By Tim Denning
For the crypto haters, the replacement global currency is not a cryptocurrency. The replacement global currency is an old favourite of the International Monetary Fund. It’s called SDR (Special Drawing Rights).
What is SDR?
SDR is an artificial [global] currency created by the International Monetary Fund.
Quick History of SDR
SDR was developed in the late 1960s by the IMF. At this point in history the IMF was afraid of a dollar crisis. The U.S. originally promised the dollar would be as good as gold.
In 1971, President Nixon announced that dollars could no longer be exchanged for physical gold. This meant, the dollar was now backed by nothing. This situation created the dollar crisis, hence the IMF’s fear.
The IMF originally created SDR as a successor for the U.S. dollar. The currency never took off. Until recently, only $200 billion in SDR has been created in the last 50–60 years.
SDR became a sleeping giant, waiting for a moment in history to be awoken.
2008 was nearly the moment. But not quite.
After the 2008 recession, China and the United Nations hoped the IMF would use SDR to help solve the world’s financial problems. China became the cheerleader for SDR. It was a false hope. It didn’t happen.
2013 saw a possible chance. Then silence.
Greece had a debt crisis. The European Union and the IMF came in and saved the day with a bailout. SDR was used lightly to help Greece.
2016 was not the right time either.
The previous U.S. administration didn’t want to have anything to do with SDR. The previous U.S. administration hated SDR because of their public distaste for China.
Also, SDR means that the U.S. dollar could be replaced as the world’s most powerful currency, and the global reserve currency that many countries trade with each other in.
Lesson from history:
When SDR becomes a hot topic, it’s a warning sign of the financial system having issues.
The Quiet Revival and Rise of SDR
SDR has been waiting for its time to shine. This is the moment. Countries are asking the IMF for financial support due to the aftermath of the health crisis. The IMF has only $1 trillion of assets available.
With a different administration in power in the U.S., The Treasury Secretary Janet Yellen got behind SDR in a letter she wrote to the IMF. By supporting SDR, Janet is showing alignment with China. As a result, the size of all SDR ever created is about to be tripled.
Even the U.S. Congress favours a $3 trillion allocation to SDR. That’s on top of the trillions of dollars the U.S. has already created out of thin air. Oh, and it’s been reported, the U.S. has another $4 trillion on the way.
One side effect of the pandemic is that the IMF’s accounting unit is advancing beyond its status as an arcane currency basket — and could become an essential part of a future monetary reset.
— William Midellkoop (The Oracle of Amsterdam in the Financial World)
Translation: The IMF can now create their own global currency out of thin air.
Who suffers because of SDR?
Nobody (on the surface). That’s why it’s pure genius.
But what it does is create more government-issued currency out of thin air.
SDR is a new layer built on top of a basket of other currencies — U.S. dollars, Euros, RMB, Yen, Pounds, etc. More SDR means more of these five major currencies will be created out of thin air.
The value of the world’s currencies issued by countries will continue to be devalued over time at a faster rate. The price of assets like stocks and real estate will continue to rise.
So if you have a country’s currency in your bank account, or own assets like stocks, this SDR global currency affects you greatly. Read that again.
Why bother with SDR then?
SDR is brilliant because it devalues and debases the world’s major currencies but in an indirect way. An indirect approach allows the process to be relatively hidden from the citizens of the world.
People like you and I feel we are getting richer so we’re happy, but in reality the value of our money is decreasing quietly and most people will never realize it. This is the genius of SDR.
What could SDR be used for?
SDR could be used to price gold, commodities, debt — or even cryptocurrency.
What are insiders and smart money doing about SDR?
I always look at the insiders and smart money. William Midellkoop sums it up beautifully. Smart money and insiders are leaving paper assets — stocks, bonds, ETFs, paper gold (gold you can’t touch).
Smart money and insiders are buying hard assets — physical gold/silver, bitcoin, land, real estate, and commodities.
Now you know what SDR is. You understand the history behind SDR and the moments in history when SDR attempted to disrupt the financial system. You understand the problems with it. You know why it is being used. You understand the support for SDR.
A global currency like SDR is needed to extend the ability for governments to print money out of thin air. The U.S. dollar has a lot of power. It seems impractical in the future that the majority of global trade will be done with one country’s currency. It’s unfair and the system wasn’t designed for it.
The call for another “Bretton Woods Moment” by the IMF and the revival of SDR are signs of a global financial reset.
Stocks can’t go up forever by creating money out of thin air (so you feel you’re getting richer when you’re not).
SDR is a reset of all currencies. That’s the bottom line.
Grab your popcorn. Watch the history of money change before your eyes. And understand the power of hard assets and why you need to own them, so you don’t have the money you have worked hard for be devalued quietly behind closed doors using the revival of the SDR global currency.
*Denning, an Australian blogger and writer for CNBC and Business Insider published this article in Medium.