Often, there are questions you want to know the answers to. You want other people's opinions, because knowing the answer isn't worth the time you'd have to spend to find it, or you're unsure whether your answer is right.
LW seems like a good place to ask these questions because the people here are pretty rational. So, in this thread: You post a top-level comment with some question. Other people reply to your comment with their answers. You upvote answers that you agree with and questions whose answers you'd like to know.
A few (mostly obvious) guidelines:
For questions:
- Your question should probably be in one of the following forms:
- Asking for the probability some proposition is true.
- Asking for a confidence interval.
- Be specific. Don't ask when the singularity will happen unless you define 'singularity' to reasonable precision.
- If you have several questions, post each separately, unless they're strongly related.
For answers:
- Give what the question asks for, be it a probability or a confidence interval or something else. Try to give numbers.
- Give some indication of how good your map is, i.e why is your answer that? If you want, give links.
- If you think you know the answer to your own question, you can post it.
- If you want to, give more information. For instance, if someone asks whether it's a good idea to brush their teeth, you can include info about flossing.
- If you've researched something well but don't feel like typing up a long justification of your opinions, that's fine. Rather give your opinion without detailed arguments than give nothing at all. You can always flesh your answer out later, or never.
This thread is primarily for getting the hivemind's opinions on things, not for debating probabilities of propositions. Debating is also okay, though, especially since it will help question-posters to make up their minds.
Don't be too squeamish about breaking the question-answer format.
This is a followup to my comment in the open thread.
They are clearly able to maintain the cap for as long as they choose to. This is because the Swiss central bank has the ability to print Swiss francs. They can always make more, and use them to buy Euros. In fact, the phrase 'print' is misleading, as no paper is needed - only electronic money is created.
By this means, the swiss central bank is always able to lower the value of the Swiss franc - it can just carry on printing more until everyone who wants one for the price of 1 Euro 20 cents has one. It is impossible for speculators to buy more Swiss Francs than the bank is able to print.
The strategy seems risk free - if in the future the value of the Swiss franc ever falls against the Euro, they can reverse the process, selling all the Euros they bought earlier with Francs, and buying back their francs at their lower price, and deprinting them. After the deal is fully unwound, they should even have money left over due to the fact that they sold Francs at a higher price than they bought them back.
However, it is not. If the Euro itself were to run into trouble, and become increasingly worthless, the Swiss bank would find that its cap becomes a dead weight - as all the Euros that it bought with printed money become worthless, it will still have lots of outstanding Swiss francs, which will probably be dragged down and become worth much less themselves.
To avoid this problem, they should avoid actually buying Euros. This is done by loudly announcing their strategy of printing Swiss Francs as necessary. Since it's mathematically impossible for speculators to win by buying more Swiss Francs than the bank can print, hopefully no speculator will try, and then hopefully the bank won't actually have to buy all that many Euros after all. This should make it much less painful to abandon the cap if the Euro falls to pieces, and the Swiss want the Swiss franc to be worth much more than 1.2 Euros after all.
Whoa, a piece of financial advice that I can actually see the reasoning behind.