It depends on wot I do with the money. if im only allowed to spend it away and only get my job back when my net asset = 0 then I will be poorer (if I'm financially educated ofcourse), otherwise for most people it won't make a different. On the same line, if you don't offer any cheque, but guarantee jobs for the masses, most of the working class will remain poor. anyways, that's not a great question to analogise the original statement. there are many more other factors to consider.
my first impression, was to mislead others. ofcourse he states himself in the book he is not going to give you direct answers on his strategy or success, but he claims the clues are in the text if you read it and think of it yourself. I think for most of the book he rambles on 'reflexibility' and his own ideas of economics and some other basic straightforward ideas that anyone should already know with a little common sense. Have you ever met a magician who does a trick and when he explains how he does, he makes it really scientific and supernatural - making most beleive that he actually has some true powers? (but yet he's technique is really basic and u might laugh if u ever knew it) that is the impression I got from reading bits of it (and I already expected it). the only thing you won't find in this book is how he makes money or anything on his investment strategy, or anything else. I feel the book makes a fun read for non-traders and others who have no clue of finance to have a read and think u need to be almost an alchemist in the business. I do not recommend anyone wasting their money or time on this.
I think through a possible scenario: Suppose the USA dollar / Japanese yen exchange rate is a historically high value. Japanese products, say cars appear to be attractively priced to USA buyers. Suppose USA people buy Japanese cars instead of USA produced cars. At the same time USA domestic cars appear expensive in Japan. Suppose Japanese car buyers do not purchase USA cars. The balance of trade is in favor of Japan; net cash flow is from USA to Japan. The USA car companies report poor sales, an indication that the "economy is weakening". I worry sometimes about the "quality" of trade. For example I might buy a computer in the USA but the computer is made in China. I trade USA dollars for the Chinese computer. 10 years later the computer is broken or obsolete. Computer value is 0, but the USA dollars are a longer term, more permanent form of wealth. 10 years after I purchase the computer the Chinese have my wealth and I have nothing. Although the trade (computer exchanged for cash) seems fair, I become poor (lost some of my wealth) and the Chinese become rich (gain some of my wealth).
These are some great points but I think you are mixing two different but related concepts. One is the current account surplus/deficit between countries, the other is differences in savings rate. Tied in with this is how the savings is invested: domestically (internally) or internationally (externally). In generally it is very helpful for economies, over the long term (10-year periods or higher), to have high savings rates as this translates into higher investment, which in turn increases productivity faster. Eg, if you produce shoe factories instead of shoes, your standard of living (consumption) growth for a few years will be slower, but as the factories come online your consumption will actually increase and can overtake the fact that you are consuming less on a percentage basis. These concepts are related in the sense that people or countries with higher savings rates will tend to have larger external surpluses. Thus, even if China eliminates every trade barrier, we will continue to see massive Chinese current account surpluses and corresponding current account deficits from the US unless the savings rates change. Currently China's net savings rate is around 50% of GDP compared to 10% in the US. This is the true source of trade deficits on the US side, and nothing, even a massive Chinese yuan appreciation, is going to change this unless China saves less and the US saves more (except possible a change in the mix of investment from external back to internal, which is unlikely given globalization). In fact, Paulson is aware of this, that is why the last few months he has gone from just talking about the exchange rate to increasingly speaking about the need for China to increase their consumption. Paulson understands these relationships, though he also (being in politics now) understands the more political needs relating to the exchange rate. In my opinion, the US should slowly switch to a consumption tax that givs incentives to save and penalizes consumption, such as perhaps a retail sales tax. This would increase the US savings rate and go a long way towards reducing global imbalances and increasing the long term US standard of living growth rate.
So please let your genius explode on that sentence : "Nearest analogy can be found in quantum physics where scientific observation gives birth to Heisenberg uncertainty principle". Of course you know as we all learnt when we were 6 years old that Heisenberg principle is a plain consequence of the choice of a wave representation in quantum physics. Could you please enhance our common knowledge on the subject and let us know why Soros deserves Nobel Prize in physics for his contribution ?
I thought it was a good book, so it just goes to show everybody has an opinion. Anyway I recommend it. A pretty good read for my money.
Scientific exactitude as applied to the markets is pretty much what Soros is attempting to dismiss when it comes to reflexivity. I'd recommend you take a second look at what he means, but given your handle I'm gonna assume you won't want to take too much out of it anyways. But the concept of reflexivity can be applied across all time frames and is something any trader here should consider more seriously.
In *THEORY* if US import/export the same amount of goods/services from EU if the currency is traded in the ratio of 1:1. (Trade Balance) if the currency ratio is 1:2 (US:EURO) That will make products made in EU look cheaper, therefore encourages people to import more goods. Which also make US goods less attractive in EU, and leads to diminishing export. (Trade Deficit to US) (Trade Surplus to EU)