SNB & CHF

The decline phase of S-Curves can be gradual or a cliff-dive. Way back in 2007 I charted five long-wave cycles that I reckoned consequential: 1. Public debt (accumulating federal deficits) 2. Inflation 3. Oil (energy) 4. Interest rates 5. Speculative fever Fifteen years ago, my chart look-ahead was about three years, to 2010, with the basic idea being that these long-term cycles had already turned or were about to turn. Looking back, I should have added a few...

For most economists and politicians, the role of central bank authorities is to make the economy as stable as possible. What do they mean by economic stability? Economic stability refers to an absence of excessive fluctuation, so an economy with constant output growth and low and stable price inflation is likely to be regarded as stable. An economy with frequent boom-bust cycles and variable price inflation would be considered unstable. According to popular thinking,...

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of right. So wrote Ludwig von Mises in The Theory of Money and Credit in 1912. And further: The sound-money principle has two aspects. It is affirmative in approving the...

All these curveballs will further fragment the housing market. Oh for the good old days of a nice, clean housing bubble and bust as in 2004-2011: subprime lending expanded the pool of buyers, liar loans and loose credit created speculative leverage, the Federal Reserve provided excessive liquidity and the watchdogs of the industry were either induced (ahem) to look away or dozed off in a haze of gross incompetence. The bubble burst was also straightforward:...

TANSTAAFL is an acronym for “There ain’t no such thing as a free lunch”. It has been around a long time – Rudyard Kipling used it in an essay in 1891 – but it was popularized by Robert Heinlein’s 1966 book, “The Moon is a Harsh Mistress”. In economics it most often refers to tradeoffs or opportunity costs; resources are scarce and if you choose to use them in one way they aren’t available for an alternate use. The other way the phrase is often used is to describe a...

On Thursday May 12, the price of silver fell about a buck. As with every one of these big price moves, the question is: what really happened? Below is a chart of the day’s action, with price overlaid with basis. Basis = future – spot. It is a great (i.e. the only) indicator of abundance or scarcity of metal to the market. However, here we are using it for a different, simpler purpose. We want to see the relative moves in the spot price and the near futures contract...

Money velocity’s role in forcing up prices is misunderstood because today’s monetary “authorities” fail to consider how new money is injected into the economy. Original Article: “The Fed Gets It Wrong on Money Velocity, Too” “Inflation” is on everyone’s lips. Commentators and politicians are quick to point out the perpetrators. It is said that climate change is the cause of rising prices or that a specific war maker is to blame. A popular opinion holds that...

Business trips are very different these days. It was a wonderful and intense week, but nothing beats coming back home with bags full of supplies! Day 79 May 13 The very real price Ukrainians are paying for other people’s imperial delusions: survivors of the Kramatorsk train station bombing. More than 30 people were killed, and more than 100 injured among about 1000 people waiting to be evacuated from the city.  ...

A major conference on cyber security took place in Switzerland last month with participants from the US government. © Keystone/Anthony Anex Defence Minister Viola Amherd has held talks with United States government representatives on international security cooperation. Amherd said the Russian invasions of Ukraine made it clear that Switzerland should seek closer cooperation, including the US, she told a news conference in Washington on Friday. But she reiterated that...

The casino has become complex and there are no easy answers or predictable paths. The Wall Street herd had it easy from 2009 to 2021. Life was simple and life was good: markets were easy to predict. As long as the Federal Reserve kept interest rates near-zero and increased its balance sheet to buy Treasury bonds, the stock market rose. As long as the Fed increased its balance sheet to buy mortgage-backed securities, housing rose. If the Fed tried to reduce its...