Rebirth of the Financial Overlord

If the husband does not fight and the temple counts as the winner, it must be counted as more;

Those who are invincible without a war must be counted as few.

——Excerpt from "Sun Tzu's Art of War"

America, Wall Street.

Quantum Fund headquarters.

Stanley Druckenmiller held the information sent back from Europe, turned the pen in his hand, and sorted out the impact and changes that the information might bring line by line.

George Soros was not there. In the early years, the Soviet Union and Eastern Europe were undergoing rapid social changes. Soros saw the opportunity of historical changes and decided to quit the investment business and devote all his energy and time to philanthropy. On the one hand, donate to social groups, on the other hand, meet with the political leaders of Western powers, publicize their aid plans, and support the reform of the Soviet Union and Eastern Europe.

In the summer of 1989, Soros had already moved his family to London. He used London as a bridgehead to travel between the Soviet Union and Eastern Europe. The main investment task of the Quantum Fund has been handed over to Druckenmiller, and he only keeps a little money for himself.

Now, Druckenmiller is the top decision maker and manager of the fund.

After reading the contents of the intelligence line by line, Druckenmiller forgot the pen turning in his hand and fell into deep thought.

Politics and economics are like a pair of twin brothers, inseparable from each other. When economic problems sharpen and problems arise, they will become political problems, and the solutions to political problems are generally economic means. The mutual love and killing of politics and economy was vividly reflected in World War I and World War II.

After World War II, due to empirical considerations left over from history, European countries hoped to bind their economies tightly together. In this way, close economic relations will avoid wars that break out every few decades, and create a "pan-European economy" to compete with the blood-sucking flood of the dollar.

This vision eventually formed the birth of the European Community, the predecessor of the European Union, and the emergence of the ERM, the predecessor of the euro.

The so-called The European Exchange Rate Mechanism is actually the European Exchange Rate Mechanism, which is equivalent to a mutual compromise product of the member countries of the European Community.

Because currency represents the sovereign reputation of a country, it is a concrete manifestation of national strength, and it is a way of national existence. Under normal circumstances, no country will voluntarily give up its own currency, and leave the independence and issuance of currency to other countries. hands.

However, with the prosperity of the Warsaw Pact alliance, the rampant use of the US dollar in various countries, and the strong impact of the yen economy on Europe, under the leadership of Germany, the members of the European Community agreed to link the exchange rates of the currencies of various countries with each other, and the central bank intervened in the market Prices, rather than market-determined exchange rate fluctuations.

Economic strength determines the right to speak politically. The German economy is the strongest in Europe. The German mark has become the anchor of European currencies. The currencies of various countries bite the German mark and are allowed to fluctuate within a range of ±6%. If the flexibility of floating is not enough, a country can negotiate with other countries to make adjustments. this

This system has achieved the two goals of balancing exchange rate stability and interest rate flexibility.

During the more than ten years of ERM's operation, the mechanism has worked well and has the following advantages: It reduces the fluctuation of European currencies, so that companies do not have to worry about the sharp exchange rate fluctuations affecting business models and profits when investing and trading; strengthens the connection between member states , relying on each other can avoid many unnecessary disputes, such as wars.

In the mid-to-late 1980s, after the privatization policy of Mrs. Thatcher, the iron lady, the British economy was strong. Mrs. Thatcher believed that the economy was healthy, and curbing inflation became the primary responsibility of the British government.

Chancellor of the Exchequer Nigel Lawson at the time believed that the best way to control inflation was to peg the exchange rate of the pound to the Deutsche mark, which would indirectly introduce Germany's anti-inflationary monetary policy to the UK. Since the British economy was sound at the time, the Bank of England chose to cut interest rates in order to curb the rise of the pound against the German mark.

This sparked a disaster, with interest rate cuts followed by a flood of mortgage loans, housing prices skyrocketing, inflation rising, and the CPI rising from 2% in 1986 to 10% in 1990.

The Bank of England is not independent of the UK government, which can influence monetary policy. British Prime Minister Margaret Thatcher has always opposed joining the ERM, and she insisted that the exchange rate of the pound should be determined by the market. But by 1990, Mrs Thatcher's political influence was waning, and that of other members of the party, who wanted to link the pound's exchange rate to the rest of Europe, including Nigel Lawson and his successor John Major, rose.

