Yes, Virginia, apparently they can. And now perhaps we understand better WHY the Bankster Priesthood of the Federal Reserve seems to be so intent on destroying capital and blowing the nation's debt bubble as far as it can go. Do you see it? The Fed knows that the ultimate Backstop is now geared up to ride to the rescue. The new SDR scheme is prepared to roll up all global debt as the IMF of the United Nations readies herself to give birth to a world reserve currency on steroids (to quote Dan Collins in the video below.)
Here is the Keiser Report posted September 6, 2016. Max and Stacy first discuss the rudiments of the M-SDR. In the second half, Dan Collins of www.TheChinaMoneyReport.com (twitter: @DanCollins2011) provides deep insight about the first World Bank M-SDR bond issuance that took place last month. Below the video is a partial transcript of the conversation between Max and Dan.
Partial transcript, partially paraphrased:
Max: If China's Yuan has 10% of the IMF Basket, this is a whole paradigm-busting, New World Order, right Dan?
Dan: Yes absolutely.... this SDR Bond is going to rocket the Renminbi up probably into the top two world currencies.
Max: And it's going to surpass the Japanese Yen.
Dan: How can Japan compete with China economically? China has 20x the population....
Max: Folks who are critical of the Central Banks say they have reached a limit of how much bond-buying they can do (or outright stock-buying, in the case of Japan)... But if the world central bank, the IMF, becomes a $100 Trillion credit facility, then you have a lot of room yet to go with central banks buying up assets around the world. China is now involved. Can the IMF now create a $100 Trillion credit facility and buy up all the garbage no-good debt from all the central banks around the world, roll it up and price it all in these Special Drawing Rights?
Dan: At the end of the day, that may have to be the global backstop. We are in an era of globally coordinated debasement of everybody's currency. It's the first time in the world [history] that everybody has coordinated to debase their own currencies. The Japanese are leading the way. At some point the levies are going to break. This might be the plan that they had [all along].
Therefore, don't expect either the Fed or the Bank of Japan to pull the reins back on further balance sheet expansion and worthless stock purchases. In fact, go ahead and load those puppies up because we've got a new Sugar Daddy in town. The Bail-Out Messiah has left the gate.
Many thanks to Stacy in the first half of that show who pointed us in the direction of this article at Epoch Times (linked here). The editor, Valentin Schmid, did a nice job of explaining the difference between the old SDR Bonds and this new "M" or "Market" SDR bond, quote:
The SDR bonds issued by the two official institutions are different from the official SDR issued by the IMF. In fact, they are a derivative of it [oh tell me you did not just say 'derivative']. When the World Bank unit called International Bank for Reconstruction and Development (IBRD) issues the bonds, it receives payment in yuan from the Chinese market or at first from the issue’s underwriter, the Industrial and Commercial Bank of China.
It can then proceed to either spend the yuan in China or exchange them for other currencies and spend them abroad. So far, the IBRD has disbursed $46 billion worth of loans, grants, and credits in China. It is important to note that this process is effectively creating SDRs, which have previously not existed.
Chinese investors receive the SDR bonds, but what do they actually own?
Official SDRs can be redeemed for dollars, euros, yen, pounds, and soon yuan through the IMF. However, the new private SDR, or M-SDR as the IMF calls it, cannot. The new bonds represent a claim on the IBRD. Since the IBRD doesn’t have any SDR assets, the repayment will also be in yuan, dollars, euros, yen, or pounds. So what’s the point of having this new basket?
For the IBRD, there is no advantage because it is borrowing in strong currencies and getting paid in a relatively weak one. For the Chinese investors, there is the advantage that they can hold a sizeable non-yuan denominated asset in China and reduce their risk to the Chinese currency, which may further fall in value. Because of still-existing capital controls, buying foreign assets in size is not yet possible on the Chinese domestic bond market.
And there you go. Chinese investors now have an almost heavenly financial vehicle in which to dump their Treasury or Yen or whatever. They don't have to worry about any bad press reported on any stinky Yuan. They can't lose. Buy those SDRs and just keep riding the wave. The article concludes with a nice shout-out to our Willem Middlekoop, one of those rare lone voices in the wilderness who proclaims the coming Reset and the arrival of the new IMF world currency:
Now that the first issuance is well underway, it is easy to lever up the balance sheets of international development organizations and keep issuing—or printing—SDR obligations even in the trillions until even private market actors support and accept them. Once the SDR is widely accepted as payment, the IMF could just redeem all outstanding local currencies for SDR and the world would not only have a new reserve currency, but just one global currency.
“You create new liquidity. That’s the kind of reform that could change the international system immediately,” says Worth Wray.
Willem Middelkoop says this could be done through an IMF substitution fund, an idea already discussed in the 1970s. “This fund could facilitate a direct exchange of dollars for SDRs. The liquidity issue would be resolved with one stroke of the pen, as an SDR would be created for every dollar that was exchanged,” he wrote in his note.
Rogue Money readers can pat themselves on the back that they have a pretty clear view of what's coming, currency-wise. They are certainly miles ahead of many of our friends and family who haven't even heard of the IMF, let alone the IMF's Special Drawing Rights. Now we wait to see how GOLD fits into this package, hmmmm.
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