Jerome R. Corsi, a Harvard Ph.D., is a WND senior staff reporter. He has authored many books, including No. 1 N.Y. Times best-sellers "The Obama Nation" and "Unfit for Command." Corsi's latest book is "Who Really Killed Kennedy?"More ↓Less ↑
The administration of President Barack Obama, without congressional authorization, is advancing a plan that could end the use of the U.S. dollar as the world reserve currency by setting up International Monetary Fund Special Drawing Rights to compete.
The move comes as the dollar heads toward a 14-month low of $1.50/euro and as some top fund managers, including some of President Obama’s top financial supporters, worry the decline will continue as long as Obama depends on China to fund trillion-dollar budget deficits.
It is Obama’s promise to participate in a G20-nations agreement by giving $250 billion to the IMF to set up the alternative reserve currency that now has been documented in the final communiqué of the London meeting, according to the G20 website.
Plans for the dollar alternative are coming into play just as a former science adviser to British Prime Minister Margaret Thatcher says the real purpose of the United Nations Climate Change Conference in Copenhagen Dec. 7-18 is to use global-warming hype as a pretext to lay the foundation for a one-world government.
“At [the 2009 United Nations Climate Change Conference in] Copenhagen this December, weeks away, a treaty will be signed,” Lord Christopher Monckton told a Minnesota Free Market Institute audience recently at Bethel University in St. Paul.
“Your president will sign it. Most of the Third World countries will sign it, because they think they’re going to get money out of it. Most of the left-wing regimes from the European Union will rubber stamp it. Virtually nobody won’t sign it,” he said.
The Soros-run hedge firm Soros Fund Management continues to bet against the dollar in keeping with the hedge firm’s reputation for betting against currencies Soros sees as weak.
International investment managers take warnings by Soros seriously, remembering that Soros earned his first $1 billion in 1992 by betting against the British pound.
Legendary hedge-fund manager Julian Robertson Jr. joined Soros in warning that the United States’ increasing reliance on China to fund trillion-dollar Obama administration budget deficits will prolong the painful effects of the current economic recession.
“I think that if the Chinese stop buying our debt, it is virtually the end of the financial world as we know it,” Robinson told the Financial Times in London last week. “The conventional thinking is that they will continue buying. But I don’t think it’s logical to assume somebody will continue to buy paper that declines in value.
“Our dollar is declining in value, and it’s been pretty shocking over the last four or five months,” he said.
At its height in the late 1990s, Robertson’s Tiger Management Fund had a reported $22 billion in assets under management.
Robert Mundell: The Fathers of the ‘One-World Currency’
Mundell, currently an adviser to China, was the originator of the suggestion that the IMF should utilize SDRs to replace the dollar as a new world standard for holding foreign-exchange reserves in international trade transactions.
In 1999, Mundell won a Nobel Prize for arguing that nation-states like the United States were not “optimum currency areas” for one-country currencies like the dollar, whereas regional markets, such as the European Union, were “optimum currency areas” that would justify creating regional currencies such as the euro.
WND also has reported Benn Steil, a senior fellow and director of international economics at the Council on Foreign Relations, wrote in the May/June 2007 issue of the Council on Foreign Relations’ Foreign Affairs magazine an article entitled, “The End of National Currency,” in which his major conclusion was that “countries should abandon monetary nationalism.”
What are IMF Special Drawing Rights?
SDRs are international reserve assets that are calculated by the IMF in a basket of major currencies allocated to the 185 member nation-states of the IMF in relation to the capital, largely in gold or widely accepted foreign currencies, that the IMF member nation-states have on deposit with the IMF.
As Red Alert previously reported, the proposal originally advanced by China and Russia would issue SDRs to central banks of IMF member states far in excess of any gold or currency reserves the member states have on deposit with the IMF.
The idea is to utilize the little-understood and largely-ignored SDRs in a new capacity as a sort of an international overdraft facility made available to bankrupt or financially failing IMF member nation-states.
The IMF created SDRs in 1969 to support the Bretton Woods fixed-exchange-rate system.
“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,” a document on the IMF website explains. “Therefore, the international community decided to create a new international reserve asset under the auspices of the IMF.”
When the Bretton Woods fixed-rate system collapsed, major world currencies, including the dollar, shifted to a floating-exchange-rate system where the price of the dollar and other major world currencies was created by trading on international currency exchanges.
Until the current global economic crisis, SDRs issued by the IMF have been used by IMF member nation-states primarily as a reserve account to support international trade transactions, not as an alternative international currency available to settle international debt transactions in danger of default.