SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Financial Collapse of 2001 Unwinding
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
From: elmatador3/17/2023 5:02:00 AM
   of 13771
 
Should a central bank invest in foreign assets?

A central bank generates seigniorage gains by pushing zero-yielding currency into circulation while investing the proceeds in assets, usually bonds, carrying a positive return. If your counterparty is domestic, the transfer of assets stays “within the country.” Some income is being transferred from those domestic counterparts to the central bank. The central bank makes a profit, pays salaries, and transfers the rest to the government. It’s a kind of tax.

But if you do the same with non-domestic counterparties you are “taxing” other countries’ citizens. US shares purchased by the SNB are not available to other investors or, if they are, then only at a higher price.

Perhaps the SNB even contributed to the bubble in technology stocks. Because the SNB was forced to invest its euros and dollars it became what is called a price-insensitive buyer. It had to buy something with the money printed.

Price-insensitive participants distort market prices. When an individual distorts markets, he will go to jail. Central bankers face no such consequences.

Is the Reckless Swiss National Bank Endangering Its Independence?

fairobserver.com

  • Countries cannot go bankrupt.
  • Central bankers cannot run out of money
  • And Central Banks cannot go to jail

Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News