Medieval alchemy was often associated with changing base metals into gold and creating the elixir of life; these days financial alchemy involves banks turning national money supply into banking credit for consumers.
Soros made his fortune through mastery of feedback loops and identification of reflexivity. This book details his theory of financial markets.
What is Financial Alchemy?
Morgana Rae is an internationally-acclaimed wealth coach. Combining modern research with ancient wisdom traditions, Morgana creates programs and books that help her clients bridge material and spiritual prosperity. Her coaching programs and books have reached thousands of clients while she has also lectured alongside the likes of Deepak Chopra, Marianne Williamson, and John Gray on various platforms.
George Soros has become famous as “the Man Who Moves Markets,” amassing his fortune through trading against the British Pound and still exerting influence among investors today. For this special edition of Alchemy of Finance, Soros provides new chapters detailing his theoretical methods as well as an expanded framework to comprehend current financial trends.
The Theory of Reflexivity
Reflexivity is an idea favored by Soros that should be integrated into financial theory and analysis. He defines it as two-way interaction between thinking participants and their situation in which they participate – something particularly crucial in stock market trading where emotions and beliefs play such an integral part of operations.
He points out that while scientists take great care to design their experiments without altering results, this level of purity in experimentation cannot be replicated in finance owing to economics being an inherently social system in which thinking participants play an integral part.
He argues that this reflexivity leads to dynamic trends that favor existing biases, leading to speculative bubbles which eventually burst at critical inflection points when these beliefs no longer hold water.
The Theory of Inflation
Soros asserts in his book that market phenomena are the result of thinking participants and can be altered through reflective participation by thinking participants. His theory of reflexivity explains how financial models such as those commonly employed by banks could become flawed and lead to the global financial crisis.
According to this theory, inflation results from the redistribution of power within capitalist production systems. Large companies attempt to maximize profits through price power they hold over markets by setting higher prices than what consumers can bear.
Redistributing power does not directly lead to inflation; however, it does create conditions that foster it. Soros’s take on this theory parallels Heisenberg’s uncertainty principle in physics; effects such as inflation can be observed but cannot be accurately measured.
The Theory of the Land Bank
Land banks hold one major advantage over central banks: they do not need to seek liquidity from outside sources in the form of deposits; rather they can exchange land notes for assets on their books – this prevents excessive inflation as any parcel not meeting standard land cannot be purchased for more than was paid initially.
Paper money only has value if people believe it has worth. Just as Europeans mocked native warrior dances that seemed illogical to them, when those dancing believed their dance helped win battles they suddenly became real and became powerful allies against enemies. This is the essence of alchemy: turning nothing into something. By believing in financial alchemy you can transform paper currency into wealth.
The Theory of Credit
Credit or debt theories of money, also referred to as debt theories, are economic theories which assert that money’s primary nature lies in credit (debt). Anthropologist David Graeber notes that for most of human history this view was dominant while rival theories such as metallism held their ground as well.
This book details how to build wealth through an easy step-by-step process based on ancient wisdom of spiritual prosperity combined with material abundance. Morgana Rae has helped many individuals generate four, five, and six figure incomes by changing their relationship with money.
For anyone who aspires to wealth, this book should be required reading. Its insights will challenge conventional thinking and the concept of efficient markets.