Is a strong currency advantageous? – A critical analysis of economic and political interests
One often hears from politicians, bureaucrats and the same experts that a strong currency is said to harm one’s own country. The argument is always the same: Exports would suffer, jobs are endangered, and competitiveness is lost. But this view hardly withstands a closer examination. Switzerland and Liechtenstein serve as impressive counter-examples.Despite or perhaps because of a strong currency, they are among the wealthiest countries in the world. The gross domestic product per worker is at the top of the world in both countries, not because of a bloated financial sector or windy transactions, but – and this is often overlooked – through a highly productive, export-strong industry. The value creation is not frombanks, but by machine builders, precision manufacturers and chemical companies.
Swiss monetary policy: A textbook example for systemic undesirable developments
Looking at the development of Swiss monetary policy in recent decades, a remarkable departure from principles that once brought prosperity and stability to the country is evident. Ironically, Switzerland, which has long been considered a haven of monetary value stability, has been booming to become one of the largest money producers in the world in recent years. The National Bank letInflate their balance sheet with excessive money creation, stronger than any other major central bank – stronger than the ECB, Fed or the Bank of Japan. The reason? The currency was to be artificially weakened to allegedly protect the export economy. The Swiss franc was printed in huge quantities and the bonds and shares quoted in euros were bought in large numbers in order to increase the francprevent. The consequences of such measures are serious: A threatening devaluation of the savings, speculative bubbles on the markets and an non-transparent redistribution in favor of those who are most closely intertwined with the state apparatus and the financial industry.
Historical mistakes and their consequences
Like many other countries, Switzerland has made crucial mistakes in recent decades. The sale of large parts of the gold reserves, joining the IMF and the task of bonding the franc of gold are only the most visible signs of a fundamental paradigm shift. If Switzerland had adhered to its proven principles, the external value of the franc would be continuousrisen. There would have been no abrupt currency shocks, but a gradual, healthy adjustment – enough time for the economy to adjust to it. The export industry should have learned to deal with a more expensive currency. But that is exactly the point of competition: He forces companies to become more efficient, innovative, better. And the reality is: SwitzerlandImports many raw materials and semi-finished products. A strong currency would have reduced production costs because imports would be cheaper. Companies would be forced to optimize their processes instead of calling for subsidies or devaluation.
The Underestimated Benefits of a Strong Currency
Not only the companies would have benefited, but above all the citizens. With a strong currency, the purchasing power of the population increases. This means that imports are becoming cheaper, goods and services from abroad are more affordable, the standard of living increases. If you have to spend less on petrol, electronics or clothing, you have more money for other purposes – for investments, for consumption,for the establishment of new companies. In strong currency countries, citizens will be the winners, not just exporters. Small and medium-sized companies in particular, the backbone of every economy, benefit from cheap imports and a stable, predictable currency. Capital flows from abroad provide additional investments, lower interest rates and a healthy oneeconomic development. The opposite of the politically motivated devaluation, which is always at the expense of the masses.
Monetary policy as an instrument of redistribution and securing power
The truth is: Politics does not create prosperity, at best it can redistribute – and it usually does so that its own networks benefit. The policy of targeted currency devaluation is nothing more than a gift to the export industry that is paid for by all other citizens. Anyone who exports is happy about the artificially low franc, but consumers pay theZeche through more expensive imports and a declining purchasing power. The political elite and their allies in business and administration have long since understood how to use the system to their advantage. It’s about influence, power, about sinecures – not about the public good.
Systemic tax waste and the role of the political elite
The pattern of tax waste can also be observed in monetary policy. A dense network of personal relationships and mutual favors is supported by non-transparent procurement processes that are specifically tailored to a few companies. Apparent companies, nested subcontractor chains and opaque advisory contracts serve only one purpose: the meansThe state is redirected into private pockets, if possible without leaving any traces. The political and economic elite secures a steady inflow of public funds via nepotism, hidden kickbacks and commissions. Pay the bill – once again – the taxpayers and citizens whose interests are systematically deceived.
The consequences of political influence on currency and prosperity
The misincentives that arise from such structures are devastating. Politicians and central bankers think in legislative periods and cycles of power. They are willing to sacrifice long-term prosperity for short-term effects, the main thing is that their own power base remains stable. A strong franc is declared a threat because it is the interests of the export industry and the political networkstangent. Therefore, an attempt is made to weaken the currency, to inflate the central bank’s balance sheet and to shift risks to the general public. The episode: A creeping loss of trust in the institutions, an ever-increasing gap between the political elite and the population and a country that says goodbye to its own recipes for success.
The comparison with Germany and the European dimension
A look at Germany shows how much the policy of a stable, strong currency was a thorn in the side of other countries. The Deutsche Bundesbank set standards for monetary stability and forced other central banks to orientate themselves on it. France in particular had to submit to the dictate of the D-Mark if it wanted a stable exchange rate. This led to Paris being hiscould not finance government expenditures by printing money at will, but was forced to pay attention to solid budget management. The stability orientation of the Bundesbank acted as a natural limitation of government debt. It is no coincidence that many political actors in Europe are striving to weaken such independent, stability-oriented institutions or completelyabolish. Power is the only real goal – and real competition in monetary policy is seen as a danger that needs to be eliminated by any means necessary.
Centralization versus decentralization – the lesson from history
The tendency towards increasing centralization of political power can be observed everywhere. Monetary union in Europe was created to curtail the influence of national central banks and gain political control over money. The result: citizens lose opportunities to escape, are forced into large, difficult-to-understand systems and are the decisions of a small oneElite delivered. Anyone who is critical or demands alternatives will be branded as a troublemaker. The self-proclaimed elites ignore the growing resistance in the population and uncompromisingly enforce their agenda. However, a look at Switzerland or former Germany shows that prosperity arises where there is competition – also in the monetary system. political integration andCentralization does not create prosperity, but leads to redistribution, inefficiency and growing frustration.
Innovation through competition – why a strong currency promotes progress
The real engine of economic success is not political control, but free competition. Companies that have to face a strong franc are forced to become more efficient, develop new products and find innovative solutions. The pressure to deal with higher wage and production costs becomes an incentive to innovate – not to the disadvantage. at the same timeConsumers benefit because they gain access to cheap imports and high-quality products. Purchasing power is increasing, prosperity is widening and the country is becoming more attractive to investors. Political interventions, central planning and currency manipulation stand in the way of this process and only promote the interests of a small, well-connected minority.
A plea for decentralization and monetary policy competition
The lesson from all this is clear: The need of the moment is no longer political integration, but less. What is needed is no longer the EU, but a return to economic integration, real free trade and a competitive monetary system based on stability and trust. States that handle their resources responsibly, do not incur debt,As if there were no tomorrow, and their citizens did not expropriate their citizens through inflation and devaluation, create sustainable prosperity for everyone – not just a privileged elite. The future does not belong to centralization, but to diversity, freedom and innovative strength of independent, strong societies. Just as Switzerland and Liechtenstein have done for decades, couldOther countries also benefit – if they had the courage to free themselves from the shackles of political power games and to trust in the power of a strong, stable currency.
