Swiss National Bank’s Monetary Racket, US Stock Holdings & the Wild Ride of its Own Shares

We’ll also look at its garbage pile at the bottom. These folks don’t even pretend to be stock pickers. They buy and let it stick till it falls off on its own.

The Swiss National Bank, which filed its disclosure of US stock holdings today with the SEC, has figured out the best money racket of all times. It works because currency speculators are eagerly gobbling up Swiss francs. In January 2015, the SNB started to print Swiss francs ostensibly to depress the value of the CHF, a tiny currency with huge global demand. It then began selling those francs for dollars, euros, and other currencies to buy securities denominated in those currencies. This monetary racket only works as long as there is endless global demand for the tiny currency.

The SNB doesn’t disclose its holdings of securities. But in the US, it has to disclose its holdings of US-traded stocks via a quarterly 13F filing with the SEC. So we know what US-traded stocks it owns, but this is just a slice of the securities it owns globally.

In its 13F filing today, the SNB revealed that it held 2,520 US-traded stocks and American Depositary Receipts (ADRs) of foreign companies at the end of the third quarter, of about 3,500 stocks traded in the US. The value of these holdings rose 1.5% during the third quarter to a record of $94.1 billion.

Its portfolio is loaded up with the FANGMAN stocks – Facebook, Amazon, Nvidia, Microsoft, Alphabet, and Netflix – with Apple and Microsoft as its largest positions. It also holds a number of ADRs, including ADRs of Chinese companies, such was Weibo, Alibaba (16th largest holding), Baozun, ZTO Express Cayman, and Huazhu Group.

These are the top 20 holdings by dollar value as of the end of the quarter. The SNB holds Alphabet’s Class A and Class B shares, in 5th and 7th position. At $2.47 billion combined, they’re the SNB’s third largest position, ahead of Amazon:

Company Name Type of shares Value, $ millions # of Shares
1 APPLE COM $3,419 15,267,199
2 MICROSOFT COM $3,376 24,281,217
3 AMAZON COM $2,399 1,382,051
4 FACEBOOK CL A $1,413 7,933,942
5 ALPHABET CL C $1,262 1,035,096
6 JOHNSON & JOHNSON COM $1,242 9,595,766
7 ALPHABET CL A $1,207 988,722
8 PROCTER & GAMBLE COM $1,143 9,192,748
9 VISA CL A $1,104 6,421,094
10 EXXON MOBIL COM $1,053 14,917,592
11 AT&T COM $995 26,293,437
12 VERIZON COM $936 15,510,451
13 HOME DEPOT COM $882 3,800,464
14 MASTERCARD CL A $863 3,176,352
15 COCA COLA COM $829 15,223,644
16 ALIBABA ADR $803 4,814,286
17 DISNEY COM $775 5,943,371
18 MERCK & CO COM $773 9,176,857
19 PEPSICO COM $763 5,559,679
20 INTEL COM $762 14,785,104

The garbage pile at the bottom.

The good folks at the SNB don’t even pretend to be stock pickers. They apparently go by the motto: Just buy and let it stick till it falls off on its own. So when markets surge, that’s great. But there are also a bunch of collapsed shares in its portfolio. At the garbage pile at the bottom we find:

Mammoth Energy Services [TUSK], an oil and gas driller based in Oklahoma City, is in 2520th position in terms of dollar value. The 13F lists 24,900 shares with a value of $62,000 at the end of the third quarter. At today’s price of $1.38, those shares are down another 44%, to $34,400. The shares had their IPO in October 2016 at $15, then rose to $41 by June last year, before collapsing 97%. One of those IPO miracles, and the SNB bought into it lock, stock, and barrel.

Chaparral Energy [CHAP] is second from the bottom in the garbage pile, with 68,200 shares, valued on the 13F at $91,000 at the end of Q3. It went public in March 2017, was trading around $25 a share until February 2018, then collapsed, and is now down 96% to $0.94. Since the end of Q3, the value of the SNB’s position has plunged another 30% to $64,000.

Aduro [ADRO], a discarded biotech, is in third position from the bottom. It IPOed in April 2015 and instantly collapsed and is now down to $1.06. The SNB lists 89,000 shares valued at $94,000; about flat with today’s price.

Exela [XELA], a business process automation provider, collapsed in June 2017 from around $10 a share to $0.61 now. The SNB lists 80,141 shares valued at $95,000. This position has since crashed by another 48% to $49,000.

Calyxt [CLXT], an ag gene-splicing company, is in fifth position from the bottom. The 13F lists 18,300 shares with a value of $103,000 at the end of Q3. At today’s price of $4.09, that position has dropped another 25% to $75,000.

The wild ride of the SNB’s own shares.

