here is the report of SNB: http://www.snb.ch/en/mmr/speeches/id/ref_20120614_tjn/source What do you think about?
What's there to think about? We know all that. Of course there's no risk for inflation, they are hoping for it in fact, like the report mentions because the deflationary risks are much worse for their economy. If my knowledge of history isn't too far off, I'd say this is the most forceful enforcement of currency value in history. They are literally tied to the Euro and probably will be for another 2 years at least, until they can manage some "inflation" (or the Euro recovers). The amount of money the Swiss have is impressive, so it's bound to be a historical enforcement. Just remember the UK government in the 80s saying the same thing about the Pound-USD... They lasted, what, a few weeks? Heh.
June annualized CPI ~ -1% 10 year bond ~ 0.5% It appears the Gnomes of Zurich haven't figured out a way to escape the effects of the German plantation(the Eurozone).
the swiss have never had it so good. would u rather be swiss or greek? would you rather be swiss or american? your post is typical american envy and american supremacy nonsense.
Country is virtually a financial fortress (aka JPM claim of their balance sheet). Basically, you can't be poor when you're the keeper of the royal treasury with the privilege of lending that money out to peons and charge a certain interest rate (and sometimes keep it if the kings get deposed). You have first world, third world, dictators, junta, etc... sending money to your banks for long term/rainy day safe keeping due to your non grata status toward nosy investigators (the right have been reduced some what in recent years) and being historically neutral in nearly all conflicts. Due to your neutral status, nearly all global organizations have offices in the country and their funds is also being kept the very same banks as well. Nothing new here . Singapore also has similar status in East.
I am not discussing the way the country is making money. I am just wondering if the 1.20 cap that SNB is defending will produce any inflation effect. Btw, at the moment the SNB reserves of Euro is 60% of the GDP, far below of countries like Singapore or Hong Kong that is 200%.
Excuse my usual rant, but here's another new article that has SNB currency reserves at 71% of GDP. However, the article said that consumer prices is still dropping for ten straight months as of July so inflation is not yet insight. My two cent is once that ratio get closer to 100% than you might see something. As stated in the article, only serious threat insight is the collapse of the Euro. http://www.businessweek.com/news/20...shes-reserves-to-record-71-percent-of-economy
"Collapse of the Euro" is a bad bet... at least in the short run. Draghi has said he will "do everything in his power to prevent"...
I'm not betting on the collapse of the Euro but just stating the current threat to the Swiss financial system. Experience have shown that they will bled the Central Bank dry before conceding defeat.