Currency Wars_ The Making of the Next Global Crisis - James Rickards [121]
In a paper entitled “Enhancing International Monetary Stability—a Role for the SDR?,” the IMF presented a blueprint for the creation of a liquid SDR bond market, the antecedent to replacing the dollar as the global reserve currency with SDRs. The IMF’s paper identifies both potential issuers of SDR bonds, including the World Bank and regional development banks, and potential buyers, including sovereign wealth funds and global corporations. The study contains recommended maturity structures and pricing mechanisms, as well as detailed diagrams for the clearance, settlement and financing of such bonds. Suggestions are made to change the SDR basket over time so as to enhance the weight of the Chinese yuan and to diminish the weight of the dollar.
The IMF study is optimistic about the speed and stealth with which this could be accomplished. “Experience . . . suggests the process may be relatively fast and need not involve significant public support,” it states. And the IMF took no pains to disguise its intentions, explaining, “These securities could constitute an embryo of global currency.” The paper also lays out a schedule for SDR money printing, suggesting that $200 billion per year of new SDR issuance would get the global currency off to a good start.
Private organizations and scholars have also contributed to this debate. One group of multinational economists and central bankers, guided by Nobelist Joseph Stiglitz, has suggested that SDRs could be issued to IMF member countries and then deposited back with the IMF to fund its lending programs. This would accelerate the IMF’s ascension to the role of global central bank even more quickly than the IMF itself has proposed. Adding the role of depository to the already implemented roles of currency issuer and lender of last resort would make the IMF a global central bank in all but name. The rise of a global central bank and a world currency would leave the U.S. dollar and the Federal Reserve in a subordinate position by default.
Here in all its technical IMF-speak glory is the global power elite’s answer to the currency wars and the potential collapse of the dollar. Triffin’s dilemma would be solved once and for all, because no longer would a single country bear the burden of providing global liquidity. Now money could be printed globally, unconstrained by the balance of trade of the leading reserve currency issuer.
Best of all, from the IMF’s perspective, there would be no democratic oversight or accountability on its money printing operations. While the IMF was drawing up its plans for a global SDR currency, it also proposed more than doubling the IMF voting rights of Communist China at the expense of democratic members such as France, the United Kingdom and the Netherlands, among others. Interestingly, these new voting arrangements made the top twenty members of the IMF more closely resemble the list of the twenty nations in the G20. The two groups of twenty are not quite identical but they are converging quickly.
The IMF is explicit in its antidemocratic leanings, what it calls “political considerations.” The SDR blueprint calls for the appointment of “an advisory board of eminent experts” to provide direction on the amount of money printing in the new SDR system. Perhaps these “eminent experts” would be selected from among the same economists and central bankers who led the international monetary system to the brink of destruction in 2008. In any case, they would be selected without the public hearings and press scrutiny that come in democratic societies and would be able to operate in secret once appointed.
John Maynard Keynes famously