![\"\"](\"http:\/\/stateofthenation.co\/wp-content\/uploads\/2021\/07\/GettyImages-476954095-1200x800-1.jpg\")
The International Monetary Fund (IMF) headquarters building is seen in Washington, DC on May 15, 2011. (Yuri Gripas\/AFP via Getty Images)<\/p><\/div>\n
The Epoch Times A controversial plan to boost global liquidity means the days of the U.S. dollar being the undisputed king of the international monetary system may be coming to a close, experts told The Epoch Times.<\/p>\n Losing that status could contribute to a serious crisis for the United States involving a dramatic loss of economic purchasing power, a geopolitical realignment and everything associated with those shocks.<\/p>\n The Biden administration-backed International Monetary Fund (IMF<\/a>) proposal to issue an unprecedented $650 billion U.S. dollars\u2019 worth of new \u201cSpecial Drawing Rights\u201d (SDRs) this year alone will also help re-shape the international financial system.<\/p>\n That is more than twice the total amount of\u00a0SDRs created by the\u00a0IMF\u00a0throughout its entire history.<\/p>\n The\u00a0SDR\u00a0is a sort of proto-global currency, based on a basket of leading currencies, dubbed an \u201cinternational reserve asset\u201d by the\u00a0IMF. Each government receives an amount of\u00a0SDRs proportional to its stake in the international organization.<\/p>\n The unprecedented new issuance, which has the support of both Beijing and Washington, will contribute to sidelining the U.S. dollar\u2019s role as the global reserve currency, analysts warned. The Chinese Communist Party is expected to be a leading beneficiary.<\/p>\n \u201cThe United States and our G7 partners are actively considering a global effort to multiply the impact of the proposed Special Drawing Rights (SDR) allocation to the countries most in need,\u201d the White House said in a statement.<\/p>\n For well over a decade, leading commentators and even political leaders around the world\u2014including Communist Chinese central bank officials and numerous European leaders\u2014have called for making the\u00a0SDR\u00a0into a true global currency.<\/p>\n Those calls are growing amid the push for a \u201cGreat Reset<\/a>.\u201d The \u201creset\u201d plan, which would transform everything from business to governance, is being promoted by the United Nations, the World Economic Forum, the IMF, the British monarchy and other power centers as a way to improve the world.<\/p>\n Ostensibly aimed at making the world more \u201cgreen\u201d and \u201csustainable,\u201d the shift would require a much larger role for the public sector at the national and international level while moving the world away from what remains of the free-market system. Widespread proliferation of new technologies associated with the \u201cFourth Industrial Revolution\u201d are a critical component of the effort, too.<\/p>\n A restructuring of the international monetary system led by the IMF\u00a0on the way to the globalization of currency\u2014with the looming SDR issuance as a major step\u2014is likely to play a key role in the global reset as well.<\/p>\n Just as significantly, the developments taking place at the\u00a0IMF\u00a0will empower global organizations to channel ever-larger sums of wealth from people in the United States and other major economies into projects selected by those organizations and their member governments.<\/p>\n Powerful global interests, for instance, are pushing to use the new\u00a0SDR\u00a0\u201callocation,\u201d as the issuing of new\u00a0SDRs is called, to finance everything from mass international COVID vaccinations to policy transformations around the world.<\/p>\n Experts and former officials also told The Epoch Times that the addition of a new layer of unbacked financial instruments on top of an already unstable global financial system would help further debase the world\u2019s leading national currencies.<\/p>\n The implications are enormous\u2014especially for the U.S. dollar and the global economy.<\/p>\n Yet, with a handful of exceptions, major media in the United States have been largely silent on this issue.<\/p>\n Officially, the justification for the largest-ever round of\u00a0SDR\u00a0creation is to help boost liquidity for governments in poorer nations still reeling from economic chaos caused by governments\u2019 responses to the CCP virus.