MAKE MONEY WITH FOREX

The Gold Exchange and the Bretton Woods Agreement

In 1967, a Chicago bank refused to grant him a college professor named Milton Friedman a loan in pound sterling because he had intended to use the funds to produce a shortage of British currency.

Friedman, who had noticed that the pound sterling was priced too high against the dollar, wanted to sell the currency and then after that the price of the currency declined, returning to repay the bank to buy it, it is So with a quick profit. The bank's refusal to grant the loan was due to the Bretton Woods Agreement, established twenty years earlier, which fixed the price of national currencies against the dollar, and set the dollar at a rate of $ 35 per ounce of gold.

The Bretton Woods Agreement, established in 1944, aimed at installing international monetary stability by preventing money from fleeing across nations, and restricting speculation in the currencies of the world. Prior to the Agreement, the gold exchange standard that prevailed between 1876 and the First World War, dominated the international economic system. Under the gold exchange, currencies gained a new phase of stability as they were backed by gold prices. It abolished the age-old practice used by kings and rulers of arbitrarily debasing the value of money and cause inflation.

But the gold exchange standard did not lack faults. As an economy strengthened, it would import heavily from abroad until it ran down its gold reserves required to back its money. As a result, the money supply would shrink, interest rates rose and economic activity slowed to the point of recession. Eventually, prices of goods had reached their lowest point, being attractive to other nations, that rush into buying excessive, which injected the economy with gold until it increased its money supply, lowering the interest rates and recreate wealth into the economy. These fall-rise patterns prevailed throughout the period of the gold standard until the beginning of World War I interrupted trade flows and free movement of gold.

After the Wars, was held on the Bretton Woods Agreement, in which participating countries agreed to try and maintain the value of their currencies in a narrow range against the dollar and a corresponding rate of gold as needed. Were prohibited from countries devalue their currencies to their trade advantage and were only allowed to do so for devaluations of less than 10%. In the 50s, the volume of international trade expansion led to massive movements of capital generated by post-war construction. That destabilized foreign exchange rates as they had been established at Bretton Woods.

The Agreement was finally abandoned in 1971, and the U.S. dollar would no longer be convertible into gold. By 1973, currencies of major industrialized nations began to more freely floating, controlled mainly by the forces of supply and demand which acted in the foreign exchange market. Prices are set every day on a free exchange rate, with increased volumes, speed and volatility of the same during the 70s, giving rise to new financial instruments, market deregulation and trade liberalization .

In the 80s, the movement of capital across borders accelerated with the advent of computers and technology, extending market continuum through the time zones of Asia, Europe and America. Transactions in foreign exchange rocketed from about $ 70 billion per day in the mid-'80s, more than $ 1.5 trillion a day two decades later.

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The Explosion of the Euromarket

A major catalyst for the acceleration of Forex trading was the rapid development of the eurodollar market, where U.S. dollars are deposited in banks outside the United States. Similarly, Euromarkets are those where assets are deposited in a currency other than the currency of origin.

The Eurodollar market first emerged in the 50s, when revenues from sales of Russian oil-all in dollars, were deposited outside the U.S. in fear of being frozen by the regulatory authorities of the States USA. That led to a vast pool of dollars from abroad, outside the control of U.S. authorities. The U.S. government imposed laws to restrict dollar lending to foreigners. Euromarkets were particularly attractive because they had far less regulations and offered higher yields. Since the late 80s onwards, U.S. companies began to borrow abroad, finding a beneficial Euromarkets where maintaining excess liquidity, providing short-term loans and financing imports and exports.

London was and remains the principal offshore market. In the 80s, became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain its leadership position in global finance. The convenient location in London (which operates at the same time as the Asian and American markets) is also crucial to preserving its dominance in the Euromarket.

Investing in forex offers significant advantages over the purchase and sale of shares and futures. Here are the advantages of the forex market:

Running 24 hours a day

The Forex market is a steady market available 24 hours a day, open on Sundays at 14:00 New York time until Friday at 16:00 hours in New York. By having the capability to operate during the hours of the U.S. market, Asia and Europe, operators have the advantage to react immediately to news of the market and determine their own hours of operation.

