Once the central bankers took away the power of the US Treasury to print money and replaced it with a consortium of private banks, we were doomed. They’ve replaced gold as the primary means of international trade between governments and central banks, replacing it with a global system controlled by the International Monetary Fund which created a system of 'Special Drawing Rights’ based on a basket of international currencies linked together and homogenized under a single unit, the dollar being the international reserve currency and the rest of the bulk including the yen, the Euro and British pound sterling, with a sprinkling of other minor currencies in the mix.
They created Standardized Exchange Tables releasing daily conversion and exchange tables to SDRs for almost every other currency on the planet, and greatly increased circulation of SDRs, distributing them to emerging market countries and needy nations off the books, at the expense of the American taxpayer. Rich countries like the U.S. pay into the Special Drawing Rights program, which redistributes “foreign aid” to poorer countries as low-interest loans denominated in SDRs. These loans show up nowhere in the U.S federal budget. In fact, most of the IMF’s funding, and thus its ability to create SDRs, comes from the U.S.
Standard & Poor's issues credit downgrades for countries with immense debt-to-GDP ratios and an inability to prove creditworthiness from exorbitant spending and inflationary habits -Greece, Ireland, Portugal, Spain and Italy to name a few. The U.S. lost its AAA rating; since we are so heavily in debt and deemed a high credit risk; even though, we have still not yet defaulted on a single interest payment on our national debt.
I will paint a scenario for you in the event that we were to default:
If we do default, then we can expect China and other nations to dump their holdings of U.S. dollars, exchanging those dollars for Special Drawing Rights instead of directly converting them into another standard currency, like Euros or Yuan. The potential with this scenario would be to elevate the SDR as a type of “world reserve currency” and to replace the dollar entirely; all the while, the IMF gets to play the hero by slowly “harmonizing” all the world’s currencies until there is no distinction in their value. Special Drawing Rights become the de facto reserve unit without officially overthrowing the dollar or any other world currency.
The U.S. Treasury, faced with the nightmare of having its own currency dumped by international central banks, jumps at the chance to support conversion to the Special Drawing Rights to lessen the damage, rather than face the full brunt of losing our reserve status. In fact, the U.S. would have no choice but to support the SDR and the IMF as the intermediary in all global financial transactions; otherwise, we would face certain, long-term, full-spectrum collapse. The only support holding up our financial system would then be our membership in the SDR basket. We then become completely dependent, and the IMF gains total centralized control over our economy. The end result would be all currencies becoming tied to and completely reliant on the Special Drawing Rights; it would then be an easy migration to a one world currency.
In today’s world, the IMF is attempting to create an environment in which any country that does not participate in SDR exchange is left in the dust by every country that does. They are conjuring an artificial economic matrix, where traditional laws of supply and demand no longer apply – a manipulated evolution of finance. They become the power determining the value of every currency on the planet arbitrarily. Just imagine what would happen if the IMF adds the Chinese Yuan to the basket and displaces the U.S dollar as the premier world reserve currency?
SDRs do have some serious limitations however. Since the values of SDRs are closely tied to national currencies, anything affecting those currencies will affect SDRs as well. Since the SDR is not a currency, it needs to be converted eventually to a national currency for most payments or interventions in foreign exchange markets, which adds to cumbersome use in transactions. The truth is that SDRs are clumsy and cumbersome. SDRs have to be reconverted back into a national currency before they can be used, and that limits their usefulness.
All of this is mere conjecture and the debt ceiling argument swirling around Congress right now is simply a Republican club to try and force the unpopular ACA out of existence, as if Obama would ever consider retracting the cornerstone of his administration. Again, I predict he will continue to borrow the money without raising the debt ceiling, propping up the house of cards.
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