- NEW YORK (CNNMoney) — The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world’s reserve currency.
- SDRs represent potential claims on the currencies of IMF members. They were created by the IMF in 1969 and can be converted into whatever currency a borrower requires at exchange rates based on a weighted basket of international currencies. The IMF typically lends countries funds denominated in SDRs
I want to point out that SDRs are merely another unbacked fiat currency, and as such are not “money” but merely “currency.” I also want to point out that the date of the SDRs creation, 1969, was a time of much monetary turmoil and under somewhat similar circumstances. Recall, the US was printing money to finance the Vietnam War. Nations began complaining about the US exporting inflation and started demanding gold in exchange for increasingly worthless dollars. Dollars were supposed to be exchangeable into gold under the Bretton Woods monetary agreement. In response, and in an effort to maintain fixed dollar exchange rates, the London Gold Pool was established and operated from 1961 until it collapsed under extreme pressure…in 1968.
So it seems the international monetary authorities are “running home to momma” and getting their “new,” unbacked fiat money out of the closet, dusting it off, and presenting it to the world as a “solution.” Of course, it solves nothing; it merely adds another layer of concealment and confusion to the very real fiscal problems facing the developed nations. SDRs, you see, are valued based on a basket of other unbacked fiat curencies. Fiat squared.
If only one could create value without work! If only things of genuine value could come from a printing press! What a wonderful world we could have. The IMF could print up a few hundred trillions of SDRs, hand them out, and no one would ever have to work again. After all, work is so overrated.