IMF Plotting Gold-Backed SDRs?
By Staff News & Analysis - May 14, 2010

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?

After Thoughts

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.

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