Lessons
Learned:
"You can't fight the Elite! When they decide they
will beat you, they will beat you -- eventually however they will fail!"
Interview with Egon von Greyerz of Matterhorn Asset Management .. on the
recent Swiss Gold Initiative vote:
"The
whole of the elite were against us. Now, we thought the people, the Swiss
people, would be on our side because the Swiss people understand the
importance of gold. They were clearly influenced by the massive campaign of the
government and of the central bank. The losses for the Swiss National Bank could have been very
serious, and that's why they were quite desperate to stop this
initiative."
What are the ramifications now?
"Switzerland
now has to print money. The currency is only backed by 7% gold, and now they
have a free-for-all to print more money .. this, of course, will be very
bullish for gold because it won't be just Switzerland. Virtually, every
country in the world will start printing money."
SOURCE:
Written December 1st, 2014 by Moderator GoldS
Categories: All
publications, Egon's
Publications
Tags: Jomas Thordan
The below memo could have been written by Thomas Jordan,
president of the SNB.
Internal Memo National Bank
From: Jomas Thordan, President
To: The Board of Directors
Date: December 1, 2014
I have
been quite concerned about the outcome of the Gold Initiative referendum.
That is why I have been in the media virtually every day for the last few
weeks. I know that the National Bank should not conduct a campaign during a
referendum of this kind but since it was a matter of national importance I
had no other choice.
As you
know, until 1999 we had over 40% gold backing in our balance sheet. At the
time it was thought that this amount of gold was critical for the stability
of the National Bank and our national currency. But fortunately we managed to
change the constitution which allowed us to sell more than half of the
nation's gold at the bottom of the market. We have been bloody lucky
fortunate that the Bank's reputation was intact after this decision which
cost our nation 30 Billion. It was clearly incompetent unlucky to sell the
gold at the lows but market timing has never been our strong point.
I am
extremely pleased that 77% of the voters agreed with my propaganda statements
that gold plays no role in modern banking. Gold is a relic of the past. We
can't print gold and that is a major disadvantage when we want to manipulate
manage our currency and financial markets. Our principles for managing the
National Bank are now laid down by the Federal Reserve and ultimately Goldman
Sachs. Here at the Bank we fully subscribe to the statement of the wise Mayer
Amshel Rotschild: "Give me control of
a nation's money and I care not who make its laws."
So
fortunately we don't have to buy any more gold and we should probably
consider selling the 1,000 tons we may still own since it serves no purpose
and has no yield. That would also give us ammunition to buy more euros.
The one
concern that I would like to share with the board is our currency position.
As you are well aware, we have printed over 400 billion and bought mainly
assets in euros but also in other currencies in order to hold the peg above
1.20. We are all aware that printed pieces of paper are not really worth
anything but since we are a national bank, we can just tell the people that
it is real money. Fortunately they are foolish wise enough to believe us.
The
reason I have been so nervous about the referendum is that the Bank is now
sitting on the biggest speculative currency position of any major central
bank in the world. Our balance sheet of 522 Billion is over 80% of GDP which
is an extremely dangerous position for our country. It is virtually
impossible to get out of this massive position without a loss of 10s of
Billions or even as much as 100 Billion. Obviously the people would
ultimately pay for this loss.
The
1.20 peg is artificial and throughout history no currency peg has ever held
in the longer term. Over time currency rates always reflect economic and
monetary differences between countries. Since our economy, for a while at
least, is likely to continue to be stronger than the weak eurozone, our home
currency will naturally outperform the euro. We are of course extremely
grateful that the voters listened to our propaganda information during the
campaign and rejected the Gold Initiative. But sadly the Bank's problems are
not over.
This
peg was critical to save the bankers banks that had lent massive amounts of
our national currency to mainly Eastern European banks. So now we are totally
linked with the eurozone and at some point we should perhaps discuss to make
this permanent. There are of course disadvantages to be tied to a very weak
currency. Everything we buy in the shops is now more expensive. Also, we
could be dragged down by euroland and end up with the same economic disaster
they are in. But fortunately the people don't understand these major
drawbacks.
But the
biggest problem with taking the euro as our currency is that the Bank would
lose its ability to be irresponsible independent. The ECB would take over and
we would lose all our power to print money.
Therefore
I recommend to the Board that we stay as we are. But that still gives us the
headache of our 470 billion speculative currency position. This is a time
bomb and we know we will never be able to extract from it without very major
losses. Hopefully the current board will have retired from the National Bank
before this happens so a new board can be blamed for it.
Finally
I would like to thank the Board for their support of my actions. The Bank now
retains total "control of the
Nation's money" which is comforting.
Jomas Thordan
President
P.S. The above is a fictional account of
events and any connection to a real situation is purely coincidental.
On November 30th the Swiss voted on:
- Returning their national gold which is held
abroad back to Switzerland
- Requiring the Swiss National Bank to hold 20%
of their assets in physical gold
- Prohibiting further gold sales
So why
was this referendum so important? Because Switzerland has, for hundreds of
years, been a bastion of sound monetary policy and low inflation. But this
has gradually changed in the last 100 years since the creation of the Fed in
the US and especially during the past 15 years when the Swiss government
quietly removed the 40% gold backing from the revised Federal Constitution
which was adopted by popular vote in 1999.
No
paper currency has ever survived throughout history in its original form. And
the Swiss Franc from having been a strong currency is now in the process of
being slowly destroyed by the recent policies of the Swiss National Bank
(SNB).
Since
2008 the SNB's balance sheet has expanded 5 times from CHF 100 Billion to CHF
500 Billion. So Switzerland has printed around 400 Billion Swiss Francs in
the last 6 years in order to hold its currency down against the Euro and
other currencies. CHF 400 Billion is around 2/3 of GDP.
This means that Switzerland has printed more money,
relatively, than any major country in the world in the last 6 years.
Video: Financial Repression Authority with Egon von Greyerz
Published 12-16-14
29 Minutes
