GayPatriot

The Internet home for American gay conservatives.

Do the Swiss get it?

by

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.

Comments

  1. It’s a complicated issue, as a country in today’s world can’t necessarily base their currency on a gold; because of gold availability & the practical aspects of it all. However; it’s another matter to require banks to keep a gold reserve.
    We live in a global society with a combination of credit & physical standards.
    It’s important for countries to allow fluidity in their currencies. Whether they act responsibly is another matter entirely.
    When I think of valued, go to currencies, I never think of the Swiss Franc. I think of British Pounds & USDollars. The economic infrastructure is so much more massive & stable.

  2. Marc – If a currency can be based on government debt – or on nothing – as today with all the fiat currencies, then it can certainly be based on something of actual value to people (like gold). And the Swiss proposal for a 20% gold backing is pretty modest.

    As to the US dollar: Remember that, since the Fed began operations in 1914, it has lost over 98% of its purchasing power – measured in consumer goods, gold, whatever. Over 98%! And the trend shall continue.

    In the 1793-1913 period, the dollar was defined as a fixed amount of gold (about 1/20 oz.) and as such, it lost none of its purchasing power over the period. The price of a loaf of bread in 1913 was virtually unchanged from 1793.

  3. I would recommend silver for personal savings, junk silver- pre 1964 coins so you don’t have to worry about numismatic value. Remember bad money drives out the good.

    The great depression happened when the US was 90+% white, had no welfare class, everyone was willing to work to eat, and people knew where food came from other than shelves. We can look to when Soros killed the British Pound as the world’s reserve currency to see what will happen when he profits from killing the dollar as reserve currency.

    This might also be a good time to suggest making sure you have a winter emergency kit in your cars including mylar reflective blankets, and some emergency food incase you get stuck somewhere.