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If you would make the same circles but with different fiat currency on one side and difference fiat currency on the other side you would figure out that exchang

by noxer 4y ago

If you would make the same circles but with different fiat currency on one side and difference fiat currency on the other side you would figure out that exchanging different fiat currency isn't generating any value therefore the Forex markets should not exists. And extending on that knowledge any currency from a country that produced more debts each year should be worthless. Reality check: Nope, both not true in the "real economy". Buffet is know for not liking stuff that does not "produce goods" like Gold. However trading any kind of asset does actually produce something it produces market liquidity which s the oil in the financial system that make the economy run smother.

rcarr 4y ago
Not sure I agree with this. If you're trading fiat currencies as investment rather than out of travel necessity, you're essentially saying that you think that the governance of one country is over or undervalued in relation to another and you can profit from identifying that discrepancy. It doesn't matter if the country is creating more debt as long as you have faith in the governance of the country and their reasoning for taking out that debt is that it will lead to net value added in the long term. This was very clearly illustrated recently in the UK. Kwarteng and Truss announced a budget that was going to increase the debt of the UK and allow them to give tax cuts to the rich. The markets didn’t see this as adding net long term value to the UK and the currency tanked as a result allowing a lot of people to profit from the forex trade. The value added in a foreign exchange trade is security which is based on the real economic growth of the country behind the currency. If a country is well governed the value of your investment is safe and will grow. If it isn’t, then it will decline. Obviously you also have to be aware that some well governed countries may choose to purposely devalue their currencies as the US historically did (and may do again).
- noxer 4y ago
  I think you misunderstand my post, I made a case AGAINST the logic of the parent story. I'm fully aware that forex trading is essential for the economy and that people make huge profits doing it. BTW if you trade fiat you are not investing you are speculating same with trading crypt. But people keep comparing it to an investment. See my other post about the distinction here https://news.ycombinator.com/item?id=33654983 https://news.ycombinator.com/item?id=33654983
mannerheim 4y ago
But forex enables international trade. Dollars to euros or vice versa allows you to buy real products from America or Europe. What can you buy with crypto? Drugs, ok... but that market is not big enough to justify its valuation. Financial products, fine, but what are the financial products? The underlying asset of the vast majority of these financial products is just other crypto stuff! Well, you can speculate on fiat. But most of the fiat speculation uses centralised stablecoins shadier than an umbrella made by the mafia. Like, I don't know, maybe there's a future for crypto in settling lumber futures or whatever, but at the moment, the FTX blowup makes it seem like every crypto financial product is based off of another crypto financial product.
- noxer 4y ago
  So what can you do with Mexican Peso if you are in Europe? Can you buy Food? Drugs? Probably not. Does it matter if you bought it solely to speculate on its value? Clearly it does not. If you bought Mexican Peso yesterday and sell it today for a profit then that's it. Why would you care about what it is good for? The whole point of speculating with assets is to make profit from price movements. Now replace Mexican Peso with baseball cards then with crypto. There is no difference. Everyone knows baseball cards are useless and wont let you buy food not even drugs. But if you get an opportunity to make money trading them why would you not? Trading crypto or even NFTs is just way way simpler than trading baseball cards so more people have access to it. If all the people who constantly say how useless everything is would actually put their money where their mouth is and would trade and bet on lower prices then they would make huge money. And in the long run it would stabilize the market so we dont get these absurd bubbles and JPEGs temporary worth millions. But its all talk no action. The market requires the "everything is worthless" people to counter the "everything is gold" people. Yet these people just stay on the side line and every 4 year when it crashes they come together and slap each-other on the back for being too clever to partake. Personally I dont mind it, these huge waves are where money can be made. The recent crashes have been very profitable for me. >But forex enables international trade. So does crypt. And cheap international remittance. Everything just runs better if liquidity is high in any asset. The whole FTX crash and all that dint change anything its just a large fraudulent entity which's fallout will now affect the whole market. The exchange actually runs on the traditional financial system everything they did that was fraudulent wasn't crypt fraud it was just normal fraud. If anything this once again shows that you should not give your money to anyone else and that the government will not protect people form criminals. Needless to say that traditional market invested in FTX so they will be affected too.

