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Thread: Save Our Swiss Gold Update - Swiss National Bank Labels Initiative "Dangerous"

  1. #1

    Save Our Swiss Gold Update - Swiss National Bank Labels Initiative "Dangerous"

    The Swiss National Bank is stepping up its opposition, calling Save Our Swiss Gold, "Dangerous"
    https://smaulgld.com/save-swiss-gold-update/



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  3. #2
    The Swiss Central Bank has been trying to defend the Swiss Franc against the Euro by buying them up. A strong SF was leading to high price inflation in Switzerland (which relies heavily on imports) and was killing their exports (making them more expensive) and costing them jobs. Having to abide by the resolution if it should pass would completely undermine that and require them to spend billions more to aquire gold to meet the requirements. Or they can sell all of the Euros they have been buying.

    http://www.bbc.com/news/business-14801324 Article from 2011 when they began intervening.

    The Swiss National Bank (SNB) has set a minimum exchange rate of 1.20 francs to the euro, saying the current value of the franc is a threat to the economy.

    The SNB said it would enforce the minimum rate by buying foreign currency in unlimited quantities.

    The move had an immediate effect, with the euro rising from about 1.10 francs before the announcement to 1.21 francs.

    It is the latest attempt by the central bank to weaken its currency, which has been at export-damaging record highs
    Last edited by Zippyjuan; 11-23-2014 at 09:49 PM.

  4. #3
    Quote Originally Posted by Zippyjuan View Post
    A strong SF was leading to high price inflation in Switzerland (which relies heavily on imports)
    ur dumb

  5. #4
    Thanks- I had the inflation wrong. The Swiss Bank has been spending billions to support the Franc against the Euro though which was hurting exports.
    Last edited by Zippyjuan; 11-23-2014 at 09:24 PM.

  6. #5
    As soon as local prices equalize with the new exchange rate exports will costs the same as before the currency is weakened.

  7. #6
    Quote Originally Posted by bxm042 View Post
    ur dumb
    According to Zippy the main reason for the massive loss in purchasing power of the dollar over the last 100 years has been from an increase in the population. According to him the increase in the monetary base (money printing) has little to do with it.

  8. #7
    No- that is not what I have said. True the monetary base has little to do with it because the monetary base is not the money supply (cash is included in the monetary base and the money supply but the base also includes excess reserves at banks- money at banks has no impact on prices). In recent years growth in the monetary base has come from banks storing more money and not loaning it out. Money has to be spent to have an impact on prices.

  9. #8
    Quote Originally Posted by Zippyjuan View Post
    No- that is not what I have said. True the monetary base has little to do with it because the monetary base is not the money supply (cash is included in the monetary base and the money supply but the base also includes excess reserves at banks- money at banks has no impact on prices). In recent years growth in the monetary base has come from banks storing more money and not loaning it out. Money has to be spent to have an impact on prices.

    Madison320: "OK, so why has M2 increased so much over the last 100 years?

    ZippyJuan: "Why has the population increased so much over the last 100 years? Why has the economy grown so much over the last 100 years?

    If the money supply grows along with the economy and population, there is no pressure on prices due to an increasing money supply- the growing economy demands more money. If the money supply grows faster than the population and economy then it can apply pressure for higher prices. Price inflation has been low because growth in the money supply has not been much above growth in the economy/ population."



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  11. #9
    Dangerous? Dangerous to whom?

    Certainly not the Swiss people, since Gold is the finest currency in the world.

  12. #10
    Quote Originally Posted by Madison320 View Post
    Madison320: "OK, so why has M2 increased so much over the last 100 years?

    ZippyJuan: "Why has the population increased so much over the last 100 years? Why has the economy grown so much over the last 100 years?

    If the money supply grows along with the economy and population, there is no pressure on prices due to an increasing money supply- the growing economy demands more money. If the money supply grows faster than the population and economy then it can apply pressure for higher prices. Price inflation has been low because growth in the money supply has not been much above growth in the economy/ population."
    That does not say that an increase in population caused a decrease in purchasing power of the dollar. It does show that the money supply can increase without prices necessarily increasing. (and again, the Monetary Base is NOT a measure of the money supply).

  13. #11
    Quote Originally Posted by Zippyjuan View Post
    That does not say that an increase in population caused a decrease in purchasing power of the dollar. It does show that the money supply can increase without prices necessarily increasing. (and again, the Monetary Base is NOT a measure of the money supply).
    You're wrong. By far the most important factor driving prices up, in the long run, is the increase in the monetary base. Nothing else comes close.

