When you’re dealing with Switzerland, Mr. Allon, is’s best to keep one thing in mind. It’s a business, and it’s run like a business. It’s a business that is constantly in a defensive posture. It’s been that way for seven hundred years.
—- Daniel Silva, The English Assassin
The following graph shows the very long-term FX rate between the dollar and the Swiss franc (blue line) and on the other side the living costs in the U.S as expressed by the CPI (red line). Obviously the value of the dollar started its descent at the moment then the Fed was created. The Swiss Franc, however, showed a stability that is only comparable to gold.
The following overview indicates the most important monetary events.
Click for the following chapters:
1860-1971: The Swiss Franc during the Gold Standard and Bretton Woods
Since the 1950s: The long-term view on the Swiss franc and the correlation to gold
1971-1996 History wrap-up: From the end of Bretton Woods until the Swiss real estate crisis
1978-1979: Volcker’s Attack on Stagflation
1978: The Volcker Moment and the First Cap on CHF
1978-1983: Volcker’s defeat of inflation strengthens dollar, weakens Swiss franc and gold
1980s: The Volcker Shock, the oil glut and the breakdown of gold and Emerging Markets
1986-1996: Swiss real estate Boom and Bust
1996-2004: Weak German and Swiss growth
2000-2007: The sale of Swiss gold reserves
2004 to 2009: Global Carry Trade and the undervalued franc
2008-2011: The Financial Crisis and the SNB Interventions
2012:The Swiss Franc becomes a “safe” Risk-On currency
The following two chapters give more background about the 1970s:
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