<\/p>\n But Holland-based Commodity Discovery Fund (CDF) founder Willem Middelkoop, author of the book \u201cThe Big Reset,\u201d told The Epoch Times that the\u00a0IMF\u00a0plan has much broader significance.<\/p>\n \u201cIt\u2019s clear the Biden administration is in favor of working together with the\u00a0IMF\u00a0and China to start using\u00a0IMF\u2019s balance sheet to create more \u2018stimulus,\u2019\u201d said Middelkoop, a leading expert on the\u00a0IMF\u00a0and the\u00a0SDR.<\/p>\n But there will be problems associated with the move, he said.<\/p>\n \u201cBy allowing the\u00a0IMF\u00a0to create $650 billion worth of new\u00a0SDRs, central bankers are able to create another layer of fiat money to an already unstable financial system,\u201d he said.<\/p>\n Among other concerns, Middelkoop warned that the plan would produce problems for the currencies that underpin the\u00a0IMF\u2019s\u00a0SDRs, which include the U.S. dollar, the Japanese yen, the euro, the British pound, and the CCP\u2019s yuan<\/a> or renminbi, added in 2016.<\/p>\n \u201cThis will lead to more debasement of the five main world currencies, which are all part of the\u00a0SDR-currency basket,\u201d he said.<\/p>\n Indeed, Middelkoop warned years ago in his book on this subject that he expected the\u00a0IMF\u00a0to pursue more rounds of\u00a0SDR\u00a0creation, in ever larger amounts.<\/p>\n At some point, once the allocation grows to a sufficient size, the U.S. Congress will have to be consulted for approval. But the $650 billion round being planned now is just below the statutory limit that would trigger congressional oversight.<\/p>\n A\u00a0short March editorial in the Wall Street Journal<\/a>\u00a0blasting the\u00a0IMF\u00a0for seeking to bail out dictators also accused the\u00a0IMF\u00a0and the Biden administration of scheming to divide up a $1 trillion\u00a0SDR\u00a0issuance into two rounds.<\/p>\n The plan, according to the editorial, was to issue the\u00a0SDRs in two stages\u2014$650 billion this year and $350 billion next year\u2014in an effort to bypass the U.S. legal requirement for congressional approval on such a large issuance.<\/p>\n When contacted by The Epoch Times,\u00a0IMF\u00a0officials denied that there was a plan to issue $350 billion in new\u00a0SDRs next year, pointing to public statements by top\u00a0IMF\u00a0leaders.<\/p>\n However, if leading\u00a0IMF\u00a0member governments agree, there would be nothing to stop further issuance of SDRs next year or anytime after that.<\/p>\n IMF\u00a0officials expect the $650 billion allocation to be complete by the end of the summer, they said.<\/p>\n U.S. Treasury Secretary Janet Yellen and G-20 governments including the CCP have all publicly indicated that they support the\u00a0IMF\u00a0plan.<\/p>\n The\u00a0IMF\u00a0executive board is expected to give its final approval so the issuance can be completed by the end of August, officials said.<\/p>\n Experts say that despite the complicated terminology, the\u00a0IMF\u2019s plans are not that difficult to understand.<\/p>\n Think of the\u00a0SDR\u00a0issuance like printing money, but at the global level.<\/p>\n When the IMF creates SDRs, it is creating from thin air an instrument with purchasing power that allows the holder\u2014typically a government\u2014to purchase real goods and services. But instead of taxing citizens to seize that purchasing power, the IMF simply creates this sort of proto-global currency. Issuing new\u00a0SDRs is basically the global equivalent of \u201cquantitative easing\u201d by a national central bank such as the Federal Reserve.<\/p>\n The primary difference is that instead of simply siphoning wealth from those holding U.S. dollars, as occurs when the Fed creates new dollars and dilutes the purchasing power of each existing dollar, the IMF issuance would also confiscate savings from those holding other major currencies in the basket that makes up the\u00a0SDR. Another key difference is that when the Federal Reserve, for instance, creates new U.S. dollars, it lends them out and they can be spent immediately on goods and services.<\/p>\n For now, at least,\u00a0SDRs must first be converted to U.S. dollars, euros, yen, yuan, or pounds before being spent on goods and services by the governments that receive the\u00a0SDRs. The United States is obligated to exchange\u00a0SDRs for dollars on demand.