IMF's Planned Global Currency Reset

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AgeOfJefferson
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IMF's Planned Global Currency Reset

Dear All,

There has been limited discussion on the Currency Reset proposed by the IMF which would appear to be planned for as early as July 20th, 2014.

I've written an article (see below) which contains some background information as well as relevant links and videos (including Christine Lagarde's cryptic message to the world's elites regarding this event).

The topic of a Global Currency Reset has been discussed by the experts Jim Rickards (in his latest book "The Death of Money") and Willem Middelkoop (with his book "The Big Reset").

I would love to hear your thoughts on what you think may happen with regards to a Global Currency Reset.

Thank you.

Dan Fournier

Here is my article:

The IMF’s Big Currency Reset – scheduled for July 20th

By Dan Fournier, July 13, 2014

Mark your calendars for July 20th, as some would speculate that it could be t-h-e date on which the doomed fiat currencies of the world are bound to meet their next savior.

Although it’s been quite sporadic and off the radar, there has been talk that the IMF (International Monetary Fund) may introduce either the idea of having a new ‘Global Reserve Currency’ or actually launch it.

Christine Lagarde, the Managing Director of the IMF, has even hinted at this last January in her ‘cryptic’ message to members of The National Press Club.

IMF & SDR Backgrounder:

The IMF currently has a quasi-currency called an SDR (Special Drawing Rights). It’s essentially a weighted “basket” of currencies (mostly the U.S. dollar, the euro, the British pound, and the Japanese yen) bundled together into one SDR unit. The weighted distributions (i.e., the SDR currency value) are updated daily and can be seen the IMF’s website.

SDRs were essentially created back in the late 1960’s and early 1970s as an emergency response to the U.S. dollar crisis that was taking place when President Nixon took the U.S. off the gold standard. At the time, confidence in the dollar was eroding rapidly with the likes of France and Switzerland dumping their dollars for gold.

The IMF feared that a global liquidity crunch would ensue and thus decided to create the SDR “fiat” currency out of thin air (as do all central banks in the world with their paper monies). They hoped that the new monetary instrument would alleviate the problem, which it actually did.

Global Bailout 2.0, IMF–Style:

Since history tends to repeat itself (“We learn from history that we learn nothing from history." – George Bernard Shaw), the IMF – which essentially acts as a global central bank – has been pondering a new [Ponzi?] scheme by which it can profit (by looting and plundering) from depressed countries’ financial mismanagement and misfortunes.

We needn’t look far back in the rear view mirror of history to have noticed the bailouts of the PIGS (Portugal, Italy, Greece, and Spain). The IMF has made substantial loans to these countries to bail them out of their excessive debt and deficit burdens, at a steep cost to their citizens of course. 

We all heard of the nightmarish austerity terms that were shoved down Greece’s throat by the “Troika” (EU, ECB, & IMF) a few years back. To this day, Greece still needs to take that bitter medicine. Greece’s only chance at salvation would have been to drop out of the euro and return to their previous currency – the Drachma. Yet that could have caused a major calamity for the Eurozone since other countries in dire straits may have followed suit. They were told that it was absolutely out of the question.

Even worse, last year we got a taste of these organizations’ pure evilness when the EU and IMF packaged a “bail-in” (i.e., confiscation/theft of depositor funds of Cyprus’ citizens and businesses) deal back in April, 2013 to “ease” the country of its debts.  Although this was touted as a “one-off” event by these global banksters, in fact it was a “test-run”, template, or model for future looting to come. Since then, many countries – including the U.S., Canada, Australia, New Zealand, etc. – have since introduced legislation allowing future bail-ins of their citizen’s bank accounts, much to the unawareness of its citizenry.

Relevant Links about bail-ins:

The next country to fall victim to the prying clutches of the IMF was the Ukraine. First, the country fell victim to a botched coup orchestrated by the U.S. diplomat Victoria Nuland and the other neo-conservatives of the Obama administration. Now, the ensuing civil war in the country is underway as a backdrop to a new cold war brewing between the U.S. and Russia.

Relevant Links about the botched coup:

Which country will be next for the U.S. and IMF to plunder? My feeling is that at this juncture, it won’t be an individual country since the world is starting to catch on. Rather, it will be a more sneaky and indirect form of theft and plundering – via the proposed new Global Reserve Currency, be it a revamped SDR or similar worthless fiat instrument. Let’s explore some possibilities.

Possible options for a new Global Reserve Currency:

Option #1 – The IMF introduces a ‘Multi-Currency SDR’ including the Renminbi

It is difficult to say which new currencies would be added to the current four (dollar, euro, pound, and yen) but one could easily assume that the Chinese Renminbi would be one of them, possibly along with the Indian rupee and the Russian ruble. Since China is a few years away from the internationalization of the Renminbi, they could benefit in participating in this new SDR since it does so much trade with many member countries of the IMF.

