The Swiss National Bank has announced that if you buy Swiss francs, you must pay a rate of interest.
This is a negative interest rate.
Why did the SNB do this? To persuade foreigners not to buy Swiss francs. Why? To keep the value of the Swiss franc low.
This is mercantilism, pure and simpleton.
This is dumb and dumber.
When you think “Swiss National Bank,” imagine this.
The folks at the SNB have not read Adam Smith’s Wealth of Nations. They are harming Swiss consumers (“no cheap imports for you!”) in order to subsidize Swiss exports (“let foreigners get our goods — none for you”).
The Swiss people get digits called Swiss francs. They don’t get goods.
This is called Keynesian monetary policy. It was refuted by David Hume in 1753 and by Smith in 1776. But Keynesians with Ph.D. degrees don’t understand Hume or Smith. They think wealth is digits called money. Digits called money are preferable to goods people can use. So, the voters get digits, and foreigners get the goods.
Free trade? No thank you, say the Swiss central bankers.
A rising value of Swiss francs? No thank you.
More goods for Swiss citizens? No thank you.
Having given up bank secrecy, having rejected greater gold backing for the franc, and having imposed negative interest rates, the Swiss have announced: “We’re giving up 250 years of free market economics. We’re all Keynesians now.”