<\/p>\n Basically, by creating new \u201cassets,\u201d as the\u00a0IMF\u00a0refers to the\u00a0SDRs, the international organization and its members are surreptitiously harvesting savings from humanity and redistributing those savings to the governments receiving\u00a0SDRs.<\/p>\n Eventually, the\u00a0IMF\u00a0and many key world leaders hope to turn the\u00a0SDR\u00a0into a true global reserve currency, sidelining the U.S. dollar that currently occupies that role.<\/p>\n Top world leaders including then-Russian President Dmitry Medvedev, then-French President Nicolas Sarkozy, multiple UN agencies, and many others have openly announced their support for a new global currency in the wake of the last global financial crisis.<\/p>\n In 2009, the head of the CCP\u2019s central bank at the time, Zhou Xiaochuan, also publicly called for the creation of a new international currency that would be disconnected from any single nation, with the\u00a0SDR\u00a0serving as the key candidate.<\/p>\n A report published on the CCP central bank\u2019s website entitled \u201cReform the International Monetary System\u201d explained that \u201cthe desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.\u201d<\/p>\n When asked about the CCP\u2019s proposal at an event hosted by the powerful Council on Foreign Relations, then-U.S. Treasury Secretary Timothy Geithner summarized it as a plan to use\u00a0SDRs more widely in the international monetary system.<\/p>\n \u201cWe\u2019re actually quite open to that suggestion,\u201d Geithner said, describing it as an \u201cevolutionary\u201d process.<\/p>\n In official reports, the UN and even the\u00a0IMF\u00a0itself have floated the idea of turning the\u00a0SDR\u00a0into a true global currency as well.<\/p>\n And now, the calls are growing louder and more public in the context of the current economic and health crises.<\/p>\n Writing in the Financial Times on March 18 in\u00a0a piece promoting a \u201cGreat Reset\u201d of the financial system<\/a>, the chief of the market research firm Longview Economics, Chris Watling, openly pitched the idea of having the\u00a0SDR\u00a0replace the dollar.<\/p>\n \u201cPolicymakers should negotiate some form of anchor\u2014whether it\u2019s tying each other\u2019s currencies together, tying them to a central electronic currency or maybe electronic special drawing rights, the international reserve asset created by the\u00a0IMF,\u201d he wrote.<\/p>\n If the U.S. dollar were to lose its status as the global reserve currency, one of the immediate effects would be to crush the purchasing power of the U.S. dollar<\/p>\n Right now, governments, central banks and businesses around the world keep large amounts of dollars on reserve to settle international transactions. This creates a constant global demand for the dollar.<\/p>\n However, if the dollar were to lose its status to the SDR, the demand for dollars around the world would plummet. The resulting collapse in purchasing power would create an enormous crisis as Americans\u2019 ability to purchase goods and services from abroad was decimated.<\/p>\n A former senior leader at a Bretton Woods institution who asked not to be identified due to concerns over potential retaliation in future employment told The Epoch Times he was \u201cdeeply concerned about the reserve currency status of the U.S. dollar.\u201d<\/p>\n Aside from the IMF plan, schemes by Beijing and other powers to undermine the U.S. dollar\u2019s global dominance are also becoming more apparent. In fact, the former official believes the CCP\u2019s digital currency is set to benefit to the point that it has \u201chuge potential to dethrone the dollar.\u201d<\/p>\n Like many other experts, the former official noted that the U.S. government\u2019s large deficits and international debts are contributing to the problem.<\/p>\n But at the international level and in nations around the world, there is a desire to move beyond the dollar.<\/p>\n \u201cIf you polled senior leaders of all these institutions, there is little appetite for the U.S. dollar to be the global reserve,\u201d he said, pointing to various motivations among officials worldwide.<\/p>\n \u201cThey believe in real globalism,\u201d the former official said. \u201cA lot of them believe we should all be ruled by the global equivalent of Brussels, where technocrats make decisions for everybody.