Markets can influence the events that they anticipate.
Interpretation
Markets can shape reality based on their expectations and predictions.
This quote by George Soros highlights the idea that financial markets are not just passive reflections of economic conditions, but rather active participants that can drive real-world events based on their anticipations and beliefs. When investors collectively foresee certain outcomes, their actions can create a self-fulfilling prophecy, impacting the economy and influencing events significantly.
In practice
In a finance seminar discussion, this quote can emphasize the role of market psychology.
The securitisation of mortgages added a new dimension of systemic risk. Financial engineers claimed they were reducing risks through geographic diversification: in fact they were increasing them by creating an agency problem. The agents were more interested in maximising fee income than in protecting the interests of bondholders. That is the verity that was ignored by regulators and market participants alike.
The collapse of the global marketplace would be a traumatic event with unimaginable consequences. Yet I find it easier to imagine than the continuation of the present regime.
Regulating and taxing marijuana would simultaneously save taxpayers billions of dollars in enforcement and incarceration costs, while providing many billions of dollars in revenue annually.
We are the most powerful nation on earth. No external power, no terrorist organization can defeat us. But we can defeat ourselves by getting caught in a quagmire.
My foundations support people in the country who care about an open society. It's their work that I'm supporting. So it's not me doing it. But I can empower them. I can support them, and I can help them.
The criminalization of marijuana did not prevent marijuana from becoming the most widely used illegal substance in the United States and many other countries. But it did result in extensive costs and negative consequences.
That's the problem with very high taxes - they don't redistribute wealth; they redistribute people.
Capitalism and market forces are very powerful in producing wealth and innovation. But we need to ensure that these forces act in the common interest.
What many economists fail to understand is that poor people are no less concerned about improving their lot and that of their children than rich people are.
The shortage of buyers, which the world is suffering from, is readily understood, not as due to people not wishing to obtain possession of goods, but as people being unwilling to part with something which might earn a regular income in exchange for those goods.
Private fortunes, in the present state of our circulation, are at the mercy of those self-created money lenders, and are prostrated by the floods of nominal money with which their avarice deluges us.
This is the paradox of thrift: belt-tightening causes people to lose their jobs, because other people are not buying what they produce, so their debt burden rises rather than falls.
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