Share this article

The Swiss “Vollgeld” Initiative Revisited

Bloomberg has numerous offices around the world, many of which appear to have quite an independent streak, at least that is our impression. Readers who occasionally watch clips from Bloomberg’s Asia Edition are probably aware of this. One can often see in-depth interviews there with people who espouse views far from the mainstream and who are highly critical of governments and central banking, such as e.g. Dr. Marc Faber or Jim Rogers, to name two prominent ones.

What must be stressed here is the “in depth” qualification – there is a big difference between e.g. CNBC offering 60 seconds of sound bites from Dr. Faber and a 20 minute interview with presenters who are themselves willing to engage in a bit of critical thinking. We are mentioning this by way of introduction, because Kuzman Iliev and Vladimir Sirkarov of Bloomberg TV in Bulgaria seem to be part of this somewhat more off-the-beaten-path tradition as well.

Recently they have done an interview with our friend Claudio Grass, the CEO of Global Gold in Switzerland on the topic of fractional reserve banking. Readers probably remember that there will soon be a referendum on fractional reserve banking in Switzerland, as the so-called “Vollgeld Initiative” (roughly translatable as “Fully Backed Money Initiative”) has garnered the required number of signatures.

The interesting thing about this initiative is that it is actually not led by free market supporters. On the contrary, the proposal comes from a bunch of socialists in close orbit around Karl Marx. It is therefore not surprising that the Swiss National Bank is far less opposed to the idea than it was to the gold initiative. The latter was painted in the starkest colors and said to be practically opening the doors to Hell, as it would actually have limited the SNB’s interventionist powers somewhat (even if not really by as much as it made out).

Warming Up an old Central Planning Idea Loved by Bureaucrats

By contrast to this, the Vollgeld Initiative is a warmed-up version of the so-called “Chicago Plan” originally proposed by the dreadful interventionist Irving Fisher and his colleagues, the forerunners of the Chicago monetarist school. As we have pointed out on a number of occasions in the past, largely thanks to Milton Friedman, the monetarists nowadays “define the borderline of respectable opinion on the political Right” to quote Hans-Hermann Hoppe. In other words, the ideas of the Chicago School represent the absolute maximum of support for the free market still considered acceptable by the establishment.

We agree with many of the views Friedman espoused, but it would be a grave error to overlook his failings. For instance, we decidedly part ways with Friedman on questions of economic method. He was a positivist, and the empirical methods of the natural sciences are simply not suitable to a social science like economics, something that can be shown easily enough. In fact, even in the natural sciences the line between the empirical and conceptual approach appears to become increasingly blurred these days.

Worst of all though, in spite of his well-known support of the free market, Friedman was dedicated to central planning of money (not to mention that he also supported the welfare state and progressive taxation). For reasons we cannot explain, he seemed to think that while the market would be best able to deal with almost everything, money was somehow an exception to the rule. The monetary system required steering by a Soviet of “wise men” (of course, Friedman is also well known for a book he wrote with Anna Schwartz, the topic of which is how the plans of this Soviet totally failed in the 1930s. This book is actually what we would call heaping error upon error – not surprisingly, monetary crank Ben Bernanke is a big fan of it).

In a nutshell, the Chicago plan is all about centralizing the monetary system even further. While we are in perfect agreement with scholars like Murray Rothbard, Hans-Hermann Hoppe, Guido Huelsmann, Jesus Huerta de Soto, Joseph Salerno and many others that fractional reserve banking is essentially fraudulent – it represents a multi-pronged violation of property rights that flies into the face of legal traditions since antiquity – we still think it is less harmful than reserving money creation powers exclusively to a central planning agency.

It is possible to show both theoretically and empirically that a free banking system that tolerates fractional reserve banking does a lot less economic harm than a banking cartel led by a “lender of last resort” with de facto unlimited money creation abilities. As we mentioned above, we are not surprised that the SNB calls the “Vollgeld” initiative “interesting” and offers at best token resistance to it. Since it promises to increase the powers of the monetary bureaucracy, one can hardly expect said bureaucracy to oppose it.

Here is the video of the interview Bloomberg TV Bulgaria did with Claudio Grass on the Swiss initiative. Even though eight minutes is not really enough to fully do the topic justice, Claudio does get the most important points across. To their credit, Messrs. Iliev and Sirkanov happily refrain from interrupting his train of thought with silly and loaded questions. This is a refreshing contrast to what one often sees elsewhere when controversial ideas are discussed in the mainstream media, where presenters often behave as if they thought their main job consisted of assassinating all messengers critical of the system.

Similar Posts

113 Comments

  1. Hi, you can fill in the subscriber form on my homepage and you will receive an email with new updates. Ok for you? Best claudio

  2. Usually I do not read post on blogs, but I would like to say that this write-up very
    forced me to take a look at and do it! Your writing taste has been amazed me.