\u201d<\/p>\n While he personally believes in freedom and the nation-state, as well as allowing people to determine their own destiny, many at the IMF and the World Bank \u201cbelieve they are exalted and brilliant people who know better than us, and that we should therefore trust them to develop rules for us,\u201d the official said.<\/p>\n The CCP is a key player in the saga. \u201cChina is looking for a way to take the United States down,\u201d said the official, who has extensive expertise in China and Chinese markets. \u201cThey view the U.S. as a speed bump on the road to global power.\u201d<\/p>\n He believes the CCP would be happy to see the SDR supplant the U.S. dollar in the not-too-distant future, but that eventually the CCP would like to see its own currency become the global reserve.<\/p>\n \u201cTheir only currency is power\u2014they can\u2019t help themselves,\u201d he said, contrasting the CCP with America\u2019s \u201cbrilliant\u201d founders who recognized that the power of politicians and political institutions needed to be limited for everybody\u2019s protection.<\/p>\n \u201cAll of these institutions want to control the lives of others and if they can do it via an international currency system, why not,\u201d concluded the official, adding that the IMF was plotting to create a digital SDR with profound implications.<\/p>\n Author and financial expert Jim Rickards, a leading authority on the IMF effort to turn the SDR into a global currency, said<\/a> recently that the 2009 crisis SDR issuance by the IMF was an effort to \u201ctest the plumbing\u201d and to \u201crehearse the governance, computational and legal processes for issuing SDRs.\u201d<\/p>\n In early 2011, the IMF even issued what Rickards described as \u201ca master plan for replacing the dollar with SDRs.\u201d<\/p>\n \u201cThis included creating an SDR bond market, SDR dealers, and ancillary facilities such as repos [repurchase agreement (repo) are for short-term borrowing of government securities], derivatives, settlement and clearance channels, and the entire apparatus of a liquid bond market,\u201d he added, saying this was to help provide liquidity but also to ensure that the system was ready for \u201ca large new issuance\u201d on \u201cshort notice\u201d if needed.<\/p>\n \u201cThe latest plan is for the IMF to combine forces with mega-banks, and big investors like BlackRock and PIMCO to implement the world money plan,\u201d he continued.<\/p>\n In mid-June, Rickards warned that push for an \u201cinternational monetary \u2018reset\u2019\u201d to sideline and ultimately replace the U.S. dollar was accelerating.<\/p>\n In fact, SDRs are already \u201cbasically world money,\u201d said Rickards, an economist and investment banker who serves as editor of Strategic Intelligence and has published multiple books on these topics.<\/p>\n \u201cThe basic idea behind the SDR is that the global monetary system centered around the dollar is inherently unstable and needs to be reformed,\u201d continued Rickards, considered one of the world\u2019s leading experts on the subject.<\/p>\n Eventually, these SDRs will help fund all sorts of global projects, similar to how national central banks help their governments finance spending without having to raise taxes.<\/p>\n \u201cOver the next several years, we will see the issuance of SDRs to transnational organizations, such as the U.N. and World Bank, for spending on climate change infrastructure and other elite pet projects outside the supervision of any democratically elected bodies,\u201d Rickards warned, calling it the \u201cNew Blueprint for Worldwide Inflation\u201d in an articlefor the Daily Reckoning.<\/a>.<\/p>\n Speaking to The Epoch Times, South Bank Research\u2019s Fortune and Freedom Editor Nick Hubble, an expert on the\u00a0IMF\u00a0and the\u00a0SDR, noted that all reserve currencies, regardless of the underlying asset, ultimately fail. That is due to inbuilt biases leading to imbalances, he said.<\/p>\n And he sees the growing effort to empower the\u00a0IMF\u00a0as a key factor in attempting to deal with this.<\/p>\n \u201cThe problems associated with the U.S. dollar being the global reserve currency have undermined the U.S. economy for decades now,\u201d he said. \u201cThis has been driving many of the economic trends which are being blamed on anything but the true cause.