News & Analysis
IMF Plotting Gold-Backed SDRs?
The IMF has urged the planet's governments to reduce their dependence on the dollar – which weakens the international monetary system already strained by the crisis – by placing other currencies, like the euro or the yen, in their foreign exchange reserves. "A number of measures can be taken to strengthen international monetary systems," in particular better surveillance of capital flows, stronger financial safety nets and greater use of special drawing rights, said Dominique Strauss-Kahn (left), head of the International Monetary Fund, after a central bankers' conference in Zurich, on 11 May. These measures include "wider use of alternative reserve assets, for example in the euro, yen or yuan," which could act as "a safety valve," explained Strauss-Kahn. Another option to lessen dependence on the dollar would be greater use of special drawing rights (SDR), considered more stable. Special drawing rights are an international reserve instrument created by the IMF in 1969 to complement members' existing official reserves. The conference was dominated by the Greek crisis and the euro's difficulties. "I have no doubt that the programme put in place to help Greece will enable the country to solve its problems," insisted Strauss-Kahn. – Europolitics
Dominant Social Theme: There are lots of options when it comes to international finance – and at least two may be emphasized.
Free-Market Analysis: International currencies are much in the news these days (see other article, this issue) and in this article we will contemplate two rhetorical goalposts that the power elite could use to move the world further on down the field toward a single Western international currency administered by one huge private central bank. (Is that their goal – the ultimate dominant social theme? We think it might be).
The first goalpost (or pole) consists of a series of regional currencies (the euro, the gulfo, the amero, etc.) The second could be arranged via the IMF – which has already begun circulating this solution in one form – SDRs, for special drawing rights. If the power elite wants to end up with one currency, it may indeed have in mind something resembling SDRs, according to savvy financial observers.
How could the IMF manipulate these two distinct currency models – assuming of course that its centralizing memes (such as the EU) remain stable? By setting up regional currencies and by floating the SDR as well, one has created both the building blocks for a potential crisis and the potential solution (a one-world currency). This conceptual strategy is known formally as the Hegelian Dialectic, and it is a tool that the power elite uses as part of its larger promotional efforts. In fact, this might explain why the elites are so determined to salvage the euro. Without the euro, and the EU, the elite would be stripped, down the road, of the possibility of creating another phony crisis (disorder), which could result in salvation (order) in the form of the SDR (or something similar).
Do you think this far-fetched, dear reader? For the longest time, we have generally considered the idea that the IMF could foist SDRs on the world to be something of a longshot. But the EU financial crisis (and the sovereign crisis in general) has caused us to take another look. We think in the above suggestion we have discerned a glimmer of what the elite might be contemplating in the future for SDRs, and how they may eventually be positioned.
Now for the part about gold. As we think the elite has muffed the whole EU/central bank/currency thing pretty badly of late, it is fairly possible that one fall-back the elite is contemplating is a new gold standard of some sort. However, since the elite emphatically doesn't want to return to a world of nation states, the powers-that-be would have to find a more globalized play on gold. Gold-backed SDRs might fit the bill.
The idea of a gold-backed SDR has already been floated amongst the powers-that-be, notably by George Soros at the ill-fated Copenhagen climate change talks (or so Google informs us), and more recently by such financial writers as CommodityOnline's Paul Nathan. Here's an excerpt from Nathan's recent article entitled "The Ugly Face of Deflation:"
Many Germans say kick Greece out of the EU for violating their promise to maintain fiscal discipline. Others say Germany itself should drop out of the EU since it is the German people that are being targeted to bail out all the other "PIGS" in the EU. If either one of these alternatives are exercised, we can expect the IMF to be looked to, to save Europe. And it is the American taxpayer that finances the IMF in large amounts. ...
The greatest threat from this crisis is an IMF bailout. However, is not higher taxes that is the real threat, it is the potential of new issuances of SDR's that will breed inflation longer term. Gold may be "mobilized" to back the creation of huge new issuances of SDR's in an attempt to restructure all world debt to buy time. As long as it is assumed that new debt can be created to "cure" the problem of old debt, the world will be digging a deeper and deeper hole for themselves to climb out of.
