HOMEPOD researched the Flash-Crash. Result: A macroeconomics problem
I am a believer in good finance and while the most extravagant problems appear sudently hurting thousands of investors, I've spent the last 2 weeks researching what it could happen next.
Having a less strong currency, resources can be shifted at a discount, thus exporters in this case, increase the transaction of goods, with less monetary value which adds friction on the services, particulary on maintenance which have less buying power, that results in poor quality of service, thus an increase in serviced prices which leads to inflation.
On the other hand it benefits in large, foreign investors with increased buying power, shifting UK assests to foreign buyers at a discounted price. This could lead to capital shift from UK investors to international investors. This is not a problem for UK because in large it benefited foreign investments.
We, people are the most affacted. A powerless pound means that we have to pay higher prices for our imported goods, which requires minimum wage increase. This will raise inflation because it requires more monetary value to buy the same quality today.
But UK has another problem. Competivity not just in UK, has droped and it mostly sustained by immigration which Brexit wants to remove. This puts pressure on UK born nationals which require higher monetary value for their service.
The strenght of the pond is very important and I believe Mr Carney should control inflation, provide and strenghthen fiscal policy to avoid further market turnmoil.