Major and his cabinet are already clearly feeling the pressure from all sides.

In the eighties, there was a wave of privatization in Europe, and large state-owned enterprises were broken up and sold to private consortia, which injected a shot in the arm for the British economy at that time. In the 90s, Britain's real economic growth rate was only 0.6 percentage points, and in 91 years, the GDP for the whole year fell by 2.1 percentage points over the previous year.

Entering the third quarter of '92, the British economy still did not improve, and various data did not increase significantly compared with the previous year, and it was basically in a flat state.

In fact, the recession of the British economy is not due to domestic factors, but to the overall international economic environment. The collective recession of the US economy and continental Europe in the late eighties and early nineties led to weak economic growth in the United Kingdom, which had become increasingly dependent on these two markets after privatization.

In order to be more connected to the continental European market, the British government joined the European Exchange Rate System (ERM) and exchanged an exchange rate of 2.95 marks per pound, but this rate was too high for the United Kingdom. There was no other reason for this, that is, the economic situation in Britain and Germany at that time were not on the same level as Germany.

At the beginning of ninety-two, the foreign ministers and ministers of the twelve countries of the European Community signed the Maastricht Treaty in Maastricht, the Netherlands, and the main core of this treaty is the European Monetary Union. According to the provisions of the treaty, the 12 countries will be divided into three stages to complete the work of unifying the currency, the first stage is to strengthen the European exchange rate system and realize the free flow of capital, the second stage is to establish the "European Monetary Agency" responsible for coordinating the monetary policy among the countries, and the third stage is to launch a unified European currency - the euro, and upgrade the "European Monetary Agency" in the second stage to the European Central Bank to formulate a unified monetary policy for all countries.

Under the constraints of this treaty, the exchange rate policies of various countries have been compressed to a very small range, and it can be said that the original independent monetary policy has gradually been lost and has become a monetary policy that can only be adjusted within a certain small range.

The exchange rate of the pound against the mark at the time of joining the European Monetary System was 2.95, the upper limit was 3.1320, and the lower limit was 2.7780, with an amplitude of 6%. This was a seemingly freely adjustable fixed exchange rate system, which naturally laid the groundwork for the subsequent pound crisis.

In April '92, the British general election, out of concern that the Labour Party could implement a nationalization policy, capital began to flow out, the exchange rate gradually fell, although Zuihou and Margaret Thatcher won from the Conservative Party of Major Zuihou, and the pound once returned to its former strength, but the economic data has not improved, and as a result, after two months of rise, it began to fall again in June.

Major and his cabinet are anxious about this situation, they are well aware of the impact of currencies on the economy, and they can only keep capital from flowing out by raising interest rates when the exchange rate market cannot be adjusted freely.

Nor is it possible to raise interest rates unlimitedly, because they will dampen investor enthusiasm and may add to the already depressed economy, so the British authorities will face a dilemma, the first is to allow the pound to depreciate when it is almost impossible to appreciate the mark, and the second is to raise interest rates to a certain extent.

That's when Druckenmiller came in.

He began to buy large quantities of the Deutsche mark and sell the pound, profiting from the exchange rate movements between the two, and, according to the analysis, manipulating the British market more or less in stocks. By the end of August, the Quantum Fund had built a position of more than $1.5 billion.

In addition to the Quantum Fund, other traders in the foreign exchange market have also smelled something different and have established bearish positions in the market for the pound.

The pressure from the Forex market was quickly transferred to the Bundesbank.

The Bundesbank plays an important role in the European monetary system. As a result of the merger of East and West Germany, in order to revitalize the entire German economy, the German government implemented an active fiscal policy and invested a lot of financial resources in infrastructure construction and social welfare to offset the adverse effects of the East German economic integration.

Stimulated by fiscal policy, Germany's economy grew strongly, making the mark indestructible.

In this case, the repatriation of capital from Germany to other countries can be done not in the mark, but in interest rate policy, that is, to reduce the level of interest rates in Germany so that capital flows to the markets of other countries.

You must know that interest rates are generally considered to be risk-free investments in the financial market, and they are an ideal investment income. There is no other reason, because the interest rate mostly depends on the interest rate level of short-term treasury bonds, and treasury bonds are bonds issued with the credit of the state power and fiscal taxation as guarantees, and there is basically no risk of default.

Therefore, some risk-averse capital in the market specializes in investing in interest rates in different markets, and these capitals are not aimed at maximizing profits, but with risk minimization as the purpose of the investment strategy. For a country, such capital is very welcome.

The German government cannot lower interest rates!

To make a long story, this has to be said before the Second Shijie War, when the German government issued money indiscriminately in order to pay the war debts and defeat compensation owed before the First Shijie War, so there was extremely serious hyperinflation in Germany, and the speed of currency depreciation was like a wild horse, and in just a few years, the mark depreciated billions of times.

At that time, the banknotes could not keep up with the rate of inflation when they were printed day and night, and then there was no choice but to change to monochrome ink printing, and even then it still did not work, and when it came to Zuihou, it could only be printed on one side, because there was no time to dry these banknotes. There used to be two such jokes, the first is that there was a golden wedding of an old couple at that time, according to local customs, the government would give a little courtesy money, and then the mayor solemnly presented the old couple with a trillion marks in the name of the state; Another thing is that in winter, people put the mark instead of firewood into the stove to keep warm, because it will be more cost-effective.

In this case, Hitler went along with the will of the people and rose to the top as the savior of the country and the nation, becoming the leader of the country, and the rest of the matter is well known.

As a result, successive governments in post-war Germany have spared no effort to prevent inflation, and interest rates have remained high. In the United States, the Federal Reserve's role is to ensure low inflation and full employment, while Germany's Bundesbank is tasked with fighting inflation.

At the same time, the perennially low inflation rate has also made the people accustomed to this kind of treatment, and if the government changes the interest rate, it will be subject to great pressure and suspicion from public opinion.

By the time Soros discovered that the pound was overvalued, Druckenmiller had already completed his first sniping attack on the pound. However, because of the position, the profit obtained is quite limited. Soon, however, the Bundesbank's attitude will become clear, and Soros and his protégés will make a comeback with a huge amount of capital. (Ask for Sanjiang tickets, I hope you will continue to support, thank you very much!) ）