Just as issuing more debt to cure the problem of too much debt is absurd, so is issuing more paper reserves in the form of SDR's to solve the lack of confidence in paper money. Euro leaders have pledged to support the Euro currency by setting up a huge new fund to buy Euros if it falls. One again, the same principle: create paper to save paper. Policy makers just don't get it! But some do...
For the first time there is actually talk of gold as the new reserve currency. Returning to a gold standard is being debated in some circles. My thoughts on the subject can be found easily by clicking my name at the top of this page under "more articles". The following is from "Are The Fiat And Gold Standards Converging?":
"I am not suggesting that we are returning to the gold standard. But I am suggesting we are moving toward it. Gold has been mobilized. It is moving into the hands of investors and savers all over the world. It is being rediscovered by central banks as a currency of last resort. Gold reserves are being increased by surplus nations. And paper currency is being sold for gold everywhere. Gold as a reserve asset among governments, and a preferred asset among individuals, investors, and institutions, is once again in vogue."
This is pretty interesting stuff (well, to us, anyway). We've always wondered why individual countries like Switzerland, Ireland, Greece and Iceland didn't issue gold-backed currencies. In the case of the PIGS, gold-backed currencies would likely prove most helpful. Instead of providing bail-out money, the IMF might purchase gold on behalf of PIGS and thus help these countries recreate more solvent national currencies.
Of course to even suggest this possibility is to participate in a fairly absurd discussion. The IMF is about as likely to help individual European countries subvert the euro via gold as it is to encourage debtor countries not to honor banking their debts. The IMF is a creature of the power elite, and it will always remain so, in our opinion. But none of this militates against the idea of the IMF backing its OWN currency (SDRs) with gold.
You can see, dear reader, that once we began to contemplate the elite's desperate zeal to keep the euro afloat along with the idea of a gold-backed SDR, the whole thing just kinda clicked. "It's a dialectic at play," we thought (all of us together). "The elite always needs two goalposts to move the ball down the field, and one goalpost would be SDRs and the other would be ever-consolidating regional currencies." Well, we didn't think this exactly, but something like it.
All this, of course, is speculation (though ironically in the past SDRs have been referred to as "paper gold," even though they are as yet unbacked by the yellow metal). And there would certainly be those, especially in the hard money community that would maintain the elite would never voluntarily relink ANY fiat currency to an underlying asset. (They might also point out the IMF has been selling gold of late.) But if the elite grows desperate enough to salvage their memes ... well, who knows?
Conclusion: As we often note (in today's other article, for instance) the power elite is having a good deal of trouble hanging on to what it has. The Internet has seemingly thrown a spanner into their plans, as it is hard to promote those who are increasingly wary of your fear-based manipulations and not, therefore, as suggestible as they would be otherwise. Nonetheless, there must be some reason why the elite continues to move along on two tracks when it comes to a more globalized currency. Is the dialectic (with or without gold) being concocted even now? What would the alternative blogosphere have to say about such a money manipulation? What would the Germans think ... and the rest of Europe ... or Americans facing a consolidated, intercontinental currency other than the dollar? ... In the 21st century – it would seem – there are as many questions as answers.
Posted by Weeble on 07/23/10 11:00 PM
From Zerohedge today 7/23/10.
Written by Gordon T Long (Tipping Points_
Click to view link
With the use of the SDR 'currency', central bankers can compound fractional reserve lending.
IT'S ALREADY HAPPENING
It is my view this process is already well along. The following Bloomberg global money supply growth chart graphically shows this. As the circles indicate, once again money is flowing into the pipeline or at least into global bank reserves.
Posted by F. Beard on 05/16/10 11:27 PM
You're welcome. I'm kinda lazy with product research but when a corporation abuses my trust, I remember. Speaking of reputation this came to mind:
"A good name is to be more desired than great wealth, Favor is better than silver and gold." Proverbs 22:1
Posted by Weeble on 05/16/10 07:51 PM
Good job. You have me convinced. I began to think about the hassle of researching a stock before accepting it as payment.
But then I thought of how much of a hassle it is to check my food for high fructose corn syrup, aspartame, hydrogenated vegetable oil, etc.; checking a stock out would be the same.
