G20 Meeting and Special Drawing Rights Potential DevelopmentsPolitics / Global Financial System Mar 26, 2009 - 07:35 PM GMT
There have been several news reports this past week on the upcoming G20 meeting in London on April 2nd. Perhaps the Chinese and Russians have been the most noteworthy in their plans for a new world reserve currency to replace the dollar. The Russians have had a focus on a basket of currencies or regional currencies which would open the door for the Russian ruble to gain a par status with the dollar and other key currencies.
For a while, it looked like the Chinese would back the Russian approach. However, as late as March 24, 2009, a report from London's Financial Times offered more details on something the Chinese broached lightly a few days ago on a push for a resurrection and new role of power for the Special Drawing Rights.
This Financial Times article, by Jamil Anderlini, was on “China calls for new reserve currency.” The article quoted Zhou Xiaochuan, China's central bank's governor. He wants the new reserve currency to be controlled by the International Monetary Fund. While much of the former talk has been on regional currencies and/or basket of currencies, the Chinese proposal is for a powerful new role for the Special Drawing Rights (SDR). These SDRs are now based on four currencies-the US dollar, the Japanese yen, the euro and the British pound. They are used largely as a unit of account by the IMF and other international organizations.
China wants to expand the basket of currencies forming the basis of the SDR valuation. China wants the valuation to include all major currencies (presumably to include the Chinese yuan and the Russian ruble). China also wants a settlement system between the SDRs and other currencies so that they can be freely used in international trade and financial transactions. The SDRs would be managed by the IMF and would gradually replace existing reserve currencies.
The Times quoted Mr. Zhou as saying that the proposal would require “extraordinary political vision and courage.” He also acknowledged a debt to John Maynard Keynes, who made a similar suggestion in the 1940s. As is known by many people, Keynes was the father of deficit spending and the demise of gold.
Backdrop on the SDRs
These SDRs came into usage in 1969. It was envisioned then that they would become the paper international currency used in international trade and especially in the settlement of accounts. But since the scheme involved a give away of these SDRs to key central banks (which are owned by the huge international banks), the plan never really was acceptable around the world. By the 1970s, dissatisfaction over the SDRs set in to limit their use and acceptance globally.
Wikipedia gives this backdrop on the purpose and current use of the SDRs : “SDRs are used as a unit of account by the IMF and several other international organizations. A few countries peg their currencies against SDRs, and it is also used to denominate some private international financial instruments. For example, the Warsaw convention, which regulates liability for international carriage of persons, luggage or goods by air uses SDRs to value the maximum liability of the carrier…
“SDRs were originally created to replace Gold and Silver in large international transactions. Being that under a strict (international) gold standard, the quantity of gold worldwide is relatively fixed, and the economies of all participating IMF members as an aggregate are growing, a perceived need arose to increase the supply of the basic unit or standard proportionately. Thus SDRs, or ‘paper gold', are credits that nations with balance of trade surpluses can 'draw' upon nations with balance of trade deficits.
“So-called ‘paper gold' is little more than an accounting transaction within a ledger of accounts, which eliminates the logistical and security problems of shipping gold back and forth across borders to settle national accounts.
“Joseph Stiglitz has argued that usage by central banks of SDRs as foreign exchange reserve could be viewed as the prelude to the creation of a single world currency. It must be understood that Gold and Silver have filled the role as global currencies for several thousand years of recorded history…Support for SDRs in the global finance system has historically been very weak, as other fiat currencies have largely supplanted the SDR as value storage mechanisms…
“The value of one SDR in terms of United States dollars is determined daily by the IMF, based on the exchange rates of the currencies making up the basket, as quoted at noon at the London market. (If the London market is closed, New York market rates are used; if both markets are closed, European Central Bank reference rates are used.)”
My Analysis of this latest development from China
These articles on Chinese proposals for the use of the fiat, paper SDRs as a new global reserve currency would please the plutocratic international bankers. This move would allow them a golden opportunity to print fiat paper money in huge quantities to flood the world. We can be sure that the fat cats would love to have a new paper world currency in their greedy little hands. Since they already control the IMF and most world central banks, such a new global currency would definitely fit into their plans for world rule.
For sure, this adventure would put the Western plutocrats into even more of a world ruling posture. It's hard for me to fathom that the Chinese would willingly give up any hope of having financial independence from the international bankers in the Christian West. It looks like lessons from history would sink in on the Chinese of how the fat cat money masters in Europe exercised hegemony over China for ages before the Communist came to power in the late1940s and took over control of China. The push for Western control was the story behind the British seizure of Hong Kong and the British-Chinese Opium wars in the 1830s.
As late as 1900, plutocrats from Europe were still trying to control China. This conflict set the stage for a story and even a Charlton Heston movie on “55 Days at Peking.” If China is floating a resurrection of SDRs, it certainly plays into the hands of the plutocratic masters running the financial markets. It's hard to imagine why the Chinese would even entertain this idea. The fact that she is floating it would suggest that some back room deal has been made by the plutocrats and the Chinese Communist leadership.
As a minimum, any carry forward of this scheme would mean a serious dent in the future role of gold and a boost up for world government and a new world paper currency. If this plan reaches fruition, we may see a fantastic collapse in the price of gold and other precious metals.
Back issues of the Goldsmiths, by the editor of the Analysis of News, can be accessed from a Google or Yahoo search engine by typing in “R. D. Bradshaw” Goldsmiths. Several hundred web sites can be found with the back issues and with translations to Spanish, Italian, German, Chinese and other foreign languages. Goldseek.com has most of the back issues of the Goldsmiths. Finally, the “Archives-Goldsmiths” of this website ( www.analysis-news.com ) has all of the Goldsmith articles issued to date.
Besides the revelations contained in the Goldsmiths' articles, the work of the plutocratic financial market manipulators to conspiratorially manipulate and control the financial markets (to make more profits and install a world government under their management) is also addressed at length in the periodic analysis of the news and in other articles produced at www.analysis-news.com . This website has an article of interest to any person interested in understanding the market Manipulators. It is the Hidden Secret of the Manipulators, why they succeed and how to follow their manipulations.
Readers of the above articles are invited to visit www.analysis-news.com and become a subscriber to regularly read some of the material from the world of information which will further reveal how extensive the manipulation, control and dishonesty realities are in the financial, currency and commodity markets, not only in the US but indeed around the world. To go to the home page of this website, please click at the link here: www.analysis-news.com .
Robert Bradshaw is a retired CPA and editor of Analysis of News at www.Analysis-News.com.
© 2009 Copyright Robert Bradshaw - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
© 2005-2013 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.