This option would also lend itself to an additional means by which the IMF and the U.S. could continue their creation of debt. In other words, an SDR bond market would likely be promoted (to replace the dying US Treasury market). SDR bonds would then replace Treasurys as the liquidity ‘instrument du jour’ in global finance.

Option #2 – The IMF introduces a ‘Gold-Backed SDR’

As countries around the world are cognizant that the central banks of the four most important currencies are all devaluating their currencies by simultaneously printing gigantic and unprecedented amounts of money, they would likely ask for an SDR that is actually backed with something that has value.  After all, these countries do have the bulk of the world’s gold reserves (at least according to the World Gold Council, but for which we know is absolutely not the case).

But the problem with this strategy is that there are simply too many units of these currencies in existence. It would certainly be impossible to completely back it with gold. They could only partially back it, perhaps with only less than 10% gold. History has shown that partial backing of a currency with precious metals never works; it has only worked with 100% backing.

Option #3 – The IMF maintains the status quo (does nothing)

The underlying argument supporting this option could lie in the fact that the IMF is, after all, a puppet organization of the U.S. In fact, the United States has veto power over all important actions by the IMF. This means that even if the IMF and its executive members opt for introducing a new SDR (before the next crisis hits), the U.S. can tell them no.

Which of these options do you think is more likely?  Option #3 is a strong contender; American policy makers and central bank executives are too ignorant and think that they can continue to create new dollars for years to come.  It’s the same for the unelected technocrats in Europe with the euro. In other words, they will want to keep their Ponzi schemes going on for as long as possible. The risk, however, is that a sudden and quick dollar collapse would leave them completely naked with no way out, essentially stripping liquidity from the global financial markets and setting the stage for a major depression.

Many would argue that Option #2 is better. But there is one card that could easily throw a monkey wrench into the mix. That is, official gold reserves held by the member countries would need to be properly updated and restated. It is currently estimated that China has somewhere between 4 and 6 thousand tons (as opposed to the “official” World Gold Council figure of just over 1 thousand tons). Once China would officially restate its reserves, this would cause a major shock to the dollar and the US Treasury market. And this would obviously hurt China greatly since it is the single largest holder of Treasurys (with over 1 Trillion $U.S.) outside of the U.S. Moreover, the U.S. would also need to restate its reserves; but since it is not allowing an audit of the Federal Reserve’s gold holdings, this would be a problem. Furthermore, there is substantial evidence that they have dumped most of their physical gold on the market to suppress the price of gold (in order to prop up the dollar). The bulk of the gold from New York and London has flowed to Eastern Asia in the last few years.

Major conundrums for both the U.S. and China

For the U.S., an SDR could provide a really good safety net.  But the reality of it losing its hegemonic superpower status as the global financial leader with the world’s reserve currency may prove too much for it to give up. A world in which the U.S. dollar is no longer the world’s reserve currency would be disastrous for the country, as it would lead to further and very painful economic decay.

Will China go for it? On the one hand it has the largest U.S. Treasury reserves for which it doesn’t want to lose its investment. But on the flip side, it could represent a means by which it could partially internationalize the RMB before it completes the process several years down the road.  That doesn’t mean China isn’t already trying to accelerate the process. Although it has been kept fairly quiet, they are trying to find more Asian partners with deep pockets along the Silk Road to fund its own IMF style bank. The AIIB, or ‘Asian Infrastructure Investment Bank’ is a development bank that is currently proposed by China as an alternative to the IMF. After all, Asian (and Middle-Eastern) countries have very little influence and receive few benefits from the IMF. So why not create their own central bank?

So what will it be?

Will the IMF really instigate a Global Currency Reset on July 20th? It is certainly possible although one would have to think that the green light would first have to be given from Washington. Dealing with crises in the past has usually been reactive in nature. Thus, being proactive could prove much more beneficial, as another (most likely larger) global financial crisis would be utterly destructive for an already fragile global economy.

But why do it now? Why on July 20th? The date could have been chosen based on the numerology of the number "7" as suggested by Christine Lagarde in her January press conference (i.e. the corresponding numerology of 07/20/2014 is 0+7+2+0+2+0+1+4 = 16 which 1 + 6 = 7); or it could imply that the G20 group of countries would be in agreement with the Global Currency Reset. July 20th also falls on a Sunday. This kind of currency reset could only happen on the weekend when markets are closed. In practical terms, this could give time for the NYSE Euronext (the parent company and operator of several major market exchanges in North America and Europe) to close for several days as would be needed to avert panic selling in the markets; it would also give them time to restate and rebalance certain accounts in the new SDR terms.