I would develop a blacklist of stocks or foods that have already been struck off my list, therefore the hassle would be minimized.
Posted by F. Beard on 05/16/10 03:34 AM
"You would have to trust or believe that the issuer of the common stock was not diluting the shares." Weeble
[Second attempt; 1st one got lost in the either?]
Of course, so it would be in the interest of the issuer to be transparent in its dealings. The usual laws against fraud would be enforced.
Posted by F. Beard on 05/16/10 02:22 AM
"You would have to trust or believe that the issuer of the common stock was not diluting the shares. " Weeble
Well, under liberty, I could refuse to accept any common stock that I did not believe was backed by good, unencumbered assets. Transparency would be an absolute necessity for a common stock money to gain market acceptance. The usual laws against fraud would be enforced, of course. Also, once one accepts a piece of common stock money then he becomes a part owner of the corporation who may vote to limit further issuance OR to issue more to buy a profitable asset. In addition, since common stock could be created without limit (yet with both negative and positive feedback via the shareholder voters) no borrowing or lending is required as would be the case with gold. This is vitally important since it precludes a boom-bust cycle.
Posted by Weeble on 05/15/10 10:15 PM
You would have to trust or believe that the issuer of the common stock was not diluting the shares. This is not easily done, unless you trust or believe the auditor.
Gold, on the other hand is easier. If it has been clipped, er, you know it. If it has been faked, you could bend it, or chomp on it, or hold a strong magnet close to it. Tungsten has a weak magnetic attraction, so the magnet has to be strong.
This site gives you some tips:
Click to view link
Paper anything, bad. Gold, silver, barter, good.
Posted by F. Beard on 05/15/10 05:34 PM
"OK. Let's get to a point where there is a free-marketplace for money and then we'll see. " The Daily Bell
Posted by F. Beard on 05/15/10 05:17 PM
"Here we disagree with you. History has taught us the best money has at least four qualities:" DB
"it is valuable and desirable of itself" DB
Common stock is of course valuable but just pieces of pretty paper as far as intrinsic value is concerned. However, it is title to the unencumbered property of a corporation and conveys voting rights in it.
"it is portable" DB
In electronic form, common stock would be the ultimate in portability.
"it is rare" DB
So is common stock because stock holders don't like stock dilution and can vote against it. However, issuing common stock to buy profitable assets would not actually be dilution of the value of the stock if the purchases were wise.
"it is malleable " DB
I suppose you mean easily divisible? So is common stock or so it easily could be if fractions of a share were allowed.
IMO, the division between common stock and money is an artificial and unnecessary one whose purpose is to allow bankers to loot productive industry. Furthermore since corporations could just buy assets with their common stock, no lending, much less lending at interest would be required. Hence no deflation would be possible. Price inflation would be held in check by the stockholders.
Still, as always, I insist on liberty in money creation, acceptance and rejection. Precious metals would of course have a role to play. But common stock is not mere pieces of paper; it has power and value.
Reply from The Daily Bell
OK. Let's get to a point where there is a free-marketplace for money and then we'll see.
Posted by F. Beard on 05/15/10 03:37 PM
"To paraphrase J.P. Morgan - Gold is Money, nothing else." Dan
You take the word of a banker? Money has been many things in history, sea shells, cigarettes, beads, etc. Gold is merely the most sophisticated of a relatively crude form of money, commodity money. Common stock as money would be much more sophisticated form.
Reply from The Daily Bell
"Common stock as money would be much more sophisticated form."
Here we disagree with you. History has taught us the best money has at least four qualities:
it is valuable and desirable of itself
it is portable
it is rare
it is malleable
Only gold and silver really fit the bill - which is why they have been recognized as money down through the ages - and often used together as the natural ratio between the two detects tampering.
Posted by Dan on 05/15/10 07:43 AM
My concern is if the IMF issued gold backed or partially gold backed SDRs there is nothing in the future that will prevent them from pulling a Nixon, i.e. severe the link between, as in the US, the dollar and gold. If the IMF does that then we will have a fiat based world currency controlled by a few. To paraphrase J.P. Morgan - Gold is Money, nothing else.
