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Switzerland's Central Bank

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  • Switzerland's Central Bank

    Every country should not be allowed to peg their currencies! Imagine the chaos if Chinese loosen it's control of their currency.
    https://www.yahoo.com/finance/news/w...153205732.html

  • #2
    So who is going to enforce your international foreign exchange rules?

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    • #3
      Do you really think MissN has thought that far ahead?

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      • #4
        Off course the control is there.. But applying a policy that dictate the value of the currency is really wrong. This what the Swiss did 3 years ago, CHF was too high, they put cap on it .. The value drop over nite ... They did it again yesterday.. but the opposite. How can we plan our retirement investment if the government keep changing the value of their currency?
        Last edited by Missnaughty; 16-01-15, 15:48.

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        • #5
          Originally posted by Missnaughty View Post
          How can we plan our retirement investment if the government keep changing the value of their currency?
          Stay young, never get old, perhaps. Just saying.

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          • #6
            Originally posted by Missnaughty View Post
            Off course the control is there.. But applying a policy that dictate the value of the currency is really wrong. This what the Swiss did 3 years ago, CHF was too high, they put cap on it .. The value drop over nite ... They did it again yesterday.. but the opposite. How can we plan our retirement investment if the government keep changing the value of their currency?
            Don't use something with no intrinsic value as a long term investment?

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            • #7
              What are "intrinsic value" investments? I would be interested in learning what sort of long term investments are not subject to the vagaries of the marketplace.

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              • #8
                I'm not talking about securities, if that is what you were thinking. Still, I'll borrow a definition and insert some italics: "When I use the term “Intrinsic Value”, I am talking about the maximum price that an investor would be willing to pay to own a security (property) if she had to hold it until “maturity”, i.e., for the entirety of its natural life as a security (property), which, for an equity security (piece of real-estate/means of production), means forever." (philosophicaleconomics.com)

                So, something that produces an income which would satisfy your investment needs, irrespective of your ability/inability to sell it later. For example: Real-estate. A farm... Real-estate... A farm... Certain businesses or means of production (shorter term, admittedly).

                Sorry, better at finding what I think is a bad idea than what I think of as a good one. International currencies fluctuate. In our lifetimes there have been currency devaluations in the thousands of percent. The IDR dropped by 80% in a couple of months. Here is a graphic for hyperinflation during world war: hyperinflationSIZE300x237.png.jpg This link, http://www.fleur-de-coin.com/articles/worthless-money , shows some of the worst devaluations.

                Imagine being 80 (when you really need a retirement, as you ain't gonna be working) and finding out that all of your cash is worthless. How do you feed yourself when everything you own has no tangible value and cannot be converted to something of tangible value? Same scenario, but with properties; you could get a loan for future value of your real property from a bank or neighbor in the short term. In the long term, you can raise rent on your property. Your commodity producing farm will also see it's value inflate with that of the currency, as will the (local) value of the commodities it produces. Anything tangible thing that produces an income has a chance to adjust with inflation or devaluation, unless it is already tied to a currency.

                Money is useful to buy things that make more of it. Holding a bunch of it and thinking you are safe is playing a lottery where you could lose everything, but win only a little.

                *In spite of several paragraphs of text, I might not have ended up giving a clear definition... I meant an investment where the value does not depend solely upon your ability to liquidate that investment. So, not dependent upon the ability to trade the actual investment in the market, but able to produce something of value that will then follow market fluctuations.

                What could possibly influence the market so as to remove the need for land capable of producing rice, or places for people to live and do business? The value may fluctuate, but it will not disappear. The value of an investment needs to be something more than the faith we and others put in it, if we want safety.
                Last edited by Happyman; 16-01-15, 22:48.

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                • #9
                  I certainly agree that income producing property as an investment is less risky than others, but businesses, including farms, fail with regularity. Residential and commercial rental property also are not risk free. The only effective hedge against regular market machinations, and black swan events, is diversification.

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                  • #10
                    You're right, any business can fail, even big banks, apparently. There is a saying (which I probably already posted), "How can a man be worth $10 million after 5 years of farming? Because he was originally worth $20 million." I was originally thinking of farm land as rental property, but thought it would be good to say more than just "rental property".

                    On the other hand, a farm that is producing a not-for-export product, and the distributors who work down the supply chain from it are better posed than most to withstand drastic currency fluctuations. The local egg price is negotiated every day. I actually know an egg distributor who says he came out of the Indonesian crisis better off than he went into it. All his money was in his supply (or buildings and vehicles). Selling eggs you bought last week at today's (inflation adjusted) price, then buying more eggs at today's price, to sell at next week's (inflation adjusted) price. Sure, the extra money you make every day is also devalued the next day, but it's a daily business to start with. It's the businesses sitting on cash or with a slow turnover (storing cash before purchasing inventory) that get screwed.

                    If I knew there was going to be massive inflation tomorrow, I'd go shopping today. That's what it comes down to. Most things are safer than cash. Sure, businesses fail, but I interpreted the original post to be a complaint about currency fluctuations. If we were expecting a huge devaluation tomorrow, I'd rather be sitting on a failing business worth $5 million than $6 million in cash.

                    *Edit: Just been reading about black swan events. Interesting... will take a while to process.
                    Last edited by Happyman; 17-01-15, 02:24.

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                    • #11
                      Originally posted by atlantis View Post
                      Stay young, never get old, perhaps. Just saying.
                      Never get old is one of my retirement plan.. and the swiss govt need to give a little news perhaps before applying the new policy... so I can do my whole body instead just a facelift!
                      Last edited by Missnaughty; 17-01-15, 19:56. Reason: Sometimes I feel too familiar and forget this is a public forum

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