The Doughty Swiss
Editorial of The New York Sun |
January 17, 2015
Congratulations
to the doughty Swiss, we say. The decision of their central bank to
remove the cap on its currency, allowing it to soar against the Euro, is
causing the foreign exchange markets to be struck with the dreaded
turbulence. It may well make things difficult for Switzerland in the
short run. But it was a vote of no confidence in the quantitative easing
that the European Central Bank is about to undertake. It may have put
some starch into the Germans, to whom the ECB just bowed by saying it
will do its quantitative easing without making taxpayers responsible for
losses.
We haven’t
heard such a primal scream from the FT since Prime Minister Thatcher cut
taxes (at that juncture the Wall Street Journal consoled its competitor
with an editorial called “Cheer Up, Lads”). The FT calls the Swiss National Bank’s move “a poor advertisement for Swiss reliability.” It suggests the Swiss demarche is “all the more remarkable” because the currency is “prized for its stability.”
We’re not sure “stability” is the word we’d have used for either the Swiss franc or the euro, or, for that matter, the dollar. The latter has lost more than 78% of its value since the start of the century (this morning it was worth but a 1,280th of an ounce of gold). A long-term chart of the Swiss franc shows that it (and the Euro) have kept pace with the dollar in this decline.
Gold hasn’t changed its policies once during this period. Its quantity hasn’t changed a whole lot; it’s still inert; and hasn’t anybody found any world-shaking new industrial uses for the silent money. Not even the FT can blame the instability on gold.
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