George Soros: The Man Who Finances the World
Jason Huffman and John Fritz
Throughout the country, a new phenomenon is growing--the rise of the activist prosecutor. From New York to Chicago, Los Angeles to St. Louis, District Attorneys have begun to implement their own idea of justice into the application of the law. In Los Angeles County, George Gascon has become synonymous with the raging crime epidemic striking the city. As a former police officer, the citizens of LA County hoped Gascon would continue the peaceful application of justice to the county as his predecessor, Jackie Lacey, had promoted. However, his election brought about a newfound culture of lawlessness to the county.
In a contentious point for the United States, 2020 was fraught with protests, riots, and general unrest. It was in this year that George Gascon took office. Coming off of the violent summer of 2020, George Gascon assumed his position on December 7th and, with this, brought about his new form of justice. In just two years since taking office, the first six months of 2022 were more deadly than any of the previous fifteen years. Leading up to this time, the City of Los Angeles cut the police budget by $88 Billion (ABC7, Jul. 13, 2022). In LA county, many crimes go unprosecuted, and those that are often end up with the criminal back on the street in no time. In 2021, teenager Kristopher Baca drove the wrong way down a street, struck a woman and her infant child, later to be stopped by an onlooker to be held responsible for his actions. However, after being prosecuted, Baca was sentenced to only five to seven months in a juvenile camp. At this same time, Baca was also being investigated for poisoning a girl’s drink at a party only weeks prior to his hit-and-run (Fox, Jan. 20, 2023). After serving his short time at the juvenile camp, Baca was released. However, the lawlessness of the city caught up to Baca, as just in early January, he was gunned down on the streets of Palmdale California.
This lawlessness is not unique, however, to Los Angeles. The City of Chicago, which has never been known to be a safe city, has only grown more violent in the past decade. As of 2020, West Chicago had a homicide rate of 146.8 homicides per 100,000 people (Crain’s Forum, Oct. 24, 2022). For reference, Tijuana, often considered to be the world’s most dangerous city, had a rate of 138 per 100,000 people. Kim Foxx, the District Attorney, has only heightened this problem. In her tenure, Foxx has implemented the Safe-T Act, which requires a great deal more burden of proof to hold criminals accountable in a court of law (Fox News, Jul. 29, 2022). Jackson, Mississippi has also found itself in a similar situation. Under Soros backed Jody Owens, Hind’s County, Mississippi has seen an incredible skyrocketing in homicides, reaching an all-time high of 98 murders per 100,000 people (Capital Research Center, Jan. 19, 2022).
In New York, Manhattan District Attorney Alvin Bragg has downgraded more than half of all felony cases committed in the Big Apple, including many counts of armed robbery (Daily Mail, Nov 22, 2022). Although Bragg is soft on dangerous crime, this is the same District Attorney who has indicted President Donald Trump for a misdemeanor bookkeeping charge, which has already passed the New York statute of limitations, which he has also attempted to upgrade to a felony (Reuters, Mar. 22, 2023). All four of these prosecutors have overseen their cities spiral into havens for crime while engaging in progressive politics, but what links each of them to another? George Soros.
George Soros, 92, is a Hungarian-American hedge fund manager who has become synonymous with progressive American politics. His fund, the Quantum Fund, started in 1969 with only $250,000 (Time, May 4, 1987). With an impressive average growth rate of 30%, the fund, now broken up into smaller firms to avoid SEC investigations, is worth hundreds of billions of dollars. With a net worth of over $8 billion, Soros often finds himself donating to political institutions and pursuits that further his view of an ‘Open Society’. His philanthropic work has ranged from defending the liberation of Sarajevo in 1992 to the funding of American Super PACS. Soros is a figure of mass wealth and political philanthropy, but today finds himself in the middle of an ongoing destruction of the American criminal justice system.
Soros was born to a wealthy family in 1930 in prewar Budapest. As an early teen, Soros experienced the Nazi occupation of Hungary firsthand. Knowing that his Jewish family was at risk, Soros’ father moved his daughters out of the city and changed the family name from Schwartz to Soros. To survive the war, Soros lived at a government official’s home claiming to be his Christian godson. During a 1994 interview with Charlie Rose, when asked about how his family survived the war, Soros claimed that it was because his father, ”had enough sense to take evasive action,” (Soros 1994). For Soros, this time would prove to be an undoubtedly formative and critical part to his future endeavors. During the war, Soros worked with his so-called godfather to help the Germans confiscate Jewish property. When asked about this experience in Nazi occupied Hungary, Soros shows no remorse, instead, pride in his father’s actions. Soros said in a 1998 interview that,” [I learned] one should think ahead, one should understand and anticipate events,” (Soros 1998). Upon further questioning, when asked if it was difficult to perform these confiscations, Soros responded, ”not at all, not at all… [If i wasn’t there] somebody else would be taking it away anyhow,” (Soros 1998). Soros lived out the war with that same government official, continuing these duties throughout the occupation. This was until the Soviet Union rolled through Nazi Hungary to push the Germans back to Berlin.
