We’ll find out on Nov 30th, when the Swiss are set to vote on a citizens’ initiative that will require their central bank to hold 20% of its reserve assets in gold.
As recently as the year 2000, the Swiss National Bank was required by law to hold 40% of its assets in gold. That made the Swiss franc a relatively hard/safe currency. But Swiss voters removed that requirement in a 1999 referendum. Oops.
The SNB soon undertook an orgy of gold-selling, as well as money-printing (keeping the franc pegged to 0.83 Euro). Today, the SNB holds maybe 7-8% of its reserve assets in gold. The new referendum would require the SNB to take it back up to 20% over the next five years.
The point about money-printing is that politicians love it because it’s a hidden tax to subsidize their government’s high spending, deficits and debt. Large financiers/banks love it, because it puts them on top; it’s a hidden tax to subsidize the financial markets. And exporters like it, because it makes their prices temporarily more competitive in world markets. But consumers, workers and domestic entrepreneurs hate money-printing – or at least, they ought to hate it – because it raises prices and costs in the real economy, lowers people’s living standards, increases the “unfair” or meritless type of inequality in society, and fuels speculative bubbles that must end in devastating crashes (think of the U.S. dot-com and housing bubbles). It’s not a good thing.
Contrary to “mainstream” macroeconomics (which today is little more than propaganda for the money-printers), a hard/safe currency protects the average worker because it protects the purchasing power of his/her wages, and actually helps moderate the economic cycle(*). In Switzerland, somebody understands that. We’ll find out, on Nov. 30, if a majority of Swiss voters understand it.
Needless to say, the Swiss National Bank is fiercely against the Swiss Gold initiative on the grounds that it would basically keep them from selling gold and/or printing money. (Well, duh.) As if by coincidence, Paypal has blocked donations to the pro-initiative side. Did some regulator somewhere (perhaps even American) make a phone call and threaten Paypal into taking that action?
(*)We can debate past economic depressions in the comments. Hint: again contrary to what “mainstream” economics teaches, the 19th-century so-called depressions were largely times of ongoing economic growth; while the Great Depression was actually caused by various actions of Big Government that kept blocking recovery (or normal growth) from the Recession of 1930.