Category Archives: Outside Commentaries

Switzerland is ranked as the freest economy in Europe in the 2014 Index of Economic Freedom, published by the Heritage Foundation in partnership with the Wall Street Journal. In the world rankings, Switzerland is the 4th most economic free country. While the United States Federal Reserve argues that inflation is necessary for economic stability, it should be noted that Switzerland has achieved its economic freedom with a current inflation rate of negative 0.7%. That means consumer goods are getting cheaper for the average Swiss citizen every year. Try to wrap your head around that, Janet Yellen. And while you’re at it, explain why the United States isn’t even in the top 10 freest economies in the world.

Yet in spite of this relative prosperity, the Swiss populace is not satisfied. They want more freedom and are getting ready to demand more economic responsibility from their central bank, the Swiss National Bank (SNB). This fall, the citizens of Switzerland will be voting on a referendum that would dramatically alter the SNB’s gold bullion allocations and holding policy.

If passed, the initiative would dictate three important gold policies for the SNB:

1. 20% of the SNB’s assets would have to be held in physical gold bullion.
2. All Swiss gold would have to be repatriated from foreign countries back into domestic Swiss vaults.
3. The SNB would no longer be allowed to sell any Swiss gold.

This initiative would force the Swiss central bank to make large purchases of the yellow metal to comply with the new guidelines. Not only that, it would make it very difficult for the SNB to manipulate the Swiss economy with destructive monetary policies. It’s a lot harder to lend money to irresponsible politicians when your holdings are in hard assets like gold bullion. Unsurprisingly, the bureaucrats of the Swiss Parliament and SNB are strongly opposed to the initiative.

Back in May, a guest columnist for David Stockman’s blog Contra Corner wrote in detail about the Keynesian opposition to Swiss gold repatriation. He raised some excellent points countering the SNB’s argument that the gold initiative would severely limit its flexibility and damage its credibility.

“There should be no ‘flexible currency’ and no central planning of money. They are at the root of the boom-bust cycle, the very reason for the various crises that have beset Western economies in recent decades. Switzerland would be far better off if no-one had the power to meddle with its money supply. As it is, there has been plenty of meddling already, and quite a bit of suspension of disbelief would be necessary to conclude that there will be no price to pay.”

Dr. Ron Paul brought the referendum back into the limelight just the other week in a new essay published at The Ron Paul Institute. As always, Dr. Paul brings common-sense wisdom to the table and urges the Swiss to vote for gold and freedom.

“Just like the US and the EU, Switzerland at the federal level is ruled by a group of elites who are more concerned with their own status, well-being, and international reputation than with the good of the country. The gold referendum, if it is successful, will be a slap in the face to those elites. The Swiss people appreciate the work their forefathers put into building up large gold reserves, a respected currency, and a strong, independent banking system. They do not want to see centuries of struggle squandered by a central bank. The results of the November referendum may be a bellwether, indicating just how strong popular movements can be in establishing central bank accountability and returning gold to a monetary role.”

So while the United States and much of the West seems to have become completely disenchanted with the yellow metal, there is a bright spot over in Europe. Just as Dr. Paul points out, if the Swiss pass their gold referendum, it could play a huge role in reestablishing gold as a foundational monetary asset for modern economies.

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The John J. Heldrich Center for Workforce Development at Rutgers University released its latest Work Trends report. The national survey found that Americans are extremely pessimistic about the state of the US economy in spite of the financial media’s claims that a strong economic recovery is underway. The report is titled “Unhappy, Worried and Pessimistic: Americans in the Aftermath of the Great Recession”. Some of its major findings include:

• One-quarter of the public says they’ve experience a major decline in quality of life.
• Only one-sixth of Americans believe the next generation will have better opportunities than the current generation.
• Most Americans don’t think the economy improved last year or will in the next.
• Four in five Americans don’t have any faith that the government will be able to improve conditions in the next year.

The report paints a bleak picture of the American workforce and economy coming from the direct experience of American laborers. Cliff Zukin, co-director of the surveys, said:

“Looking at the aftermath of the recession, it is clear that the American landscape has been significantly rearranged. With the passage of time, the public has become convinced that they are at a new normal of a lower, poorer quality of life. The human cost is truly staggering.”

Read the Full Report Here

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Stocks continue to soar to record highs and the media breathlessly touts the economic recovery. But the Fed-fueled bull market for stocks can’t last forever. In an article from CNN Money, some renowned experts are issuing ominous warnings:

• Nobel Prize-winning economist Robert Shiller says the stock market is looking very expensive. By his metric, stocks have only been at their current level three other times: 1929, 1999, and 2007.
• Hedge fund king Carl Ichan says, “We are in an asset bubble.” He describes a “dangerous financial situation” dependent on the Federal Reserve continuously refilling the punchbowl to stimulate the economy.
• Ex-Treasury Secretary Robert Rubin says that extremely low interest rates have caused major instability and could lead to another financial crisis. When the bubble pops and hedge funds all head for the doors at the same time there is a risk of a “contagion and snowballing effect.”

Read the Full Article Here

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