Soros grew up in a Soviet controlled Hungary and later studied at the London School of Economics with an initial intention of studying philosophy. After studying under English philosopher, Sir Karl Popper, Soros changed his intentions and studied economics. It wasn’t until 1956, when he moved to New York, that his financial career boomed. Working as an analyst of European securities, Soros quickly made a name for himself in the New York finance community. In 1969, Soros created the Quantum fund. This fund started as a group of analysts managing a portion of individual investors’ wealth. However, this fund began to grow at a rapid rate. Between 1970 and 2011, the Quantum Fund had an average annual growth rate of 30% (247 Wall St., Mar. 20, 2023). It is needless to say that the only thing that can bring such an astonishing growth rate is financial savvy. George Soros knows where, but most importantly, when to move money.
It is Soros’ timing that becomes the main focus of how he makes his money. Throughout the years, Soros has strategically exchanged currencies and treasuries at the perfect moment. Avoiding market crashes and anticipating booms seems to be the reason behind Soros’s success.
The Nature of a Currency Crisis By: John Fritz
Currency crises unfortunately became rather common in the second half of the 20th Century, and each one had significant economic, political, and financial ramifications for the nations in which they took place and for broader regional economies. The definition of currency crisis has developed and changed over time as various crises with different causes and effects have taken place. One clear and concise explanation that takes these past crises into account is “a sudden and drastic devaluation in a nation's currency matched by volatile markets and a lack of faith in the nation's economy” (Investopedia.com). In some cases, despite being sudden, the impending currency crisis is preceded by certain subtle warning signs that give investors and speculators such as billionaire George Soros a chance to profit from the turmoil. However, whether the crisis is truly sudden or predicted by some, “the result is always the same: The negative outlook [and currency devaluation] causes wide-scale economic damage and a loss of capital” (Investopedia.com). No currency crisis is exactly like another. However, as several crises have occurred over the decades, certain common factors have been identified that have the tendency to lead to significant issues. First, researchers have concluded that many crises develop “when investor expectations cause significant shifts in the value of currencies” (Investopedia.com). These investor expectations are driven by micro- and macro-economic fundamentals within a given country as well as external economic factors and political developments. Thus, some experts say that the currency crisis is “the clue of every category of financial crisis” (Antczak, 2000, p. 10) and that it is “often the symptom and not the disease of greater economic malaise” (Investopedia.com). If certain aspects of a nation’s economy are out of equilibrium, investors and other stakeholders may begin to worry about the health of the entire economy. For example, recent currency crises have been preceded by heavy borrowing that has led to current account deficits, rapidly increasing currency values, and uncertainty about political factors (Investopedia.com). When foreign investors see these problems and begin to lose trust in the economy’s stability, they “often attempt to withdraw their money en masse […]. This is referred to as capital flight” (Investopedia.com). Capital flight, in turn, causes general economic struggle to turn into a self-fulfilling prophecy. A rapid removal of investment leads to a run on the nation’s currency, which causes the exchange rate to drop dramatically and increases the chances that the country will no longer be able to finance its spending (Investopedia.com). Therefore, investors who remove their funds from a nation due to worrisome economic factors end up creating “objective economic conditions that make the [currency] devaluation more likely” (Antczak, 2000, p. 21). There are two primary ways in which central banks and governments can intervene in an attempt to stabilize a struggling currency that investors expect to be devalued. First, central banks can “take their reserves of foreign currency and purchase their own currency on the open market. This causes the currency to appreciate relative to other currency, prompted by a rightward shift of the demand curve for the currency” (theeconreview.com). The goal of this strategy is to shift the demand curve by a larger degree than the supply curve will shift as a result of the capital flight. In other words, if the purchases of the domestic currency by the central bank exceed the amount of domestic currency being sold by fleeing investors, the currency can be stabilized. However, if the capital flight is greater, a devaluation is likely. The second option for the central banks and governments are to raise interest rates. This move “induces a flow of capital into your country, causing your national currency to appreciate” and offset the depreciation from the capital flight (theeconreview.com). Although these strategies can be effective, they cannot be maintained forever. When a central bank buys domestic currency, it can drain the nation’s foreign reserves. Thus, if the exchange rate is not stabilized quickly, the country will lose its ability to purchase its own currency on the foreign exchange market, and the currency crisis will remain. Likewise, the raising of interest rates does not affect only interest rates. Rather, this act has significant contractionary impacts on the wider economy that could push the nation into a recession. If introduced incorrectly or extended for too long, these solutions to a currency crisis can instead give speculators “even greater incentives to attack the currency because expected profits from selling the currency have risen” (Antczak, 2000, p. 9). This theory unfortunately became a reality in the Black Wednesday Currency Crisis of 1992 in Great Britain and the Asian Financial Crisis of 1997.
