Gambling with fiat currency
Switzerland is due to issue a new set of banknotes this year. Currently they have 60 billion swiss francs of banknotes in circulation of which 36 billion is in the mightly 1000 CHF banknotes.
If they are sitting on such an incredible mountain of foreign reserves, I don't know why they don't declare the 1 CHF=1 Euro and just use euros for circulation.
At the end of 2007 the foreign currency reserves in Switzerland were $43.867 billion, and now they have ballooned to almost half a trillion dollars in efforts to keep the CHF from becoming too valuable.
They can let people keep the 1000 CHF banknotes as a speculation if the SNB wants to lift the parity in the future.
Quote: pacomartinSwitzerland is due to issue a new set of banknotes this year. Currently they have 60 billion swiss francs of banknotes in circulation of which 36 billion is in the mightly 1000 CHF banknotes.
If they are sitting on such an incredible mountain of foreign reserves, I don't know why they don't declare the 1 CHF=1 Euro and just use euros for circulation.
At the end of 2007 the foreign currency reserves in Switzerland were $43.867 billion, and now they have ballooned to almost half a trillion dollars in efforts to keep the CHF from becoming too valuable.
They can let people keep the 1000 CHF banknotes as a speculation if the SNB wants to lift the parity in the future.
It seems like to me it's just a great big matrix and I grasp pieces of it here and there, but certainly not all of it anywhere?
#1 Are those new francs or are they SDR's or gold backed or backed by the basket of reserve's?
#2 If you are speaking of Switzerland the reserves are a mixed bag of currency's, are they not? Some would be $, some Yen, Yuan, etc. Didn't this latest de-peg @ 1.20 result in a near 1/1 ratio? IMO, the Swiss have one of the most honorable [as far as value] currencies going. If say two weeks ago, the Swiss had allowed all capital in country to be valued in Euros, then this move would have devalued everyone in the country's possesions, IIANM? So, wouldn't that be a tragedy for the citizens?
If they keep parity, I believe that is what causes all the "hot money" to rush into the country causing inflation for the locals, to much money chasing the same amount of goods. This seems to be sometimes a dyslexic part of my thinking process. I get price and yield reversed at times as well. Isn't that why they were trying to keep the peg, to stop the inrush of hot money?
I see on the chart the US isn't on there and at the bottom it calculates 100% of world reserves, I don't get that? I remember the FED loaned the Euro billions of dollars @ 0% since 08 to help prop up the Euro, so the US should be sitting on a ton of Euro's, [in reserve?]. How in the hell is a red chip player supposed to make any money on the churn? IDK, money market pays squizzot. I tried to learn fundamentals, and basic charting. The market is no longer anchored to reality. I can't believe the DOW continues to go up while we exported our manufacturing base. Our biggest export is financial products and they are all based on fraud. Likewise BLS propaganda about jobs, currency manipulation [see GLD, SLV], printing [digitally] exponentially with est. 100 trillion worth of unfunded liabilities and big campaign donors like John Corzine remain free to walk the streets. TEOTWAWKI?
Quote: petroglyph
It seems like to me it's just a great big matrix and I grasp pieces of it here and there, but certainly not all of it anywhere?
#1 Are those new francs or are they SDR's or gold backed or backed by the basket of reserve's?
I am not sure I follow the question. The foreign exchange is measured in US dollars, which have the same value as SDR.
The Swiss franc has historically been considered a safe-haven currency with virtually zero inflation and a legal requirement that a minimum of 40% be backed by gold reserves. However, this link to gold, which dates from the 1920s, was terminated on 1 May 2000 following a referendum. At that time the Swiss National Bank had $28 billion in foreign reserves.
Quote: petroglyph
#2 If you are speaking of Switzerland the reserves are a mixed bag of currency's, are they not? Some would be $, some Yen, Yuan, etc.
Yes it is a mixed bag, but it is predominantly Euros. In any case since they broke the legal requirement for 40% backing in gold the foreign exchange has swelled from $28 billion to almost $500 billion which far exceeds the $60 billion in Swiss currency being circulated.
Quote: petroglyph
Didn't this latest de-peg @ 1.20 result in a near 1/1 ratio?
Yes, you have the ratios correct. The franc increased in value from 1.2 euros to CHF to 1.0 euros to CHF. But it wasn't pegged. The Swiss National Bank kept buying foreign currency (particularly euros) so that the value wouldn't increase higher. But after over 3 years they had amassed so much currency, that they stopped buying and let it slip to parity. It's not a peg, but a free market that is heavily manipulated.
Quote: petroglyph
IMO, the Swiss have one of the most honorable [as far as value] currencies going. If say two weeks ago, the Swiss had allowed all capital in country to be valued in Euros, then this move would have devalued everyone in the country's possesions, IIANM? So, wouldn't that be a tragedy for the citizens?
If they keep parity, I believe that is what causes all the "hot money" to rush into the country causing inflation for the locals, to much money chasing the same amount of goods. This seems to be sometimes a dyslexic part of my thinking process. I get price and yield reversed at times as well. Isn't that why they were trying to keep the peg, to stop the inrush of hot money?
They would value in francs, but just peg the franc to the euro. It would stop all the currency speculation
Quote: petroglyph
I see on the chart the US isn't on there and at the bottom it calculates 100% of world reserves, I don't get that? I remember the FED loaned the Euro billions of dollars @ 0% since 08 to help prop up the Euro, so the US should be sitting on a ton of Euro's, [in reserve?].
The chart is from Dec 2013, so it is a bit dated. The USA would presumably be part of "other". If gold is included then USA usually makes the top 20 or 30. However, the USA has no real reason for FOREX as the dollar is the basis of the world system of currencies. Outside of the gold supply, the foreign exchange held by the central bank is tiny as a fraction of the economy.
Quote: petroglyph
How in the hell is a red chip player supposed to make any money on the churn? IDK, money market pays squizzot. I tried to learn fundamentals, and basic charting. The market is no longer anchored to reality. I can't believe the DOW continues to go up while we exported our manufacturing base. Our biggest export is financial products and they are all based on fraud. Likewise BLS propaganda about jobs, currency manipulation [see GLD, SLV], printing [digitally] exponentially with est. 100 trillion worth of unfunded liabilities and big campaign donors like John Corzine remain free to walk the streets. TEOTWAWKI?
It can be baffling. Why isn't Quantitative Easements illegal?
Whoever said "a little knowledge is a dangerous thing" had me pegged, I at least however have stopped trying to outsmart the stock market or trade in PM's.
Why isn't QE illegal? I think it is, but no one to enforce it. Somebody somewhere gave the fed permission to print all they want. It's a great gig if you can get it.
Quote: petroglyphWhy isn't QE illegal? I think it is, but no one to enforce it. Somebody somewhere gave the fed permission to print all they want. It's a great gig if you can get it.
You might find this funny (in a slit your wrists kind of way).
