Though the lamestream media does occasionally out and out lie and unquestioningly pass on dubious information completely fabricated by Propaganda Agencies...uhhh, I mean 'Public Relations Firms' they usually lie by omission.
A case in point of this is a recent article in Time magazine entitled, "Down with the Dollar!" which introduces and synthesizes a lot of key information without drawing the obvious consequences.
Let me explain.
The article does a great job of explaining what SDRs are (the so-called 'Special Drawing Rights' of the International Monetary Fund) and their history. Originally the Bretton-Wood's global financial system was founded on the U.S. dollar as the world's reserve currency backed by gold. As the article points out the economist John Maynard Keynes, the head of the British delegation to Bretton--and thus one of the architects of the Bretton system--had wanted to give the IMF the power to create a "supranational bank money" and thus the role of currency creation.
Ultimately, the United States won the day with reassurances that the dollar would always be redeemable for gold. However, due to the cost of the Vietnam war, Nixon was forced to de-couple the dollar from gold in 1971 and the world entered into the very fiat system that has (my words, not the article) divorced the money supply and paper wealth from any semblance of real wealth.
In any event, this de-coupling of the dollar from gold and the resulting crash of the dollar:
...led to talk of establishing the SDR as global reserve currency. That faded when the high interest rates set by Federal Reserve Chairman Paul Volcker to throttle inflation lured foreigners back to the dollar in the early 1980s.
Having given the background the article then goes into explain why a transistion to a global currency regulated by a world central bank would be a good thing.
The question I'd like to ask at this point is, "How does the article try to sell its readers on this global banking system?" and "What is (intentionally or not) being left out?"
Consider the following:
...[W]e've had an international monetary system in which the dollar is the main store of value. When countries want to protect themselves from the vagaries of global financial markets, they stockpile dollars the way nations in previous eras hoarded gold. This stockpiling has enabled the U.S. government to borrow almost without limit in global markets and until recently allowed American consumers to do the same.
Over the short term, this can seem like a positive; we can get away with running a federal deficit that could hit $2 trillion this year only because of the dollar's status as global reserve currency. But borrowing trillions isn't really a ticket to long-run prosperity. In fact, the current economic crisis may have been spawned by huge imbalances in global trade and capital flows that are in part the product of the dollar's special status. Global demand for dollars supplanted demand for U.S. products and services, argues Columbia University economist and longtime SDR fan Joseph Stiglitz, resulting in trade deficits, the decline of U.S. manufacturing--and years of supereasy mortgage credit.
We got fat and lazy.
This is all well and good and quite correct, but it implies that it is in the interest of the long-term health of the United States to abandon this system. [As an aside, it would have been worth mentioning: (1.) The decline in U.S. manufacturing was largely due to Volker's rate increases of the 70's which protected the dollar at the expense of the U.S.'s economic base and in favor of globalization as companies who couldn't afford to produce in the U.S. anymore fled abroad (that is, beginning the "race to the bottom" for the workers of the world) and (2.) this massive borrowing has favored the central banks who collect interest on all of this lending.] What isn't mentioned here is the pain that would be felt if the dollar did loose its status. Since the dollar as the reserve currency has--artifically and unfairly, to be sure--propped up the U.S. economy, the loss of the dollar's role coupled with the lack of a manufacturing base spells serious trouble.
Now the rosy-eyed may say this spur a revitalization as the U.S. recreates the fundamentals of an economy that is now based almost entirely on consumption (70%) and militarism. But where are the loans to drive this revitalizaion going to come from?
Well, perhaps home banks in the U.S. will start lending again instead of hoarding the trillions that they have been injected with. But this would mean pouring dollars into the U.S. economy just as foreigners begin dumping their dollars (since it no longer has the same global role). This is the Weimer scenerio.
Or maybe the loans will come from the IMF as dollars get translated into new global currency on terms dictated by the bank.
And we can trust them right? As Rockefeller himself said:
"We are grateful to The Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But, the work is now much more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries." David Rockefeller, founder of the Trilateral Commission, in an address to a meeting of The Trilateral Commission, in June, 1991.
Surely! Just look at the IMF's track record in third world countries. (This is described in detail in John' Perkin's Confessions of an Economic Hitman). More on this in a later post.
The article concludes:
The G-20 decision to create $250 billion in new SDRs marks a "major step" toward establishing the SDR as a global reserve currency, says Stiglitz. It's only a step, albeit enough of one to prompt Republican Representative Michele Bachmann of Minnesota to make the claim that Obama was out to ditch the dollar. Actually, the dollar would live on in an SDR-dominated world. It would no longer reign supreme, but neither would the yen or the euro or the yuan. Which might be the best long-run outcome the U.S. can hope for.
What evidence has been given for that? In short, this article seems to arrive at its cheery conlusion only by neglecting any discussion of the hyper-inflation that would likely result from dollar dumping (exacerbated by the rampant money creation presently under way) and by assuming that the IMF will treat the U.S. favorably.
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