ABSTRACT
This chapter considers the problems created by the market structures and the supply and demand conditions. In capitalist theory, the assumption is that in each market a price is determined by the supply and demand in that market. But, in real life, the foreign exchange rates are determined by the supply and demand generated in two different markets: the foreign trade market and the capital market. The most significant delusion of the free market economies is the belief that markets may generate income or cause loss. The capitalist economic system strongly believes in the faultlessness of the free market mechanism. The market mechanism's main strength is its respect of people's choices, though currently, only the choices of those who have the means to purchase are regarded. The inherent weakness of the mechanism is that it may foster euphoria in some markets and vicious cycles that lead to financial crises.
