The G20 sessions have ended without specific agreement. The conclusion of the G-20 meeting granted Internaciona Monetary Fund (IMF) the ‘possibility’ of expanding its resources “without limits”.
“I leave here with a permit to expand my resources without ground, without shelter, without limits. The G-20 members have told us they will do everything possible so that the IMF is fully equipped with resources to act in case of crisis’.
Nov 4th 2011, Christine Lagarde.
The only issue here is when this massive imf monetization will occur? How deep does the crisis have to go to result in the IMF’s world wide monetization of debt? It was telling that no specific agreement was reached on Friday. The UK was pressing hard for an immediate increase in the IMF’s special drawing rights but emerging market states blocked the deal. (It is worth noting that the UK has become one of the leading proponents of monetization of debt). The next g20 meeting is in June 2012 in Mexico, g8 plus 5 in may 2012.
The ‘SDR’ powers of the IMF are being widely reported as being the method to enable the IMF to inflate nominal prices world wide.
The Special Drawing Right (SDR) was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. The international community decided to create a new international reserve asset under the auspices of the IMF. 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.
So an SDR is a piece of paper created by the IMF which immediately creates the fiat money on the balance sheets of the local central banks that domestically issue this currency. It is a claim on newly created fiat pieces of paper. It neated removes the issuance of new paper outside of national issues and control.
In a world populated by debt laden balance sheets nominal price rises are urgently needed. In this situation even bogus liquidity, ie further debasement of world currencies, in the form of dodgy IMF manovers will be applauded by all.
http://www.imf.org/external/np/exr/facts/sdr.htm
Rich
(2 votes, average: 5.00 out of 5)
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