The new film “Broke: The New American Dream” gives sobering news about government involvement in your trading.
Directed by Michael Covel and premiering on Discovery Channel, Broke: The New American Dream examines the financial decisions, government policies, and systemic failures that produced the Great Recession and continue to distort markets and personal financial outcomes. The film moves from the 2008 financial collapse to broader questions about how government intervention, lottery systems, and financial media affect ordinary people’s economic lives.
For traders the message is direct. Government fiscal and monetary policies distort markets. Central bank interventions move currencies and bond markets on political timelines that have nothing to do with fundamental economic reality. Regulatory environments shift the risk landscape in ways that are not predictable from historical data alone. None of this is a reason to avoid trading. It is a reason to trade with a method that does not depend on predicting government behavior.
Trend following does not predict what central banks will do, what fiscal policy will produce, or how regulations will change. It reads price. When government intervention produces a large, sustained price movement in any market, the trend following system is positioned to follow that movement wherever it leads. The policy is noise. The price response to the policy is signal. A method that follows price rather than predicting policy is structurally better suited to a market environment distorted by government involvement than any approach that requires accurate forecasting of political decisions.
As Marc Faber observed in response to Michael Covel’s work on trend following: “Today, government regulations and fiscal and monetary policies are badly distorting financial markets. In this ‘manipulated’ financial environment, you should never expect markets to move as you wish or expect. Rather, disregard your fundamental beliefs and simply follow the trend.” That is the complete answer to government involvement in trading. Follow the trend.
Frequently Asked Questions
What is Broke: The New American Dream about?
It is a documentary film directed by Michael Covel that examines the financial decisions, government policies, and systemic failures behind the Great Recession and broader economic dysfunction. The film covers topics including financial market structure, government intervention, lottery systems as a tax on the poor, and what genuine financial literacy and market understanding look like compared to what financial media teaches.
How does government involvement affect traders?
Government fiscal policy, central bank decisions, and regulatory changes all produce price movements in currencies, bonds, commodities, and equities. These movements are often large and sustained, making them tradeable opportunities. The challenge is that they are not predictable from fundamental analysis because they are driven by political decisions rather than economic ones. A price-reactive approach that follows what markets actually do, rather than what they should do under normal conditions, is better suited to a policy-distorted environment.
Why is trend following well-suited to government-distorted markets?
Because it requires no forecast of government behavior. When intervention produces a currency trend, a bond market rally, or a commodity spike, the trend following system enters in the direction of the movement and holds it. The political cause of the movement is irrelevant. What matters is the price movement itself, and trend following is built to capture price movements regardless of their origin.
Trend Following Systems
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