Central Banks are Arbitrary and Capricious

Chaos can break out astonishingly fast in the financial markets, especially when central bankers decide to flex their muscles. Just look at what happened in Switzerland on Thursday, when the Swiss National Bank abruptly decided to ditch the euro-franc peg which prevented its currency from appreciating too much. Everybody and everything immediately went haywire. It was a case study in how economic shocks can be self-inflicted, a remarkable event the likes of which we rarely see in Western economies.