Perhaps no feature of the international monetary system is more covered in mystery and confusion for the nonexperts than the Special Drawing Rights (SDR).
This should not be the case at all because the SDR is a straightforward device. The SDR is world money controlled by the IMF, backed by nothing and printed at will, exactly like Ghana’s currency.
Simply, it’s the IMF’s money.
Once the IMF issues an SDR, it sits comfortably in the reserve accounts of the recipient like any other reserve currency. In international finance, the SDR captures the mood of the 1985 Dire Straits hit song “Money for Nothing”.
SDR attacks the very foundations of democracy and the planet’s life-support system. One clearly understands why no government in Africa - Ghana, should go to IMF for its “Money for Nothing.”
Although this cancer of SDR has spread widely and deeply, most people in Africa still are not aware of it; yet all of us are impacted by the collapse of our economy.
It has caused every single economy in Africa including Ghana, regardless of how smart and educated its citizens are, to be unable to manage its own currency.
Created in 1969
At the time of international monetary distress, repeated exchange rate crises, rampant inflation and the dollar devaluation were putting pressure on global liquidity (the flow of currency) and reserve positions of many IMF members in Africa like Ghana.
Several SDR issues were relatively small, equivalent to about US$33.8 billion in April 2011 exchange rates.
Interestingly, the original SDR from 1969 was valued using a weight of Gold.
The Gold SDR was abandoned in 1973 and was replaced with the paper SDR currency basket, still in use today as President Nixon did exactly in 1971 and Africans had no idea what was going on.
But I know exactly why the West is very afraid and is doing everything possible to prevent Africans from using gold as money, and I thank God Almighty who has given the boldness to Zimbabwe to launch gold coins to tackle inflation. I wonder why Gold Coast - Ghana, with all the smart people, is still sitting down till now.
SDR new world money
In 2009, the world again faced an extreme liquidity shortage from losses incurred in the Panic of 2008 and the subsequent deleveraging of balance sheets of financial institutions and consumers. The world needed money fast, and the leaders of the International Monetary System went to the 1970s playbook to find ways to print more currency (paper SDR backed with nothing).
This time the effort was not directed by the IMF itself but by the G20 using IMF as a tool for their global monetary policy. The amounts were huge, equivalent to US$289 billion at the April 2011 exchange rate. This global emergency “Money for Nothing” printing went almost unnoticed by the financial press, which was preoccupied with the collapse of the stock market and home prices at the time.
Yet, this was the beginning of a new concerted effect by the G20 and the IMF to promote the use of SDRs as the global reserve currency alternative to the dollar, while during that period Ghana was still planning its economic activities with the dollar and was making the same mistakes made with the occurrence of COVID-19, which as a result has sent Ghana back to the IMF for SDR “Money for Nothing”.
If the elites who control the affairs of Ghana, do not get this superior knowledge on the difference between money, cash and currency, we will be still going back to IMF till the year 2050.
We need to understand this in order to implement a gold-backed currency or coins now, which is the only way out of this cycle of debt.
The ultimate goal for the IMF is to dominate. In order for the SDR to succeed as a reserve currency, SDR holders will require a large liquid pool (currency) of investible assets of various maturities that holders such as the West, can invest their reserve balances in order to achieve a return and preserve the value of their investment.
This requires the SDR bond market to have public and private instruments and a network of primary dealers and derivatives to provide liquidity and leverage. By 2011, the Federal Reserve System (the Fed) was limited in providing global liquidity singlehandedly. The Chinese Yuan was not yet ready to assume a reserve currency role. The IMF needed to fast-track the emergence of the SDR and some kind of roadmap was required.
On January 7, 2011, the IMF provided the map. In a paper entitled “Enhance International Monetary Stability - a Role for the SDR?” the IMF presented a blueprint for the creation of a liquid SDR bond market, the antecedent to replacing the dollar as the global reserve currency with SDRs.
Africa and Ghana did not know this and thought they would never need to go to the IMF again with the old mentality that, the US dollar is still the global reserve currency.
The IMF does not believe in democracy and does not employ democratic processes in the printing and management of its currency.
Best of all, from the IMF’s perspective, there would be no democratic oversight or accountability for its money printing operations.
While the IMF was drawing up its plans for a global SDR currency which can be printed globally, it is clear in its anti-democratic leanings, what it calls “political considerations”, while, pushing Africa- Ghana to practice absolute democracy which they know very well will never help any country in Africa to develop its currencies.
The SDR’s blueprint calls for the appointment of an advisory board of top-notch experts to provide direction on the amount of money printing in the new SDR system. Perhaps, these experts would be selected from among the same economists and central bank workers who led the international monetary system to almost destruction in 2008.
In any case, they would be selected without the public hearing and press scrutiny that come with democratic societies and would be able to operate in secret once appointed.
One in a million is able to diagnose IMF’s tactics on the SDR.
The process of creating the SDR engages all the hidden destructive forces in economic law and does it in a manner, that only one man in a million is able to diagnose. Only very few understand the inner workings of the IMF. We hope to gain a fuller understanding of those inner and hidden workings before the IMF implements its plan to completely displace the dollar with SDRs.
In the end, the IMF’s plan for the SDR as announced in the blueprint document is expedient, not a solution.
It confronts the unavoidable sequential failure of fi at (paper and ink) money regimes by creating new fiat money.
Its papers cover the problems of paper currencies with a new kind of paper, just like replacing an old car model with a newer version - nothing really changes.
Return to Gold Standard
Again, the only way to be “economically safe” as a country is to be bold enough to return to the Gold standard. Gold generates more impassioned advocacy, both for and against, than any other subject in international finance.
Gold is not a commodity. Gold is not an investment. Gold is money par excellence. It is truly scarce. It took me 16 years to understudy and understand this, and it’s clearly unfair to Africa.
“Only Gold is God’s Money and it is 100 per cent reliable.”- Kokroko Kwasi Kokuro Oppong-Agyare.