Money is nothing but a tool of war for those who dream of empires. That's true during the industrial revolution and 'it's true now. During the age of the gold standard, the U.K. applied monetary pressure to other nations to protect the empire. Nowadays, China has been accused multiple times of currency manipulation to favour their export industry. But these two nations aren't the only example. During the Cold War, several countries engaged in currency exchange manipulation as the U.S. and the USSR fought satellite wars.
Whenever the central bank of a country introduces a change in its economy, the numbers on the financial markets around the world will go upsides or downsides. Traders are aware of this, so they follow the events closely in order to stay informed and know how to act.
What Is Forward Guidance?
Central Banks make public communication about the state of the current economy, and what would possibly be the outcome for future monetary policy. This communication practice is called Forward Guidance and is significantly helpful for traders.
Forward Guidance gives an estimated path for the interest rates that affect the decisions for making inversions or adjusting the prices on different business. It notes the public about possible changes in the economy; that way, it won’t come as a surprise when it happens. Forward Guidance is now widely used by most of the major central banks in the world, including the US Federal Reserve, the Bank of England, the European Central Bank, and the Bank of Japan.
Start of the Tulip mania
Since 1593, when the tulips were imported from Turkey to Netherlands “for the first time,” this commodity became a frequently sought and demanded good in a short period of time.
The more these tulips enjoy popularity, the more their growers were becoming popular. High popularity and limited number of bulbs of these plants in Netherlands that time resulted in their price jumping in an incredible tempo.
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