On Black Wednesday in 1992, George Soros's traders Stanley Druckenmiller and Scott Bessent made a billion dollars in one day by betting against the pound. The Bank of England raised interest rates from 10% to 15% in hours to defend the currency, but the hikes crushed variable-rate mortgage holders and made the pound indefensible. The market collapsed and the traders won.
Let's go back to September 1992. This is when George Soros got famous for making a billion dollars in a single day by breaking the Bank of England. He broke a bank. How? By fighting against the currency. This was known as Black Wednesday. Look it up. It's a big day. Black Wednesday. They broke the bank. Now, this was George Soros under their London Fund. Okay. Now, a couple other names that I've talked about on this channel quite regularly. So George Soros Fund, the London Fund. Stanley Druckenmiller, or Druck, we call him the GOAT. He's the greatest of all time, the best track record, no losing years, all those things. And Scott Bessent, he was 29 years old at the time. So George Soros, now George Soros politically, there's a lot of reasons why we should not like him, but financially he's made a lot of money. And so we want to understand those things. But Stanley Druckenmiller is the GOAT and Scott Bessent, young, 29, executing this trade, again, made $1 billion in a day. Now, what they were doing is they were watching Britain's and they're watching the Bank of England's reserves. So they're looking at how much money they had to defend their position. But Bassett, Scott Bassett, he was doing something different. He was watching something completely different, a different number. What he was watching specifically was Britain's variable rate mortgages. You see, in the United States, we have 30-year fixed mortgages. But the rest of the world, they don't have that. And so Britain had variable rate mortgages. And what was happening is, as Britain, as the Bank of England was trying to protect their pound, they kept raising prices. So at 9 AM, the rates were at 10%. By 11 AM, just 2 hours later, they had to raise to 12%, trying to, trying to protect that peg. Here we are by 2:15 PM, They got to 15%, and then before it even got implemented, they canceled it and it round-tripped all the way back down. Why? Well, the reason why is because while it was trying to protect their market, they were crushing the consumers.
