The coming evolution of the SDRWell thought out for the most part.. but this is sort of hysterical
This movement is taking the “two steps away from the USD and one step back” approach, and with each turn and shift the USD is being further removed as the primary reserve currency used in global trade. The much promoted death of the dollar in the alternative media is largely based on misinformation and unintended breaks in analytical rationalization as the full scope of the multilateral structure, and the global support from all countries of the world for such a system, has been cleverly hidden behind a script of geopolitical tension, as well as the dual crisis of growing sovereign debt and currency imbalances.
It should be stated that the USD will categorically remain as one of many reserve currencies with it’s position secure in the SDR basket composition, alongside the Chinese renminbi, among others, potentially even the Russian ruble. The path of the Special Drawing Right is being drawn along the transition points of the multilateral structure. These transition points exist as both geopolitical and macro-prudential positions which have been carefully scattered across the global landscape.
If this were to happen, it would mean the federal government would no longer be able to print dollars without permission of the IMF ruling elite ( which the article itself admits will probably be controlled by BRICS..) They may use the SDR and the current world bank as a vehicle ( hijacked) to give them more legitimacy off the bat than they would have just launching a new currency. (But that legitimacy can be easily achieved by backing thier currency with Gold/Silver/Rare Earths, Oil and other commodities that the BRICS have in spades) But SDR or BRICS Bucks makes no difference
If the dollar is pegged to another currency, it is the death of the dollar as the world reserve, and really that equates to the death of the dollar as we have known it. This is like Greece entering the Eurozone - the dollar is no longer a dollar. It is some fraction of a SDR. The Fed can no longer print them willy nilly and loan them out to pay our governments debts. The financial and economic disaster in the United States happens when the US cannot pay its debts... paying in devalued printed dollars is as much a (partial) default as refusing to pay the full amount in an sound currency. If SDRs impose a sound currency, instead of an inflatable one, it will MAKE NO DIFFERENCE. The collapse will simply be deflationary instead of inflationary. Why do you think Greece wants out of the Euro? SO they can control their own monetary policy and print as much as they like!
I don't see our leaders going to deflationary scenario. It will be politically unpopular and will require the govt budgets ( and their opportunities for graft) in half. That means the EBTs don't get charged and riots in the cities. Somehow, I just don't see American politicians willingly going for that, and they will only be allowed to be part of the SDR if they agree to it. Obongo might do it by fiat I suppose, but it would be a death blow at that moment instead of a Kick the Can opportunity. The SDR might prevent the wholesale dumping of US Treasuries abroad and slow the death, but it won't stop it. If America can't print, it can't pay its debts with devalued currency and the US Treasury Bonds become junk ..
The real question is why would the SDR even want the Dollar in its basket with that sort of dynamic? Being part of the SDR means US Bonds are worthless today. Not being part of the Basket means the Dollar dies by inflation tomorrow.
Its over. Go home.
Maybe there is something I am missing. Yes there is a lot of people would like to keep some of the value of the dollars they are holding, but I don't see how the SDR can really help them achieve that - other than be establishing a fixed rate at which they can be converted to the new SDR reserve currency. - a controlled demolition and rebuild of the reserve, instead of the chaotic panic and collapse scenario. But that is what this would be - a meeting of America's creditors to determine how to handle and divide up American assets in its bankruptcy. Where the parties all agree to take 20 cents on the dollar, which they will instantly transfer into the new currency at the established rate. Sure the dollar is part of the mix - only no one is holding them, because they know what comes shortly after, and that looks like Greece.
This guy also has a 10 part series on SDR
http://philosophyofmetrics.com/2014/04/07/sdrs-and-the-new-bretton-woods-part-ten/#more-363(that is part 10, links to the others below)
He seems to have an (unpalatable to me) metaphysical bent that sees human systems and the mind as unalterable and inherently corrupt.. that power corrupts I do not deny, but I still think that the Founders had it right in trying to set up a system in which that damage is limited by the distribution of power over many locations.
In reading this series I came across this -
http://philosophyofmetrics.com/2014/02/18/sdrs-and-the-new-bretton-woods-part-six/Perhaps the United States is negotiating a shared risk instead of sole responsibility for maintaining the dollars SDR composition value on the substitution account as the transition from dollar reserves to SDR reserves takes place.
It is well known by all sides that the dollar cannot collapse without causing the collapse of the new SDR system before it is even fully implemented. The I.M.F. and the U.S. both require this substitution account as a temporary transition point to ensure there is no sudden drop in demand for dollars. The transition has to be slow and orderly....
et’s us go back to the beginning of this essay and think in term of the chess game again. The complexity of this SDR system is not easily understood or explained. It will be sold to the public at large as an extension of what is happening already. In previous essays we have thought in terms of micro and macro patterns. Let us do so again, as we consider that the Quantitative Easing through the Federal Reserve will slowly transition into SDR Quantitative Easing through the International Monetary Fund and accounts balanced through the Bank for International Settlements.
As the Fed tapers QE we can expect that it will mean an increase in SDR QE through the I.M.F. In time this will become more obvious.
and this
http://philosophyofmetrics.com/2014/12/17/the-sdr-purpose-of-brics/In short, the USD system is creating systemic instability and a new multilateral reserve asset is required to balance the international system of finance and create stable liquidity. Some of the methods and components of this transition and new system can be found in the idea of substitution accounts.
The purpose of the substitution accounts is mainly for the exchange of IMF members foreign reserve assets, such as USD, for SDR denominated claims and assets. SDR assets will, at least for a few years, enhance global liquidity and facilitate hedging.
He writes well and clearly and without a lot of bias.. For some reason he seems to think the the current oligarchs have this under such perfect control that this is being planned in advance. Rather I think its entirely reactionary in nature, and I do not think the current crop of Banker etc have real control of anything. He acts as if this isn't East vs West, and that China, Russia is just full-on-onboard with the NWO/COnslidation of power - all while citing human nature.
I can guarantee that China, Russia and the rest of the BRICs are participating not because they are in league with each other, but each sees an opportunity to advance their own status and power. Sure, they are all willing to call it an "international effort" and "consolidation" - so long as they are holding the reigns of that organization.
He is correct that the western nations will loose their sovereignty- but its not so obvious the larger players will, or that the IMF will continue to be used as the vehicle for their ambitions.
He also seems to feel the control of the one world oligarchy is assured. How can you be in control when large sections of the world are engaged in Civil Wars or wars with each other. He suggests the consolidation is inevitable, because it will further the survival possibilities ( mutual defense, food production etc) This will not be the case in Western Nations whose standard of living will drop precipitously. Where large populations of non-contributing Zeros cash government checks that suddenly are gone. Then you see nationalistic movements. Then you see people LEAVING the consolidated Euro.
The EURO was a trial run for this - and it failed!
