IMF Calls for New Reserve Currency

The head of the International Monetary Fund (IMF) says there is a need for a new global reserve currency that does not depend on the U.S. dollar, and the policies, practices, conditions and leadership of a dominant country - in this case, that would be the United States.

New Reserve Currency?

There is no doubt that the continued murmurs about dropping the USD, is a growing grumble, and is intended to ready for a new day, and a new world order.  This from a professor at the New York University's Stern business school:

Known as "Dr Doom" for his negative stance, Prof Roubini argues that China is better placed than the US to provide a reserve currency for the 21st century because it has a large current account surplus, focused government and few of the economic worries the US faces.

Wall Street Journal February 3, 2010:

Prof. Joseph Stiglitz of Columbia University and a former World Bank chief economist, wants to see an "orderly transition" from a dollar-based global economy. "It is peculiar that we still have the dollar system when we are so globalized," he says. "[There is a] need for a new global reserve system to replace the dollar-based system."...

Not only has the value of the dollar fallen, but with official interest rates close to zero and yields on bonds at record lows, the dollar has started looking like an unappealing asset to hold.... 

Figures from the International Monetary Fund show that the share of foreign-exchange reserves held in dollars by central banks resumed a downward trend in the third quarter of last year. The dollar's share has declined to 61.6% from 71.6% in the first quarter of 2002, when the currency hit its peak....

Always lusting for a one world order, the United Nations says the dollar should be replaced with a global currency, proposing the biggest overhaul of the world's monetary system since WWII.



Others talking about the demise of the dollar:
Left Coast Rebel

Related and Background:
Foreign Bank Bailout: War Funding Bill Funds IMF
Oil for Basket of Currency: Falling Dollar Road to One World Currency?
Congress Rebukes Obama -Wants Report on IMF Activities: Presidential Signings Rebuked 
Gulf Arab States: Oil Producers Deny Dollar Dump

IMF $100 Billion Green Fund: George Soros Directs the IMF $100 Billion Green Fund?

A disasterous no-climate-change scandal, the UN's IPCC disgraced, a distinguished (not any more) British scientist asked to resign his position at the University of East Anglia Climate Unit - and it's not enough. The International Monetary Fund (IMF) is proposing a $100 billion green fund to "finance low carbon development in the world's poorer countries." And guess what? George Soros is likely behind the plan.

From the Wall Street Journal:

The idea seems to be this: The central banks of developed countries would inject capital into the fund using some of their SDR allocations. The fund would then issue bonds to investors, including sovereign wealth funds that would be backed by the green fund’s capital.

So, with no agreement in Copenhagen, the US will participate anyway?

The idea appears to be uncannily similar to that proposed by financier George Soros around the time of the Copenhagen meeting -– though the IMF boss didn’t give him a name check.

How many water systems would $100 billion build? How many DDT sprays would it buy to abolish malaria? How many schools would it build? How many tractors would it buy?

The Wall Street Journal asks: How will it be paid for?

According to Dominique Strauss-Kahn, the IMF managing director, who made the proposal public Saturday, the capital will come from Special Drawing Rights – the IMF’s own currency — held by world’s central banks.

What does "Special Drawing Rights" mean? From the IMF website:

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. With a general SDR allocation that took effect on August 28 and a special allocation on September 9, 2009, the amount of SDRs increased from SDR 21.4 billion to SDR 204.1 billion (currently equivalent to about $324 billion).

In short, the IMF says they will use their "own currency." But where does the currency come from? The international community is the answer. In 1969:

...the international community decided to create a new international reserve asset under the auspices of the IMF.

Here is a more specific explanation of a Special Drawing Right (SDR):

The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions.

Similar to a carbon credit, maybe? A wealthy person with a large carbon footprint, buys carbon credits to plant a tree in a third world country?

This from the Wall Street Journal article linked in the second paragraph:

SDRs were first created and issued to IMF members in 1969 in an era of a dollar shortage, where central banks couldn’t find enough dollars and gold for their reserves. Now, after a new issue last year, the amount held in central banks around the world exceeds $300 billion.

The fund would then use that money to make grants and low-cost loans to developing countries to finance low-carbon growth.

In the meantime, the people have no drinking water in their communities, no agriculture, no roads, no electricity, no way to combat malaria, but they will have a tiny carbon footprint.

Foreign Bank Bailout: War Funding Bill Funds International Monetary Fund

While our soldiers await the latest round of funding from Congress, the Senate added an amendment to the original war funding Bill. Some see that amendment as an effort to bailout foreign banks, and via the International Monetary Fund (IMF), perhaps put money into the pockets of terrorist organizations. Could this amendment have anything to do with releasing the Guantanamo Bay photos? Seems it might.

International Monetary Fund

The Senate added an amendment to the War Funding Bill to provide a $100+ billion line of credit to the IMF. It is reported the GOP is objecting with gusto. President Obama "promised" the line of credit at the G-20 Summit in April. The risk to taxpayers is said to be $5 billion but the U.S. would need to borrow $108 billion. The Obama administration says that there will be zero cost to taxpayers, but the Congressional Budget Office places the cost at $5 billion.

Borrowing money from China for a global bailout of the IMF makes no sense," said House GOP Whip Eric Cantor of Virginia.

To get the IMF funding, the Leiberman-Graham amendment to hold secret the Guantanamo Bay photos had to be scratched to get Democrat support. However, some Dems do not like the idea of war funding happening through an emergency supplemental.

Blue Dogs are against the IMF funding but have the national security need for the war funding side of the Bill looming. Here's how TPM's Brian Beutler says the Bill has progressed: 51 Democrats voted against the original war spending bill 14 of those who voted for it now say the have some concerns about the IMF provision Four Democrats didn't vote at all. The Democrats need 218 votes to pass the bill. There are 255 Democrats, which means they can lose as many as 37 of their own members and still pass the thing. Another way of putting that: 200 voted for it in May - and now the administration and Democratic leaders have to convince 18 more Democrats that either a) they shouldn't be concerned about the IMF provision, or b) the IMF provision is actually so important that they should ignore for now their principled opposition to the supplemental process and vote for it (Barney Frank is in this group)

Let's go back to the possibility of bailing out foreign banks and putting money in the pockets of terrorists. Rep. Eric Cantor (R-VA), House Repbublican Whip, charges that:

"under current IMF policy, a long list of member countries have access to an IMF currency that be exchanged by those countries for low-interest loans of hard currencies. That list of countries includes Iran, Venezuela, Sudan and Syria."

We have some unfortunate experiences with bailing out our banks. A foreign bank bailout is unthinkable. Another "unthinkable" is that this trash legislation could be placed in the war funding Bill. If the U.S. economy is critical to the world economy, and if the U.S. economy is unstable, as it currently is with our record deficits, why would we guarantee $100 billion for the IMF who in turn makes loans based on crisis situations? This is a table short one and half legs.