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Swiss National Bank Facing Record Losses. A New Energy System to Turn Mines into Mega Watts.
Bank Of Japan's Response To Supply Shortages.
Here is what we will be getting into today:
The Swiss National Bank's Power to Create Money to Buy Foreign Currencies.
Implications for Japan's Economic Growth and the US CPI Report.
From Mines to Mega Watts: How Underground Gravity Energy Storage is Disrupting the Energy Storage Industry.
Let's Dive In!
Website: Wolf Street
Title: SNB Cuts Holdings of All its Top 50 US Stocks in Q4: Apple Chopped by 8% since Q2. MSFT, GOOG, AMZN, TSLA, XOM, All
Here are the key highlights:
The Swiss National Bank (SNB) has recently been making headlines for its unique approach to currency manipulation, which involves using Swiss francs to buy foreign currency, primarily euros and dollars. This is a departure from the more traditional approach of buying bonds or equities in its own currency.
In 2022, the SNB experienced a staggering 132 billion Swiss francs in losses due to this strategy, which is the largest annual loss in its history. This loss was largely attributed to the strengthening of the Swiss franc relative to the euro and the dollar.
As a result of these losses, the total amount of foreign currency investments on the SNB's balance sheet dropped by 176 billion CHF, or 18%, from its peak in February 2022 to CHF 801 billion. This decrease is significant and indicates the extent of the SNB's losses.
In addition to reducing its holdings of foreign currency, the SNB has also been reducing its holdings of some of the top 50 stocks, including Apple and Tesla. Specifically, the SNB has dumped 5.7 million shares of Apple, or 8.1%, since the peak of its Apple holdings in Q1 2022, and is now down to 65.3 million shares. In Q4 2022, the SNB also dumped 623,902 shares of Tesla, bringing its stake down to 10.8 million shares.
Despite these losses, the SNB cannot run out of money or go bankrupt because it creates its own money. This is a key advantage that central banks have over other types of investors. While other investors may have to sell assets or borrow money to cover their losses, the SNB can simply create more Swiss francs to cover its losses.
The SNB's ability to create its own money and manipulate currencies even when faced with losses highlights the power that central banks have in the global economy. The SNB's approach demonstrates that central banks are still able to influence markets and currencies in a significant way.
YouTube Channel: Eurodollar University
Title: Even the language we use to describe inflation is all wrong.
Here are the key highlights:
The global economy is facing a supply shortage due to an imbalance between demand and supply, which is most apparent in Japan. The Bank of Japan is raising prices and encouraging companies to invest more heavily in production and research, which will help restore the balance between supply and demand.
Japan's government must take proactive steps to ensure a successful economic recovery, such as implementing fiscal stimulus measures, pursuing free trade agreements, and addressing structural issues like an aging population and low productivity growth. Despite facing an economic recession, Japan has remained relatively resilient compared to other countries affected by the pandemic, and its economic recovery is likely to remain stable in the foreseeable future.
Understanding the complexities of the Euro Dollar system is crucial for preparing for tomorrow's economy and making informed financial decisions. The Bank of Japan's decision to reverse its policy of restricting bank reserves is a positive sign for Japan's economy, indicating an increase in consumer confidence, higher economic growth, and more jobs.
The recent US CPI report indicates that CPI does not necessarily reflect the underlying economic fundamentals, even when inflation is low. This can result in increased goods prices due to low inflation rates, but this does not indicate a strong economy. Economic data from the BLS paints a positive picture of the US economy, with a modest reduction in year-over-year inflationary pressure.
To keep inflation under control while still allowing economic growth, the Federal Reserve needs to implement monetary policies such as lowering interest rates & quantitative easing. The government also needs to take action by increasing minimum wages or providing tax incentives for businesses that offer affordable housing options to address the cost of living which has been steadily increasing over the past few decades and causing strain on households and businesses.
Title: Researchers Look To Turn Decommissioned Mines Into Batteries
Here are the key highlights:
Underground Gravity Energy Storage (UGES) is a new energy storage technique that uses decommissioned mines to store energy in an efficient and cost-effective way. UGES works by transporting sand into abandoned underground mines, and the potential energy of the sand is converted into electricity via regenerative braking.
The main components of UGES are the shaft, motor/generator, upper and lower storage sites, and mining equipment. The deeper and broader the mineshaft, the more power can be extracted from the plant, and the larger the mine, the higher its energy storage capacity.
The investment cost for UGES is estimated to be between 1 to 10 USD/kWh, with power capacity costs of 2,000 USD/kW. UGES has a global potential of 7 to 70TWh, with most of this potential concentrated in China, India, Russia, and the USA.
UGES has several advantages over other energy storage methods such as batteries, including ultra-long time energy storage ranging from weeks to several years, and no energy is lost due to self-discharge over long periods. UGES could be a great solution for communities that rely solely on decommissioned mines for their economic output, as it could create job vacancies while providing a long-term energy storage solution.
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