\u201d<\/p>\n The global shift away from the U.S. dollar as the global reserve will produce a \u201cpainful\u201d economic crisis to begin with, Hubble explained. However, it may ultimately help the United States get its trade deficit under control, he continued.<\/p>\n \u201cSDRs represent an attempt to transition away from this single national currency system to a multinational reserve currency\u2014a basket of national currencies,\u201d continued Hubble, who said he does not identify with any particular nation. \u201cThis will spread the economic pain between the currencies in the basket, and may well create a working solution for a few decades again.\u201d<\/p>\n However, such a move would lead to new imbalances that would require a reworking in the future.<\/p>\n \u201cThe plan to make\u00a0SDRs the next global reserve asset is the U.S. dollar\u2019s best chance of avoiding a collapse as it nears the end of its shelf life in that function,\u201d he argued. \u201cU.S. dollars are a large part of the\u00a0SDR\u00a0bundle. But nations currently underrepresented in the\u00a0SDR\u00a0bundle are likely to demand a reshuffle of the\u00a0SDRs weightings in exchange for adopting the system. And they hold the trump card that the U.S. dollar is on borrowed time.\u201d<\/p>\n Currency resets are not new, and in fact occur every few decades, said Hubble, pointing to various examples throughout history.<\/p>\n \u201cA transition away from the U.S. dollar as the global reserve asset would be nothing new,\u201d he continued. \u201cThe only question is what it\u2019ll be called and whether it\u2019ll involve\u00a0SDRs or some other asset.\u201d<\/p>\n \u201cIt would be a managed decline of the U.S. dollar\u2019s prominence, with leaders trying to maintain control,\u201d Hubble added.<\/p>\n Asked about whether he was concerned about the power shift to the\u00a0IMF\u00a0that would result from allowing it to issue the new international reserve, Hubble noted that there is already a \u201crotating door between the\u00a0IMF, treasuries, and central banks.\u201d<\/p>\n As such, it would largely be the \u201csame people\u201d running the new system, he said.<\/p>\n Still, \u201cinternational institutions do lack democratic accountability,\u201d Hubble warned.<\/p>\n \u201cA change in the global reserve may be both a symptom and a cause of the United States\u2019 reduction in global power,\u201d Hubble added, calling the dollar\u2019s current status as the reserve currency a \u201cmixed blessing.\u201d<\/p>\n Another leading expert in the field, former managing director at Deutsche Bank and Lehman Brothers John Butler, suggested that the planned $650 billion\u00a0SDR\u00a0allocation was merely an effort by the\u00a0IMF\u00a0to remain relevant and keep up with the rapidly ballooning balance sheets of central banks around the world.<\/p>\n \u201cWhat this\u00a0SDR\u00a0issuance would do is grow the\u00a0IMF\u00a0balance sheet too, a \u2018catching-up\u2019 exercise as it were,\u201d said Butler, who now works as an independent investment consultant and author.<\/p>\n The plan may help emerging markets deal with funding crises resulting from COVID lockdowns, he said.<\/p>\n But it will not significantly change the international reserve system or the U.S. dollar\u2019s key role in it, he told The Epoch Times, acknowledging that his views are different from those of other experts in the field.<\/p>\n The\u00a0IMF\u00a0allocation would also benefit pharmaceutical companies involved in vaccine production.<\/p>\n \u201cWhether that would indeed be the best use of such funds is largely subjective,\u201d he said. \u201cSome might argue that there are more cost-effective means of protecting public health, given that emerging-market COVID death rates are not particularly high relative to other causes such as basic nutrition and sanitation.\u201d<\/p>\n Despite the very public moves to sideline the U.S. dollar as the global reserve asset in favor of turning the\u00a0SDR\u00a0into a true global currency, Butler said in a phone interview that he believed the\u00a0IMF\u2019s members were further from agreement on that today than 10 years ago.<\/p>\n In his view, rather than replacing the increasingly troubled current system with a new\u00a0SDR-centric one, the world should look carefully at gold.