    Thank you, quite great post.

  3. I am now not sure the place you are getting your information, but great topic.
    I must spend some time finding out much more or understanding more.
    Thanks for wonderful information I was looking for this info for my mission.

  4. You really make it appear really easy together
    with your presentation but I find this topic to be really one thing that I think I might never understand.
    It sort of feels too complex and very vast for me. I am looking ahead in your
    next publish, I’ll try to get the hang of it!

  5. Very good blog! Do you have any recommendations for aspiring writers?

    I’m planning to start my own site soon but I’m a little lost on everything.
    Would you propose starting with a free platform like WordPress or go for a
    paid option? There are so many options out there that I’m totally confused ..

    Any recommendations? Bless you!

  6. Hi there! This blog post couldn’t be written much better! Looking at this post reminds me of my previous roommate!
    He always kept talking about this. I’ll forward this information to him.
    Fairly certain he will have a good read. I appreciate you
    for sharing!

  7. You actually make it seem so easy with your presentation but I find this topic to be
    really something which I think I would never understand.

    It seems too complicated and very broad for me.
    I’m looking forward for your next post, I’ll try to get the hang of it!

  8. Thanks for a marvelous posting! I quite enjoyed reading it, you’re a great author.
    I will be sure to bookmark your blog and will often come back in the foreseeable
    future. I want to encourage that you continue your great posts, have a nice afternoon!

  9. Ƭhanks , I have recently been searching for informɑtion аpproximately tһiѕ
    subject for ages and yⲟurs is tһe beѕt I hаve discovered ѕo far.
    Howevеr, what ab᧐ut the bottom line? Are you positive about tһе supply?

  10. I’m impressed, I have to admit. Rarely do I come across a
    blog that’s equally educative and entertaining, and without a doubt, you’ve hit the nail on the head.
    The problem is something too few men and women are speaking intelligently about.
    Now i’m very happy I came across this in my hunt for something concerning this.

  11. Hello There. I found your blog the use of msn. That is a really well written article.
    I’ll be sure to bookmark it and return to learn extra of your helpful information. Thank you for the post.
    I will certainly comeback.

  12. Hmm it seems like your blog ate my first comment (it was extremely long) so I guess I’ll just sum it up what I had written and say,
    I’m thoroughly enjoying your blog. I too am an aspiring blog writer but I’m still
    new to the whole thing. Do you have any points for newbie blog writers?
    I’d really appreciate it.

  13. I really like what you guys are up too. Such
    clever work and reporting! Keep up the very good works guys I’ve included you guys to
    my personal blogroll.

  14. Hi! This post could not be written any better!

    Reading through this post reminds me of my good old room mate!
    He always kept talking about this. I will forward this write-up to him.
    Pretty sure he will have a good read. Thank you for sharing!

  15. Excellent article. Keep posting such kind of information on your page.

    Im really impressed by it.
    Hey there, You have performed an incredible job. I’ll definitely digg it
    and individually recommend to my friends. I am confident they will be benefited from this web site.

  16. If some one wants to be updated with most up-to-date technologies therefore he must be pay a visit this web site and be up
    to date everyday.

  17. Great web site. A lot of useful info here. I am sending it to some
    friends ans also sharing in delicious. And certainly, thanks on your effort!

  18. I blog often and I genuinely thank youu for your content.
    This great article has really peaked myy interest. I’m going to book mark your blog and keep checking for new information about once per week.

    I subscribed to your RSS feed too.

  19. Howdy! Someone in my Myspace group shared this website with us so I came to
    give it a look. I’m definitely enjoying the information. I’m
    bookmarking and will be tweeting this to my followers! Excellent blog and wonderful style and design.

  20. Awesome blog! Do you have any tips and hints for aspiring writers?
    I’m planning to start my own blog soon but I’m a little lost on everything.
    Would you advise starting with a free platform like WordPress or go for a paid option? There are so many choices out there that I’m totally overwhelmed ..

    Any suggestions? Bless you!

  21. Woah! I’m really digging the template/theme of this website.
    It’s simple, yet effective. A lot of times it’s challenging to get that “perfect balance” between superb
    usability and appearance. I must say that you’ve done a amazing job with this.
    In addition, the blog loads extremely quick for me on Firefox.

    Exceptional Blog!

  22. Thank you for any other informative site. The place else may I am getting that kind of information written in such an ideal method?
    I’ve a challenge that I’m simply now operating on,
    and I have been on the glance out for such information.

  23. Hello there, I found your site by way of Google
    even as looking for a comparable topic, your website came
    up, it looks great. I’ve bookmarked it in my
    google bookmarks.
    Hi there, just turned into alert to your weblog through
    Google, and found that it is truly informative. I’m going to be
    careful for brussels. I will appreciate for those who proceed
    this in future. Lots of other folks will be benefited out of your writing.
    Cheers!