The SNB has issued 100,000 shares that are owned by these entities:

  • 55.9% by the Swiss Cantons.
  • 18.4% by public Cantonal banks.
  • 0.5% by other public institutions.
  • 25.3% by the public, as publicly traded shares.

The SNB pays an annual dividend not exceeding 6% of the nominal share value set at 250 CHF, which has amounted to an annual dividend of 15 CHF no matter what the actual shares do. At the current price of 5,330 CHF, this amounts to a dividend yield of 0.28%.

From the late 1990s on, the 25,300 publicly traded shares had been trading at around 1,000 CHF. But in 2016, they suddenly started surging and in 2017 began skyrocketing, to hit 8,600 CHF a share by April 2018.

The entire float is only 25,300 shares, and it’s very easy to push up the price with a little determination.

So the baffled SNB responded. Its president Jean Studer told shareholders at the SNB annual general meeting in April 2018:

“Even though the SNB refrains, in principle, from commenting on its share price performance, I am fully aware that this current movement may raise questions.”

“SNB shares are unlike other shares. They are subject to certain restrictions on shareholder rights imposed by law … the special character of SNB shares means that they are less a conventional investment than a means for shareholders to express their solidarity with our institution.”

What a way to douse the enthusiasm. Its shares plunged by over half, reaching 4,050 CHF a share by December 2018.  At today’s price of 5,330 CHF, the shares are down 38% from their peak.

After peak negative-yield-absurdity in August, bond prices fell – the “bond bloodbath” – and the mountain of bonds with negative yields has plunged by $5 Trillion, or by 30%, despite rate cuts. ReadNegative Yielding Bonds Turn into Punishment Bonds

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  79 comments for “Swiss National Bank’s Monetary Racket, US Stock Holdings & the Wild Ride of its Own Shares

  1. Petunia says:

    If you are going to be in the market it doesn’t really matter what you buy, since profits and valuations don’t matter. Buying everything and hoping for the best is as good a strategy as any other, that’s what the VCs in Silicon Valley do.

    • sierra7 says:

      You mean,……”sputter……sputter!…..that if I put a dart board on the wall with all kinds of stock names and used darts I might do well…..”sputter, sputter!”
      I’m “Shocked….shocked” to think that may be true!!

  2. WES says:

    Seems to be quite a good racket!

    Issue money out of thin air, buy real thin air companies.

    Exchanging nothing for something!

    Why can’t I do this too?

    • Jk says:

      Wes, agree, total scam. Print money out of thin air, sell the currency to speculators, use the proceeds to buy stocks that represent real value. How is this ok? No wonder valuations are magical.

    • bungee says:

      At $2,47 billion combined, they’re the SNB’s third largest position, ahead of Amazon

      …should be $2,47 million

      • Wolf Richter says:


        No, all dollar amounts in the table are in millions.

        ALPHABET Class C = $1,262 million ($1.26 billion); and Class A = $1,207 ($1.21 billion) for a total of $2,469 million ($2.47 billion).

        However, there was a comma when there should have been a decimal point, and maybe that’s what threw you off, and I corrected that. Thanks.

  3. Lisa_Hooker says:

    This sounds better than buying International Postal Coupons in various countries and turning them in for cash in the USA.

    … I’m still waiting to see how you get the chicks for free.

    • Unamused says:

      If you really want to know I’ll tell you, but you have to promise not to tell anybody else.

  4. kiers says:

    Lordy. All those FANGMAN cos. are “helpful” in keeping up appearances, otherwise the US Treasury yield curve would be in seriously NEGATIVE TERRITORY. All these central bankers call each other all day coordinating stuff, including picnics at scenic spots.

    • Robert says:

      So you think the Fed told all the other central bankers before it began cranking out billions of “repos?” CB’s are indeed a clubby bunch (the expression is “thick as thieves”) but how does CB A really know how many dollars, kopeks, shekels and lira CB B is surreptitiously cranking out? (spoiler alert: this is why the now-much-derided-but-nevertheless-eagerly-accumulated-by-the-private-central-bankers gold standard got started in the first place: to enforce a little honesty.
      The joke today is that even Switzerland, held up as the paragon of fiscal probity, does not even want an American opening an account for fear of retaliation by a nosy U.S. if voluminous documentation is not provided, jerks its own currency’s value around according to the needs of Swiss Miss and Nestles.

  5. Bob Hoye says:

    SNB staffers are stupid.
    Taking Modern Portfolio Theory and applying it the central bank reserves.
    Which in either deflationary or inflationary credit conditions, gold is the ideal reserve.
    And then buy stocks indiscriminately.
    In New York the old saying has been “The market never accommodates the desires of the crowd.”
    On the old Vancouver Stock Exchange it was “The mooches are not allowed to make any money.”
    SNB staffers are mooches.

