Capital Flows – The Key to Everything

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HI Marty

In your blog on Computer Intelligence you said “currency movement reflects the capital flows.” If the AI is attempting to predict the collapse of a currency, how does it pick this up from currency movements? Wouldnt the collapse in the currency occur first, before the computer can factor that movement in to make a prediction? Or is there another raw data set that is used as an input for currency movement, like bank deposit figures of all banks in a country?



1900$X-M 1931 Sovereign Debt

ANSWER: A currency will not collapse unless there are trends that may be subtle, which unfold in advance. Just as with war. Whoever is going to start a war, repositions their capital in advance. If China were to plan an attack on the USA, they would sell all their US bond holdings first. A currency will NOT collapse out of thin air. Capital loses confidence and starts to flee. This was the indicator for the 1931 Sovereign Debt Crisis. The capital fled Europe and that pushed the dollar to record highs, our politicians responded with protectionism failing to understand what was happening. This led Hoover to describe the capital flows as: