Switzerland starts competitive devaluation

After Japan, the USA, the UK, Canada, the Eurozone, and Switzerland having all their interest rates at 0.5% or below, it's difficult for them to do anything but Quantitative Easing (lingo word to say: set the printing presses to full speed).

A decade ago, Japan started QE with disastrous results. Last week, the UK started QE and we are certain the result is going to be far worse than Japan. The USA — the Fed — has been thinking about doing it for quite some time but has been taken over by the SNB — the Swiss National Bank — which has hence taken the 3 position in the competitive devaluation of the currency.

Try to guess the exact moment they devalued on this chart:

March 12 (Bloomberg) -- The Swiss central bank cut its interest rate close to zero and started buying foreign currencies to stem the franc’s appreciation as the recession sharpens and deflation looms.

The franc plunged the most against the euro since the single currency was introduced in 1999 after the Swiss National Bank in Zurich lowered its main lending rate to 0.25 percent from 0.5 percent. The SNB also said it would buy corporate bonds as well as currencies in its first solo intervention in foreign exchange markets since 1992.

Intervening on the markets to sink their own currency has a name: devaluation.

This is the reason why I never bought Swiss Francs as a safe haven, because I knew their Central Bankers are as mad as Ben Bernanke and Mervyn King. For those who still believe the Swiss Franc is better than the USD or the GBP, I suggest you read Gold Wars, The Battle Against Sound Currencies as seen from the Swiss Perspective by Ferdinand Lips. It's a fantastic book.

All these countries believe that the faster they devalue their currency, the better it is. Not only devaluation is not a solution but an additional burden on their citizen, but even worse, when everybody wants to devalue, it becomes a competitive process. The result being probably several inflationary bust to come sometime in the next 3-5 years.

I will keep on buying gold and silver as there's no way rates are raised in the next several years. The only solution politicians see is devaluation and printing until all the 25-30 years mortgages are erased.