    • Claude says:

      You are so right
      Now central banks are becoming the buyers of last resort
      the SNB has become a (speculative?) hedge fund and if you look at the performance of hedge funds it has not been so great to say the least
      Not only they have not bought any gold but they sold half their gold few years ago and their balance sheet is so out of proportion compare to their GDP

  6. Memento mori says:

    Come on Wolf, you are missing the forest from the trees. I know it’s difficult to generate content as often as you do , but don’t undermine the quality. Arguing about share value loss when SNB can print their own fiat, it’s meaningless.
    Rather I see SNB as the avant garde of what other central bankers might be doing in the future.
    A discussion as to how this might evolve and what the consequences might be , would be interesting. Will we ultimately end up being owned by the central banks?

    • Wolf Richter says:

      Memento mori,

      You didn’t even read the first paragraph. But if you read just one thing, read the first paragraph. You will find that “the best money racket of all times” only “works because currency speculators are eagerly gobbling up Swiss francs.” And that this “monetary racket only works as long as there is endless global demand for the tiny currency.”

      If global demand for this little-itty-bitty currency disappears, the game is over. Other countries with less global demand for their currency will crash their currency if they tried to do this to this extent. Currencies are a confidence game. Once a currency spirals out of control, it’s difficult to bring it back in.

      So your statement: “I see SNB as the avant garde of what other central bankers might be doing in the future” is just wishful thinking or fanciful dreaming. The BOJ is carefully dabbling in it via ETFs to prop up the Japanese stock market that is still down 38% from 1989, and even the ECB has no appetite for taking on this risk.

      You’re welcome to entertain those dreams, but I’m not going to waste my time on these types of wild speculations.

      • Memento mori says:

        I am sure 10 years ago if someone told you that the Fed would purchase directly bonds by the trillions you would have discarded it as nuts. I have been on the record since Dow was 22k that it will reach 30k before the November election. I have invested accordingly. There are many things I don’t like about Fed policy but I can’t change it, all I can do is try to understand where it is going and profit from it.
        We are slowly going to get zero to negative rates, Fed has zero tolerance for any stock market downturn and will throw the kitchen sink if it happens. I think Yellen had already talked about giving more flexibility to the Fed to buy stocks, so the idea isn’t new here.
        Just like people are now largely convinced that the stock market is the economy, and keeping it elevated justifies endless money printing, so they will be when it’s time for the Fed to purchase stocks, for our own good. Ignore them at your own peril.

        • Dickie says:

          The NY Fed will purchase stocks because the NY Fed is owned by the big Wall St. banks. The NY Fed will support the stock market because the bank stocks of the owners of the NY Fed are already shaky and if the market made a major fall then those banks go with it.

          I’d even bet they already been doing it. I’ve seen stories of suspicious moves late in a trading session where suddenly the Dow Industrial jumps up a fair bit which makes the headlines not quite so gloomy and helps keep the market from crashing the next day. Don’t know who’s doing it. But I’d never bet against the NY Fed being willing to do that to save the banks that own the NY Fed.

          As the Great Philosopher Carlin put it, “Its a Big Club, and you ain’t in it.”

        • BagHolders says:

          Unless the Fed can stop companies from laying off people, declining earnings, ratings downgrades credit ratings, all that equity will be used to payoff those at the top at the capital tier structure… which are not shareholders…

        • Robert says:

          You and Dickie make some good points, but the Fed, a privately owned racket running the biggest trading desk on Wall Street, is out for itself, and if that means crashing the market, they will do it. And, IMHO, all the more likely in that they are part of the Deep State that is looking to overthrow Trump, who is beginning to be regarded as not reliably enough supportive of 24/7 undeclared war enriching the banks that own the Fed.

        • Gandalf says:

          Memento mori,
          We are indeed living in uncharted financial territory here where the only reason we haven’t sailed off into Hyerinflation Space is because every industrialized economy in the world is expanding their fiat money. So it’s anybody’s guess as to what happens next.

          Just curious what your predictions are about when or if this is all going to crash. Or do you think the fiat money expansion and stock market will continue successfully to Infinity and Beyond?

          The Standard Model of the Universe based on the yield curve inversion does say that stocks will hit a new high months after the inversion, so everything still fits. It also predicts that easy money and lack of strict regulation will eventually lead to mountains of bad debt that will blow up, and we’re starting to see early signs of that with clear links between unsalable junk bonds stuck at the big financial institutions and an unstable repo market

          So, whaddya say?

      • Cas127 says:


        I don’t want to get in the middle, but I do have a related question – why is there still huge demand for the SF?

        I used to think it was because the Swiss were thought to be the least likely to corrupt their currency via money printing/neg int rates.

