As Currency Speculation Skyrockets 70%, Reason Drops at Similar Speed
What can the European ministers, who will meet today, do in response to this problem? Not much, indicates Motte, since this is being determined by a market where every day $3.2 trillion, a massive sum, are exchanged. According to the latest report from the Bank of International Settlements (BIS), the value of daily operations on currencies has jumped by more than 70% in the last three years, without any relation to world trade in physical goods.
It is the currency exchange market, where 30% of volume is dominated by financial speculators (hedge funds), according to Motte, which has really changed status in the last years. "Currencies have become a class of assets upon which more and more investors want to make profits, including the central banks," insisted Valery Perez, boss of the currency exchange for Deutsche Bank in France. Central Banks' are now adding their own reserves of $5.2 trillion to the bets made by the managers of speculative funds, while investments of the more classical funds (mutual and pension funds) are themselves following right behind. Sorry grandpa!
And indeed, according to data gathered by weather balloons up in the financial outer-stratosphere, derivatives contracts on interest rates reached $76 trillion in 2006. Of course, as EIR has recently described in an article by John Hoeffle, titled Debt Is Not An Asset, trying to con others into believing that mere money-play might represent actual value, is a game played by fools, who do not understand economics.