what do you think when you hear the name
george soros a lot of conspiracies say
yes
illuminati new world order ross childs
even though he has absolutely nothing to
do with that
his active life in the political scene
made him the target
of many conspiracies soros is
progressive
and liberal he deeply believes that
ordinary people
should be represented in the highest
levels of government
and fought viciously for equality before
the law
the guy is a self-made man but being
born in a jewish family in hungary
in the mid 1930s makes him the perfect
conspiracy theory
regardless of what you think of him he
is one of the greatest minds in the
world of finance
he rose from ashes to build a
multi-billion dollar empire
and donated over 30 billion dollars
to various charity foundations over the
course of his life
one of his best moves was when he fooled
the bank of england
and made 1.2 billion dollars overnight
many might criticize him for his actions
but he took advantage of the
opportunity that was in front of him and
his strategy was
way more genius that money heist could
possibly come up with
but to understand how one man fooled an
entire nation
we have to understand what led the bank
of england to make such a horrible
mistake
back in the days the euro wasn't even a
thing
it didn't exist creating a single
currency for multiple countries isn't
easy if not impossible since most of
these countries are not
economically equal take germany for
example
it's a highly advanced country that has
a strong manufacturing industry
and it's a dominant player on the world
stage on the other side
you have greece that highly depends on
tourism
germany's gdp per capita is twice larger
than greece's one that's one of the
reasons why these countries haven't
completely recovered
from the 2008 financial crisis
so before the euro europe tried to
connect its economies through
a fixed exchange rate or erm
european exchange rate mechanism when
currencies fluctuate
too much it makes it difficult to trade
between the nations
because that volatility creates
uncertainty
imagine exporting a ship full of bmws
from germany to the united kingdom
let's say one deutsche mark which was
germany's currency before the euro
equals to one british pound and let's
say hypothetically
a bmw car cost a thousand deutsche mark
to manufacture
deutsche company ships bmws to britain
and sells it
for 1500 pounds which is the average
price for such a car in britain
but what if by the time the bmw reaches
british soil
the exchange rate changes where the
pound drops in value by
half when 1 mark equals to 2 british
pounds
now bmw can no longer sell the car for
1500 pounds
because 1 pound is equal to 0.5 marks
they have to sell it for at least 2 000
marks
to break even to prevent that and assure
investors that when they ship their
products to the neighboring country
they can expect the exact same exchange
rate because
all currencies are fixed through erm
suppose there is a shortage of the
british pound in the market
in that case the bank of england will
supply the market with british pounds by
selling more british pounds
in contrast if there is an oversupply of
the currency in the market
the bank of england will buy them all to
keep the exchange rate
fixed simple right but not
everything is sunshine and rainbows
every country is different
if a country is experiencing high
inflation it might need to raise
interest rates or vice versa but when it
has to artificially be hedged against
other currencies
that makes it difficult and can ruin up
the entire economy
that's why britain declined to join the
erm when it was created
back in 1979 but due to rising
pro-european politicians
the uk ended up joining the erm
in october 1990 but the problem was
britain was in a recession it was doing
terribly economically
enjoying the erm meant that it had to
adjust its interest rates
and artificially keep the pounds strong
enough to be part of the erm
that meant that the pound should not
fluctuate by more than 6 percent
which was quite impossible for britain
if it wanted to get out of the recession
in 1989 the uk had inflation three times
the rate of germany
higher interest rates at 15 and much
lower labor productivity than france and
germany
which indicated that the uk was in a
much worse economic situation
in comparison to other erm countries
and that's what solos realized he
understood that sooner or later
the british pound will have to devalue
and the bank of england
won't be able to keep it strong
artificially which is why he began
building
a huge short position he simply borrowed
huge sums of pounds from various
financial institutions
including the banks and sold them in
foreign exchange market
for german marks so that when the
british pounds devalues
he will use that cash to buy the british
pounds back at a lower price
and return them to the bank of england
britain raised interest rates to 10
percent and spent
billions buying british pounds in the
forex market
to keep it strong these measures failed
to prevent the pound from
falling below its minimum level in the
erm
at this point many speculators lost
faith in the british pound
and began selling massively including
soros the exchange rate mechanism
required the bank of england
to accept any offers to sell the pound
however the bank of england only
accepted orders
during the day when the market opened in
london the next morning
the bank of england began their attempt
to defend their currency
they bought a billion dollar worth of
pounds but had zero
effect the british pound raised interest
rates from an already high
10 percent to 12 percent to attempt
speculators to buy the pound
but that didn't work out in fact it only
made the bank of england
look more desperate despite the
government announcing that
they will raise interest rates to 15
dealers kept selling pounds convinced
that the government
would not keep its promise by the end of
the day
the bank of england purchased almost 30
billion dollars
worth of pounds and announced british
would leave the erm and interest rates
would remain
at the new level of 12 however
on the next day the interest rates were
back to 10 percent
the british pound significantly was
devalued against
other currencies and as much as 25
against the us dollar for example and
soros
profited over a billion dollars by
shorting
10 billion dollars of the british pound
this
shows that the man is a genius when it
comes to forex trades
if there is one person who can teach you
how to really profit in the forex market
then it's george soros but if you want
to learn how the forex market works
we have made an entire video explaining
how it works
which link i will leave in the
description but it wasn't all bad for
britain
inflation was reduced to around 2 and
the economy started growing again
so everyone won in some ways at the end
of the day
the erm system eventually was turned
into the euro
at the end of the century after such a
disastrous experience
britain probably would never give up
control over its currency again
but the experience put george soros on
the map
short selling is extremely dangerous and
you need iron balls to pull out
something like that
and in such a huge volume it's also a
lesson that
with every crisis comes an opportunity
and whoever is ready to take that
opportunity
can end up profiting enormously
and now it's your turn do you think
soros is a financial genius
or he simply fooled the entire nation
let's try to keep the comment section
free of conspiracy theories anyways
it's time to give this video a thumbs up
if you have enjoyed it
and smash that subscribe button and the
bell besides it
thanks for watching and until next time