<\/p>\n \u201cAs I write in my books, gold provides the only game-theoretical monetary equilibrium for a multi-polar, globalized world,\u201d he said. \u201cNo one can print it or devalue it to benefit themselves at the expense of their trading partners.\u201d<\/p>\n \u201cIt is the only truly objective, neutral, global money,\u201d added Butler. \u201cIt does not require any government or group of governments to give it value or make it legal tender.\u201d<\/p>\n Ultimately, he said in a phone interview, gold is the only real instrument that would adequately and fairly address the problems with the international monetary system.<\/p>\n \u201cHence I believe that, in future, gold will eventually displace the dollar as the dominant global reserve asset,\u201d said Butler.<\/p>\n As has occurred with previous shifts in the system, it will likely take a crisis or series of crises to catalyze the shift to a gold-based international monetary regime.<\/p>\n But eventually, he believes a gold-backed monetary order will come\u2014and it will be beneficial to all.<\/p>\n Rickards, the economist and banker, also believes gold will shine during the looming crisis that he says will dwarf the last two.<\/p>\n Once the\u00a0IMF\u00a0produces the new\u00a0SDRs, assuming it goes through, governments and dictatorships will have wide latitude in how they spend the new \u201cliquidity.\u201d<\/p>\n Some governments will even see a doubling of their foreign reserves under the plan.<\/p>\n So far, it is not clear what governments would use the new \u201cliquidity\u201d on.<\/p>\n In a report released in April, though, the powerful Rockefeller Foundation called for \u201cleveraging a large issuance and reallocation of International Monetary Fund (IMF) Special Drawing Rights (SDRs)\u201d to inject more than two thirds of the population of developing countries with CCP virus<\/a> shots.<\/p>\n Among other ideas, the report calls for using at least $100 billion of the $650 billion\u00a0SDR\u00a0issuance this year for helping the \u201cdeveloping world\u201d to vaccinate the overwhelming majority of the population by the end of 2022.<\/p>\n When contacted by The Epoch Times for more information,\u00a0IMF\u00a0Senior Communications Officer Wafa Amr simply referred to various links on the\u00a0IMF\u00a0website and a statement put out by\u00a0IMF\u00a0chief Kristalina Georgieva late last month.<\/p>\n However, it appears from public statements that Georgieva is onboard with the Rockefeller-backed plan to funnel much of the \u201cliquidity\u201d to pharmaceutical giants through major vaccine purchases.<\/p>\n \u201cIf approved, a new allocation of\u00a0SDRs would add a substantial, direct liquidity boost to countries, without adding to debt burdens,\u201d said the Bulgarian\u00a0IMF\u00a0chief.<\/p>\n \u201cIt would also free up badly needed resources for member countries to help fight the pandemic, including to support vaccination programs and other urgent measures,\u201d she continued, saying the plan would also \u201ccomplement the range of tools deployed by the\u00a0IMF\u00a0to support our membership in this time of crisis.\u201d<\/p>\n Biden also backs the plan. In a statement released last month, the White House expressed support for using up to $100 billion in SDRs to \u201cfurther support health needs\u2014including vaccinations.\u201d<\/p>\n Final approval by the IMF board of governors is expected in the coming month.<\/p>\n The U.S. Treasury did not respond to repeated e-mail and phone requests for comment.<\/p>\n
\nNews Analysis<\/em><\/p>\nMore Liquidity\u2026 or Instability?<\/strong><\/h2>\n
![\"Epoch](\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2021\/07\/13\/GettyImages-1326486264-1200x800.jpg\")
<\/a>What Is Really Going On?\u00a0<\/strong><\/h2>\n
![\"Epoch](\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2021\/07\/13\/GettyImages-483781636-1200x801.jpg\")
<\/a>Dethrone USD for China\u2019s benefit?<\/strong><\/h2>\n
Global Currency and Central Bank in the Making<\/strong><\/h2>\n
Dollar<\/a> Trouble Inevitable<\/strong><\/h2>\n
![\"Epoch](\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2021\/07\/13\/GettyImages-1227917506-1200x800.jpg\")
<\/a>Golden Opportunity?<\/strong><\/h2>\n
Spending the new\u00a0SDRs<\/strong><\/h2>\n