  14. #12
    Evidence to support that? Please include other possible factors including supplies and demands. If we just look at the last ten years where we saw a huge increase in the monetary base (due to banks keeping higher reserves) yet price increases have been small.

    Here is a chart from Japan.


    http://www.adamsmith.org/blog/money-...and-inflation/

    United States:


    http://www.theresilientinvestor.com/...oke-inflation/

    Sweden: (same link as above):
    In the 1990s, Sweden’s central bank, the Riksbank, more than doubled the country’s monetary base during the Nordic banking crisis, but inflation remained moderate during and after the expansionary period. The graph below documents that even as the monetary base jumped from 1994 to late 1996, inflation did not follow suit, and in fact, remained flat before falling in 1996.



    Sweden’s monetary base expansion is one of several international examples of quantitative easing over the past two decades. These case studies, which include past expansionary periods in the UK, Switzerland, Japan, Australia, New Zealand, and Iceland, are discussed in a recent Federal Reserve Bank of St. Louis review. The researchers concluded that doubling or tripling a country’s monetary base does not lead to high inflation if the public views the increase as temporary and expects the central bank to maintain a low-inflation policy.
    Last edited by Zippyjuan; 11-26-2014 at 03:34 PM.

  15. #13
    Increase in monetary supply AND increase in debt destroys the dollar - 17.3 Trillion in Debt & Over $100 Trillion in Unfunded Liabilities (Social Security & Medicare) is why investing in Gold long-term is Smart.

  16. #14
    Quote Originally Posted by Zippyjuan View Post
    Evidence to support that? Please include other possible factors including supplies and demands. If we just look at the last ten years where we saw a huge increase in the monetary base (due to banks keeping higher reserves) yet price increases have been small.
    http://research.stlouisfed.org/fred2/series/AMBSL

    Those charts you provided showed relatively small increases in the monetery base over relatively short time periods. If you look at long term data (50 years) the ONLY correlation to rising prices is the monetary base.

    I've asked you at least 5 times what you think is the cause of these price increases and the only responce I've gotten is a wishy washy reference to population growth. Maybe you could answer the question? Or is it too difficult for you?

  17. #15
    Sorry, but that chart doesn't look at all like this chart. The Adjusted Monetary Base shows a slow and steady increase until just recently. Have prices grown slowly and steadily? If that one was a major cause of this one they should be the same shape.



    http://en.wikipedia.org/wiki/File:US...on-by-year.png

    Once again, I have not said that price inflation is caused by population. Well, it kinda is. Population (demand) relative to supply of goods. Basic supply and demand. Changes in technology also factor in. Monetary inflation can be A factor in price inflation but it is not the only (or the major) one. Monetary inflation is based on measuring increases in the money supply and the monetary base is not a useful measure of money supply.

    Monetary base is cash (dollar bills and coins) plus excess bank reserves. Until 2007, excess reserves were practically zero (note the sharp spike it makes that year) which means that up until then the monetary base was basically just cash money. Cash accounts for only about ten percent of the money supply and its percent has declined over time. That is why the monetary base is a poor measure of money supply. M2 is the most commonly used measure of money supply- not the monetary base.

    If your theory that the monetary base is the cause of all price inflation, we should be seeing massive price increases today since it has undergone its largest and sharpest increase in its history. Are we? Why not? Are other factors at work?
    Last edited by Zippyjuan; 11-27-2014 at 12:50 PM.

  18. #16
    Quote Originally Posted by Zippyjuan View Post
    Sorry, but that chart doesn't look at all like this chart. The Adjusted Monetary Base shows a slow and steady increase until just recently. Have prices grown slowly and steadily? If that one was a major cause of this one they should be the same shape.



    http://en.wikipedia.org/wiki/File:US...on-by-year.png
    Off topic, but how come there was practically deflation during the roaring twenties?



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  20. #17
    There was actually a major recession then following the end of WWI.

    http://en.wikipedia.org/wiki/Depress...920%E2%80%9321

    Factors that economists have pointed to as potentially causing or contributing to the downturn include: troops returning from the war which created a surge in the civilian labor force and more unemployment and wage stagnation, a decline in agricultural commodity prices because of the post-war recovery of European agricultural output which increased supply, tighter monetary policy to combat the postwar inflation of 1919, and expectations of future deflation that led to reduced investment



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