An “irate taxpayer and emerging markets hedge fund manager” points out that, as currently proposed, the Special Drawing Rights option to the U.S. Dollar as a reserve currency has all the texture and stickiness of a redistribution scam. He points out:
Basically, it is money-printing on a global scale, with the fruits being shared among all members of the IMF, including some of the world’s most noxious regimes. Of course, the SDR consists only of USD, GBP, EUR, and JPY, so you can see whose citizens bear the cost and their currencies get diluted as the crap countries cash in their shiny, new SDRs. For example, international financial scofflaw Argentina gets over $2 billion worth of SDRs. The Nigerians, whose email scammers will surely now start dangling SDR-related propositions to already-fleeced Americans, will get a similar amount. Syria gets $350 million, perhaps some of that will go to protect Hezbollah from a painful devaluation that would push up the local currency price of Cemtex.
We aren’t quite this caustic in our assessment of the SDR scheme (we mean this in the British sense of the word) but the points are not lost on us. Certainly, now that the United States is somewhat dazed by the present crisis, economic heel-nipping is easy. Let’s just hope that some misplaced “capitalist guilt” doesn’t cause this Administration, or the next, to buy into what amounts to a redistribution scheme.
“Let’s just hope that some misplaced “capitalist guilt” doesn’t cause this Administration, or the next, to buy into what amounts to a redistribution scheme.”
Hahahaha.
i think its too late. the redistribution scheme is already in action.
agreed. way too late. we done.
That chick in the youtube video spewing how obama would pay for her gas and mortgage. remember her? we all laughed at her. no look who’se laughing.
we done bitches.
As a Canadian (looking to buy cheap US stuff, like a nice 3 bdrm condo in Naples) I say a big “thank you, eh?”
1 2 and 3
Obviously this post is way above your heads.
Links?
@6- it’s not a link, it was told to DB.
can we discuss CNBC right now suggesting that the media (which apparently doesn’t include cnbc) is the one fabricating this populist rage? LOOK IN THE FUCKING MIRROR, DENNIS KNEALE. cockbag.
Presumably you meant Semtex
@ 5. Would you care to explain?
We have Obama bowing to his Saudi masters in London and Hillary running around the globe apologizing to every nation whose leader will accept an iPod as a friendship gift, and you guys are worried about “capitalist guilt” ?!!??
Guy might be right from an ideological standpoint, but we still have yet to see if SDRs are as liquid/fungible as people are making them out to be. Syria might be getting SDRs, but they can’t very well trade these drawing rights to some terrorist organization for uranium (whereas they would be able to if they got st8 cash)
side note… why so much commenting on cnbc? people who watch that are unemployed/execution traders
12 here, another thought, why the F is this “irate taxpayer” worried about a $1tn blended gift to the IMF in reserve currency? is this guy really concerned with the USD/SYP exchange rate? is he going to have a stroke when he realizes that the gov’t balance sheet has been expanded multiple times this amount over the past year?
on a relative basis, this should be good for USD/any of the other exchange rates (save maybe JPY), as the GBP and EUR are pretty f’ed in their own right and this won’t help from a monetary policy perspective… EP who is this guy?
This is negative for GBP, EUR, JPY, and USD and positive for every overlevered EM country’s currency. Before, the EM country would face a torrent of hard currency buying from USD (or EUR) indebted local corps/individuals. The EM country had a limited level of reserves to meet that demand. Now, with a grant of SDRs, the country’s reserves are higher — it can get hard currency by using the SDRs and can then intervene to meet hard currency demand from the locals. One reason USD has held up well in this crisis is that EM countries are USD-indebted and deleveraging requires local agents to buy USD (or default). Now they can get the USD via the SDR route rather than via the market. Unequivocally EM bullish and USD bearish.
hi. got to this site from google search for “nipping”. where’s the the boobies?
Since getting laid off, I have resorted to mugging people that look like they are probably Democrats.
Lucrative and surprisingly guilt free.
Printing money to finance additional government spending is not a desirable option. A
government’s borrowing from the central bank should be driven by monetary policy
objectives, viz., the creation of sufficient liquidity to support an economy’s real growth,
preferably on a relatively noninflationary basis. Even if a government were to explicitly seek
to rely on the possibility of money creation to facilitate a somewhat higher level of
government expenditure, there are clear limits, given the potential impact that this would
have on inflation in the domestic economy. Given the money multipliers in most developing
countries, the scope for additional expenditure that can be financed in principle by money
creation is rarely above 1 percent of GDP, unless a clear and relatively quick supply-side
impact can be obtained from the higher level of expenditure. Except in situations where
inflation is being gradually brought down from hyperinflationary levels, it would be unusual
for the IMF to endorse a program that consciously targeted an inflation rate above 10–12
percent (Khan and Senhadji, 2000). Long experience suggests that high inflation is not
conducive to sustained rapid growth, private investment (Fischer, 1993), or distributional
equity, as the poor are most heavily taxed in an inflationary environment.
pg 10
http://www.imf.org/external/pubs/ft/pdp/2005/pdp04.pdf
Apparently the IMF does not read its own publications.