        But they have been printing money for a while now…so why do they still enjoy Haven status – despite the actual evidence?

        • Wolf Richter says:


          Excellent question. Let me twist the question around. Why is there such demand for Tesla shares as to drive up the market valuation of the company to $63 billion? People can rationalize this however they want to, but in the end it boils down to human behavior and sentiment, and those can go wherever and change on a dime. In other words, I cannot give you a real answer. But I could give you a lot of rationalizations :-]

        • bungee says:

          The Swiss pegged to the euro in 2011. Then a few years later, after printing too much to maintain the peg, they dropped it. But the thing is, they LIED about their intentions. They announced they would maintain the peg going into the forseeable future and then scrapped it after everyone had positioned themselves for the peg. If they told people, everyone would stampede trying to front run it. It busted plenty of people for various reasons. No one wants to be on the wrong side of that again.
          That’s my rationalization ;)

        • Cashboy says:


          I would say that the Swiss Franc has such a large demand by elimination of the choice of others.

          You have to ask yourself, if you were worried about your local currency what would you exchange it for?

          Most would opt for the US Dollar (rightly or wrongly) but if you diversify what is your next currency choice?

      • morticia says:

        Well its a “Most excellent racket”

        I wonder how close the SNB is tied to the BIS (Swiss Bank of International Settlements – Mother Bank of All), seems like the BIS makes all this possible. It’s never clear whether the FED owns BIS, or BIS owns the FED, but IMHO I think FED created the BIS like UN, just a cover because the guy behind the curtain pulling the levers is a ‘neutral country’.

        People just didn’t get the message, a few years ago “CHF” was the gold of paper-currency, but then they pulled the rug out and people lost 20% overnight, and now they do Fiat2Infinity just like USA.

        So CHF ain’t gold anymore, but they’re taking advantage of the situation, like you say, and they’re playing the big-boy HEDGEFUND game just right, looks like a Ray Dalio “All Weather Portfolio” to me. :)

        • lisa says:

          One is at:
          Centralbahnpl. 2, 4051 Basel, Switzerland,

          and the other one is at:
          Börsenstrasse 15, 8001 Zürich, Switzerland

          per Google that’s 1hr and 8minutes/91.6km shortest distance
          by auto.

          I’d say close enough for at least a sleep-over any day of the week, possibly a breakfast, lunch, or dinner engagement would be a good possibility too. Not quite close enough for any staffers or upper elite to grab a quick coffee during a fifteen minute kaffeeklatsch tho!

      • Claude says:

        Wisdom and history are on your side

      • Wes says:

        Excellent article Mr. Wolf. If my memory serves me correctly the Swiss franc was a stable currency during the Gold Standard aka the Bretton Woods agreement. When the USA broke from the Bretton Woods agreement many international banks and US entities converted their currency into Swiss francs and side stepped the dollar devaluation when the USA decided to let the dollar “float” circa 1974-1979.

        Fast forward to the 2008 great financial crisis when the EU decided to monetize the EU’s debt. The euro systematically fell and the SNB was afraid the Swiss franc was appreciating way too fast and would put their little country into a recession.
        So, the SNB decided to buy euros with printed Swiss francs to keep their currency from appreciating. Well, they held out for a while and finally gave in because of the ever growing balance of the euros piling up on their balance sheet. When they made the decision to secretly stop buying Euros(stop printing Swiss francs) there were a substantial number of international investment banks like JPM etc. who had taken up significant short positions. Needless to say they lost. Ever since then the Swiss franc has lost its creditability as a safe haven currency. The SNB, being secretive as they are, may have very well taken up long positions via international accounts to profit on the surprise Swiss franc appreciation. The SNB has been operating and using numbered accounts for a long, long time.

        History Note:
        The SNB laundered gold bullion for the Nazi government throughout WWII since the German currency was sanctioned and Germany needed to buy natural resources from other countries to maintain their military industrial complex. The SNB, the ultimate middle man and currency broker.

  7. raxadian says:

    Sounds a lot likr the US dollar scam, only at a much lower scale.

  8. Wisoot says:

    Nature is coming to sort out this top 20 in January 2020. They will feel the full karmic force. May their souls be ready.

  9. Lisa_Hooker says:

    So the Swiss launder their currency through other countries currencies before buying stuff (sort of like the FRB uses primary dealers, but even more arm’s length). Whereas the Japanese just buy stuff directly?

    • Cas127 says:

      Maybe the Fed has been talking to the Swiss – running a third nation print and equity pump – sorta like how the CIA outsources torture to Romania/Bulgaria in order to avoid US laws.

      The Fed can’t legally buy US equity – yet – but they can lean on other countries to do so – and then reimburse them in one way or the other.

