Jim Rickards: All Roads Lead to the IMF; SDRs to Replace Dollar as New World Currency

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Excerpts

"When you start manipulating markets and you're relying on data to guide your decisions, but the data itself is the result of the prior manipulation, then the data is no good and you're just going to make more bad decisions." 

"We haven't had much inflation yet, that's true. But you can see it coming from the actions of the Fed and the Fed has said publicly that they want inflation. And yet, some people think that 2.5% or 3% inflation is benign saying, 'Well, that's not too bad. We can live with that.' That's not true. I mean 3% inflation will cut the value of your purchasing power in half in about 24 years…there's nothing benign about it."

"When people talk about deficits, my first question is, ‘Okay, tell me what the deficit is, but also tell me what the growth rate is?’ And if you're growing faster than you're borrowing then the debt is sustainable. But if the debt is going up faster than the economy is growing, then the debt is not sustainable. So, where are we today? We are at a point where even today those debts are still going up faster than growth, and that's a recipe for disaster."

"Sovereign banks bailed out the private sector, but now who's going to bail out the sovereign banks because they are all—all the major ones anyway—are insolvent now on a mark-to-market basis. Well, who's bigger than a sovereign? The answer is the IMF.”

“This is not well-known, but they have a printing press also. They can print special drawing rights, so-called SDRs... Just to be clear: you and I are not going to have SDRs in our pockets. We're still going to have US dollars. It's just that the dollar will cease to function as the global reserve currency. It will be a local currency...but it won't be used for the big things [like]…the price of oil, settlement and balance of payments between countries, rescue packages, and probably the financial statements of the hundred largest corporations, [which]…in the not too distant future they'll actually publish their financial results in SDRs, not in dollars.”

"People use the phrase, 'kick the can down the road'...it's more like kicking the can upstairs. So, going from private debt to a sovereign debt bailout was kicking the can upstairs… And the reason is that the central banks used up their balance sheets—used up their capacity—to deal with the last crisis. So they've got nothing left to deal with in the next crisis. So it's going to have to go to the IMF because they have the only clean balance sheet left in the world. Just to give you a concrete example...the Fed is leveraged 80:1. The IMF is only leveraged 3:1, which means the IMF has a lot of headroom to issue new money and they will. I've had private conversations with senior people and they say they will do it."

"What the elites are trying to do is they're trying to engineer higher inflation to make the debt worth less, keep a lid on interest rates so they don't get even more debt on top of it, rob the savers—do it through the banking the system—and print the money at the IMF. So it's all kind of one big thing that they're working on...again this is not speculation, there are academic papers on financial repression, there are official IMF papers on SDRs. This is all out there and I've researched it and put it all in The Death of Money."

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