I like to ask people what is the foundation of all public demand for any currency (like the US Dollar). Since most people cannot state the simple answer concisely, it is predictable that they will not understand how public demand for a currency can change (and will change).
There are big changes and small changes. There are trends.
Why are most people unable to state the foundation of demand for all currencies? Was this always the case?
No, it is the result of massive indoctrination programs called by such names as “public schooling” and “mainstream news.” The confusion and “scattered” disorientation of the masses is an economic target of certain commercial interests.So, most people also do not really understand the simplicity of how demand changes for gold or oil or anything else (even real estate). In an article from 2005 (linked below), I set a framework for several future events.
Why did oil prices rise from $11 per barrel in 1999 to eventually hit $148 in 2008? It is simple enough.
Why did gold make the much smaller and much less significant rise from $240 to $1950 (then plunge to $1200)? Again, it is no great mystery really.
Note the title of the article here: “worth it’s weight in… oil” In the title, I am making fun of those who worship gold and neglect the far more significant resource of oil (or of energy in general).I wrote recently about the huge gap between how most people invest and methods that specifically target limited-risk and very high profit potentials. I mentioned the specific method of trading “option contracts.”As a hint regarding the potential benefits of options trading, I will give a real example from yesterday to today. The price of gold rose 1.77% in one day which is a notable gain, but not very unsual for a market with as low a volume as gold. (In other words, in a much more important market like the US Dollar forex markets, it would be extremely rare to have a change of 1.77% in a single day.)
So, gold rose 1.77% in one day. I saw that rise coming and purchased several options yesterday for $13 each. I just sold them for $21. That is an overnight gain of well over 50%. 50% is a lot more than 1.77%, right?
I already purchased one of group of option contrasts yesterday, those pertaining to the US Dollar Index (and the ETF “UUP”). I bought them for $25. I could sell them right now for $32 but I am holding them for the moment, though I might “dump” them at any time to “protect my profits.”
Do I personally care that I was trading contracts relating to gold or to a currency? Not at all. I am just a trader. I am not complaining about how the world should not be how it is and picking favorites from some utopian worship of an ideal or a sacred document of a religion, such as the U.S. Constitution.
I could be buying cigarettes at wholsesale prices and selling them for a big retail profit. Or it could be toothbrushes or guns or cell phones. I am not attached emotionally to particular markets to the extent that most investors are.
My attention to the fluctuating emotional trends of the masses is in fact a primary foundation of my trading strategies. There are waves of panic and euphoric delusion. Marketers and PR firms manipulate the perceptions of the public so that a pharmaceutical pill that costs 9 cents to manufacture can be sold for $31 by a hospital and then billed to the taxpayers of Canada.Why do marketers drive up the prices for the things they market? Because that is how they earn their money. Lobbyists, in my opinion, are a type of marketers.
If an Ebola hysteria can be generated at great profit to a company, then concentrated effort will be made toward that result. If hysteria about the collapse of demand for the US Dollar can be generated at great profit to an institutional investment operation, then once again concentrated effort will of course be made toward that result.
In reference to my opening question regarding the source of public demand for currency, I will share a few comments. First, I will give the answer with a story.
Once upon a time there were two men and one had several guns and lots of ammunition. The other man had several bars of gold and some really important pieces of paper.
The two men were both crossing the same rope bridge over a canyon when they noticed each other. The one with guns was calm. The one with no guns was terrified.
One of the men died on the bridge that day. The other one left with all of the guns, the remaining ammunition, and all of the other valuables.So, the violence of operations of government is the foundation of all tax systems. Extortion is “unauthorized” taxation. When the courts dictate to the masses what form of payment is accepted by that operation of organized coercion, then that creates public demand for the sacred object of that religion: a currency.
the origin for public demand for the sacred object of court systems (“money”)