Swiss National (central) Bank proves (again) that there is no safe fiat currency

It's almost a waste of time to go into all of the daily news regarding Germany, France and the PIIGS.  It has devolved into one predictable can kicking action after the next.  The collapse is coming which will be followed by the public anger stage, the civil unrest stage, the "contagion" stage, the finger pointing stage, etc.  There is no way out.  Every "fix" is nothing more than an attempt to issue more credit to already insolvent countries.  What cannot be paid back will not be paid back and there is no such thing as a little default.  If you are going to default, go big.  Default everything.  Throw in the kitchen sink.  This is what is going to happen in Euroland and elsewhere.  As I have often written, no scam lasts forever and a debt Ponzi is absolutely a scam.  The marginal players will get whacked the first and the worst.  It will be one for the history books and I would not be surprised if it resulted in war at some point.

While I'm waiting for something that can truly be called a catalyst for that sequence to go to the next level, I do want to point out again that the Swiss Franc, supposedly a "good" fiat currency, is turning out to be no better than anything else.  The Swiss Central Bank is promising to debase it yet again should it remain too strong relative to other worthless fiat currencies in the world.  The message is clear: there is no such thing as beneficial diversification from one fiat currency into another; all of them are crap waiting to hit the fan.  The reason is simple: fiat currency and fractional reserve banking (which, if you haven't made the connection yet, is a placeholder for credit of all kinds) have led economies to rely on exports.  When the currency gets too strong, export revenues fall.  Simple as that.  When export revenues fall, GDP falls, taxation falls, jobs fall, infrastructure collapses, safety nets collapse and then people starve and riot.  That's the inescapable math of it.  Ergo, the global race to debase.  The US is doing it.  The Japanese are doing it.  Euroland is doing it and even the supposedly "it's different with us" Swiss are doing it.  They have no choice because they are all painted into the same corner. 

The only safe haven from all of this is gold and perhaps some silver.  Governments can (and do) manipulate these money metals over the short and medium term to try to make them appear as risky assets.  But look around you: central banks are buying gold and calling their gold home from foreign vaults.  Bailouts in the trillions?  No problem!  As long as they are all paid for with fake, debt based fiat currency!  But request that payment for bailouts be done with gold and central banks will show you the door as Germany recently did to the G20.   Only an idiot will spend his gold on anything as long as other people are spending worthless paper on those same things and getting away with it.

A lot of people that I talk to are still incredulous when I explain to them the basics of gold.  You can spot the folks who really haven't done much thinking on the subject because they will be the ones saying "you can't eat gold".  I guess they read this is the mind-washing financial "news" along with the one liner that a gold standard is a "barbarous relic" blah, blah, blah.  People need to slow down a bit and consider that you can't eat fiat currency either yet everyone has absolutely bet their entire future on it.  To someone like me, this is a very scary thought.  Trusting in fiat currency is tantamount to trusting in greasy politicians and central bankers whose only goal is to remain in power without doing an honest day's work.  I'm still searching for the words that will be effective in explaining this to those who are still in The Matrix but the bottom line is that anyone who trusts in paper money is trusting their retirement to con men and liars.

Let me remind people that money was invented in order to store one's excess labor in a form that will not rot, deteriorate or go out of style.  The goal of this was to be able to work hard today and be able to save for a time when you are too old to work.  If there was no money, people would be storing their long term wealth in stores of dry goods, clothing, equipment and the like.  But if you get flooded or get forced out of your house by conflicts, you can't take all of this with you and so you lose your wealth or you have to sell it for a fraction of its worth. 

We've been there in the past as a people.  It was clear that we needed some small, easily divisible, high value per weight and size commodity token that is universally recognized as having value and easily exchanged that could serve as a marker for stored wealth.  By design, this token should be something that cannot be eaten because doing so would rapidly change the supply of it and thus its value (according to the laws of supply and demand).  I hope this point is not lost on people who believe that the inability to eat gold should negatively affect its value.  Anything could work as money as long as it cannot be easily acquired without doing any work to get it (and it passes a whole litany of other tests) but over thousands of years the people of the world have always selected gold as the best, most trusted form of money.  As JP Morgan said, Gold is money and everything else is credit.