IMF To Print SDR Funny Money

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machinehead's picture
machinehead
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IMF To Print SDR Funny Money

It's B-A-C-C-C-C-K-K-K-K-K-K -- the SDR (Special Drawing Right),
that is. The UK's Telegraph says the IMF is being encouraged to do its
own 'quantitative easing' --

[UK Treasury Secretary] Alistair Darling and senior figures in the US Treasury have been
encouraging the Fund to issue hundreds of billions of dollars worth of
so-called Special Drawing Rights in the coming months as part of its
campaign to prevent the recession from turning into a global
depression.

Should the move, which is up for discussion by the
summit of G20 finance ministers this weekend, be adopted, it will
represent a global equivalent of the Bank of England's plan to pump
extra cash into the UK economy.

Simon Johnson, former chief economist at
the IMF, said: "The principle behind it is that everyone would get
bonus dollars and instead of the Federal Reserve having to print them,
everyone gets them. The objective is to create a windfall of
cash. However if everybody goes out and spends the money it could be
very inflationary."

http://www.telegraph.co.uk/finance/financetopics/recession/4986287/IMF-p...

The best explanation of SDRs is found on the IMF's own website. The
story is frankly unbelievable, in its fraud, deception and chicanery.
But I am not making this up --

The Special Drawing Right (SDR) was created by the IMF in 1969 to
support the Bretton Woods fixed exchange rate system. A country
participating in this system needed official reserves—government or
central bank holdings of gold and widely accepted foreign
currencies—that could be used to purchase the domestic currency in
world foreign exchange markets, as required to maintain its exchange
rate. But the international supply of two key reserve assets—
gold
and the U.S. dollar—proved inadequate for supporting the expansion of
world trade and financial development that was taking place.
Therefore,
the international community decided to create a new international
reserve asset under the auspices of the IMF.

However, only a few years later, the Bretton Woods system collapsed
and the major currencies shifted to a floating exchange rate regime. In
addition, the growth in international capital markets facilitated
borrowing by creditworthy governments. Both of these developments
lessened the need for SDRs.

Today, the SDR has only limited use as a reserve asset, and its main
function is to serve as the unit of account of the IMF and some other
international organizations. 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.

The value of the SDR was initially defined as equivalent to 0.888671
grams of fine gold—which, at the time, was also equivalent to one U.S.
dollar.
After the collapse of the Bretton Woods system in 1973,
however, the SDR was redefined as a basket of currencies, today
consisting of the euro, Japanese yen, pound sterling, and U.S. dollar.
The U.S. dollar-value of the SDR is posted daily
on the IMF's website. It is calculated as the sum of specific amounts
of the four currencies valued in U.S. dollars, on the basis of exchange
rates quoted at noon each day in the London market.

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

Don't you just love the fact that the SDR is 'not a claim on the IMF,' despite the fact that the IMF issues them? An SDR is a piece of paper giving the holder a claim on other, unredeemable pieces of paper -- that is, it's a derivative. And not a very liquid one, since it's accepted nowhere as a currency, and traded on no public market.

Nevertheless, in a world starved for liquidity, even bogus liquidity
in form of dodgy IMF paper may do. It's worth reviewing what happened
the last two times SDRs were handed out --

Decisions to allocate SDRs have been made only twice. The first
allocation was for a total amount of SDR 9.3 billion, distributed in
1970-72. The second allocation was distributed in 1979-81 and brought
the cumulative total of SDR allocations to SDR 21.4 billion.

Discerning readers may recall huge surges of inflation in the
early 1970s and again in the late 1970s to early 1980s -- exactly when
the IMF was dumping helicopter-loads of monetary kerosene (the most inflammable
fuel known to man, as proved in the WTC disaster) onto the raging
inflationary fires. Can the IMF -- the central banksters' bankster --
pull off this masterful feat of timing yet a third time? As the IMF's
pampered tax-free bureaucrats say ... 'YES, WE CAN!'

