💰George Soros built a position worth $1.5 billion against the British pound.
🏛️The Bank of England was unable to maintain the value of the pound within the fixed exchange rate system.
🌍The collapse of the pound had a global impact, with other currencies following suit.
🔮Soros's trade was based on his prediction that the pound would have to devalue.
💸Soros made a profit of $1 billion from his trade, while the cost to the British taxpayer was over 3 billion pounds.
What is the Exchange Rate Mechanism (ERM)?
—The ERM was a system that linked the currencies of European countries and aimed to stabilize exchange rates.
Why did George Soros bet against the British pound?
—Soros believed that the pound would have to devalue due to the flaws of the ERM and the economic troubles faced by the UK.
Did the UK recover from the collapse of the pound?
—Yes, the UK eventually experienced high levels of economic growth and the pound became more valuable than during the ERM.
How did George Soros profit from his trade?
—Soros borrowed pounds and sold them, anticipating a drop in the exchange rate. He then bought back the pounds at a lower price, making a profit.
What was the impact of the collapse of the pound?
—The collapse had a global impact, with other currencies experiencing devaluation, and it cost the British taxpayer over 3 billion pounds.
00:00George Soros, a controversial figure, was one of the most successful investors of all time.
02:01The European Exchange Rate Mechanism (ERM) linked the currencies of European countries.
03:06The UK joined the ERM in 1990, despite initial opposition from Margaret Thatcher.
07:00The British pound was already weak when the UK joined the ERM, and the economy was in a recession.
09:11George Soros bet against the pound, anticipating that it would devalue.
09:56Soros sold the equivalent of $10 billion worth of pounds, causing chaos in the markets.
10:24The British government announced the suspension of the pound from the ERM.
09:56Soros and his fund made a profit of $1 billion from their trade.
