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Reply #13: Good lord, I was going to ask the EXACT SAME THING! (wondering about Rothschild example) [View All]

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drokhole Donating Member (759 posts) Send PM | Profile | Ignore Fri Jul-29-11 11:04 PM
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13. Good lord, I was going to ask the EXACT SAME THING! (wondering about Rothschild example)
Edited on Fri Jul-29-11 11:07 PM by drokhole
Was just having trouble posing/constructing the question, which you did in a fantastically comprehensive way. So, while I apologize for having nothing of value to add to the conversation, I greatly appreciate your efforts. Anyway, here's what I mean about the Rothschild family (and how they accumulated a vast amount of their fortune):

"The Rothschilds already possessed a very significant fortune before the start of Napoleonic Wars (1803–1815), and the family had gained preeminence in the bullion trade by this time. From London in 1813 to 1815, Nathan Mayer Rothschild was instrumental in almost single-handedly financing the British war effort, financing the shipment of bullion to the Duke of Wellington's armies across Europe, as well as arranging the payment of British financial subsidies to their Continental allies. In 1815 alone, the Rothschilds provided £9.8 million (at 1815 currency rates - a huge sum in today's money) in subsidy loans to Britain's continental allies.

The brothers helped co-ordinate Rothschild activities across the continent, and the family developed a network of agents, shippers and couriers to transport gold across war-torn Europe. The family network was also to provide Nathan Rothschild time and again with political and financial information ahead of his peers, giving him an advantage in the markets and rendering the house of Rothschild still more invaluable to the British government. In one instance, the family network enabled Nathan to receive in London the news of Wellington's victory at the Battle of Waterloo a full day ahead of the government's official messengers.

The basis for the Rothschild's most famously profitable move was made after the news of British victory had been made public. Nathan Rothschild calculated that the future reduction in government borrowing brought about by the peace would create a bounce in British government bonds after a two year stabilisation, which would finalise the post-war re-structuring of the domestic economy. In what has been described as one of the most audacious moves in financial history, Nathan immediately bought up the government bond market, for what at the time seemed an excessively high price, before waiting two years, then selling the bonds on the crest of short bounce in the market in 1817 for a 40% profit. Given the sheer power of leverage the Rothschild family had at its disposal, this profit was an enormous sum."


http://en.wikipedia.org/wiki/Rothschild_family


Is this at all a possibility? Already obscenely rich folks buying up and turning over government bonds at huge profit down the road? Forgive me for being fairly naive on the situation.
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