{"id":455,"date":"2011-09-08T11:44:22","date_gmt":"2011-09-07T23:44:22","guid":{"rendered":"https:\/\/blog.waikato.ac.nz\/physicsstop\/2011\/09\/08\/thermoeconomics\/"},"modified":"2011-09-08T11:44:22","modified_gmt":"2011-09-07T23:44:22","slug":"thermoeconomics","status":"publish","type":"post","link":"https:\/\/blog.waikato.ac.nz\/physicsstop\/2011\/09\/08\/thermoeconomics\/","title":{"rendered":"Thermoeconomics"},"content":{"rendered":"<p>I&#8217;ve been following with a bit of interest the &quot;slow-motion crisis&quot; of the European debt.&nbsp; One of its consequences is some unhealthy shifts in exchange rates &#8211; for example the soaring Swiss Franc. That hurts Swiss exporters.&nbsp;<\/p>\n<p>In the last couple of days, Switzerland has decided that this isn&#8217;t acceptable <a href=\"http:\/\/www.bbc.co.uk\/news\/business-14801324\" target=\"_blank\">and is taking drastic measures<\/a> to reduce the value of its currency, by selling it in &quot;unlimited amounts&quot;. Basically, they&#8217;ll flog off as many Swiss francs as it takes for the rate to get back to 1.2 francs to a Euro.<\/p>\n<p>With economics, there are some obvious (that is, if you are a physicist) links to thermodynamics. There&#8217;s a branch of economics called <a href=\"http:\/\/en.wikipedia.org\/wiki\/Thermoeconomics\" target=\"_blank\">&#8216;thermoeconomics&#8217; <\/a>which overlaps the two ideas.&nbsp; For example, if you pump heat into a object it increases its temperature. That&#8217;s a bit like what is happening to Switzerland &#8211; people are wanting swiss francs rather than euros so money (heat) gets pushed its way and its exchange rate (temperature) therefore shifts.&nbsp; Now, it&#8217;s difficult to get heat to flow naturally to a hot body.&nbsp; To do that, you need a hotter body. (Second law of thermodynamics). Likewise, it&#8217;s difficult to get people to buy swiss products, because they are now very expensive. What happens is that people in Switzerland, with their &#8216;hot&#8217; francs, will find it easy to import stuff from overseas. So money leaves the Swiss economy which doesn&#8217;t do their industry much good.<\/p>\n<p>What the Swiss National Bank is doing with its policy is similar to throwing all the doors and windows of a house open to reduce its temperature. You could think of the situation as a house with heat pumps going full blast (investors converting their euros into &#8216;safe&#8217; swiss francs) with all the doors and windows open (the national bank trying to get rid of swiss francs to make them cheaper).&nbsp; Doesn&#8217;t sound very clever, does it? One would think, in these terms, the best thing to do would be to turn the heat pumps off and close the doors, but it&#8217;s probably not as easy as that.<\/p>\n<p>I may have got the economics a bit wrong &#8211; I&#8217;m not an economist, but the physics is certaintly right. <\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I&#8217;ve been following with a bit of interest the &quot;slow-motion crisis&quot; of the European debt.&nbsp; One of its consequences is some unhealthy shifts in exchange rates &#8211; for example the soaring Swiss Franc. That hurts Swiss exporters.&nbsp; In the last couple of days, Switzerland has decided that this isn&#8217;t acceptable and is taking drastic measures [&hellip;]<\/p>\n","protected":false},"author":20,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[13,14],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Thermoeconomics : Physics Stop<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blog.waikato.ac.nz\/physicsstop\/2011\/09\/08\/thermoeconomics\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Thermoeconomics : Physics Stop\" \/>\n<meta property=\"og:description\" content=\"I&#8217;ve been following with a bit of interest the &quot;slow-motion crisis&quot; of the European debt.&nbsp; One of its consequences is some unhealthy shifts in exchange rates &#8211; for example the soaring Swiss Franc. 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