Money mouthBRING ON THE CLOWN POSSE Money mouth

qxcvr's picture
qxcvr
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Re: IMF To Print SDR Funny Money

Bah!  you beat me to posting this by 37 seconds!!  ha ha ha  Oh well.  Yeah this looks a lot like a 1 world currency then?  I am not super sure I am totally understanding everything behind it but if anyone has any layman's explanations they would be greatly appreciated!  My guess is this will be held steady while all national currencies inflate around it eventually it would be the worlds reserve currency and national currencies would be worthless?  Am I wrong about this?  The derivative aspects of this keep throwing me off.  -Dan

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Re: IMF To Print SDR Funny Money
Quote:

if anyone has any layman's explanations they would be greatly appreciated!

All you need to know is that it's a derivative of already irredeemable paper currencies.  In other words, it's more BS packaged in fancy terms and seemingly complicated schemes designed to hide the fact that it's BS.  Is that layman enough?  ;)

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Re: IMF To Print SDR Funny Money
Patrick Brown wrote:
Quote:

if anyone has any layman's explanations they would be greatly appreciated!

All you need to know is that it's a derivative of already irredeemable paper currencies.  In other words, it's more BS packaged in fancy terms and seemingly complicated schemes designed to hide the fact that it's BS.  Is that layman enough?  ;)

 

Patrick,

I do so enjoy the way you cut quickly to the core!

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Re: IMF To Print SDR Funny Money

Here is one way to look at it, via a simple example. Let's say that
you and I, while hanging out at the strip club, exchange million-dollar
IOUs scribbled on cocktail napkins. If I can discount your IOU at my
bank for a $1 million loan to me, and you can discount my IOU at your
bank for a $1 million loan to yourself, then we have jointly created 2
million dollars, in what is essentially a chain-letter scheme.

The
vast expansion of international reserves during this decade also
resembled a chain-letter scheme. The U.S. trade deficit piled up
dollars in China, which became international reserves for China. China
then recirculated these dollars to the U.S., providing the expanding
volume of debt financing which is essential to keep a Ponzi scheme
expanding. There is no numerical limit, other than the economy's
ability to service the debt, to prevent this cycle from endlessly
repeating.

In recent months, the drastic shrinkage of the U.S.trade deficit
has slowed this runaway transmission belt to a crawl. Reviving trade is
going to take years. If one's objective is to restore the heady
20-percent annual growth of international reserves during the Bubble II years,
then new reserves must arise from some source other than expanding
trade.

Enter the IMF, with its SDRs. SDRs are acceptable as
international reserves, because nearly all countries belong to the IMF
club. SDRs can be created out of thin air as derivatives of existing national
currencies and then handed out to central banks, in a process exactly
like our exchange of cocktail-napkin IOUs. Central banks in turn can
exchange SDRs among themselves to settle trade debts, meaning they can buy real goods
with these thin-air paper derivatives. And that's the very definition
of inflation -- purchasing power created from nothing, with no
corresponding increase in investment or production. So all purchasing
power gets diluted accordingly.

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Re: IMF To Print SDR Funny Money

I wouldn't bet on it.  It's like giving over control of your currency to the IMF (indirectly).  In some sort of fantasy 'theoretical' way this may work but the reality is very different.

 This is just a way to inject quick "cash" (printing $$) without having to print 'real' money.  

 It could work......c'maaaaaaaaaaaaaaaaan!

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Re: IMF To Print SDR Funny Money

Incrementally, western nations are losing their financial sovereignty - which is the greatest power of a nation.  We are becoming nothing but client states for the international bankers.

Ron Paul said  (WND article)

"Since its inception, the Federal Reserve has always operated in the
shadows, without sufficient scrutiny or oversight of its operations,"
he continued.

"The Federal Reserve can enter into agreements with foreign
central banks and foreign governments, and the GAO is prohibited from
auditing or even seeing these agreements. Why should a government –
established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be
allowed to enter into agreements with foreign powers and foreign
banking institutions with no oversight?"

This is a serious allegation that is getting absolutely no MSM attention.  Private banks are negotiating our country's financial future behind closed doors.  It should be readily apparent to all citizens that our government has been over-thrown by those who had previously worked behind the shadows.  

