A friend, who is involved in local politics but strives to know the truth about things, sent me a link to a talk by respected investment councillor Jim Rickards in which the latter predicted that the IMF was plotting to elevate the Special Drawing Rights instrument to the status of an actual currency (not just a basket of currencies) intended to replace the US dollar as the world reserve currency. Rickards predicts (see link below) that the dollar will be replaced by March 1 of this year.
My friend wanted my opinion as to the veracity of Rickards’ audacious claim and whether the fall of the dollar may be imminent.
My email to my friend:
I can't say whether it is imminent, but the Chinese and Russians have been working on de-dollarization of international trade settlements for years now and there is no doubt it will happen sometime.
I was unaware that the IMF was plotting something like this but it is logical. After all, as Rickards mentioned, the French got screwed royally by Obama's Treasury Department when they made a transaction with Iran in dollars and were fined $8.9 billion for that, and as Rickards said,the transaction was not even illegal. So IMF president Christina Lagarde, a French national, would be carrying a big grudge against the US and its all-powerful dollar. Rickards is pretending to be pro-Trump, or maybe he is, but his pitch is that the IMF is trying to make Trump look bad by scheduling this on his watch. Whatever, it doesn't really matter.
The SPD, special drawing rights, was created by the IMF in 1969, and the principle is to sort of create a currency-like instrument by blending a bunch of world currencies in a single "basket" and assigning a value to it so that it can act as a single currency for reserve purposes. It was not intended for settlements in trade.
Rickards neglected to mention that the US dollar is one of the currencies in that basket so the dollar will not lose all its value over night no matter what steps the IMF should take.
BTW, much of this is in fact Trump's fault because he uses the USD as a weapon, slapping sanctions on everyone and his brother. All recent presidents have done this, but Trump took it to a new level, ignoring the possible consequences. It was only a matter of time till someone slapped down the dollar, and that – ie, de-dollarization – has been in progress for several years, spearheaded by Russia, China and the BRICS.
Recently, the EU, Russia, China and Turkey came up with a plan to create a Special Purpose Vehicle to transfer money without using SWIFT, to get around sanctions, particularly sanctions on Iran. The SPV is now viable and has a new name, ISTEX. Trump is working on blocking it, but that may not be possible. In any case, theoretically, the US will not be able to track payments made by this international transfer system and therefore, Europe, for example, can truthfully say to the US Treasury that a trade with Iran is “none of your darn business.” Imagine the sense of freedom in being truly free of the machinations of the Land of the Free.
At any rate, aside from what Rickards says, these 4 groups plus Iran will not be using dollars in their trade any more, and that in itself will hurt the dollar.
The reasoning of Europe is that they are sick of the dollar being used as a weapon, and since Trump is the biggest bully in this regard, they are going after him. I am referring not only to the IMF’s alleged plan to replace the dollar with the SDR but also to the well-known plan to use the SPV/ISTAX for that purpose.
Russia and China are de-dollarizing because they are tired of the US using dollars to make war on everyone and his brother.
The euro will probably play the biggest role in the existing systems, ie, the SPV and the Russian-Chinese schemes to de-dollarize world trade. However, Rickards may be right that the SDR will be the currency to take down the dollar. He says he has insider info and Rickards is indeed an insider.
Yes, it is scary. We are in for a rough ride no matter who comes out on top.
Sadly, the US people were not awake enough to see that the bullying, ie, endless wars and sanctions, would eventually lead to this, so almost no one in the US protested. Now they may not have to protest.
The only worry will be survival of the Americans.
But who will take pity on them when the crash comes?
Libya maybe? Iraq? Syria? Serbia? Iran? Venezuela?
What goes around comes around as they say.