      • Soupcon says:

        “Maybe the Fed has been talking to the Swiss – running a third nation print pump” The Fed has been doing this since approx 1972 when it went off the gold standard and jumped into bed with KSA. It is called the petrodollar.

      • Tang says:

        yeah, proxy, proxy. Later congress aid on the way. Or some form of currency swap arrangements as return favour. Remember the those countries given US $ swap arrangements during Obama years? Can recall those countries. Watch where Obama visit next as he should perhaps be there to collect his dues.
        So all are friends. You aid here, I aid there. And we happily collect our dues fair and square.

  10. SNB is a mutual fund running a central bank? Those under performing stocks which were IPOs smell of some kind of deal? Do they have a common underwriter? Is it one of the Primary Dealers? Switzerland has 7th largest gold reserves and 8th largest holding of US Treasury bonds (ahead of Belgium). When Yellen asked for authority to buy a “broader range of assets” it was pretty much a given. Brainerd was going to be the next Fed chief (and HC would be potus). Maybe the Swiss were the work around, in the interim. When Powell got the job there was no real hurry to end the arrangement. Those assets are likely owned by US taxpayers, one way or another.

  11. David Hall says:

    They also bought gold.

    Americans may buy Swiss company stocks like Nestle or Roche. They have high dividend taxes to keep money in their country.

    China does not like to pay dividends. It is a state owned racket. Hong Kong companies paid better dividends.

  12. Unamused says:

    This monetary racket only works as long as there is endless global demand for the tiny currency.

    Which begs the question: why is there endless global demand for the tiny currency?

    • Bobber says:

      Bank secrecy? No tax?

      • Unamused says:

        Cold. Colder.

        • Cas127 says:


          Don’t be a D tease – just give us your theory why Europeans are still buying SF despite the Swiss’ relatively newfound willingness to debauch their currency (arguably to save their export industries – like pharma – from an excessively strong currency).

          I can’t see the reason either, once the Swiss’ surrendered currency stability – bank secrecy/tax avoidance from other Euro-kleptocracies might be a partial explanation.

    • John Taylor says:

      I think the answer is a kind of lingering nostalgic momentum.

      People, particularly those of the older generation who run everything (average age of politicians is quite high), think of Swiss Banking as a world model of security.

      Pre-Euro, the Swiss Franc has been thought of as a symbol of strength on par with or even stronger than the German Deutsche Mark.

      After reading this I’m starting to think they’re being smart … they know their currency is highly overvalued, and they don’t want their economy crushed. Why not take advantage buy diversifying their holdings into everything they can buy? Why not sell SNB shares at very hyped valuations as basically a very low-paying preferred stock in case entities would like to diversify from their negative yielding national debt. They’re making out like bandits here.

    • MC01 says:

      The same reason for the surprising increase in demand for Japanese yen over the past 12/18 months: both the Banque Nationale Suisse and the Bank of Japan are seen as having exhausted the arsenal of funny money policies they expended so enthusiastically over the past decade to boost exports and slash domestic lending costs.
      Of course, both central banks can slash interest rates even more into the negative or launch into more audacious currency manipulation schemes, but it won’t do them any good: the BNS tried, and completely failed, to defend the “soft peg” to the euro which had a ne plus ultra top exchange rate of 1.10. We have been around 1.09 since August and it will probably drift slowly towards 1.08 as the ECB “must” sink even further into useless lunacy.
      Swiss exporters are hopping mad but there’s nothing that can be done about it bar a miracle at the ECB.

  13. R2D2 says:

    I’ve watched the Wolf of Wall Street movie. I know what goes on in Switzerland ;-)

  14. Brant Lee says:

    So, it must be a natural human trait to fiddle with the currency of a nation once you are in power to do so. How glorious for the few. One does get the notion in the USA that once the election is over, the politicians go to work–for themselves.

  15. DR DOOM says:

    After reading the past several posts I have retreated to my safe place with my modeling clay and coloring books. Not gone full fetal yet but the situation is fluid.

    • Xabier says:

      Clay and colouring-in books are much to be recommended.

      I can’t remember who said it, but:

      ‘Being an artist is like living in Switzerland during a world war.’ :)

    • Cas127 says:


      I agree that it is unnerving to realize that the US gvt is keeping itself alive via what is more or less a massive forgery racket (and ancillary scams, cons, crimes, and protection schemes) but awareness is the first step in returning power to that residual decency/honest ability/true asset value that hopefully still exists in the US.

      DC is about to die in its own shit and lies from the past 50/60 years – but the political class is not the nation. Which is something they are desperate for the other 320 million of us not to figure out.

  16. JM says:

    The BRI is in Switzerland and the SNB obey buying US equities, is logic

  17. Jeff Relf says:

    Best case scenario, America will become as well-off as
    Japan and Switzerland, but with more immigrants.