It will be interested to see what happens on July 20th. Perhaps nothing will hit the news headlines and people will go along with their daily routines. This could actually be the scariest scenario of all, as we’ll be left in the dark as to the day the next currency crisis will hit us all.  When it does, will the world be prepared?

Thetallestmanonearth's picture
Thetallestmanonearth
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yikes

I have a flight to Chicago on the 21st coming back at the end of that week.  If a major reset happens I would sure prefer to be at home to watch the reaction of the markets from the safety of my little homestead.  Here's to crossing my fingers that they decide to wait another month or two....

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Jim H
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But why?

Problem - Reaction - Solution.  Where is the problem?  We have not had the currency crisis yet amongst the primary Western nations.  Why would this happen now?  If anything, we are on the cusp of a derivatives daisy chain crisis - how would SDR's help fix that?  You have really not made a case other than citing Legarde's (admittedly strange) references to numerology. 

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AgeOfJefferson
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Because the dollar could crash (i.e. lose 30-40% of its value)

Jim,

Thanks for your reply. The case for a reset (or new "Bretton Woods" type monetary system) is clear for those who see what is currently happening with the petro dollar around the world. All previous 3 currency resets that have taken place in the last 100 years have occurred out of crises. Most likely (here's where I mostly agree with you) it will be the same the next time. But the IMF has suggested several times in the last two years that a preemptive reset would be wise (these documents are well hidden in their website but many references have popped up on sites like www.zerohedge.com).

Here are a few other well-known facts to support the case for a currency reset (whether preemptive or reactive) or dollar crash (which I mean a sharp devaluation of 30-40% which would take place over the matter of weeks or months):

a) There is strong evidence to support that Russia, China, Japan, Brazil, et al., have been opting out of the dollar in their bilateral trade agreements and deals (case in point the $800 billion-equivalent deal recently signed between Russia and China);

b) Nobody, yes that's a big NOBODY outside the U.S. is buying US Treasurys anymore (apart from the Fed). You might say that Belgium is, but we all know that their purchases made through Euroclear are through a well-disguised agreement with the Fed. Moreover, this is a clear indication that they are actually NOT tapering QE as they claim.

c) Since 2008-2009 the Fed, their bullion banks (JP Morgan, Goldman Sachs) and other major central banks (read the Bank of England) have been manipulating the "paper" price of gold to keep the dollar propped up. This is not conspiracy theory but rather fact.

d) Most of the gold in Western central banks are there no more and have been leased, hypothecated, re-hypothecated, liquidated, and flowed to East Asia (especially to China, India). Other case in point, Germany never got their gold from the Fed which they have asked for. Moreover, the Fed won't allow it's gold vaults to be audited (they haven't been audited in over 40 years!)

Related articles (factual proof) about the gold flowing out of Western central banks:

- Do Western Banks Have Any Gold Left???

- Part II

- Part III

e) I can provide countless other examples of why the dollar is meeting its demise. You can get daily examples on www.zerohedge.com.

I also agree with you that "we are on the cusp of a derivatives daisy chain crisis". Once the Fed loses its grip on interest rates (read 3%+ on the 10 year Treasury) it will be game over and 80% of those 4 quadrillion dollars in derivatives will kick in leaving the TBTF banks stripped of their bogus assets. As for the SDR's fixing this, I never said it would. Actually, I don't think it would work (especially since the four major currencies are all diluted and printed to oblivion). 

With the article, I am merely trying to get a discussion going about how it actually WOULDN'T work. I have no faith in the IMF, the FED, et al. It's not gonna be pretty! Best to prepare yourselves now. I hope you are not currently in the U.S.; if you are, I would think twice about leaving money in banks!

Take care,

Dan

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Jim H
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Currency reset..

Dan,  you are preaching to the choir.. I most certainly agree with everything you say above.  As Rubino and so many others suggest... the collapse is already baked in.  The only thing I question is the order of things you presented in the opening piece - why would the collapse essentially start with some kind of hand-off of the dollar's role to that of the SDR?  In my mind, elevating the SDR is one possible reaction that the elites may have to a crisis.. but we are not in the crisis quite yet.  We have not even reversed the taper yet.  What specifically makes you think we might actually be there within the next week, other than Legarde's oblique numerology?  That is the crux of my question.     

SDR's are pretty weird things actually;

http://www.imf.org/external/np/exr/facts/sdr.HTM

  The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions. In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other international organizations.

Well.. that clears it up, doesn't it? (sarc). 

I am very much interested in thinking about how a devaluation might unfold, so thank you for the interesting dialogue Dan.  I have linked recently to a piece on Japan.. and there is some conjecture in that piece as to how Yen hyperinflation might start up that could be instructive here;

  http://www.oxford-royale.co.uk/articles/japan-country-crisis-abenomics-s...

How hyperinflation will start in Japan

Image shows a Japanese shopping centre.

How long can Japan remain on the verge of economic collapse?

