The graph below shows the ratio between Swiss debt and their gold holdings, as described here. Materials sourced here, here, and here.
I have seen different estimates for debt/GDP ratios for Switzerland, and have used one longer time series, even though it seems to have been lower than other shorter series. The longer series is consistent with the shorter series (highest debt/GDP ratios happened in the same years) so I can only conclude that the data I have used is omitting some type of debt. Overall, I believe the above graph to be correct in form, but the values on the confidence axis might be larger.
As is the case for the US, the UK, Germany, and Japan, we see that ratio increased until the turn of the century, and has been declining since. Like Germany, debt is declining. The gold price is rising, but Switzerland actually sold half of its gold between 1999 and 2005.
In principle, these declining ratios are good--they suggest that these countries are becoming increasingly solvent with respect to gold.
My concern is the shadow of an inflationary past. Must it arise in the future? I don't think so. But might it? This is harder to reject, as now that the Swiss have announced that they will defend the 1.20 euro level, the entire world seems bent on inflating. And that, according to Sennholz was the political choice that tipped Germany into hyperinflation in 1923.
And we should be clear--it was a choice. Monetary authorities had the choice between accepting the devaluation imposed on the mark by the market, and trying to force the market to accept the "value" of the mark assigned by the monetary authorities. By the time they were finished attempting to show the market who was boss, the German middle-class had disappeared in a blizzard of paper. Tyranny followed.
The market is devaluing paper all over the world. Will the monetary authorities accept deflation--or will they try to impose by force their own values on the world? History shows us the most likely answer. And tyranny will follow.
I have seen different estimates for debt/GDP ratios for Switzerland, and have used one longer time series, even though it seems to have been lower than other shorter series. The longer series is consistent with the shorter series (highest debt/GDP ratios happened in the same years) so I can only conclude that the data I have used is omitting some type of debt. Overall, I believe the above graph to be correct in form, but the values on the confidence axis might be larger.
As is the case for the US, the UK, Germany, and Japan, we see that ratio increased until the turn of the century, and has been declining since. Like Germany, debt is declining. The gold price is rising, but Switzerland actually sold half of its gold between 1999 and 2005.
In principle, these declining ratios are good--they suggest that these countries are becoming increasingly solvent with respect to gold.
My concern is the shadow of an inflationary past. Must it arise in the future? I don't think so. But might it? This is harder to reject, as now that the Swiss have announced that they will defend the 1.20 euro level, the entire world seems bent on inflating. And that, according to Sennholz was the political choice that tipped Germany into hyperinflation in 1923.
And we should be clear--it was a choice. Monetary authorities had the choice between accepting the devaluation imposed on the mark by the market, and trying to force the market to accept the "value" of the mark assigned by the monetary authorities. By the time they were finished attempting to show the market who was boss, the German middle-class had disappeared in a blizzard of paper. Tyranny followed.
The market is devaluing paper all over the world. Will the monetary authorities accept deflation--or will they try to impose by force their own values on the world? History shows us the most likely answer. And tyranny will follow.
> so I can only conclude that the data I have used is omitting some type of debt
ReplyDeleteIn some graphs, only federal and not cantonal and communal debt is counted. Here's an example that only includes federal debt:
http://de.wikipedia.org/w/index.php?title=Datei:Schulden_Schweiz.gif
It's nice to see that the 'debt brake' added to the constitution in 2001 seems to work and debt could be reduced since then.