Concerns Surround IMF Plan to Flood World With Liquidity

IMF plan to boost global liquidity by funneling $650 billion to governments and pharmaceutical companies for massive vaccine campaigns

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 “deeply concerned about the reserve currency status of the U.S. dollar.”

Aside from the IMF plan, schemes by Beijing and other powers to undermine the U.S. dollar’s global dominance are also becoming more apparent. In fact, the former official believes the CCP’s digital currency is set to benefit to the point that it has “huge potential to dethrone the dollar.”

Like many other experts, the former official noted that the U.S. government’s large deficits and international debts are contributing to the problem.

But at the international level and in nations around the world, there is a desire to move beyond the dollar.

“If you polled senior leaders of all these institutions, there is little appetite for the U.S. dollar to be the global reserve,” he said, pointing to various motivations among officials worldwide.

“They believe in real globalism,” the former official said. “A lot of them believe we should all be ruled by the global equivalent of Brussels, where technocrats make decisions for everybody.”

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 “believe they are exalted and brilliant people who know better than us, and that we should therefore trust them to develop rules for us,” the official said.

The CCP is a key player in the saga. “China is looking for a way to take the United States down,” said the official, who has extensive expertise in China and Chinese markets. “They view the U.S. as a speed bump on the road to global power.”

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.

“Their only currency is power—they can’t help themselves,” he said, contrasting the CCP with America’s “brilliant” founders who recognized that the power of politicians and political institutions needed to be limited for everybody’s protection.

“All of these institutions want to control the lives of others and if they can do it via an international currency system, why not,” concluded the official, adding that the IMF was plotting to create a digital SDR with profound implications.

Global Currency and Central Bank in the Making

Author and financial expert Jim Rickards, a leading authority on the IMF effort to turn the SDR into a global currency, said recently that the 2009 crisis SDR issuance by the IMF was an effort to “test the plumbing” and to “rehearse the governance, computational and legal processes for issuing SDRs.”

In early 2011, the IMF even issued what Rickards described as “a master plan for replacing the dollar with SDRs.”

“This 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,” he added, saying this was to help provide liquidity but also to ensure that the system was ready for “a large new issuance” on “short notice” if needed.

“The 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,” he continued.

In mid-June, Rickards warned that push for an “international monetary ‘reset’” to sideline and ultimately replace the U.S. dollar was accelerating.

In fact, SDRs are already “basically world money,” said Rickards, an economist and investment banker who serves as editor of Strategic Intelligence and has published multiple books on these topics.

“The basic idea behind the SDR is that the global monetary system centered around the dollar is inherently unstable and needs to be reformed,” continued Rickards, considered one of the world’s leading experts on the subject.

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.

“Over 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,” Rickards warned, calling it the “New Blueprint for Worldwide Inflation” in an article for the Daily Reckoning..

Trouble Inevitable

Speaking to The Epoch Times, South Bank Research’s Fortune and Freedom Editor Nick Hubble, an expert on the IMF and the SDR, noted that all reserve currencies, regardless of the underlying asset, ultimately fail. That is due to inbuilt biases leading to imbalances, he said.

And he sees the growing effort to empower the IMF as a key factor in attempting to deal with this.

“The problems associated with the U.S. dollar being the global reserve currency have undermined the U.S. economy for decades now,” he said. “This has been driving many of the economic trends which are being blamed on anything but the true cause.”

The global shift away from the U.S. dollar as the global reserve will produce a “painful” economic crisis to begin with, Hubble explained. However, it may ultimately help the United States get its trade deficit under control, he continued.

“SDRs represent an attempt to transition away from this single national currency system to a multinational reserve currency—a basket of national currencies,” continued Hubble, who said he does not identify with any particular nation. “This will spread the economic pain between the currencies in the basket, and may well create a working solution for a few decades again.”

However, such a move would lead to new imbalances that would require a reworking in the future.

“The plan to make SDRs the next global reserve asset is the U.S. dollar’s best chance of avoiding a collapse as it nears the end of its shelf life in that function,” he argued. “U.S. dollars are a large part of the SDR bundle. But nations currently underrepresented in the SDR bundle are likely to demand a reshuffle of the SDRs weightings in exchange for adopting the system. And they hold the trump card that the U.S. dollar is on borrowed time.”