    America’s ability to wholeheartedly accept immigrants,
    rich or not, into its inner-cities is its biggest strength.
    We need the rich and poor alike.

    Locally, we tax gross assets, i.e. houses;
    the same could be done at the federal level,
    were more money needed to the house “undesirables” (strays).

    Family Values have gone into the toilet;
    and the trend is not about to reverse.

    • Cas127 says:

      “Locally, we tax gross assets, i.e. houses;
      the same could be done at the federal level,” – yes, let’s start with coastal CA and Manhattan whose valuations have soared due to the gutting of national interest rates.

  18. Stuart Davis says:

    Just to lighten the thread, Maulden Economics published this in an piece about the SNB back in 2015!

    “Pity the Poor Swiss.

    To help us understand the mindset of the Swiss central banker, let’s turn to a tongue-in-cheek analysis of the problems of the SNB by my friend Charles Gave. (Charles has a wicked-sharp sense of humor at all times, but he’s at his best when skewering economists.)

    They [the SNB] didn’t mind pegging the Swiss franc to the Deutsche mark, but it is becoming more and more obvious that the euro is more a lira than a mark. A clear sign is the decline of the euro against the US dollar.

    Mr. Draghi has been trying to talk the euro down for at least a year. This should not come as a surprise. After all, in the old pre-euro days, every time Italy had a problem, the solution was always to devalue.

    But the Swiss, not being as smart as the Italians, do not believe in devaluations. You see, in Switzerland they have never believed in the ‘euthanasia of the rentier’, nor have they believed in the Keynesian multiplier of government spending, nor have they accepted that the permanent growth of government spending as a proportion of gross domestic product is a social necessity. The benighted Swiss, just down from their mountains where it was difficult to survive the winters, have a strong Neanderthal bias and have never paid any attention to the luminaries teaching economics in Princeton or Cambridge. Strange as it may seem, they still believe in such queer, outdated notions as sound money, balanced budgets, local democracy, and the need for savings to finance investments. How quaint!

    Of course, the Swiss are paying a huge price for their lack of enlightenment. For example, since the move to floating exchange rates in 1971, the Swiss franc has risen from CHF4.3 to the US dollar to CHF0.85 and appreciated from CHF10.5 to the British pound to CHF1.5. Naturally, such a protracted revaluation has destroyed the Swiss industrial base and greatly benefited British producers [not!]. Since 1971, the bilateral ratio of industrial production has gone from 100 to 175… in favor of Switzerland.

    And for most of that time Switzerland ran a current account surplus, a balanced budget, and suffered almost no unemployment, all despite the fact that nobody knows the name of a single Swiss politician or central banker (or perhaps because nobody knows a single Swiss politician or central banker, since they have such limited power? And that all these marvelous results come from that one simple fact: their lack of power.)
    The last time I looked, the Swiss population had the highest standard of living in the world – another disastrous long-term consequence of not having properly trained economists of the true faith.”

    • JM says:

      Excellent analysis thanks to having it exposed to clarify what is the Swiss with a touch of irony.

    • JZ says:

      For small countries like Swiss, the key to maintain national economic/military strength is the well being of all citizens.
      For small countries, what happened in the capital will soon be noticed by neighbors since the country is small.
      Big countries like US, China, if 1% F*** 99%, national economic/military power is NOT affected. You only need 1% building the machines to run/rule/defend the nation and if the 99% rot, it only benefit the 1%. Plus, what ever Washington does, the mass will only figure out what it means 10 years later since 99% lives far away from 1% that makes those decisions.

      If you are the 99%, you should be born in Switzerland. Just know that when world war happens, you will be stomped into a pulp by larger powers. If you are 99% born in large countries, you will be left rot on the street, every day, and it is up to you to unrot yourself and move to 1% division. If you fail to do that, when world war happens, you will be sent to stomp on small countries like Switzerland, and you better hope you can make home alive with all the limbs.

    • Leser says:

      When once asking a Swiss friend as to why his country’s been governed largely so well through modern history, he said: The Swiss are so conservative and slow to adopt new ideas that by the time they’re ready to, the errors and fallacies of many such new policies have become evident in other countries and are easily avoided.

    • Cashboy says:

      Switzerland is a very different case.
      The population is very small in relation to the size of the companies listed in Switzerland. Hence they have a surplus due to the amount of corporation tax coming to Switzerland.
      I understand that more than 60% of jobs in Switzerland are actually state jobs.

  19. OutLookingIn says:

    The Way It Is.

