Currency Trading and The False GDP
Tun Dr Mahathir Mohammad elaborated on the false GDP of the United States in his third installment in a series on the trends that led to the present financial crisis. He specifically pointed out that currency trading is also a culprit in contributing to the false GDP in his posting titled Currency Trading.
1. Currency trading is another non-real contributor to the wealth of the rich countries. The trading again involves non-existent money. Banks would lend as much as 30 times the amount of investors’ money held by the traders. The loan is again made up of bank created money. So also would be the investors’ money if they borrowed from the banks.
2. Individuals cannot borrow 30 times more than the money they have in order to invest. But currency traders can. Hence the investors’ preference to invest with the currency traders.
3. The huge borrowings by the currency traders enable them to manipulate the market; pushing the value of the currency up or down.
4. The trade in currency is estimated to be 20 times bigger than total world trade.
Quotes: Currency Trading.
Read More on Currency Trading by Tun Dr Mahathir.
The False GDP
Tun Dr Mahathir simple explanations on currency trading eliminate all doubts that currency trading is one of the culprits contributing to the false GDP. It is known that Currency Traders and Stock Pickers market capitalization is billions of dollars and with the credit facilities from the Banks the funds available for their trading operations would easily be increased into trillions.
With the trillions dollar of funds the Currency Traders can trade trillions dollar worth of currency contracts and could easily manipulates the Forex market. Profits could amount to billions. These billions will contribute positively to the GDP.
The GDP for the United States is a gauge of the overall output (goods & services) of the U.S. economy on the continental US GDP is the most comprehensive overall measure of economic output and provides key insight as to the driving forces of the economy.
GDP Influence On the Forex Market
If the figure increases, then the economy is improving, and thus the dollar tends to strengthen. If the number falls short of expectations or meets the consensus, dollar bearishness may be triggered.
Source: DailyFx.
The rich nations with their unregulated banking practices are fooling the undeveloped and the under developed nations with their false GDP. They make believe that their management and governance of their economy is good.
1. The claim by the rich that they were good in management and governance is only partly true. They did produce goods, provide services and they traded domestically and internationally. But their wealth from these activities is not as big as they made out to be. If the per capita and GDP are based only on these real businesses they would not be as rich as they claim to be. Certainly the United States and Britain would actually be nearly bankrupt.
Source: Economic Indices and the Wealth of Nations.
Retail Forex Traders are equally tricked because GDPs and GDP Price Index figures are fundamental news that has a high impact on the strength of the dollar. The dollar and dollar related currency pairs moves with the release of the GDPs and GDP Price Index but the extent of the movement is best judged by the big timers Currency Traders.
Because the false GDP have a high impact on the strength of the dollar, the dollar is always overvalued. Therefore, the exchange rate of the dollar with other currencies is also always unrealistic.
[...] http://myforextradingplatform.com/forex-news/currency-trading-false-gdp-united-states/Tun Dr Mahathir Mohammad elaborated on the false GDP of the United States in his third installment in a series on the trends that led to the present financial crisis. He specifically pointed out that currency trading is also a culprit … [...]
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Elcorin
I am from Malaysia.