The Swiss throw in the towel, Decide to Enter the Fiat Currency Battle Royal

9/6/2011 Portland, Oregon - Pop in your mints…

We spent the weekend attacking sections of our yard that had, until now, remained a wilderness reserve due to our inner laziness.  Trees, shrubs, ivy that had been allowed to grow unchecked all fell victim to our saw and lopper (which must be the best tool ever invented).  The yard now appears more barren, if not civilized, than before.

Like everything, it came at a price.  Our back may never be the same and working in such close company with the pines seems to have triggered a latent allergy which nearly floored us for the balance of the weekend.

Fighting nature is not a long term strategy, but it has provided a strange sort of satisfaction in the near term.

This is the same sort of satisfaction that the Swiss National Bank must be feeling after they arbitrarily decided to cap the Franc:Euro exchange rate at 1.2:1, effectively throwing their lot in with the doomed Euro.  From the Wall Street Journal:

The SNB said Tuesday that it would "no longer tolerate" the euro falling below the minimum rate. In a statement, it said it will enforce the limit with "the utmost determination and is prepared to buy foreign currency in unlimited quantities."

Their abstention from joining the Euro in the first place was a testament to this.  Their capitulation today simply gives more credence to the extraordinary pressures that the competitive devaluation of all fiat currencies is placing on those Central Banks which for one reason or another have chosen not to compete.

The Swiss currency has been under siege ever since its neighbors embarked on the Euro currency experiment.  Being the ingenious people that they are, the Swiss, with their mountain bunker airbases and underground buildings, were able to hold out for a long time.

What finally sent them over the edge?  We are not certain but we can only imagine that, as the Franc soared unwittingly towards parity with the Euro, the intelligent Swiss flocked across the border to purchase whatever they could from their unwitting neighbors who are all unequally yoked to the Euro’s fate.

In other words, why shop in Geneva when your Francs go further in France?

Having seen enough, the SNB is has now crossed the ropes and is entering the Battle Royal of fiat currency devaluation.  Who will be standing at the end?



Fiat Currency Battle for Devaluation

This is a trick question, as our equally intelligent fellow tax-payers will quickly point out. There are no winners when something with no value is widely recognized as such.  Only mayhem, yelling, pile drivers, body slams, blood, and drama.

Most investors are now waking up and realizing that it is time to hold currency reserves (household savings) in Gold, Silver, Pork loins, anything but fiat currencies.

Get out of the arena and avoid the ensuing traffic jam.  This sort of mayhem is better enjoyed from the comfort of one’s home and the quicker one gets there the better!

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S.  For more ideas and commentary please check out The Mint at http://www.davidmint.com/

Key Indicators for September 6, 2011

Copper Price per Lb: $4.06
Oil Price per Barrel:  $86.49

Corn Price per Bushel:  $7.47  
10 Yr US Treasury Bond:  1.98%
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,880 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.5%!!!   UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average:  11,139  TO THE MOON!!!

M1 Monetary Base:  $2,108,800,000,000 RED ALERT!!!
M2 Monetary Base:  $9,473,600,000,000 YIKES!!!!!!!

While this type of action should come as no surprise to our readers, it is significant because the Swiss have traditionally been a sort of neutral safe haven on a number of fronts, not the least of which being money and banking.