currency board

[John K. Taber]

pms wrote:
> 
>  " By
> prohibiting shorting on the stock market they
> eliminated the following transaction sequence:
> 
> borrow a stock
> sell it
> take the HK currency and convert to dollars
> wait for HK currency to fall (caused in part by the act
> of conversion)
> wait for stock market to fall (helped along by shorting
> and fall of currency)
> buy currency back at much lower price
> buy stock back at much lower price and pay off "short
> position"
> 
> ...which had the aforementioned effect of causing bank
> liquidity to dry up.  Buying HK dollars in an effort to
> outgun the speculators would have been fruitless.  By
> contrast, bidding stock values up against short
> positions was a major "burn" to speculators, forcing
> them to come back in (buying currency and stock) in
> order not to get caught having to pay back that
> borrowed stock at an appreciated price and quite
> possibly in an appreciated currency."]
> 
> Greg-thanks for this step-by-step.
> I think I'm getting aholt of it.
> 
> I hope reading Doug's book will help me with this stuff. (Bought it the
> first week as a political statement, but.... Partly I think it's hard to
> understand because it really is amazing that people are allowed to do this
> shit. Sick, sick, sick.  One thinks of self-obsessed children playing a
> board game, tossing people instead of dice.  I know I've been jazzed about
> my little pesos in the market but that's a matter of being happy I'm making
> a late attempt at pro-active functioning of many sorts.
> Almost makes me want to pull that black blankie back over my head,
> NOT!
> 
> Koo-koo-ka-choo
> pms

Doug speaks for himself of course. The way I read his book, people
do these kinds of things with their loose cash because the real
economy can't use the money it has. The "sick games" yield better
returns than expanding the real economy. 

In other words, it's the economy that's sick.