Posted by Koo Blimey on 05/15/10 12:54 AM
Koo Blimey, Chalky sez he wants a pint up t'pub. Ah'll join 'im.
Somethin' good 'bout workin' fo' the anti-christ, what
with the free parkin' n' all.
Posted by Weeble on 05/15/10 12:54 AM
Nudge, nudge, wink, wink.
My feelings are that having a gold backed SDR would be untrustworthy. Do you think anyone would believe there was any gold in the IMF vault? The only time I hear about Fort Knox is from "Tom and Jerry" and "Pinky And The Brain."
I have the sneaking suspicion that India and China are loading up on gold, so they can perform a reverse alchemic trick and turn it into gold plated tungsten, and steal the gold for their upload fee to the Boss Fella. Remember, governments are just front men for the Power Elite.
They want to jump from one lily pad to another, as the first is sinking fast. Time and fiat money are on a logarithmic scale and they need to get to the end game sooner, rather than later. Time has always been their friend, but not now, with the speed of net communication and the Great Awakening.
Courtesy of Wikipaedia
The term debit comes from Middle French debet from Latin debitum "that which is owed" (the neuter past participle of debere "to owe"). Debit is abbreviated to Dr (for debtor). The term credit comes from the Latin creditum meaning "that which is entrusted or loaned" from the past participle of credere "to trust or entrust". Credit is abbreviated to Cr (for creditor).
Trust is the key word here. Since the invention of the TRAP and the Euro TRAP (yes, I meant it), the masses are rapidly losing trust in their so called leaders. The SuperDollaR (SDR) will not go over well with the masses; and especially with the major governments, as their presses will be tied behind their backs. The IMF hit men will be looking at their M3 like a CCTV camera looking at a garbage can in London.
Getting back to some actual SDR facts, Lord Christopher Monckton (you should interview that dude), exposed as best he could, the goings on at COP 15 last fall. As soon as the African nations got wind there was a core 12 counties (yes, I meant it) on the inside track, and the IMF was to administer the massive funds flow from the 1st world counties as payday loans to the 3rd world counties, they would have none of it. If COP 15 had been successful, the IMF would have been the clearing house for the worlds currencies. They would have quickly put the SDR in place instead of a pesky exchange rate to keep it simple. COP 15 failed, so they activated plan B, or the 2nd goalpost you spoke about, which is to exacerbate the crisis by increasing the withholding of lending for a more rapid implosion.
You can see the strength of the SDR compared to most currencies at the IMF site itself:
Click to view link
Check out your County. This is the devaluation you would experience if they were to peg this weekend over a crisis that happened while we were all sleeping. (Ironically true).
These SDRs are like my wife looking at my arm muscles, saying, ooh, youre sooo strong! Not bad for a fake mother currency, backed by fake sovereign currencies.
Begone, Euro! Begone, USD! Begone, UK pound! The kings currency is dead; long live the kings currency!
Alternative home grown currencies such as gold and silver coins and barter will take hold as the tax levels increase worldwide. The government is the last to know when a small scale black market takes away their Tribute. Organized black market is not such a good idea. You do not broadcast such a thing for obvious reasons! If the SDR is put in place, then we will still be taxed more, and the alternative currencies will still take hold. The Power Elite cannot win our trust back once it has been destroyed.
Wealth is created by productive people, and we all want to keep it, so we can use it wisely. Not give it to the Power Elite, so they can use it unwisely. If I get to keep my whole paycheque, I want to save up to buy 3 Fiats and have a smash up derby with my friends. Hey DB, you can come too!
Posted by Seen2much on 05/15/10 12:19 AM
Hmmm.. Who's to be trusted? Can we really believe that the same thieves who released the hounds of economic chaos upon us can be trusted to tell us the truth about what gold is where? Mining records should show the truth, but once you start looking at the potential and even necessity of conspiracy by the power elite... Well, then EVERYTHING is suspect. That tin foil hat can get pretty itchy...
As far as what the power elite have control over, I think they have lost control, and like a petulant child that's been playing with matches, things have gotten out of hand.
