Come back inflation, all is forgiven

Come back inflation, all is forgiven. The removal of the Swiss Franc's artificial currency ceiling with the Euro last night, and the Swiss currency's subsequent rise of around 17% - from 83 euro cents to above parity - has heightened already elevated concerns about deflation. The simple fact is that the euro is toxic again and the Swiss franc is an attractive alternative, but the increase in the latter's value will cause immense damage to Switzerland's export and tourist industries, with costs in the Alpine state suddenly 20% higher relative to the countries around it. Wages will need to be cut and people naturally won't like it. But to understand how deflation works, we need to take a step back. An economy is financed by people taking capital, putting it to work and promising to pay it back. This can be done in two main ways - either by a participating in profits (like shares) or with the return of a fixed amount (like cash and bonds). Read more: (VIEW LINK)