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The Swiss Want Even More Economic Freedom (and Gold)

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Switzerland is ranked as the freest economy in Europe in the 2014 Index of Economic Freedom, published by the Heritage Foundation in partnership with the Wall Street Journal. In the world rankings, Switzerland is the 4th most economic free country. While the United States Federal Reserve argues that inflation is necessary for economic stability, it should be noted that Switzerland has achieved its economic freedom with a current inflation rate of negative 0.7%. That means consumer goods are getting cheaper for the average Swiss citizen every year. Try to wrap your head around that, Janet Yellen. And while you’re at it, explain why the United States isn’t even in the top 10 freest economies in the world.

14 09 24 Flag_of_Switzerland

Yet in spite of this relative prosperity, the Swiss populace is not satisfied. They want more freedom and are getting ready to demand more economic responsibility from their central bank, the Swiss National Bank (SNB). This fall, the citizens of Switzerland will be voting on a referendum that would dramatically alter the SNB’s gold bullion allocations and holding policy.

If passed, the initiative would dictate three important gold policies for the SNB:

  1. 20% of the SNB’s assets would have to be held in physical gold bullion.
  2. All Swiss gold would have to be repatriated from foreign countries back into domestic Swiss vaults.
  3. The SNB would no longer be allowed to sell any Swiss gold.

14 09 24 swiss gold

This initiative would force the Swiss central bank to make large purchases of the yellow metal to comply with the new guidelines. Not only that, it would make it very difficult for the SNB to manipulate the Swiss economy with destructive monetary policies. It’s a lot harder to lend money to irresponsible politicians when your holdings are in hard assets like gold bullion. Unsurprisingly, the bureaucrats of the Swiss Parliament and SNB are strongly opposed to the initiative.

Back in May, a guest columnist for David Stockman’s blog Contra Corner wrote in detail about the Keynesian opposition to Swiss gold repatriation. He raised some excellent points countering the SNB’s argument that the gold initiative would severely limit its flexibility and damage its credibility.

There should be no ‘flexible currency’ and no central planning of money. They are at the root of the boom-bust cycle, the very reason for the various crises that have beset Western economies in recent decades. Switzerland would be far better off if no-one had the power to meddle with its money supply. As it is, there has been plenty of meddling already, and quite a bit of suspension of disbelief would be necessary to conclude that there will be no price to pay.”

Dr. Ron Paul brought the referendum back into the limelight just the other week in a new essay published at The Ron Paul Institute. As always, Dr. Paul brings common-sense wisdom to the table and urges the Swiss to vote for gold and freedom.

Just like the US and the EU, Switzerland at the federal level is ruled by a group of elites who are more concerned with their own status, well-being, and international reputation than with the good of the country. The gold referendum, if it is successful, will be a slap in the face to those elites. The Swiss people appreciate the work their forefathers put into building up large gold reserves, a respected currency, and a strong, independent banking system. They do not want to see centuries of struggle squandered by a central bank. The results of the November referendum may be a bellwether, indicating just how strong popular movements can be in establishing central bank accountability and returning gold to a monetary role.”

So while the United States and much of the West seems to have become completely disenchanted with the yellow metal, there is a bright spot over in Europe. Just as Dr. Paul points out, if the Swiss pass their gold referendum, it could play a huge role in reestablishing gold as a foundational monetary asset for modern economies.

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5 thoughts on “The Swiss Want Even More Economic Freedom (and Gold)

  1. P. Wild says:

    As a Swiss resident and voter I was against the sell-off of most gold reserves by the SNB years ago. However, the present initiative is problematic. The balance of the SNB has grown extremly through the intervention for the exchange rate Euro/Swiss Franc and the added liquidity after the 2008 events. Therefore, a 20% gold holding of this inflated balance sheet would become a much higher percentage after a normalization, as no gold could be sold thereafter.
    Furthermore, storing all this gold in Switzerland is risky. During WW II, Nazi Germany would have had an additional motivation to invade and get a hold of it.

