Sunday, February 13, 2011

Response to: IMF to Drop the Dollar as Reserve Currency

From: John Webster
Re: IMF to Drop the Dollar as Reserve Currency
And what isn't said directly is that the government inflation figures LEAVE OUT the
costs of food and fuel, the very things that ARE going up.  That leaves the official
figures looking much better, but WE know that we are being squeezed to death.
The SDR's are one of the things that have been talked about for the last several
years as the world-wide re-valuation of currencies - downward -(as part of the
establishment of The New World Order) is rapidly approaching.  People do
not have a clue.  Various projections are for an after-revaluation Dollar or
Amero, or Special Drawing Rights, or WHATEVER, to be as low as 10
cents on the CURRENT dollar (already devalued by +/- 90%).  In other
words, we will end up with nothing.  I have repeatedly tried to warn
people to get their finances in order - all to completely deaf ears.
Sent: Friday, February 11, 2011 5:46 PM
Subject: [New post] HERE WE GO --- IMF to Drop the Dollar as Reserve Currency!

HERE WE GO --- IMF to Drop the Dollar as Reserve Currency!

atrueott | February 11, 2011 at 11:46 pm | URL:

Bernanke is smooth.  Smooth as silk.  He says "inflation is low." What he is NOT saying is the POTENTIAL for HYPERINFLATION is at an all-time high.  Replacing the "dollar" (actually the U.S. "Federal Reserve Note") with "Special Drawing Rights" (SDR) will, in my opinion, ignite a hyper-inflationary bonfire - much like pouring jet fuel on a small camp fire.    Don't forget, folks, that the "Fed's" equation for calculating "inflation" is misleading.  It recognizes the housing bubble deflation's effect on the Consumer Price Index.  The true measure of inflation is the cost of food and fuel.  Food is up over 25% across the board, and is projected to spike even higher this year.  That is the measure of inflation, folks --- because everyone has to eat.

IMF calls for dollar alternative By Ben Rooney, staff reporterFebruary 10, 2011: 4:37 PM ET

NEW YORK (CNNMoney) -- The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world's reserve currency.
The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system.

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
While they are not a tangible currency, some economists argue that SDRs could be used as a less volatile alternative to the U.S. dollar.
Dominique Strauss-Kahn, managing director of the IMF, acknowledged there are some "technical hurdles" involved with SDRs, but he believes they could help correct global imbalances and shore up the global financial system.
"Over time, there may also be a role for the SDR to contribute to a more stable international monetary system," he said.
The goal is to have a reserve asset for central banks that better reflects the global economy since the dollar is vulnerable to swings in the domestic economy and changes in U.S. policy.
In addition to serving as a reserve currency, the IMF also proposed creating SDR-denominated bonds, which could reduce central banks' dependence on U.S. Treasuries. The Fund also suggested that certain assets, such as oil and gold, which are traded in U.S. dollars, could be priced using SDRs.
Oil prices usually go up when the dollar depreciates. Supporters say using SDRs to price oil on the global market could help prevent spikes in energy prices that often occur when the dollar weakens significantly.

Fred Bergsten, director of the Peterson Institute for International Economics, said at a conference in Washington that IMF member nations should agree to create $2 trillion worth of SDRs over the next few years.
SDRs, he said, "will further diversify the system."
Dollar firms after starting 2011 weak
The dollar has been drifting lower so far this year as the global economy improves and investors regain their appetite for more risky assets such as stocks and commodities.
After rising above 81 in early January, the dollar index, which measures the U.S. currency against a basket of other international currencies, eased below 77 earlier this week.

However, the dollar was higher Thursday against the euro, pound and yen as disappointing corporate results weighed on stock prices following several days of gains on Wall Street. The rally in the commodities market also cooled, with the price of oil and metals backing off recent highs.
In addition, renewed concerns about the debt problems facing troubled European economies put pressure on the euro and supported the dollar. The yield on Portugal's benchmark bond rose to a record high Wednesday, and borrowing costs for Ireland, Spain and Greece remain elevated.

"The market is shedding risk, with equities and commodities weakening and the U.S. dollar broadly stronger" said Camilla Sutton, currency strategist at Scotia Capital.

Traders were also digesting comments from Federal Reserve chairman Ben Bernanke, who told Congress Wednesday that despite a strengthening economic recovery, the unemployment rate remains high while inflation is "still quite low."

Those remarks reaffirmed the view that "the Fed would be very slow to tighten policy given its dual mandate of price stability and employment," analysts at Sucden Financial wrote in a research report.
Bernanke also urged lawmakers to come up with a "credible plan" to bring down "unsustainable" federal budget deficits.

"We expect that the outlook for the U.S. fiscal position will weigh heavily on the U.S. dollar in the quarters ahead," said Sutton. In the near-term, however, she said "a strengthening growth profile" could help provide "a temporary period of dollar strength

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