWAYS be a group with more wealth and a group with less wealth. But the membership in those groups is constantly being exchanged. Cantillon effect ignores that fact and only looks at numbers.
Greg by next year the 10 YEAR..... will be in the 3s. This market will not stop.
To rebalance the system they do this:
Hierarchical Society is trained and thus readily willing to pay taxes, fund welfare and social programs, fund research such as for cancer, childhood diseases, space exploration, national defense, etc before much new money gets to the normies. However this alone is not enough.
By far the most effective way they maintain the percieved value of money versus its volume is KILL OFF THE USERS OF IT. Simply by eliminating the amount of people on the planet that can spend money, they can negate much damage done by overprinting currency. This is now the main reason for wars.
Reminder; messengers like us are not the ones advocating for wars.
The Cantillon effect is absolutely true. Give it some thought and your own life’s experience.