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Pascal Hügli



Articles by Pascal Hügli

Thanks to Central Banks, the Old Investment Rules Don’t Apply Anymore

November 5, 2021

Thanks to central banks’ easy money policies, historically low interest rates and a desperate search for yield have created new danger zones for investors trying to stay out of trouble.

Original Article: “Thanks to Central Banks, the Old Investment Rules Don’t Apply Anymore”

Sixty percent equities, 40 percent bonds. What has been considered the golden rule of portfolio theory for decades is of less and less value to investors today. Because central banks have backstopped almost every market, essentially mimicking the market maker of last and first resort, returns have been low, correlations have increased, and valuations are deprived of their meaning.
To act as the ultimate market maker as such, central banks have been leveraging up their balance sheets. They

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Thanks to Central Banks, the Old Investment Rules Don’t Apply Anymore

October 29, 2021

Sixty percent equities, 40 percent bonds. What has been considered the golden rule of portfolio theory for decades is of less and less value to investors today. Because central banks have backstopped almost every market, essentially mimicking the market maker of last and first resort, returns have been low, correlations have increased, and valuations are deprived of their meaning.
To act as the ultimate market maker as such, central banks have been leveraging up their balance sheets. They have been creating liquidity—mainly in the form of electronic bank reserves—only to mainly swap them for pristine collateral in the form of government bonds. This has several consequences. Good collateral is siphoned off from the markets onto the Federal Reserve’s balance sheet,

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Digital Currencies Are Changing the Money Landscape

January 29, 2021

Government-mandated money in the form of legal tender is a historical anomaly. For much of mankind’s history private monies and quasi monies competed alongside each other. Now, again, a new era of private money competition is resurging and reshaping our world.
Money, finance, and banking are currently experiencing the “Great Unbundling.” Value chains within finance are being broken up across the spectrum. Customers or users are no longer obtaining their money services as an all-in-one package from a single universal bank but increasingly follow a best-in-class approach in which the best offers from many different providers are chosen.
This trend of the fragmentation of financial services has also been recognized by the tech giants of our time. Amazon, Apple,

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The Result of “Too Much Money”: Asset Price Inflation and Inequality

January 1, 2021

In the eyes of many, covid-19 has truly accelerated things. Tech aficionados have been rejoicing as virtual meetings, Zoom calls, and overall digitization within companies have seen a serious boost. At the same time, the corona crisis has intensified another contemporary development that people generally don’t really care about: today’s ongoing expansion of the money supply.
Although monetary policy had been ultraexpansionary even well before the virus hit the world, central bankers are currently upping the ante once again. While it took the Federal Reserve almost six years to create 3.5 trillion in new US dollar liquidity, this time around it took only ten months to unleash a monetary tsunami of $3 trillion with the projection of at least another $1.8 trillion

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Central Banks and the Problem with Playing God

October 23, 2020

It seems the reach and influence of central banks has never been higher, yet they are increasingly flying blind in an environment where central bank tools are growing ever more imprecise and dangerous.

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: “Central Banks and the Problem with Playing God​“.

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Swiss Retail Sales, May 2020: 5.6 percent Nominal and 6.6 percent Real
Turnover adjusted for sales days and holidays rose in the retail sector by 5.6% in nominal terms in May 2020 compared with the previous year. Seasonally adjusted, nominal turnover rose by 30.2% compared with the previous month.

An

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Central Banks and the Problem with Playing God

October 19, 2020

Today’s Western institutions have long been deemed to be sacrosanct. As a matter of fact, though, nation-states are increasingly met with reservation or even outright resentment. Public trust in government is near historic lows, and pillars like the media or democracy are suffering from a loss of confidence.
But one modern institution seems to be standing as strong as ever: central banks. Although their role has changed significantly over the course of a few decades and their mandate has been infringed on more than once, they are still met with a high level of trust by financial experts, economic actors, and investors. With every looming crisis heating up, global liquidity is seeking refuge in government bonds and cash, while central banks are being called for

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The Social Consequences of Zero Interest Rates

July 6, 2020

Anyone who has ever been to Japan knows: Japan is special. The country has many strange habits. The Japanese culture is simply different and many peculiarities are hardly understood in the West.
But it’s not only the old established traditions that are foreign to us Westerners. Just as disturbing are social developments such as the increasing tendency of Japanese people to overwork, parasite singles who isolate themselves, or the existence of platonic relationships in which people are paid to hold hands. All of these phenomena are indeed odd and are generally attributed to the peculiar Japanese culture. However, few people are aware that there is probably a deeper reason for these curiosities, namely an economic one: zero and negative interest.

What You See and

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Bitcoin — when mainstream?