by noxer 4y ago

rcarr 4y ago

Not sure I agree with this. If you're trading fiat currencies as investment rather than out of travel necessity, you're essentially saying that you think that the governance of one country is over or undervalued in relation to another and you can profit from identifying that discrepancy. It doesn't matter if the country is creating more debt as long as you have faith in the governance of the country and their reasoning for taking out that debt is that it will lead to net value added in the long term. This was very clearly illustrated recently in the UK. Kwarteng and Truss announced a budget that was going to increase the debt of the UK and allow them to give tax cuts to the rich. The markets didn’t see this as adding net long term value to the UK and the currency tanked as a result allowing a lot of people to profit from the forex trade. The value added in a foreign exchange trade is security which is based on the real economic growth of the country behind the currency. If a country is well governed the value of your investment is safe and will grow. If it isn’t, then it will decline. Obviously you also have to be aware that some well governed countries may choose to purposely devalue their currencies as the US historically did (and may do again).

noxer 4y ago
I think you misunderstand my post, I made a case AGAINST the logic of the parent story. I'm fully aware that forex trading is essential for the economy and that people make huge profits doing it. BTW if you trade fiat you are not investing you are speculating same with trading crypt. But people keep comparing it to an investment. See my other post about the distinction here https://news.ycombinator.com/item?id=33654983 https://news.ycombinator.com/item?id=33654983

mannerheim 4y ago

But forex enables international trade. Dollars to euros or vice versa allows you to buy real products from America or Europe. What can you buy with crypto? Drugs, ok... but that market is not big enough to justify its valuation. Financial products, fine, but what are the financial products? The underlying asset of the vast majority of these financial products is just other crypto stuff! Well, you can speculate on fiat. But most of the fiat speculation uses centralised stablecoins shadier than an umbrella made by the mafia. Like, I don't know, maybe there's a future for crypto in settling lumber futures or whatever, but at the moment, the FTX blowup makes it seem like every crypto financial product is based off of another crypto financial product.

noxer 4y ago
So what can you do with Mexican Peso if you are in Europe? Can you buy Food? Drugs? Probably not. Does it matter if you bought it solely to speculate on its value? Clearly it does not. If you bought Mexican Peso yesterday and sell it today for a profit then that's it. Why would you care about what it is good for? The whole point of speculating with assets is to make profit from price movements. Now replace Mexican Peso with baseball cards then with crypto. There is no difference. Everyone knows baseball cards are useless and wont let you buy food not even drugs. But if you get an opportunity to make money trading them why would you not? Trading crypto or even NFTs is just way way simpler than trading baseball cards so more people have access to it. If all the people who constantly say how useless everything is would actually put their money where their mouth is and would trade and bet on lower prices then they would make huge money. And in the long run it would stabilize the market so we dont get these absurd bubbles and JPEGs temporary worth millions. But its all talk no action. The market requires the "everything is worthless" people to counter the "everything is gold" people. Yet these people just stay on the side line and every 4 year when it crashes they come together and slap each-other on the back for being too clever to partake. Personally I dont mind it, these huge waves are where money can be made. The recent crashes have been very profitable for me. >But forex enables international trade. So does crypt. And cheap international remittance. Everything just runs better if liquidity is high in any asset. The whole FTX crash and all that dint change anything its just a large fraudulent entity which's fallout will now affect the whole market. The exchange actually runs on the traditional financial system everything they did that was fraudulent wasn't crypt fraud it was just normal fraud. If anything this once again shows that you should not give your money to anyone else and that the government will not protect people form criminals. Needless to say that traditional market invested in FTX so they will be affected too.