THE FUTURE OF MONEY Bernard A. Lietaer - library.uniteddiversity ...

perspective. Such volume amounts to over 150 times the total daily
international trade of all commodities, all manufactures and all
services world-wide. It is in the order of 100 times the daily trading of
all equities in all the stock markets around the world. It is even 50
times greater than all the goods and services produced per day
(GDP) by all the industrialised countries. Furthermore, the volume of
foreign exchange transactions continues to grow at a breakneck rate
of 20-25% per year, compared to an average 5% annual growth for
global trade. It is fair to conclude that something very unusual is
going on in the global foreign exchange markets, something that we
have never experienced before.
The Global Casino
What happened is that 'speculative' trading (i.e. trading whose sole
purpose is to make a profit from the changes in the value of the
currencies themselves) has all but taken over the foreign exchange
markets. In contrast, the 'real' economy (i.e. transactions relating to
the purchase and sale of real goods and services abroad, including
portfolio investments) has now been relegated to a mere side-show of
the global casino of the speculative monetary exchange game.
The Figure P.2 illustrates this complete reversal in importance
between the 'real' and the speculative transactions. At this point, 98%
of all foreign exchange transactions are speculative, and only 2%
relate to the real economy.
Speculation can play a positive role in any market: theory and
practice show that it can improve market efficiency by increasing
liquidity and depth in the market. But current speculative levels are
clearly out of balance. 'Speculators may do no harm as bubbles on a
steady stream of enterprise. But the position is serious when
enterprise becomes the bubble on a whirlpool of speculation. When
the capital development of a country becomes a by-product of the