In October 1990, Chancellor of the Exchequer John Major persuaded other officials in the Treasury that Britain join the ERM, a move that was also supported by other parties. At that time, one pound could be exchanged for 2.95 German marks, and the British government was obliged to maintain the exchange rate within the range of 2.773-3.13.

Shortly thereafter, John Major replaced Margaret Thatcher as Prime Minister of the United Kingdom. Britain's accession to the ERM is one of the important achievements he is proud of. John Major believes that ERM is simply in the "automatic cruise" mode, and that the UK's monetary policy will operate on its own in the future without the need to bother.

Thinking of this, Druckenmiller couldn't help showing a smile on his face.

From the perspective of quantum mechanics, the UK's self-cruising monetary policy is simply whimsical. It seems that there is no need to bother, but in fact there are many shortcomings.

Joining the ERM means that the UK's monetary policy is no longer independent, but has become a passive follower of the German monetary policy; the German central bank adopts a tightening or loose monetary policy to combat inflation or release currency liquidity. According to the ERM agreement, the UK The central bank needs to adjust monetary policy simultaneously.

However, the economic levels of various countries are not consistent within a certain period. With the fall of the Berlin Wall and the merger of East and West Germany, Germany’s strength has greatly increased, and inflation remains high. Germany needs higher interest rates to curb inflation.

But the UK can’t. Although privatization has stimulated the British economy, it has also exposed various problems. The continuous interest rate hikes have also brought the UK into an economic predicament. Now, the UK needs to lower interest rates to stimulate the economy. Only constrained by the exchange rate mechanism, the British government cannot print money at will to stimulate the economy.

After contemplating for a moment, Druckenmiller got up from his office chair and walked to the world map not far away.

Judging from the current situation in Europe, among the ERM, the UK will be the biggest weakness in this exchange rate mechanism, and it will never change.

As an island country, it is isolated from the European continent, and its railway and road transportation cannot be integrated into the European continental system. Naturally, it is impossible to integrate the entire European political situation. If Europe is unified, its political and cultural centers may be Paris, Berlin or even Rome, but absolutely Not London.

And a European Union with a population of more than 200 million and a unified foreign and economic policy, the United Kingdom can only be reduced to a small follower, overwhelmed by its brilliance.

Judging from the decisions made by the British in history, they are like European shit sticks. Whoever becomes bigger in the European continent will unite with other countries to beat him. Spain, France, and Germany have all suffered from it in history.

Now, the strength of Germany must make both Britain and France deeply disturbed.

Scott Besser has researched the UK property sector and has shorted several property stocks. He told Druckenmiller: Germany maintains high interest rates, the pound is already at the lower limit of the ERM mechanism, and the Bank of England can raise interest rates to maintain the pound.

However, mortgage rates in the UK are usually floating. If the central bank raises interest rates, the common people will immediately have pressure to repay their loans. The decline in consumption will make the UK already in recession worse.

Therefore, the Bank of England will never raise interest rates.

Now, the biggest question is whether the Bundesbank can withstand the pressure from the other twelve countries to cut interest rates. If Schlesinger can resist the pressure from the other twelve countries, the biggest shortcoming of ERM will be completely exposed.

"Schlesinger, I think, you definitely don't want to sacrifice the interests of Germany to bring these pig teammates. They have cheated you time and time again."

Withdrawing his gaze from the map, Druckenmiller whispered to himself.

Misfortunes depend on blessings, blessings lie on misfortunes!

The operation of the economy is like a yin and yang theory, both contradictory and interdependent.

Later, inflation in countries around the world was sluggish, and central banks rushed to cut interest rates to stimulate inflation. Many countries even used up all their bargaining chips, and lowered interest rates to the sea level, completely entrusting their fate to God.

In the era of 0 interest rate, an interest rate of 2.0% is enough to attract countless capitals. A certain amount of treasure is only 0.2% higher than the bank's benchmark interest rate, which can accumulate trillions of funds.

Risk is always relative to benefit.

When the risk is higher than the bank's benchmark interest rate, you have to consider the possibility of principal loss.

But unfortunately, many people always feel that he will never be among the unlucky ones.

Moudong's financial management reached 6.5%, easily attracting countless desperate Christians, risking their capital being wiped out, and resolutely joined the army of activists.

As a result, there was a problem dealing with it immediately upon maturity, and the fund lost as much as 70%.

