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Dollar’s Fans Needn’t Fear Biden SDRs

6 comments

The latest attempt to move the global economy away from the dollar’s dominance involves a plan by Biden to issue $650 billion of Special Drawing Rights (SDRs) through the IMF. Ardent fans of the greenback needn’t worry, however, since this sum, as large as it seems, is just a drop in the bucket compared to a derivatives market that supplies more than $2 quadrillion to the world’s biggest financial players. The dollar is the only currency big enough to handle their action, which dwarfs global trade in actual goods and services of no more than $90 trillion. Under the circumstances, it’s unlikely the dollar will be replaced any time soon.

The $650 billion supposedly will enhance global liquidity, as though more liquidity were needed in a world where financiers can borrow practically unlimited quantities of money for next to nothing.  China’s communist government is backing the SDR expansion, although for reasons that are doubtless different from Biden’s. One suspects that globalists have Biden’s ear and that he is unwittingly going along with them because, well, because he was witless to begin with. For its part, China undoubtedly thinks more funny-money loosed in the ether can only be a good thing, since the CCP’s main enterprise these days is helping poor countries go deeper into hock for Belt & Road projects.

Pinto Beans for the Poor

The SDR initiative is being touted as a way to make the world more “green” and “sustainable,” which is another way of saying that anyone who opposes it is trying to make life even more miserable for the poor. Arguably, they will in fact be better off, since even if $600 billion of Biden’s giveaway goes toward purchasing fleets of Bentleys and sumptuous vacation homes for Third World dictators, the $50 billion that eventually trickles down will still buy a lot of pinto beans, Monsanto seed, prescription drugs and sacks of cement.

Meanwhile, Biden and his commie friends can gin up as many SDRs as they want and it’s not going to change things significantly. Think of it as a game of Monopoly in which a splinter group called Park Place LLP is formed to generate side-action with $1,000 worth of scrip. That’s only about 5% of what the official bank holds, but because it is not nearly as leverageable or fungible as “real” Monopoly dollars, the partners will eventually fritter away their “SDRs” paying hotel rents, utility bills and jail fines. Similarly, players who are dealt Biden SDRs will be constrained from multiplying them in the way a single real dollar magically becomes 50.

To avoid having to write another commentary about why the dollar is here to stay, let me address an ungainly theory that frequently resurfaces  – i.e., that America’s energy-producing enemies will gang up on the greenback by demanding payment in other currencies. The simple fact is, the world is perfectly happy paying for something as valuable and useful as oil with a currency that is in almost infinite supply. If Russia, Iran or OPEC were to demand payment in harder money – gold bullion, for instance — sales would quickly drop to zero. End of argument.

  • William King,;;; July 21, 2021, 4:41 am

    I loved it! You speak the truth!

  • ed moloney July 21, 2021, 12:15 am

    has the usa and the federal government come out and say publicly tht other countries energy roducers are enimys.
    energy producer ( are you refering to coal plants, gas plants, or nuclear power plants, as thats what those are duh!
    or are you trying to refer to what is known as a commodity , oil natuaral gas, interesting how wrong you are, if settlemt stoped occuring in federal reserve note thee be no sales realy, the govt wouldnt provide electricity to the people?

    look wh tyou wrote i.e., that America’s energy-producing enemies will gang up on the greenback by demanding payment in other currencies. The simple fact is, the world is perfectly happy paying for something as valuable and useful as oil with a currency that is in almost infinite supply.
    energy producing prodces electricity, did you use a reuters survey or what survey compaqny did you use that the world is perfectly happy, suposition the federal resever and the usa, are not going tohave a problem with othe countrys sloly unwinding there dependency on the fed note to settle salea. and it will have quite to opposite effect you are guesing at, brittan still has some of the oldest money and aint part of the european mess, i could go on an don about how wrong you are, just watch the value ofd the dollar go up ready for .95
    as for the sdr 650 billion of sdr will the imf cave in an dnot tie it to the entire basket and where are you account for the gold that has to be attached to the 650 billion whose vault allocated un allocated or to replace alan greenspans lent out gold by repurchasing with the whatever figure you thru out.
    it a complex geopolitificnnnumeried mess, the less the world use the federal reserve not the stronger it gets and hte better off for each country. so on and so forth……….. respectfully zambini!

    &&&&

    Not sure what your point is, Ed, but have you ever asked yourself why we need a $2 quadrillion financial edifice to service a global economy that produces no more than $250 trillion in actual goods and services? RA

  • Mary T Ficalora July 20, 2021, 6:36 pm

    This dismissal of the SDR strikes me as an echo of the historical California Ranchero’s dismissal of the Greenback upon its’ introduction. Stories live on of the Ranchero hubris lighting up paper Greenbacks to light cigars over the ridiculous idea that the Greenback could ever surpass the Mexican Silver Dollar in value. Funny money.

    $$$$$

    You’ve inadvertently underscored my point, Mary, since it takes far more greenbacks these days to buy a Mexican silver dollar. But if you want to swap your St. Gauden coins for SDRs, there’s nothing I can do to stop you. I’m curious, though, about what kind of person, other than a bankster or Third World bag-man, would defend SDRs? RA

  • The Seer July 20, 2021, 8:10 am

    Jim Sinclair stated that the dollar will not go away.

    &&&&

    A bold call! RA

  • Richard Charles July 18, 2021, 7:33 pm

    Rick, inclined to agree with you despite dollar run-up since April 2014 with bearish sentiment.

    UUP Targets + 69 %.

    Not one adult in a million is alive from the great deflation of the Thirties.

    • Dorcas July 20, 2021, 9:15 pm

      My old man was there so he must be 1 in a million


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