People talk of the Swiss Franc, I have a question

Smittys

Isn't paper paper?
No matter where it's printed?

derryb

different paper has different value and it's constantly changing. Traders go to the paper with the best value and shun the one with the least value. Lots of money made (and lost) trading paper. It is easier to trade than physical items. You can trade physical gold, but you have to deliver it to complete the transaction. Paper is a good trading vehicle since it comes in many flavors and can be bought and sold in seconds. Physical PMs are not for trading, they are for holding.

RedTiger

No, paper is not paper, not all paper is created equal.

As I have written several times before, currencies tend to go to zero because of major historic events. The short list is:
1) revolution or civil war
2) loss in a major war
3) massive famine or plague

Switzerland is politically stable, so #1 is out. Switzerland doesn't enter into wars and has no real enemies, so #2 is out. That leaves 3 and 4. Other countries have varying chances at #1 and #2. If economic times get hard enough, war or revolution and blood is a common historical outcome. Switzerland is as immune from these forces as any country can be, and much more so that all the other major economies. So the chance of the Swiss currency going to zero is much less than the realistic odds are for other currencies. I haven't even mentioned economic policy, political leadership, or debt levels.

Smittys

<< <i>No, paper is not paper, not all paper is created equal.

As I have written several times before, currencies tend to go to zero because of major historic events. The short list is:
1) revolution or civil war
2) loss in a major war
3) massive famine or plague

Switzerland is politically stable, so #1 is out. Switzerland doesn't enter into wars and has no real enemies, so #2 is out. That leaves 3 and 4. Other countries have varying chances at #1 and #2. If economic times get hard enough, war or revolution and blood is a common historical outcome. Switzerland is as immune from these forces as any country can be, and much more so that all the other major economies. So the chance of the Swiss currency going to zero is much less than the realistic odds are for other currencies. I haven't even mentioned economic policy, political leadership, or debt levels. >>



That all being said, what is the Swiss Franc backed by ?
A neutral country but it's still paper.
If the SHTF happens would you take Swiss francs for payment?
But then again if SHTF,

RedTiger

The Swiss do have a high level of gold reserves and tend to be fiscally conservative. It is still Fiat, but it is definitely the luxury version of the small car.

If there is still a country, a person can take their paper there. If the country no longer exists, then what? Would you rather have Greek Drachmas post Euro? Really? How about Libyan what-ever they use? Or Egyptian money? Or Israeli money, when the threat of it being nuked off the map are much higher than someone wanting to nuke Switzerland (and succeeding).

There are many factors, I mostly focused on the chances of the currency going to zero.