This speech (my bold) the other day by the Vice Chairman of the Governing Board of the Swiss National Bank is very interesting, particularly in view of what the SNB has actually been doing in the market.
Essentially the SNB decided to peg its currency against the so that the rate never fell below 1.20 to the CHF.
Speculators would normally have piled in to attack the peg through buying CHF and selling , because Central Banks customarily ensure that the currency they create is backed by debt.
But the SNB foxed the market - and put another nail in the coffin of mainstream economic orthodoxy - by announcing that they would not be 'funding' CHF creation with debt in this way.
The speculators realised that any Central Bank has an infinite capacity to hold down its currency by creating currency and exchanging it for foreign assets, and didn't bother trying, although quite a few traders lost their arse as a result, one of them possibly being UBS.
Of course, the mainstream headbangers are now promising inflationary doom in Switzerland as a result of all of the CHF created. But the simple fact is that while these CHF held by foreigners may - insofar as the Swiss permit - be used to buy Swiss assets, such as stocks and houses, it is not going to get out into Swiss retail demand other than through fiscal action.
What the headbangers do not realise is that this would require fiscal, rather than monetary action. In fact, hyperinflation is - everywhere and always - a fiscal phenomenon, accommodated, but not caused, by 'printing' of money.
But to return to the point, Mr Jordan's speech blows away many of the cobwebs and myths which surround Central Banks and their Alice in Wonderland accounting.