P2P, wealth management, and financial management, the explosion of landmines one by one, can't stop the rush of funds, because this is the nature of capital, chasing profits.

Boston, on the Charles River.

Shen Jiannan held a fishing rod in his hand, absent-mindedly accompanied Song Xiaodan to fish by the river.

Compared with the low inflation and interest rate hikes in various countries, the situation in various countries is just the opposite.

In March 1980, U.S. inflation was as high as 14.8%, and then Federal Reserve Chairman Volcker continued to raise interest rates. In June 1981, the federal benchmark interest rate reached 20%.

Yes, the benchmark interest rate was 20%, a terrifying figure that no one would have dared to think about later.

A U.S. recession ensued, and inflation fell to 3 percent in 1983. The extremely tightened monetary policy made room for Reagan, relying on the government to borrow heavily, and drawing blood from the Japanese market, using the Plaza Accord to coerce Japan into buying dollars. The U.S. economy took off, and Reagan laughed.

The "Peerless Twins" of the Federal Reserve Volcker and Reagan have become a model for central banks and governments around the world: the "Sword of Volcker" that tightens monetary policy to combat inflation and the "Reagan Economics" that stimulates the economy through fiscal deficits.

Since then, the central banks of many countries have followed Volcker in tightening monetary policies, and the people of the world have united to resist inflation; at the same time, these tightening policies are paving the way for the global economic recession in the early 1990s.

Now the general trend has been tilted. When the Plaza Accord was signed, when the Soviet Union disintegrated, and when Yasuno Yizhong chose to make concessions for the dollar, everything was already doomed.

Like a wheel of inertia, various layouts and pushes, no matter whether it is his outsider on the chessboard or European countries, there are not many choices in themselves to choose or not to choose.

The question is, how can we cut off the greatest benefits in this torrent.

The pool is capped.

Just like the prize pool of the seven-color ball, the largest total amount of the general is nothing more than emptying the prize pool.

To be short, a condition must first be met.

There is an opponent.

Because the three basic logics of short selling are to borrow, sell, and buy back.

In the middle selling link, a buyer is needed to buy.

What are the consequences without a buyer?

The borrowed money may rot in one's own hands like waste paper, watching the short-selling target depreciate, but losing money like a redhead.

The Bank of England is the biggest fat sheep in this game, but it only has 22 billion pounds of foreign exchange reserves, which is equivalent to 44 billion U.S. dollars.

It means that in this lottery pool, the total prize money that can be withdrawn is 44 billion US dollars.

But the creation of a general trend requires more people to participate. Everyone shares the bonus in the bonus pool, and the bets placed must be controlled within the maximum amount of the bonus.

Otherwise, it would be a waste of time.

Shen Jiannan couldn't help raising his eyebrows. There was only so much meat in the plate, so he had to be the first to attack. As for the latter, he couldn't blame him for the disaster.

The breeze rippling on the river made the fish float gently in the river. Suddenly, Shen Jiannan's fish floated.

Song Xiaodan, who was paying attention to the fishing all over, quickly shouted in a low voice.

"Jiannan, a fish has been bitten."

fish?

Then this time, just treat those guys as fish.

Grinning his teeth, Shen Jiannan let the fish float up and down slowly on the river surface, trembling as the fish tried.

The fish floated a little.

The float moved again.

Suddenly, the float sank and disappeared from the river.

call out--

Shen Jiannan withdrew his thoughts, Ma Liu picked up the fishing rod, and a fish weighing about three catties flicked its tail, unwilling to be fished out from the river.

"Wow, this fish is so fat."

"Hmm. It's really plump."

"What kind of metaphor are you using? Implying that I'm fat?"

"My Miss Song, this is my compliment, okay? Look at this fish, where it should be big, it should be big, and where it should be small, it's not fat or greasy, and its body is round and smooth. Especially this fish's mouth, which opens and closes, hey-hey"

Shen Jiannan held the fish and said, his eyes were full of smirks.

I just didn't say directly: like you.

How could Song Xiaodan agree, his eyes widened, and he grabbed the bastard's ear.

"Hey, hey! It hurts. A gentleman uses his mouth but doesn't move his hands."

"Stinky rascal. You talk."

"I just told you not to do it."

"Bah! Don't pretend I don't understand what you're talking about."

"Baby. Why are you so perverted now? I just feel pain. Please don't do it. What are you thinking about?"

"."