Final Word from Wednesday, February 15, 2017

The CNB has a low regard for the crown. It routinely invalidates coins and bills that it issued in the past. The Kč 50 banknote will literally become a worthless piece of paper at the end of March. The CNB thinks so little of the crown that it has pegged it for the past 39 months to the Deutsche Mark (sorry, euro) and has spent more than Kč 1 trillion subduing the Czech currency as it tries to liberate itself. Czech central bankers boast about their ability to print an unlimited number of crowns, which implies a willingness to depreciate the crowns already in existence ad infinitum. The CNB has been depleting its gold stock, and Gov. Jiří Rusnok justified it this week by saying that gold is illiquid, volatile and risky. What a paradox. The CNB is pegging the crown to the D-Mark, and the Bundesbank is boasting about retaking physical possession of its gold, yet the CNB is bad-mouthing the one asset that could save the crown from the profligacy of its masters. [Czech Republic Czech National Bank devaluation]

Glossary of difficult words

to invalidate - to render something no longer legally or officially acceptable;

to peg - to fix (a price, rate, or amount) at a particular level;

to subdue - to bring (a country or people) under control by force;

ad infinitum - again and again in the same way; forever;

to deplete - to use up the supply or resources of;

illiquid - (of assets) not easily converted into cash;

to bad-mouth - to say bad things about someone or something;

profligacy - reckless extravagance or wastefulness in the use of resources.

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