    Economic statistics are manipulated. Good news is the result of propaganda and spin-doctors. The global economy, (along with all it’s myriad nationalistic parts), and its financial markets are centrally controlled. Governments openly prop up stock markets.
    A complete disconnect between the price and the value of assets has emerged. An historic global financial and monetary crises has arrived. The severity of which has the potential of resulting in a complete distrust of paper assets, including fiat currencies.
    Leading to an unprecedented global wave of hyperinflation in which prices of real goods explode, debts melt away, the entire economy collapses and banks world-wide will have to close.
    Central bankers are very much aware that a global monetary reset plan, must be put in place before this occurs. In the meantime, they will do anything and everything possible to keep the present system afloat.

    Much more bizarre times a coming.

  20. Tony says:

    I lived in Switzerland for quite some time. It’s not a racket at all. It is like Norways’ sovereign wealth fund, except the value is not extracted from oil in the North sea but from the strength and stability of the Swiss economy and political system. The Swiss franc has consistently been too high as compared to its purchasing power, and in spite of that the Swiss export economy is thriving.

    • mortician says:

      Well also, everybody was selling MTG’s in Germany, and denominating them in CHF, which drove up the rates for Swiss. When the CHF increased in value people all over Europe were hurt. So Switzerland made it very painful to hold CHF ( negative rates ), they also de-valued the CHF over-night by 20% that hurt a lot of speculators very bad.

      The problem with being the ‘gold standard’ paper-currency, is everybody wanted it, which was very bad for swiss people. So they have fixed the problem, now the currency is every bit as worthless as the USD.

      I think the only two good currency’s left is the Norwegian, and the Singapore.

    • AndyJd51 says:

      Thanks for speaking clear text on what’s going on in Switzerland.

    • normansdog says:

      its true, but the economy is tiny and the currency massively overvalued. I personaly think that all of the worlds billionaires and various despots (trillionaires possibly) all plan, when the shit hits the fan, to go any live in a villa (not all in the same villa of course, they can afford one each) on lake Geneva near Phil Collins and the rest of the F1 racing drivers. Hence they keep most of their cash there for this reason.

  21. Ensign_Nemo says:

    I have read reports that the Bank of Japan has essentially seized effective total control of the Japanese government bond market, and is now buying so many stocks (shares are held indirectly through purchases of stock index funds) that it is a top ten stockholder in about 30% of all Japanese companies.

    This raises an interesting point.

    What is there to prevent the BoJ from buying an effective majority share of all Japanese publicly traded companies, in the same fashion that it now owns enough government bonds to set prices to whatever level it wants?

    It is the next logical step in QE to infinity.

    Once a central bank starts to create money out of thin air and use it to buy assets in the “real” world, every purchase transfers ownership of a tiny percentage of the real world from nonbankers to bankers.

    If there is no countervailing force, then these purchases will eventually give the bankers a controlling interest (50% or more) in every single bond and stock. The process becomes self-perpetuating. The central bank usually doesn’t pay taxes on its bonds’ interest payments and stocks’ dividends. There may be a “voluntary” contribution of some of the money for the sake of appearances, but they don’t have to do this, as the charters of such central banks almost always make them immune to national, state, and local taxation. They get to keep and reinvest the compound interest, but individuals must pay taxes every year, and big death taxes when they die.

    Actual people can’t compete with an immortal and tax-immune central bank.

    During the medieval centuries, it was customary for dying Christians with lots of land to give some to the church in their will, as a way to get in the good grace of God just before they were sent to either Heaven or Hell. The church was immune to taxation. Over time, the church owned huge swathes of land in England, more than the king himself. Henry VIII is remembered for his many wives, but the real reason he broke with the Roman Catholic Church is that he then seized their lands and made himself immensely more wealthy and able to finance armies and fleets.

    There’s nothing right now to stop central banks from becoming the next Central Committees of the Politburo, by seizing control of everything.

    Communism is defined economically as the ownership of the means of production by the government.

    Ironically, the new version of Communism’s Politburos may be the central banks – if they buy a controlling interest in every corporation, then they are effectively our new rulers.

    We may need another Henry VIII soon, in order to steal the planet back from the central banks.

    • Yes so who do corporations answer to?

    • Cas127 says:

      “steal the planet back from the central banks.”

      Not a bad historical analysis, but you err in thinking that the Fed in the end is a creature of the banks – it isn’t.

      In the last analysis, the corrupt political class in DC dictates what the Fed will do – at gunpoint if necessary.

      • Dan Romig says:

        Cas127, I would disagree that the Politicos in DC dictate to the Fed.

        With the passing in 1927 of the McFadden Act, Congress, and Congress alone has the power to rein in the Fed, but it is clear that in the ninety-two years since, this has not occurred.

        For a tutorial on who is in control between the Fed and Congress today, one should read Pam and Russ Martens’ “Wall Street On Parade.”