July 19, 2018

Since the beginning of the year, Bitcoin has seen its price cut in half and beyond. Other crypto assets have fallen even more. Although the king of the crypto world has rebelled from time to time over recent months, Bitcoin’s occasional price increases have always been met with follow-up downturns.
The crypto market is still mainly populated by private investors. Institutional investors, especially Wall Street, are not invested, apart from a few hedge funds. Reports like the one from BlackRock a few days ago might give an indication that general interest seems to be present, but concrete steps towards professional investment by institutional investors have hardly been taken.
The absence of Wall Street has long been

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Learn about Crypto’s true revolutionary potential

July 12, 2018

The publication of the Bitcoin white paper immediately after the outbreak of the global financial crisis in 2008 is hardly a mere coincidence. The financial collapse especially touched on one crucial question: Money talks, but who talks money if you will? According to Satoshi Nakamoto, the pseudonym behind Bitcoin, it’s the world’s central and commercial banks which rule over our money.
As a careful analysis of the matter indicates, Nakamoto does not seem to be wrong with his assertion. Starting with the industrial revolution, the constantly growing intertwining between what we would call the unholy triumvirate consisting of industry, state and banks has taken its course ever since. Increasingly large economic areas

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Let there be Bitcoin! And it was Bitcoin!

July 6, 2018

Bitcoin’s origin can be traced back to September 15, 2008. This is the day the investment bank Lehman Brothers announced its bankruptcy and the financial crisis reached its peak. With the bankruptcy of Lehman Brothers a ripple effect set in, several other banks had to be saved by their patrons, the states. These bail-outs wreaked havoc on the debt of many countries, which is why central banks initiated their massive government bond purchase programs. Even today, the balance sheets of the major central banks are still massively inflated and although central banks have begun to tighten, it is still not clear whether they will ever be able to siphon off the liquidity without major problems.
Only a month after the crisis

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What’s so special about crypto?

June 29, 2018

Towards the end of 2017, Bitcoin — and with it other cryptocurrencies — experienced a real hype. Within a few months, prices shot through the ceiling. The euphoria was ginormous and in hindsight pure madness.
With the new year, the disillusionment arrived. The market capitalization of all cryptocurrencies fell by more than half and prices plunged. This somewhat harsh consolidation was expected to bring the crypto world down to earth and many hoped that this phase would lead to a more solid foundation on which real knowledge, a greater sense of reality and a deeper understanding of crypto would inevitably flourish.
After almost seven months into the new year though, the previously broad interest in crypto seems to be

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Vollgeld – Eine umfassende Analyse

June 4, 2018

Am 10. Juni stimmen wir in der Schweiz auf nationaler Ebene über die Vollgeld-Initiative ab. Diese widmet sich einer der wohl komplexesten und zugleich wesentlichsten Thematiken unserer Gesellschaft: unserem Finanzsystem. Die Idee des Vollgeldes geht weit über die Initiative in der Schweiz hinaus und ist heute in erster Linie Bestandteil der «Modern Monetary Theory». Ihren Ursprung lässt sich in das 19. Jahrhundert zurückverfolgen. Auf der Webseite der deutschen Vollgeld-Vereinigung ist zu lesen:
Vollgeld steht in der Tradition der Currency School der 1830–40er und der staatlichen Theorie des Geldes (Chartalismus), die es seit ungefähr 1900 gibt und steht im Unterschied zu den Lehren der Banking School.

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Wie Sozialisten den Kapitalismus prägten – Teil 3

October 26, 2017

Im zweiten Teil dieser Analyse wurde zu zeigen versucht, weshalb es für das eigentliche Verständnis unseres heutigen Geldsystems und dessen spezifischen Eigenschaften wenig sinnvoll ist, in der Kritik desselbigen zwischen Staat, Zentralbank und Geschäftsbank zu unterscheiden. Alle drei Akteure sind für die in Teil Zwei beschriebene «monetäre Revolution» unabdingbar und haben die von der natürlichen Knappheit losgelöste Kreditgeldschöpfung erst ermöglicht. Das moderne Geld- und damit auch das Wirtschaftssystem ist auf der Grundlage staatlicher und privater Schulden, Privilegien und Währungsmonopole errichtet worden.
Dennoch wird in der heutigen Debatte um das Geldsystem – wie im ersten Teil beschrieben – allzu gerne

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Worin die populäre Geldschöpfungskritik irrt – Teil 2

August 4, 2017

Wie der erste Teil darzulegen versuchte, muss einer Ausweitung der Geldmenge durch Geschäftsbanken zwangsläufig eine Vermehrung der Basisgeldmenge vorausgegangen sein. Ohne eine Entscheidung der Zentralbank, den Geschäftsbanken –vorgängig oder nachträglich – Basisgeld zur Verfügung zu stellen, ist eine jede Geschäftsbank aufgrund der gegenseitigen Konkurrenz untereinander in deren Möglichkeit, Geld zu schöpfen, beschränkt.
Aus dem Gesagten geht folglich hervor, dass die Finanzkrise letzten Endes auf dem Mist der Zentralbank (in diesem Fall des Federal Reserve) gewachsen ist. Natürlich waren es die Geschäftsbanken, die übermässig stark Kredite vergeben hatten und hierfür massenhaft Kreditgeld oder eben elektronisches

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