A powerful tyrant once said: "Never ascribe to malice that which is better explained by incompetence.".. I think much of what is unfolding can be filed under this thought.
My greatest fear is that gold may not be allowed to shine it's Liberty giving radiance over our futures... And instead, we are all carried by our "betters" into the darkness of war. In war the preferred metal of exchange is lead jacketed in copper, traded between you and your fellow man at high velocity...
Posted by F. Beard on 05/14/10 08:00 PM
""Sometimes the law defends plunder and participates in it. Sometimes the law places the whole apparatus of judges, police, prisons and gendarmes at the service of the plunderers, and treats the victim - when he defends himself - as a criminal."
- Frederic Bastiat " via DB
Yep. Try using an alternative money to pay your workers and see if an IRS swat team does not pay you a visit.
Reply from The Daily Bell
It will have to be an elite-blessed alternative currency.
Posted by F. Beard on 05/14/10 07:42 PM
Speaking of the IMF:
'"If public debt is not lowered to pre-crisis levels, potential growth in advanced economies could decline by over half a per cent annually, a very sizable effect when cumulated over several years." ' from Click to view link
Typical banker tripe. Bankers are allowed to destroy economies with their boom-bust cycle via government privilege but governments should not alleviate the pain of the victims?!
Hey IMF, I have news for you. Money does not require debt. May the world learn that lesson and reduce you to insignificance.
Posted by Beverlee on 05/14/10 04:09 PM
DB: We would like to see a market-based money solution, one not mandated by the state.
The power elite is not stupid. Perhaps it too has realized the power of the internet which is just beginning to find its legs. Weimar is not lost on them either. Perhaps the potential IMF gold-backed financial instruments are merely the fall-back position (soon to become primary) that will be in place when economies collapse and people search for market-based currencies.
The power elite will already have a product in place, will insist on monopolistic power, and will remain in control for the next 150 years: "the IMF gold-backed special drawing right." Even if political units fall for it, as long as gold truly backs up the SDRs (and that would involve an audit), it will be harder for the PE to transform us back into mindless sucklings in our lifetimes. But, to be sure, our great-grand children will be gasping for breath trying to survive the ploys of the PE offspring.
Government must be forever divorced from currency regulation. Then we will be free.
Reply from The Daily Bell
"Government must be forever divorced from currency regulation. Then we will be free."
We agree with this.
Posted by Jessiekay on 05/14/10 03:17 PM
All these marvelous plans talk about GOLD!
And nobody is able, neither the IMF itself, to prove that the tons of gold are available for this purpose.
If you refer to all the articles GATA (Gold Anti-Trust Action) Committee has been writing about gold and silver, it comes to the question of the real existence of these supposedly huge mountains of precious metal to be put in guarantee of any kind of drawing rights!
I think the reality is quite different of what we have been told in the recent past and you can consult freely all the comments of GATA following:
Click to view link
PS: I am not a member of the GATA committee, just a simple reader!
Reply from The Daily Bell
Here's our most recent interview with Bill Murphy of GATA.
Click to view link
Posted by Jeff Wright on 05/14/10 02:24 PM
The big question I have about gold-backed SDRs: Where does the IMF come up with enough actual metal reserves to make "gold-backed" have any real meaning?
Does anyone think they can replace the crashing fiat system with a fractional metal system having, at most, 15% backing? Even obtaining the 15% is going to be a stretch when one looks at the distribution of total above-ground inventory. 50 years ago that distribution might have allowed it. Not today.
I, for one, do not think there's a hope-in-hell of implementing a supra-national, gold-backed anything.
Reply from The Daily Bell
Maybe it wouldn't have to be fully-backed to have an impact.
Posted by Jim Welsh on 05/14/10 01:54 PM
I think I will return to my closet and forge some more of my man-made diamonds. At least I'll have plenty of currency before someone catches on!
Posted by F. Beard on 05/14/10 09:23 AM
"We would like to see a market-based money solution, one not mandated by the state." The DB
Indeed. Must every problem be solved by appealing to government guns, tasers, fines and prisons? A rule of thumb: Good ideas do not have to be forced on others and bad ideas should not not be.