Government administers the trading post: The underlying philosophy of the law of markets ….

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Commentary

Government’s role is to administer the trading post by managing the masses with a law-and-order scheme; broadcasting the value of its money through a regulated banking system; and expanding into and protecting new markets with its military and diplomatic corps.  Government, specifically western government, operationalizes the tenets of western philosophy: that man is at war with himself and nature and to alleviate the uncertainty of extermination, man must divide up the world and seek the most yield from the resulting parts.

Humans have no other reason to engage each other but to extract value from one another.  To garner the most yield from this engagement, the exchange, the trade, needs to be unencumbered by conflict.  Where it is impossible to obtain the means for survival by staying in one’s lane and exchange is necessary, humans then put in place customs, practices, rules designed to reduce conflict. 

Government promulgates the statutes, codes, and policies that manage the day-to-day mitigation of conflict.  It stays “in the money” by optimally maintaining the physical and social infrastructure that facilitates and expands its tax base.  It’s ability to effectively manage infrastructure and expand its tax base makes its money more attractive to traders.

Unfortunately, government has taken on a life of its own, going beyond its mandate to manage infrastructure and ensure law and order to regulating society on an increasingly micro level.  More of its policy and legislative initiatives appear intended to replace private market judgment with its own government judgment.  This imposition of government judgment on market judgment was not part of the original deal between traders, market makers, and government.  The imposition has seeped into the act of establishing price, an act that is best left to markets. 

Government now wants more than its cut in the form of taxes.  It now wants to weaponize price discovery and price setting for the purpose of expanding its cut by garnering more votes from the electorate.

The merchant trader, to protect her lane, should inform herself daily on the political process and support efforts that push back on government efforts to intervene in her ability to set price and other terms and conditions within and via the markets.

Alton Drew

27.03.2022

For consultation on how this political or legal event impacts your foreign exchange trade, request an appointment at altondrew@altondrew.com.

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Disclaimer: The above is provided for informational purposes and should not be construed as financial or legal advice or as creating an agreement to provide financial or legal advice.

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