Currency resets are not new, and in fact occur every few decades, said Hubble, pointing to various examples throughout history.

“A transition away from the U.S. dollar as the global reserve asset would be nothing new,” he continued. “The only question is what it’ll be called and whether it’ll involve SDRs or some other asset.”

“It would be a managed decline of the U.S. dollar’s prominence, with leaders trying to maintain control,” Hubble added.

Asked about whether he was concerned about the power shift to the IMF that would result from allowing it to issue the new international reserve, Hubble noted that there is already a “rotating door between the IMF, treasuries, and central banks.”

As such, it would largely be the “same people” running the new system, he said.

Still, “international institutions do lack democratic accountability,” Hubble warned.

“A change in the global reserve may be both a symptom and a cause of the United States’ reduction in global power,” Hubble added, calling the dollar’s current status as the reserve currency a “mixed blessing.”

Golden Opportunity?

Another leading expert in the field, former managing director at Deutsche Bank and Lehman Brothers John Butler, suggested that the planned $650 billion SDR allocation was merely an effort by the IMF to remain relevant and keep up with the rapidly ballooning balance sheets of central banks around the world.

“What this SDR issuance would do is grow the IMF balance sheet too, a ‘catching-up’ exercise as it were,” said Butler, who now works as an independent investment consultant and author.

The plan may help emerging markets deal with funding crises resulting from COVID lockdowns, he said.

But it will not significantly change the international reserve system or the U.S. dollar’s key role in it, he told The Epoch Times, acknowledging that his views are different from those of other experts in the field.

The IMF allocation would also benefit pharmaceutical companies involved in vaccine production.

“Whether that would indeed be the best use of such funds is largely subjective,” he said. “Some 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.”

Despite the very public moves to sideline the U.S. dollar as the global reserve asset in favor of turning the SDR into a true global currency, Butler said in a phone interview that he believed the IMF’s members were further from agreement on that today than 10 years ago.

In his view, rather than replacing the increasingly troubled current system with a new SDR-centric one, the world should look carefully at gold.

“As I write in my books, gold provides the only game-theoretical monetary equilibrium for a multi-polar, globalized world,” he said. “No one can print it or devalue it to benefit themselves at the expense of their trading partners.”

“It is the only truly objective, neutral, global money,” added Butler. “It does not require any government or group of governments to give it value or make it legal tender.”

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.

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.

But eventually, he believes a gold-backed monetary order will come—and it will be beneficial to all.

Rickards, the economist and banker, also believes gold will shine during the looming crisis that he says will dwarf the last two.

Spending the new SDRs

Once the IMF produces the new SDRs, assuming it goes through, governments and dictatorships will have wide latitude in how they spend the new “liquidity.”

Some governments will even see a doubling of their foreign reserves under the plan.

So far, it is not clear what governments would use the new “liquidity” on.

In a report released in April, though, the powerful Rockefeller Foundation called for “leveraging a large issuance and reallocation of International Monetary Fund (IMF) Special Drawing Rights (SDRs)” to inject more than two thirds of the population of developing countries with CCP virus shots.

Among other ideas, the report calls for using at least $100 billion of the $650 billion SDR issuance this year for helping the “developing world” to vaccinate the overwhelming majority of the population by the end of 2022.

When contacted by The Epoch Times for more information, IMF Senior Communications Officer Wafa Amr simply referred to various links on the IMF website and a statement put out by IMF chief Kristalina Georgieva late last month.

However, it appears from public statements that Georgieva is onboard with the Rockefeller-backed plan to funnel much of the “liquidity” to pharmaceutical giants through major vaccine purchases.

“If approved, a new allocation of SDRs would add a substantial, direct liquidity boost to countries, without adding to debt burdens,” said the Bulgarian IMF chief.

“It would also free up badly needed resources for member countries to help fight the pandemic, including to support vaccination programs and other urgent measures,” she continued, saying the plan would also “complement the range of tools deployed by the IMF to support our membership in this time of crisis.”

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 “further support health needs—including vaccinations.”

Final approval by the IMF board of governors is expected in the coming month.

The U.S. Treasury did not respond to repeated e-mail and phone requests for comment.