    • JM says:

      Tour historical reflection is interesting in the current context, in fact, if the central banks take the total ownership of the de facto companies, without realizing the people we all find ourselves in a state that completely controls the economy as a communist state, in fact, these ” super controls for our safety “it becomes clear that it has long been a well-defined plan by the new kings and barons. All this would not be possible without the creation of central banks.
      The Chine is sadly our future.

    • normansdog says:

      “Once a central bank starts to create money out of thin air and use it to buy assets in the “real” world…”

      …this is the only thing that central banks do or ever did. All FIAT money is created out of thin air and it is all used to buy real assets in the real world (buildings, bridges, roads, hospitals, atom bombs F35’s)

      • Ensign_Nemo says:

        The original idea was that a central bank would simply lend to other banks, and that it would not directly buy bonds, or stocks.

        It is only quite recently that CBs have started to buy stocks, and they are still using ETFs to add an extra layer of misdirection to their intentions. Only the Swiss bank has released enough information for others to be able to calculate the precise levels of investments in ordinary stocks.

        It’s also suspected that other banks such as the Fed may be covertly buying stocks to prop up the market, but they wouldn’t tell us if they were doing this. They are so opaque that they won’t even release the names of all of the banks that own shares in the FED itself.

        If TSHTF in a future crisis, I expect that central banks will directly buy shares in companies.

        Millions of Americans may wake up one day and find that they are now working directly for the Fed, as it is now the primary shareholder in their employers.

  22. Petunia says:

    Another reason for CHF demand is the watch export business. Swiss watches are the new casino chips in Asia.

    • lisa says:

      The greatest and latest take-away tick-off!

    • Cashboy says:

      Swiss watch sales were 40% to Asia a couple of years back. That is dropping fast as the Chinese economy slows down and anyway the Chinese can now make better quality watch components than the Swiss.

  23. Augusto says:

    Just another example of the government inflating this bubble. When it all comes crashing down they will of course blame the business community. That being said much of the so-called Finance Community of bankers and brokers have turned into a gamblers and percentage clippers who see their clients as marks to be fleeced. This will all end badly.

  24. NARmageddon says:

    Here’s an interesting little calculation:

    94.1e9/(817068.8*1.0113*1e6) = 0.113858408542543

    What I just calculated is that 11.4% of the backing of the CHF (swiss franc) is US stocks.

    Details: Today’s exchange rate 1.0113 USD/CHF (yahoo), stock valuation 94.1B (wolfstreet), and the SNB balance sheet total of 817068.8*1e6 CHF (from web search, also is about $826B)

    Wow, crazy.

  25. Mean Chicken says:

    So if I’m to understand the point, the SNB is underwater on their stock holdings? The top 20 have done well, no?

    • Wolf Richter says:

      It doesn’t matter to the SNB if it is underwater or not. It creates its own money. The concept of profit or loss is meaningless under those conditions. It buys shares and doesn’t care what happens to them. That’s the point.

  26. ewmayer says:

    Late to this — OK, so the way the SNB is doing things exposes them to a lot of market risk. But what if they instead printed their boutique currency and invested the proceeds from its sale in solid, stodgy blue-chip high-dividend companies? In effect, collect interest on your own new-printed-at-negligible-cost money. This could be a quite good budgetary booster for a country like Switzerland, since demand for CHF is high and they are small enough that even large share purchases in terms of their national budget wouldn’t move the prices of the companies whose shares are being bought overmuch.

    • Wolf Richter says:


      A central bank doesn’t think that way. “Profit” or “income” means nothing if you can print your own money. That’s why they don’t care what they have in their portfolio. The purpose is to sell Swiss francs, do depress its value against the dollar — currency manipulation — and the stocks are just a side effect.

      • ewmayer says:

        Despite blather about ‘independence’, a central bank is supposed to serve a nation’s government by supporting the economy, yes? Given the sustainable-free-revenue model that presents here, I’m surprised the Swiss government hasn’t nudged the SNB in the “right idea, wrong investment mix” direction, is all. I mean, do you see any downside of a CB like the SNB printing money to trade for relatively safe dividend-yielding investments? Certainly less downside risk than their current portfolio. Sure, the CBers may not care since it’s just ctrl-p money for them, but the same foreign demand for CHF that supports their printing could vanish in the next downturn if their printed-for-investing fiat is suddenly backed by a far smaller pool of foreign-currency holdings (via equities) than it initially bought.

  27. Cashboy says:

    I have never understood the reason why the SNB doesn’t buy gold with the free money it produces.
    Surely there is less risk (Swiss are very risk adverse) and more confidential than buy American shares that have to be disclosed.

  28. Keith says:

    Sooner or later one of these central banks is going to wise-up and print their currency to buy gold. First mover wins.

    P.S. Another great article – Thanks Wolf Street

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