Larry

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Re: IMF To Print SDR Funny Money

Awesome explanation.  Thanks very much for this.  I almost feel like it's not real sometimes because it is so simple and so logically flawed!  I just can't believe it happens and no one knows or talks about it.  It boggles my mind.  I try to tell people around me and they don't understand.  When I finally explain it to them, they simply don't believe me!  It's amazing.

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Re: IMF To Print SDR Funny Money

IMF/SDR Well born in 1949 worked hard payyyed my taxes payyyed for the child/children i made guess that's out of still.Pepole don't want to know the TRUTH about nothing in FACT! TRUTH  is DEAD in my humble opion. Guess i'll go fishin

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Re: IMF To Print SDR Funny Money

Before World War I, most countries were on the gold standard:
currency issue was tied to the gold held in their reserves. A country whose gold
holdings fell, had to shrink its money supply too. Such stiff discipline meant
inflation was close to zero: governments could not print notes at will. But
governments needed huge spending in World War I and so gave up the gold standard
for the printing press. Besides, the bulk of gold production came from Russia
and South Africa, and others refused to be at the mercy of those two countries
for future money supply.

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Re: IMF To Print SDR Funny Money

Think of an SDR as more of an IOU than money.  An SDR is not currency.   I can write all the IOU"s I want but I don't necessarily have to deliver.  I wouldn't spend too much time on this.

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Re: IMF To Print SDR Funny Money
machinehead wrote:

I

Decisions to allocate SDRs have been made only twice. The first allocation was for a total amount of SDR 9.3 billion, distributed in 1970-72. The second allocation was distributed in 1979-81 and brought the cumulative total of SDR allocations to SDR 21.4 billion.

Discerning readers may recall huge surges of inflation in the early 1970s and again in the late 1970s to early 1980s -- exactly when the IMF was dumping helicopter-loads of monetary kerosene (the most inflammable fuel known to man, as proved in the WTC disaster) onto the raging inflationary fires. Can the IMF -- the central banksters' bankster -- pull off this masterful feat of timing yet a third time? As the IMF's pampered tax-free bureaucrats say ... 'YES, WE CAN!'

 

Somebody at the forum praise you for your clear cut answer. But, you're answer is in fact wrongly connecting cause and effect.

As we know from history in the 1970s, the failing confidence over the inflationary ways of Vietnam-era U.S. inflation promoted international pressure to redeem dollars for gold, which could have resulted in a U.S. default. The inception of the SDR was to prevent the Bretton Woods System from collapsing as it could increase world reserves without the usage of dollars, and thereby alleviate the speculative pressure on the U.S. gold stock or equivalently increase confidence in the dollars’ convertibility.

Argument against SDRs you use by comparing them to: dumping helicopter-loads of monetary kerosene onto the raging inflationary fires.

Fact, we do not fear inflation at the moment, even stronger, we would like some inflation. Secondly, in the 1970s en early 1980s both the allocation of SDRs were relatively Now, after the allocation of 250 billion of SDRs there isn't the slightest hint of inflation.

I would argue that SDRs can alleviate some of the current, and possibly future pressures of the International Monetary System. As long as the dollar will be the main provider of liquidity, so will we suffer from the so-called Triffin dilemma and will the system remain inherently unstable.

 

Cheers wouter


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Re: IMF To Print SDR Funny Money

 

Seems like the Financiers of this upside down world are taking notes from "Crystallizing Public Opinion"

"Propaganda is the executive branch of the invisible government"

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funny money

SDRs are funny money.  If i am selling a car and someone trys to pay me with SDRs I will not accept them.  They are not real money.  If I go down to the grocery store and buy a bag of roots they will not accept them.  If I go the the gas station they will not accept them.  If I try to pay my taxes with them the IRS will reject them.  SDRs are worthless.

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Dogs_In_A_Pile
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Not so funny?
dshields wrote:

SDRs are funny money.  If i am selling a car and someone trys to pay me with SDRs I will not accept them.  They are not real money.  If I go down to the grocery store and buy a bag of roots they will not accept them.  If I go the the gas station they will not accept them.  If I try to pay my taxes with them the IRS will reject them.  SDRs are worthless.

dshields -

Haven't seen you post in a while - good to see you back.