Sources: Antczak, Rafal. “Theoretical Aspects of Currency Crises.” Studies & Analyses, Case for Social and Economic Research, 2000, www.files.ethz.ch/isn/138429/SA211.pdf. Hayes, Adam. “Currency Crisis: What They Are, Examples and Effects.” Investopedia, Investopedia, 30 July 2024, www.investopedia.com/articles/economics/08/currency-crises.asp. |
In September of 1992, Europe faced a startling currency crisis. Referred to as Black Wednesday, September 16th of 1992 saw the British Pound drop 4.3% in one trading day (Reuters, Sep. 16, 2022). This one day of extreme fluctuation led to a season of the Pound’s value dropping, hitting its low of $1.4225 in February of 1993, a drop of 26.94% from the August high of $1.9470 (Google Finance, Mar. 24, 2023). At the time, the United Kingdom was a part of the European Exchange Rate Mechanism (ERM). The ERM was set up to maintain currency stability within Europe in preparation for the introduction of the Euro. However, with the plummeting value of the Pound Sterling, the United Kingdom was forced out of the ERM so as to not destabilize the whole continent (investopedia.com, Aug. 15, 2022). Most investors saw great losses in September of 1992, but Soros set a new record high. The Quantum fund and its affiliated groups in the Antilles Islands made $1.5 billion dollars that month alone (Forbes, Nov. 9, 1992). Between August and October of 1992, his fund’s value rose 31%, seeing an increase of 51% year to date for the funds (Forbes, Nov. 9, 1992). Soros knew when, what, and how to sell, and this proved invaluable to his funds.
Soros knew exactly how to move in the European money market. Although the continent saw a grave financial disaster, this investor knew how to maneuver his money through the continent to profit off of this impending collapse; shorting the British Pound. Simply put, shorting a currency is borrowing that currency at a low price, exchanging that currency for a more stable and higher value currency, and once the original currency has dropped precipitously in value, paying back the original loan and pocketing the extra money left. In September of 1992, Soros did this with the British pound, buying German marks and French francs to hold until the value of the pound plummeted (Forbes, Nov. 9, 1992). However, he did not just short the currency, but anticipated the markets’ reactions. Soros, figuring that equities quickly rise after a currency devaluation, bought $500 million of British stocks before the crash at a low (Forbes, Nov. 9, 1992). He also bought both German and French bonds and sold the countries’ stocks, figuring the interest rates would fall, leading to better returns on bonds (Forbes, Nov. 9, 1992). All of this was done months in advance, and after the September sixteenth drop, the Quantum Fund knew it was all worth it. While shorting a currency is not necessarily a malicious act, creating a self-fulfilling prophecy is another.
By 1992, Soros was already a big name in the investment world. The Quantum group of funds was worth $15 billion, an impressive feat for any investment group (theeconreview.com, Oct. 16, 2018). His speculations meant a great deal to the banking world, and when he moved his money, people kept a close eye on his funds. There were obvious flaws with the incorporation of the pound in the ERM, as the currency was overvalued to the Deutsche mark, but without Soros’ speculation, there may have not been such a collapse as there was, and had there been, it may not have been as drastic as that of September sixteenth, 1992. In just one morning, the fund executed its plan, leading many other hedge funds to follow suit. Even before the British markets opened, tens of billions of pounds had been sold, leaving British banks to scrabble to sell foreign currencies to buy pounds in order to keep the currency from falling without a floor (theeconreview.com, Oct. 16, 2018). Soros, with the push of a button, caused a whole currency to plummet. While he raked in more than $1.5 billion, the Bank of England was ruined and was rejected from the ERM.
This would not be the last time that Soros played a similar game. In 1997, a similar affliction which plagued Europe in 1992 was replaying in Asia. However, his bets were made more public that time by Malaysian Premier, Mahathir Mohamad, as the leader openly criticized the bets against the Malaysian currency (LA Times, Sep. 22, 1997). While Mahathir’s criticism did not successfully deter the collapse of the Asian markets, it did raise eyebrows to the actions of Soros’ investment groups. Soros is able to destroy an economy from halfway across the world, simply with the order to execute. By doing this, Soros has become one of the wealthiest investors on Earth. With all of this money, Soros was left to promote his social and political objectives.