For what it is worth, here is how I think it will pan out: Japan is only a viable investment destination for as long as the returns offered by the stimulus addicted Nikkei and JGB markets exceed the depreciation in currency relative to the dollar. Once it becomes clear that there is no real return in the market worth the risk premium, money will start to drain out. Japanese consumers will, at this point, start to lose confidence in quantitative easing as its headline impact is supposed to be on asset prices and asset prices are falling; they will then start to spend, quickly exchanging depreciating yen for tangible products. At this point, the situation will tip in to hyperinflation, and all economic hell will break loose not just in Japan but in all the major world economies sold the snake oil of quantitative easing.

All actions have consequences. The hangover analogy is over-done, but true. In a bid to avoid the hangover of our prior excess in 2007/8, the world’s economies have been on a binge. Not only has the binge made them very little better in the short term, it is compounding the problems we will eventually face in the long-term. The refusal to face the consequences of mis-pricing risk in 2007/8 has meant that we have completely corrupted the market pricing mechanism now. This cannot go on forever, and when the hangover hits, Japan will feel it first.

In our case, I suppose a stock market crash could drive the US 10 yr. back down to 1.5%.  In the case of Japan.. there ain't much lower the yield can go.   

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AgeOfJefferson
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Anti-Dollar Alliance Prepares Launch of BRICS Bank

And so it accelerates!

Anti-Dollar Alliance Prepares Launch of BRICS Bank (ZeroHedge article)

http://www.zerohedge.com/news/2014-07-14/anti-dollar-alliance-prepares-launch-brics-bank

Let's see what kind of announcements come out in the next few days from the BRICS Summit.

Things are definitely heating up!

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Thetallestmanonearth
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Numerology

This numerology stuff is cracking me up.  If there's anything to it I'll be really surprised, but it's interesting to see people starting to get somewhat mystical about the markets since rational thought is no longer a useful lense to understand what is happening. 

To throw a little fuel on the silly fire, I just saw this regarding the new brics bank:

"The countries’ finance ministers signed the memorandum of understanding in Fortaleza, Brazil on Tuesday, the first day of the BRICS 6th summit."

1 + 6 = 7.  Coincidence?  I think not! /sarc

http://rt.com/business/173008-brics-bank-currency-pool/

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AgeOfJefferson
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BRICS establish their own $100bn bank

As anticipated the BRICS leaders came through with a stellar move by creating their own BRICS Development Bank with over $100bn and more funds to come.

Fed up with the lack of respect and recognition by the IMF as per the following statement:

We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund (IMF) reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness.

the BRICS took the matter into their own hands, showing that a new sheriff has arrived in town.

Here are a few relevant links:

- ZeroHedge article: BRICS Announce $100 Billion Reserve To Bypass Fed, Developed World Central Banks

- RT.com article: BRICS establish $100bn bank and currency pool to cut out Western dominance

- Full Press Release and Agreement Treaty: Treaty for the Establishment of a BRICS Contingent Reserve Arrangement – Fortaleza, July 15

This is what we call genuine cooperation folks, not using coercion, threats, blackmail or bullying like the U.S. and IMF does. The BRICS will also be helping many other nations get involved.

Undoubtedly this is going to be a HUGE BLOW to the dollar!

IMF, "check to the king", your move.

 

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Karen Hudes
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An end to the Federal Reserve Note

The three options mentioned in this article are not exhaustive.  What is happening is that the Federal Reserve Notes are being replaced by the uncut US dollars on deposit in Union Bank of Switzerland, issued by the Treasury, and backed by the gold in the Global Debt Facility.  This is on an interim basis until the gold currency and aurum can be minted.  The other paper fractional reserve fiat currencies are also being replaced.  https://s3.amazonaws.com/khudes/Twitter8.5.14.pdf

 

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james_knight_chaucer
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Karen Hudes wrote: The three
Karen Hudes wrote:

The three options mentioned in this article are not exhaustive.  What is happening is that the Federal Reserve Notes are being replaced by the uncut US dollars on deposit in Union Bank of Switzerland, issued by the Treasury, and backed by the gold in the Global Debt Facility.  This is on an interim basis until the gold currency and aurum can be minted.  The other paper fractional reserve fiat currencies are also being replaced.  https://s3.amazonaws.com/khudes/Twitter8.5.14.pdf

 

Welcome to PP Karen.

I'm surprised no-one else noticed that the famous World Bank Whistleblower had joined. I did find the above a little difficult to understand. Could you expand?

James

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sana5500
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Its plan is not good because

Its plan is not good because it is threat for another currencies .

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Balantrodoch
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Global Currency Reset/RV

Why is noone talking about this if it is as big as people say it is?? How can a program that supposedly will inject Trillions and Trillions of currency into economies around the world, not be discussed???

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