Bill Fleckenstein, president of money management firm Fleckenstein Capital, sees several major implications from the Swiss National Bank's decision Thursday to end its three-year-old ceiling for the franc.
The move sent financial markets into turmoil, with the Swiss franc soaring and Swiss stocks tumbling.
- "The most important lesson to be learned from this is: no one (not even a central bank) is bigger than the market," Fleckenstein writes on Financial Sense.
- "The second most important takeaway is that we are going to continue to see intense volatility virtually everywhere." Central bank manipulation of economies breeds such volatility, he says.
- "Folks are no longer going to be able to trust the central banks, since bankers can change their minds." That will happen in the United States, when the Federal Reserve has to refrain from raising interest rates, Fleckenstein writes.
- "As far as paper currencies go, nobody wants to have a strong one," he says. Gold is more highly valued.
Meanwhile, Dennis Gartman, publisher of the Gartman letter, says the SNB's move represents the worst central bank policy he's seen in four decades of watching markets.
"This really is a silly decision on their part, and it has inflicted enormous losses across the world to a great number of people," he told CNBC.
The SNB wanted to restrain its currency to protect exports, but it came to see its policy of selling franc as more expensive than it was worth. Gartman was unimpressed. "They gave you no indication that this was going to happen," he said.
"They had been spending enormous amounts of Swiss francs [to restrain their currency], which they could create as a central bank out of the thinnest of air. They promised that they would be doing that on a consistent basis."
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