The dollar as the world’s reserve currency is dead

I know you have heard it for years but nothing really has happened, you think. Well seems some people have woken up by S&Ps down rating of US credit, but in fact the dollar has been doomed way before this non event. In fact IMF has released a complete, comprehensive as well as very detailed proposal on how and what will replace the dollar as the world’s reserve currency.

The new currency is the so called SDR, Special Drawing Rights managed by the IMF. The SDR's value is defined by a weighted currency basket, today of four, major currencies: the Euro, the US dollar, the British pound and the Japanese Yen.

How about the Chinese? Could they not become the next reserve currency and aren’t they part of the SDR? As of now the Yan isn’t ready just yet but as it probably will sometimes in the not too distant future possibly within 5-6 years and yes it seems it’s intended the Yan will be part of the SDR as well.

In order to manage this then US dollar needs a kick down so that US volumes get reduced and is possible to gradually be replaced by the Yan.

In the last Davos meeting and as Rickards said in this interview it was stated “we need to fill the financial system with some 100 trillion of new credit i.o. debt”. Now it’s clear where that new debt will be generated from. Yes via the new SDR. So if it’s possible to implement the SDR in a quick fashion then the hope is IMF will be able to generate new addition and basically perpetual QE as far as the eye can see.

There you have it - in Davos the people in the know said what they are aiming, what they want and then some months later the IMF is able to present a complete and very detailed plan for the replacement of the dollar as the worlds reserve currency and with the ability to create an abundance of new debt sorry credit, I mean money. Well actually the new SDR plan has been in the works for many, many years.

But then in order to manage this quick the dollar need a real push down in order to free space for primarily the Yan as the by the markets preferred currency. In that regards as well as timing vice didn’t S&Ps dollar downgrade come in just handy? As well as the defecit cealing deabacle? I wonder if the Tea Party activists really understands what they now are in fact supporting? Now the more reason for China to push for a new order.

China Blasts US After S&P Downgrade, Calls for New Global Reserve
http://www.ibtimes.com/articles/193532/20110806/us-debt-downgrade-after-dollar-future-china-blast-standard-poo.htm

Clearly defending the dollar at this point by hiking rates is contra productive as the economy is anemic to say the least as well as it will not be possible to deflate as planned on the US deficit. Paying of all the defecit is completely and utterly unrealistic as official inclusing un official US debt now is close to $100 trillion according to proffessor Kotlikoff.

And then I would imagine the Yan gets appreciated in conjunction to this, Chinese goods will increase in price and thus create inflationary pressure in e.g. the US in particular as its currency is going down. Cheap Chinese imports will become less cheap.

I wonder what the equivalent of US $100 trillion of new credit in to the system means in terms of inflation?

http://www.youtube.com/watch?v=ZmDuS_IQ40g

Here more about how the dollar quietly can be debased in a corner and by the way IFM is already anointed as sort of the world’s central bank. Then besides more inflationary pressure in the US as their currency depreciates and import gets more expensive e.g. oil, then and as Rickards asks – how with a weak dollar will the US be able to manage its security and military commitments? By the way this interview is now some two years old.
http://www.youtube.com/watch?v=IxOSmrE_Kyw&feature=related

The consolidation of power is escalating. In the US a new Super Congress has been implemented by President Obama:

Under the new law, the federal government will cap spending levels by about $1 trillion over a ten-year period and delegate the responsibility of slashing another $1-$2 trillion to a powerful 12-member committee.

No, it's not the Gang of Six (times two). This time it's called the "Super Congress."

The committee of six Republicans and six Democrats, which will do most of its work behind closed doors, will have until Nov. 23 to develop a plan to reduce the budget deficit that must pass through both Houses of Congress before Christmas.

Once they come up with a plan that seven members agree to, it will go to both chambers and can pass with just a simple majority. No filibustering, and no amending allowed.
http://news.yahoo.com/blogs/ticket/meet-super-congress-191709031.html

And in the Euro Zone all fiscal policy decision is now outright managed by Germany via EFSF. In that regards Ireland, Greece etc are not any longer able to get a vote.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/7/30_Jim_Rickards.html

Question is when IMF the world’s central bank decides to demonetize Gold? I mean if you intend to run a QE perpetual approach you then simply do not want anything to give you away as far as inflation is concerned?