  24. I loved as much as you’ll receive carried out right here.
    The sketch is tasteful, your authored material stylish.
    nonetheless, you command get bought an impatience over that you wish be
    delivering the following. unwell unquestionably come further formerly again as exactly the same nearly a lot often inside case
    you shield this increase.

  25. Heya i am for the first time here. I found this board and
    I in finding It truly useful & it helped me out much.

    I am hoping to offer something back and help others
    like you aided me.

  26. You actually make it appear really easy together with
    your presentation however I in finding this
    topic to be actually one thing which I think I’d never understand.

    It kind of feels too complex and extremely vast for
    me. I am looking ahead in your subsequent put up, I’ll try to get the hold of it!

  27. Attractive component of content. I simply stumbled upon your
    site and in accession capital to assert that I get actually loved account your blog posts.
    Any way I’ll be subscribing for your feeds or even I fulfillment
    you get entry to constantly quickly.

  28. Hello! This article could not be written much better!
    Going through this article reminds me of my previous roommate!
    He constantly kept preaching about this. I most certainly will forward this article to
    him. Fairly certain he’s going to have a very good read.
    Many thanks for sharing! Is it OK to post on Reddit? Keep up the really awesome work!

  29. I like the valuable information you provide in your articles.

    I’ll bookmark your weblog and check again here frequently.
    I’m quite sure I will learn many new stuff right
    here! Good luck for the next!

  30. My brother recommended I would possibly like this website.
    He was entirely right. This submit actually made my day. You can not
    imagine just how so much time I had spent for this information! Thank you!

  31. Wоw, fantaѕtic Ƅlog structure! How long have
    you ever been running a blog for? you make running a blog
    look easy. Thе overall look of your web site is fantastic, ⅼet alone the content!

  32. Hello! I could have sworn I’ve been to this website before but after going through
    many of the articles I realized it’s new to me.
    Nonetheless, I’m definitely happy I discovered it and I’ll be book-marking it and checking back regularly!

  33. Does your blog have a contact page? I’m having problems locating it but, I’d like to send
    you an email. I’ve got some recommendations for your
    blog you might be interested in hearing. Either way, great site and I look
    forward to seeing it develop over time.

  34. My spouse and I stumbled over here from a different page and thought I might as
    well check things out. I like what I see so now i’m following
    you. Look forward to looking into your web page again.

  35. Hi there to all, how is the whole thing, I think every one is getting
    more from this site, and your views are fastidious in favor of new
    visitors.

  36. Your mode of telling all in this paragraph is in fact nice, every one be able to without difficulty be aware of it, Thanks a lot.

  37. Wow that was strange. I just wrote an very long comment but after I clicked submit my comment didn’t show up.
    Grrrr… well I’m not writing all that over again. Anyway, just wanted to say superb blog!

  38. Unquestionably imagine that that you stated. Your favourite justification appeared to be on the web the easiest factor to take into accout of.
    I say to you, I certainly get irked even as people think
    about concerns that they plainly don’t recognise about.
    You controlled to hit the nail upon the highest and outlined out the entire thing with no need
    side-effects , other people could take a signal. Will probably be again to
    get more. Thanks

  39. you are really a good webmaster. The website loading pace
    is amazing. It seems that you are doing any unique
    trick. Moreover, The contents are masterwork.
    you have performed a fantastic process on this topic!

  40. Excellent beat ! I wish to apprentice while you amend your site, how could i subscribe for a blog web site?
    The account aided me a acceptable deal. I had been a little bit acquainted of this your
    broadcast offered bright clear concept

  41. Do you mind if I quote a couple of your articles as long as I provide credit and sources back to your
    blog? My blog site is in the very same area of interest as yours and my
    visitors would certainly benefit from some of the
    information you present here. Please let me know if this okay with you.
    Thanks!

  42. Thanks for ones marvelous posting! I quite enjoyed reading it, you happen to be a great author.
    I will be sure to bookmark your blog and will come back in the future.
    I want to encourage you to definitely continue your great work, have a nice morning!

  43. Generally I don’t learn post on blogs, however I
    would like to say that this write-up very compelled me to
    take a look at and do so! Your writing style has been surprised
    me. Thank you, very great post.

  44. You can definitely see your enthusiasm within the work you write.
    The world hopes for even more passionate writers such
    as you who aren’t afraid to mention how they believe.

    Always go after your heart.

  45. whoah this weblog is great i love reading your articles.
    Stay up the good work! You already know, lots of individuals are searching around
    for this information, you could aid them greatly.

  46. thank you – feel free to share the better ideas with your friends 🙂 let’s grow the network from the bottom to the top 🙂

Leave a Reply