Increased liquidity

With a daily trading volume 50 times greater than the volume traded on the New York Stock Exchange, there are brokers and dealers (agents) to buy or sell currencies in the forex markets. The liquidity of foreign exchange market, especially the market for major currencies, helps ensure price stability. Traders can almost always open or close a position at a fair market price. This represents a major advantage of the Forex market.

100:1 leverage on the forex market

The online forex market dealers offer a 100 to 1 leverage, which far exceeds typical 2:1 margin offered by brokers and beyond 15:1 futures market. With a leverage of 100:1, the operators a margin deposit of $ 1000 for a position of $ 100.0000, or 1%.

Transaction costs low

It is much more cost efficient to operate based on the foreign exchange market in terms of commissions and operating expenses in the purchase and sale of currencies.

Equal potential for profits in both bull markets and falling

Across open forex position, an investor has a long position in one currency and short another. A short position is one in which the trader sells currency before it will depreciate. In this case, the investor benefits from a fall in market price.

The ability to sell currencies without any restrictions is another distinct advantage over the stock market.

History of money.

Some say that money makes the world. Others, however, regard it as the cause of all ills of mankind. But most people recognize that money is needed and that we all should learn how to handle it properly.

It is difficult to believe that there was a time when there was no money. The truth is that thousands of years ago nobody was using. To obtain the goods they needed, people in ancient times used the barter, that is, changing one thing for another. This exchange does not always work well, it was necessary that each person possessed something that appeals to the other. Which was very difficult to find, but not to say that even if the operation of barter is too complicated, and it meant an improvement of societies self.

There are many types of goods that were looking to fulfill something that always provide for the exchange, however, always were drawbacks to using them: they attempted to use cattle, but could not be divided into smaller parts, olive oil (very divisible but difficult to use). Other goods used were: beer, wine, cigarettes, some metals, etc.. The latter, metals were the best suited to the needs, because it could divide into small pieces, were easy to distinguish itself was beautiful, resistant and had a value by itself scarce. The silver and gold were the metals used, initially in paperback form, and then, more elaborately, in coins. However, silver tarnishes is, while, by contrast, no gold, which gave him more advantages and made it easier to detect forgeries. The only problem is that the gold was very low and the currency should be very small.

The difficulty and danger involved in carrying gold coins was clear: apart from being heavy, they were easy prey for thieves, which is why we tried to replace the coins for something easier to bear that much weight and do not involve risk, being as there was paper money, commonly called "ticket", which in principle could be exchanged for gold.

The Greek historian Herodotus ascribes the invention of money to the deal, a village in Asia Minor, which for 670 years before Christ circulating coins made from an alloy of gold and silver. Long before them, the different cultures of the world and used a variety of objects such as money shells cauri in India, rice in China, records of limestone on the island of Yap in the Pacific, in addition to seeds, snail and miniature tools, among many others.

To facilitate trade, people started using coins made of precious metals to pay for goods and services they needed. And it was the Chinese who invented paper and typography, the first to use paper money, in the 9th century. The value of this was secured by gold and silver from the Chinese government, with the advantage of not being as heavy as the coins.

  Paper money appeared in Europe during the 16th century and its value depended on who owned gold deposits in each country. At present, most countries have their own monetary system and print their own money, which be made of paper has very little value by itself. Paper tickets representing a monetary value declared by the government of each country.

  A variety of coins in the world. Some of the best known are: the pound sterling in England, part of Germany, the Japanese yen, the Russian ruble, the euro and U.S. dollar eEurope.

Among the ways we have to pay the money now in cash, checks and credit cards. The cards from ATMs, (in Puerto Rico are known as ATH), can obtain cash quickly and are also used in some shops as payment.

Currencies continue to change and evolve, some disappear and new ones replace them. And what awaits us in the future? The digital money in the form of bits and bytes might be the currency of the new millennium. This money acts as normal, but it is not made of paper. The money from the bank account is converted to a digital code and stored on a microchip in a card or hard disk of a computer. This electronic money could be used to anonymously purchase from any retailer or vendor who accepts the transaction, either online or in a mall.

Guys we are in the future and must be getting used to manage internet payment systems, carry out transactions with e-gold, and far superior systems that will appear in the future.

Our money in the future is dependent on databases, but the question is always the same.

  Can achieve in the future a system so secure that it is impossible for anyone else that we can access our belongings?