There is no free in liberty.


Tuesday, September 6, 2011

The Swiss Go Bernanke on Europe... I got a fevah and the only prescription is more Keynesian Depression ...


The title comes in part from from polipundit whose synopsis of the Swiss dance is the most succinct yet:

For decades, the Swiss Franc has had a reputation of quality and stability, as the Swiss could be counted on for sane fiscal and monetary policy (not to mention a refreshing lack of entanglement in foreign military quagmires).

The SNB indicated it would buy an
unlimited amount of euros regardless of the risk to maintain that

The idea is that as the U.S. and Europe debase their currencies to try to prop up their bad banks, other countries will devalue as well in order to keep their export and labor markets competitive. No country can afford to have the only sound currency in a Zimbabwe Ben world. Not even Switzerland....

Simon Black at Whiskey and Gunpowder had this to add:


Markets are not functioning properly. Competitive devaluation means that governments are all striving to out-print each other… Europe is printing as much as they can to bail out the PIIGS, Switzerland just signed up to join then, Japan and China are not far behind, and QE3 is set to launch soon in America.

With so much money sloshing around the financial system, there is absolutely no sense of value anymore; people cannot invest with confidence given all the massive bureaucratic intervention.


In the Swiss National Bank’s brief statement, they said “With immediate effect, [the SNB] will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.”

The three key words here are ‘WITH IMMEDIATE EFFECT’. This is just another example of a government making instant changes that pose dramatic risk over people’s lives and livelihoods.

Make no mistake, we can all wake up tomorrow to a new reality.

How is accurate pricing communicated through our markets when there is no sense of value? It isn't.

Our Keynesian Depression has just been lengthened.


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