  2. […] month we reminded you of the upcoming “Save Our Swiss Gold” initiative in Switzerland. This is a direct democracy […]

    • Rumi Vesuna says:

      Swiss political parties and Swiss National Bank (“SNB”) statements that by having gold backing the Swiss Franc (“SF”), would prevent them from maintaining a fixed ratio of the Euro/SF and would cause Swiss industries to not be competitive. This is false fear mongering and is intended for the political parties and their colleagues in SNB to feed at the troughs like pigs by maintaining fake agendas of printing unlimited fait SF to create a false economic picture and fill their pockets while they are in political office. There are many ways for SNB to maintain the Euro/SF ratio and have gold backing the SF. The simplest method is for SNB to purchase Euros when the SF rises in value to the Euro and purchase gold with the Euros and print SF with newly purchased gold backing the newly printed SF. This would enable the SNB to adjust the market value of the SF to a desired Euro/ SF ratio and at the same time have the SF with gold backing it to become a world’s most valuable desired currency. Central Banks around the world would be encouraged to hold SF in their reserves instead of the fiat US$ and fiat Euros. The Swiss would set an example and the lead the world Central Banks to follow in increasing gold backing their individual currencies. There are many obvious advantages to ultimately going to the gold standard for the major currencies. However the most important is that it would stop countries from waging war against other nations by funding their war efforts with fake IOU’s fait $ all printed on unlimited amount of paper to create fait money to pay for their war machines and bombs to destroy people and replace governments of nations they do not like. The Swiss by a “Yes vote” will be taking a giant step in reforming the SF which will have a very major influence in leading the world to ultimately go to a gold standard backing the major currencies of the world. It would be almost impossible for a country such as UK or USA that declared World War II in Europe. USA has been waging war in Korea, Vietnam, Nicaragua, Panama, Afghanistan, Iraq, Libya and Syria all in the name of democracy for the benefit of lawyers, judges and unscrupulous politicians that are influenced by lobby groups to promote their individual agendas. They have now started to antagonize Russia which is a major nuclear power . Fortunately Putin is cool minded and very intelligent therefore he is unlikely to start a war. USA spends trillions of fiat $ on their war efforts, yet several hundreds of thousands of their citizens are homeless sleeping on the streets in the major cities. It would be impossible for the USA or any other country to pay for their war efforts with a gold backed currency. Throughout history the Monarchs in Europe have waged war on people and when their treasury chest started depleting, they cheated their soldiers by adding copper to the gold coins. The soldiers were cheated because gold mixed with copper still resembles gold. This is unlikely to happen today because it is easy to analyse pure gold. Swiss creators of Red Cross which is the greatest humanitarian organization, vote “YES” in the referendum and lead the world to live in peace. God Bless Switzerland

  3. Rumi Vesuna says:

    The Euro/SF rates issue can be readjusted by the Swiss National Bank having a Swiss Franc split, similar to company shares splitting into more shares to revise the share price downwards to make it more attractive for investment. Central Bank can issue 10 New Swiss Francs for 1 Old Swiss Franc. This will be a first for the Swiss Franc, but many countries such as Brazil has had to do the opposite, which is reverse split in which 10 Old Cr were exchanged for 1 New Cr.The New Swiss Francs should still be backed by 20% gold; however it will not effect the competiveness of the Swiss industry because their products prices will be on the New Swiss Franc. The proposal to hold only 20% gold to back the SF will still leave 80% margin for adjustments on a day to day basis. In the 1900’s the world currencies were divided into hard and soft currencies. Soft currencies had zero gold backing. Nation with Hard currencies which were backed by gold such as Germany etc flourished in trade. Countries with Soft currencies had to devalue frequently to trade. My opinion is that the world should slowly return to the gold standard. It will make it very difficult for nations to finance wars which they can easily do today with fiat fake money.

  4. Thalia says:

    Peculiar article, just whzt I wanted to find.

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