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reminder on how even the great John Maynard Keynes first made a fortune and nearly went bankrupt due to his currency speculation in 1920:
mini thread
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mini thread
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2/ "Before 1914, currencies had been fixed, and opportunities to profit from the instability of exchange rates had been almost nonexistent. In the aftermath of the war, as exchange rates of the major currencies lurched up and down, it became possible to make large returns -
3/ "and also lose equally large amounts - by betting on the direction of such moves.
In the latter half of 1919, convinced that the inflationary consequences of the war would undermine the currencies of the main belligerents, Keynes went short on the French franc,
In the latter half of 1919, convinced that the inflationary consequences of the war would undermine the currencies of the main belligerents, Keynes went short on the French franc,
4/ "the German Reichsmark, and the Italian lira, buying the currencies of countries that had sat out most of the war: the Norwegian and the Danish kroner, the U.S. dollar, and interestingly enough, the Indian rupee.
He made $30,000 in the first few months.
He made $30,000 in the first few months.
5/ "In early 1920, he set up a syndicate, with his brother, some of the Bloomsbury circle, and a financier friend from the City of London.
By the end of April 1920, they had made a further $80,000.
Then suddenly, in the space of four weeks, a spasm of optimism about Germany
By the end of April 1920, they had made a further $80,000.
Then suddenly, in the space of four weeks, a spasm of optimism about Germany
6/ "briefly drove the declining European currencies back up, WIPING OUT their ENTIRE capital.
Keynes found himself on the verge of BANKRUPTCY and had to be bailed out by his tolerant father.
Nevertheless, propped up by his indulgent family and by a loan from the cooly
Keynes found himself on the verge of BANKRUPTCY and had to be bailed out by his tolerant father.
Nevertheless, propped up by his indulgent family and by a loan from the cooly
7/ "acute financier Sir Ernest Cassel, he persevered in his speculations - built for the most part around the view that the German and Central European currencies were headed for disaster.
By the end of 1922, he had amassed a modest nest egg of close to $120,000."
By the end of 1922, he had amassed a modest nest egg of close to $120,000."
8/
all that from pages 164-165, "Lords of Finance".
note: Cable then was about $4, so his $120,000 =Ā£30,000 and for reference, the UK average: yearly salary Ā£240, house Ā£320, car Ā£270.
all that from pages 164-165, "Lords of Finance".
note: Cable then was about $4, so his $120,000 =Ā£30,000 and for reference, the UK average: yearly salary Ā£240, house Ā£320, car Ā£270.
9/end
So even Keynes nearly bankrupt in 1920, got bailed out.
He also didnāt see the crash 1929 coming with roughly 90% of the collegeās funds in stocks.
And for the perma-bears: "The market can stay irrational longer than you can stay solvent."
So even Keynes nearly bankrupt in 1920, got bailed out.
He also didnāt see the crash 1929 coming with roughly 90% of the collegeās funds in stocks.
And for the perma-bears: "The market can stay irrational longer than you can stay solvent."
