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emanreus Post time: 2016-1-23 16:55
> the market is no longer a market, but rather, it is a "fixing" as done by London <
Fixers choose ...
The difference between a Free Market and a Fixed Market is that in a Free Market, the price at which the goods are cleared (sold) is determined by the balance of supply and demand among the market participants, while in a Fixed Market, the price at which the goods are cleared is determined by either a seller with inexhaustible goods to sell, or margin to borrow the goods to sell, or a buyer with inexhaustible funds to buy whatever he wishes, or both.
The real market is actually made up of two fixings. There is a group that wants to buy up the goods in order to make them scarce, and thus be able to sell them in the future at a higher price. There is also a group that wants to sell the goods until there are no more buyers, and thus be able to buy them back in the future at a lower price. The long and the short of it is that when a monolithic player can move the price either up or down according to his predetermined target, that market ceases to reflect the general supply and demand, and becomes merely the bulletin board on which the monolithic player announces the price at which he is willing to buy and sell, and this is increasingly the case in all the bourses of the world. At present, the Central Banks are playing the role of such monolithic players in their domestic stock markets. Their activities affect in turn the exchange rate of their currencies, even against their own wishes. In this situation, China should simply print more Yuans, support its own stock market, and allow the Yuan to naturally devalue according to market supply and demand, reaping the best of both worlds.