In 1992, the Siege of Sarajevo began. After the breakup of Yugoslavia in 1991 and 1992, the ethnic groups of the region began to fight for their own countries. As a result, Bosnia and Herzegovina voted to leave the newly created Serbia on March third, 1992. This led to a four- year long conflict between the Serbs and Bosnians. Soros, growing up in Eastern Europe, felt a pressing need to aid the people of Sarajevo, and more broadly, the newly established Bosnian state. At the beginning of the siege, Soros immediately pledged $50 million, after already pledging $100 million to former Soviet state scientists (Washington Post, Dec. 19, 1992). Soros’ contributions were $1 million to the International Save the Children Fund Alliance, Medecins Sans Frontieres (Doctors Without Borders), and the International Rescue Committee and Oxfam, with the remaining $46 million to the U.N. High Commissioner for Refugees (UNHCR) (Washington Post, Dec. 19, 1992). At the same time, Soros, continuing his focus in the development of Central and Eastern Europe, opened the Central European University in Vienna (Washington Post, Dec. 19, 1992). Soros had a clear devotion to the exchange of ideas in the former communist states and the development of open societies. From supporting the overthrow of Apartheid in South Africa, the development of Eastern European economies and education, and supporting democracy in Myanmar, Soros’ Open Society organization has spread his philanthropic operations throughout the world.
On his philanthropy, Soros has said,“I believe that in philanthropy one should do the right thing, whether or not it succeeds,” (opensocietyfoundations.com). The ‘right thing’, however, is a very subjective topic. In the United States, Soros’ philanthropic work often takes on a political edge. In the 1990’s, the Open Societies foundation supported the creation of the Lindesmith Center (now called the Drug Policy Alliance) (opensocietiesfoundations.com). This center was designed to aid the development of public policy to support drug policy reform. This program was designed to combat the war on drugs and implement policies more sympathetic to the drug user. For example, the center supported the implementation of ‘treatment instead of incarceration’ initiatives in California, Ohio, Florida, and Michigan (Drug Policy Alliance, Jan. 27, 2022). This center was more politically involved with the legalization of medical marijuana in many states. According to the Alliance’s website, the group is,“is committed to legalizing marijuana at the state and federal levels,” (Drug Policy Alliance). This stance, though varying throughout the country, is debated and constantly being challenged in political arenas. Soros’ Open Societies Foundation, the funder of the Drug Policy Alliance, has supported this political action through the support for the Alliance.
This is of course not the only political stance taken by the Foundation. In 2019, the Foundation announced a $15 million grant to the NAACP, a famously liberal and progressive organization (opensocietyfoundations.org). The Open Societies Foundation, through its grants and donations, funds causes and organizations that promote left-wing activism. However, in recent years, this has transformed into more than just donations to political groups. Soros’ Open Societies Foundation and other affiliates have begun to directly fund progressive political candidates.
In the 2021 off-year election cycle, Soros spent more than $3.2 million on election contributions (Capital Research Center, Nov. 10, 2021). Through political action groups (PACs) such as Democracy PAC, the Justice and Public Safety PAC, and the Color of Change PAC, Soros contributed to the election campaigns of district attorneys to governors from all parts of the country (Capital Research Fund, Nov. 10, 2021). Every political contribution that Soros made was directly linked to a very left-wing activist candidate. For example, Soros’ contributions to the Pennsylvania Justice and Public Safety PAC were spent on campaign ads for Larry Krasner, the Philadelphia progressive DA (Capital Research Center, Nov. 10, 2021). Larry Krasner oversaw an enormous spike in crime in the City of Philadelphia, and only continued to implement policies that lessened punishment for convicted criminals. For this reason, in November of 2022, only one year after Krassner’s election, the DA was impeached by the Pennsylvania House of Representatives (Fox News, Nov. 16, 2022). Krassner was not the only DA supported by Soros. This brings us back to the beginning of this article.
Larry Krassner, Kim Garner, George Gascon, Kim Foxx, and Alvin Bragg have all benefited from George Soros’ deep pockets. Soros’ political agenda has now made its way into the electoral processes of the United States. What has this resulted in? A former president has been indicted on charges considered too weak to be considered by both federal and state prosecutors, the South Side of Chicago has become more dangerous than the most homicidal city on Earth, and the City of Los Angeles has devolved into letting convicted felons roam the streets. George Soros has an extraordinary life story. From being a Jew in World War II Hungary to becoming one of the world’s wealthiest investors, Soros has no doubt had a unique journey and has gained a great deal of political insight throughout his life. His recent political contributions, however, are suspect to review. The candidates Soros has supported have overseen explosions of crime in their cities. No longer do victims see justice for the crimes committed against them, but their offenders running free throughout their cities. Soros is a major force in the American political system, working behind the scenes through PACs to influence elections.
Sources: