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Trying to Recover from SNB Blunder - January 18, 2015

Trying to Recover from SNB Blunder - January 18, 2015

5 Years ago | January 18, 2015 00:00:00

SNB Drops EUR Peg
Its rare when a central bank blunders as badly as the Swiss Nation Bank did last week. The "blunder" started several years ago when the SNB made the decision to "peg" the value of the CHF to the EUR at 1.20. Those of us who have been around a good while "knew" that every attempt to peg one currency to another in the post-WWII era has failed and usually with a major disruption when the peg failed. The problem is that a fixed exchange rate builds up pressures until until it fails. The other problem with a peg is that there is no way to exit from that scheme gentilly when a large price adjustment is way overdue. There is no excuse for the SNB not having known this. We have seen this many times before. To make matters wors

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