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Why no one ? You don't believe, out of all human in the world, that there is someone that gain satisfaction out of destroying healthy financial entities ?
by matz1 7y ago
Why no one ? You don't believe, out of all human in the world, that there is someone that gain satisfaction out of destroying healthy financial entities ?
- BubRoss 7y agoIf one person could destroy it, it wouldn't be healthy would it?
- matz1 7y agoHealthy doesn't mean could not be destroyed.
- BubRoss 7y agoIn this context that's exactly what it means. I have no idea what you are talking about, but this article is about the pound not being backed and the peg being forced to break. That doesn't happen unless there is some sort of dishonesty or insolvency going on.
- matz1 7y agoIn your context, even if the pound are being backed, doesn't mean it can't be destroyed.
- BubRoss 7y agoThat's exactly what it means. If there is enough to exchange for the price that is claimed, then a billionaire can't break the peg by exchanging out pounds and forcing their hand. The gold standard collapse in the US happened when France thought they didn't really have enough gold to back their currency. They started exchanging dollars for gold and the US was forced to break the amount of gold they claimed dollars were worth. What do you think is meant by destroyed here? How is a financial entity destroyed if they aren't insolvent?
- matz1 7y ago>If there is enough to exchange for the price that is claimed, then a billionaire can't break the peg by exchanging out pounds and forcing their hand. Sure, doesn't mean that there is no other way to break it.
- BubRoss 7y agoWhat do you mean by 'break' and how would it happen?
- ummonk 7y agoIf the currency is priced at fair value but the country is small and thus has proportionate reserves, a multi-billionaire could simply pump all his money into pushing the currency out of its declared price range, causing a loss of trust in the currency, resulting in a further slide of the currency. That isn't what happened here of course, but it could happen to a smaller country trying to maintain a pegged currency.
- BubRoss 7y agoIt isn't what happened here because that doesn't happen anywhere. Putting more money into a currency makes it worth more. If a currency is backed by something else, you buy more of it as your currency is bought. That's how pegs work, the currency is an IOU for something else. Insolvency happens when a financial institution says they have more than they do and someone withdrawals enough to call their bluff. You don't 'break' a currency or financial institution by pumping money into it.