Quotable 
“There is no important idea that stupidity does not know how to make use of, for it can move in all directions and is able to wear all the garments of truth.  Truth, on the other hand, has only one garment and one road and is always at a disadvantage.”
 

                              Taken from Robert Musil’s book, The man without qualities

Commentary & Analysis

Reflexivity in the Currency Market: Cause and effect are two horses from the same stable
 
From George Soros the brilliant macro trader (not the less than brilliant leftist activist) circa 1985:
 
“While reflexive interactions are intermittent in the stock market, they are continuous in the market for currencies.
 
“Changes in one [fundamentals versus exchange rate] may precede changes in the other, but it does not make sense to describe one as the cause and the other as the effect because they mutually reinforce each other.  It is more appropriate to speak of a vicious circle in which the currency depreciates and inflation accelerates or of a benign circle where the opposite happens.”
 
“Vicious and benign circles are a far cry from equilibrium. Nevertheless, they could produce a state of affairs akin to equilibrium if the reflexive, mutually self-reinforcing relationship could be sustained indefinitely.  But that is not the case. The self-reinforcing process tends to become more vulnerable the longer it lasts and eventually is bound to reverse itself, setting in motion a self-reinforcing process in the opposite direction.”
 
Not long ago, people who write books and talk about currencies, where damning the US for creating a “currency war” by weakening the dollar.  

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