I'm not so sure SDRs are worthless - especially if a a country such as India, wants to denominate their currency against SDR "dollars" to purchase oil.  All an SDR represents is a potential claim on the currency of the IMF member state for which they are being exchanged. 

Someone could educate us all with an SDR 101, but I think they are very real.  I did find this which should be a little more than chilling

"The basket of currencies that values the SDR could be re-evaluated sooner than 2015 if the IMF decides that the current basket no longer reflects "the relative importance of currencies in the world’s trading and financial systems."

Like when the dollar blows up?????

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dshields
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Dogs_In_A_Pile
Dogs_In_A_Pile wrote:
dshields wrote:

SDRs are funny money.  If i am selling a car and someone trys to pay me with SDRs I will not accept them.  They are not real money.  If I go down to the grocery store and buy a bag of roots they will not accept them.  If I go the the gas station they will not accept them.  If I try to pay my taxes with them the IRS will reject them.  SDRs are worthless.

dshields -

Haven't seen you post in a while - good to see you back.

I'm not so sure SDRs are worthless - especially if a a country such as India, wants to denominate their currency against SDR "dollars" to purchase oil.  All an SDR represents is a potential claim on the currency of the IMF member state for which they are being exchanged. 

Someone could educate us all with an SDR 101, but I think they are very real.  I did find this which should be a little more than chilling

"The basket of currencies that values the SDR could be re-evaluated sooner than 2015 if the IMF decides that the current basket no longer reflects "the relative importance of currencies in the world’s trading and financial systems."

Like when the dollar blows up?????

Yes'em - I work in the FX industry and today was sell EUR day.  We had a pretty big day.  Not a record but decent.  I have been re-evaluating my position on a lot of thing.  This seems like a good place to spill it.  I had great hopes after the 2010 mid-term election.  It turns out those hopes were misplaced.  Now we are in big trouble.  Glad to be back.

1) The banksters are trying to turn the Greeks into debt slaves - and for what ?  If they get a bailout and the country is looted they still will not be able to pay back what they owe.  They should default.  They should quit talking and default.  The Greeks defaulting will break the banksters backs as it will set a precedent for default.  Iceland defaulted but nobody cared as the numbers were small and Iceland did not have much wealth to extract.  The Greeks have wealth and they just can't wait to get their hands on it.  They want them to sell their telephone company, their parks, resources, buildings, become poor people and pay huge sums to the banks, sell their roads, you name it.  And, in the end, when they are flat on their backs they will still default and have nothing.  They will have to put together a new government and nationalize their stuff to get it back.  They will not have any capital to rebuild.  They will be in a world of hurt.  They would be doing themselves and the world a favor if they default.

2) If the Greeks default then Spain, Portugal, and Italy are more likely to default and not have all their wealth extracted either.  The EUR will cease to exist and things will go back to being normal in Europe.

3) Then it comes to us.  Out of control government spending continues.  It is not going to stop until it is forced to stop because nobody will buy our debt.  When that happens we should default.  We should refuse to allow our wealth to be extracted.  It is just that simple.

Several large defaults will bring about the following:

1) Banks (IMF, ECB, FED, WB, etc.) will stop making crazy loans to countries knowing that they can not pay back the money and then when they do not, then they try to extract their wealth.  That would stop.  Risk would once again be a consideration in lending.  Crazy loans would stop.  People would be forced to live within their means - just like we used to.

2) Nationalize the Fed Res.  Congress passes the law, the president signs it, and we own the Fed Res.  They will not be extracting our wealth.  Uncle Ben and the rest of them will be working for us - as they should have been all along.

3) There would be a massive debt implosion.  For the banks that survive, they will grow and prosper.  The rest will be throw on the trash heap of history.  Crooks going down the drain is not new.

Forget SDRs.  They are worthless.  We have to become self reliant.  No more bailouts.  No more moving toxic private debt to public debt.  This would break the back of the banking cartel and we would have our country back and we would be running it.  I would not much care what the cancel on foreign relations, the UN, the WB, or any of the rest of the one world folks would do that that point.  They would be out of business for good.

Makes me crazy just thinking out it.  Default - the sooner the better.  We get to retain what we have to try to rebuild a new America. 

 

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