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One aspect in stories of this kind always seems to be somebody trying to artificially inflating the value of some stock (or currency) by buying lots and lots of
by facepalm 12y ago
One aspect in stories of this kind always seems to be somebody trying to artificially inflating the value of some stock (or currency) by buying lots and lots of it. In this case, the bank of England. (I've read the same thing about Indonesia, and the Barings Bank incident).
That seems so silly - I mean here are these supposedly highly trained financial experts, and all they can do is try the most primitive stock manipulation imaginable?
What would have happened if the Bank of England wouldn't have tried to artificially inflate the pound by buying lots of it? Would it have had the same cost to the tax payer? Obviously there would have been a cost because of the devalued pound (less buying power for foreign goods), so perhaps the question is did it even make any difference? Either they lose because of the diminished buying power, or they lose directly because of the buying spree of the Bank of England?
- lmm 12y agoThe thing is that you only see the failures. Propping up a currency like that works fine until it doesn't. Not buying up pounds would have meant dropping out of the ERM immediately. In the short term that would have saved money. In the long term, depends on your view of how similar or different the UK and German economies are.