Wednesday 8th June 2005

"MAKING SWISS CHEESE OF THE FRANC" 

We have been looking at the war on money. I was asked, "why the preoccupation with this subject?" The answer is simple; history has shown us that, when good money is replaced by bad money, there are far reaching ramifications from which very few (other than those that are forewarned and correctly positioned) can escape.

Yesterday we asked the question; what about the Swiss Franc? Once considered "as good as gold", the Franc is fundamentally important in our discussion of money, so who better to turn to than our esteemed Swiss Banker. 

Ferdinand Lips has written; "In the nineties, the gold war entered what may be its last and most tragic phase. Gold-rich Switzerland became the main target. War preparations are often made a long time before actual hostilities begin." 

"The groundwork was laid many years ago when it was suggested that neutral Switzerland join more international organizations. The battle for Switzerland's gold opened when the country became a member of the IMF in 1992."

"A few years later, in 1996, the Swiss National Bank (SNB) radically changed its gold policy. Almost a quarter of a century after Switzerland's central bank started floating its currency in January of 1973 under the leadership of Frit Leutwiler, another historic shift took place. This time the change was more dramatic." 

"Very few realized what an impact it would have on Switzerland's future as a sovereign nation. The same goes for its position as a financial center or the long-term effects on its economy. For decades neutrality and the strength of the country's currency were at the base of the world's confidence in Switzerland's banking system. The reason was quite simple: 

The Swiss Franc was 100% backed by gold and, therefore, considered as good as gold."

"Late in 1996, the Swiss government, in co-operation with the SNB, came to the surprising conclusion that, in today's world, a 40% reserve banking of its currency was no longer necessary. These were the sensational findings of a joint study group, which had been formed to work out a plan for eliminating this 'old fashioned' proviso without excessively shocking the prudent Swiss citizens." 

"To many, there is still no doubt that the 40% reserve requirement, which was anchored in the constitution, was one of the cornerstones for the worldwide respect given the Swiss Franc and the Swiss banking center."

The battled over the Franc's backing to gold has been fought on a variety of fronts and has been waged gradually but progressively. As Dr. Lips points out, the change started in earnest once Switzerland "sold its sovereignty" by joining the IMF. 

So much change in the world is the direct result of lies and dis-information. What so few Swiss citizens realized back in 1992 was that, under the IMF Articles of Agreement (2b, paragraph IV), adherence by its members to a gold backed currency was prohibited. 

All the way back in 1965, at a time when the gold war was well established and underway, the President of France, Charles de Gaulle said in defense; "the time has come to establish the international monetary system on an unquestionable basis that does not bear the stamp of any country in particular. On what basis? Truly, it is hard to imagine it could be any other standard other than gold. Yes, gold, whose nature does not alter, which may be formed equally well into ingots, bars or coins; which has no nationality and which has, eternally and universally, been regarded as the unalterable currency par excellence. 

Best Regards 

Philip Judge
pjudge@anglofareast.com