VADUZ, Liechtenstein, December
19, 2014 /PRNewswire/ --
With the world's political and economic parameters rapidly
deteriorating, it is not surprising that the SNB is willy-nilly
forced, at an ever increasing rate, to add funds to its super
suspect € portfolio. This unenviable posture by a highly
competent institution is the result of a Swiss government
directive, stating that the central bank has to erect an
impenetrable barrier against the value of 1 € slipping under
SFR 1.20.
More than 20 years have passed since representatives of the
states using the Euro as their currency solemnly agreed the terms
of the Maastricht Treaty, to ensure within their territories
"sound fiscal policies, with the national debt limited to 60% of
GDP and the annual deficits no greater than 3% of GDP."
The conclusive evidence 20 years on, that the countries of the
Eurozone are not complying with their own rules, is that the ECB,
the creation of these selfsame partners, finds it difficult now to
dispose of its long term € denominated debentures. The
reason being the lack of confidence in the future of the Euro, as
there is hardly a single member of the currency union that can
claim to have complied with the terms so solemnly sworn in
Maastricht.
The Swiss finance minister can only be compared with the tragic
figure of King Canute, who set his
throne on the sea shore and commanded the incoming tide to
stop, to prevent him wetting his clothes. The fact that the sea did
not comply with his command had a salutary effect on the giver of
this preposterous order. He never again attempted to defy the rule
of nature. Owing to his subsequent acquisition of the thrones of
Britain, Denmark and Sweden, he went down in history as the Great
Cnut or Canute. So there is still hope that the present
holder of the office of the Swiss ministry of Finance will also
eventually see the light and abandon a policy "of attempting to
stem the tide". Of course the officials of the SNB, as
all financially qualified people, are aware that there is no
escape from Gresham's Law, according to which bad money drives out
good money. They must have been aghast at the decision of the
government to buy Euros of an indefinite quantity yet at a
fixed rate, just to prop up an arbitrary rate of exchange, ignoring
the fact that in a free economy only supply and demand can
determine prices or in this case currency rates and not government
directives.
As a result, smart capital is now flowing into SFR, which is
considered to be undervalued, not only by the usual suspect
currency speculators but also by all holders of Euros, who are
unsure about the future of their currency.
Yet there is no reason to despair, as long as we examine the
question unemotionally.
For it is clear that every currency serves at least two
separate purposes. As a means of exchange for goods and services
or as a store of wealth. And that is the reason why, there
is an alternative to the present currency policy of the SNB,
that is doomed to fail and is bound to end in disaster.
It stands to reason that the current demand for Swiss francs is
not a sudden passion for Swiss cuckoo clocks, but rather reflects
the anxieties of investors who wish to invest their wealth in a
currency that will stand the test of time. Taking into account the
double nature of the currency, it is imperative in this case, to
create a separate Swiss investment currency, that will take off the
heat from the Swiss franc, which could then continue to be used for
commercial purposes.
As Switzerland shares its
stable money, in a currency union, with Liechtenstein, it should be no overwhelmingly
difficult task, to establish a new currency, with the title
"Liechtenstein Taler", to be traded as an investment currency for
all non-residents merely on line, who submit their identity
documentation to the authorities, in accordance with the existing
compliance rules. This would result in a twofold blessing. It
would take off the pressure from the Swiss franc further
appreciating, by reducing the demand for the current commercial SFR
and providing additional business for the banks of CH & FL.
Contact:
Albertinaplatz Communication Consulting Gesmbh
Dampfschiffstrasse 6
1030 Wien
Peter Szabo
+43-1-512-88-77
peter.g.szabo@gmail.com, acc@abc.at
http://www.goldbrokers.li