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This isn't the SNB's first rodeo. Frustrated at years of failed attempts to halt the franc's...

This isn't the SNB's first rodeo. Frustrated at years of failed attempts to halt the franc's rise in the 70s, the bank set a floor under CHF/DEM (deutsche mark) in 1978. The move worked, but at the cost of exploding inflation - which went from near nill to 6.6% over the next 3 years.
Comments (2)
  • I wouldn't really call that" working" in 1978. Price controls always fail, it is systemically flawed. In fact, it almost guarantees and unintended consequence that is worse than the original concern.

     

    The only thing that worked during this episode of monetary history was Volker getting out of the way and letting interest rates explode to their natural rate. Savers loved this. Borrowers got creamed. Currencies finally settled down because markets were no longer controlled, as the SNB is doing now.....
    6 Sep 2011, 10:11 AM Reply Like
  • Yes the old unintended consequences...that is the last chapter..so many moving parts now in the world that I do not know what that will be.....
    6 Sep 2011, 10:17 AM Reply Like
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