By JC Collins
With March quickly coming to an end it appears there will be no passage of supporting legislation in Congress for the IMF 2010 Quota and Governance Reforms.
On Friday, the House of Representatives introduced a new aid bill for Ukraine which did not include the reforms. An earlier version of the bill did in fact include the reforms.
We are entering into a situation where the G20 countries have told the United States that they have until the Finance Ministers and Central Bank Governors meeting on April 10th and 11th to enact the required supporting legislation for the IMF Reforms.
This meeting is being held in Washington and it will certainly be a few days to remember.
Let’s recall that the G20 countries have stated that they will take aggressive measures to by-pass the United States and its veto power over the IMF Executive Board by the April meeting.
Let’s recall that Russia has threatened to dump its US Treasury Bonds and begin settling trade in other currencies other than the US dollar. As many have predicted, this will be the death of the petrodollar and reserve currency status of the American dollar.
America has but a few weeks to enter into multilateral agreements with the rest of the world and show its willingness to become part of a more balanced and centralized financial system. The financial power of the rest of the world has created a situation for the US where it is collapse or consolidation.
While not paying attention to the obvious sovereign debt crisis the US will have the moment the dollars status is removed, television pundits and government officials will talk America into a corner by saying that they will not be financially held hostage to the whims and desires of corrupt financial institutions which are now controlled by a consortium of special interests.
Like Nixon taking the dollar off its 30% gold peg in 1971, the American people will never be told the truth of why and how international economics has given them a post WW2 life style with the reserve status of the dollar, and how that same lifestyle and image will now be reduced as the reserve currency status is shifted to the centralized SDR system.
America is playing a dangerous game where it thinks that the level of Treasury debt being held in the foreign account reserves of other countries will protect it from a debt default. The consensus is that if the US dollar collapses so will the foreign assets of other countries. As such, its in the best interest of all countries to keep the dollar alive.
One can’t help but wonder if the simplicity of this argument is injected into the social collective to enforce the forthcoming deniability of American administration officials. There is way too much focus put on this component of the US debt and bond issue. How easy would it be for the rest of the world, represented by a disgruntled G20 and International Monetary Fund to aggressively restructure the US debt into the SDR bond allocation and composition system, while using the Bank for International Settlements as the clearing house for all transactions?
One can only think of such historical paradigm shifts as the Versailles Treaty and the end of the Ottoman Empire.
The US dollar will be removed from its current status as primary reserve currency and the world will move towards a centralized SDR system. Of this there is little doubt. When even China and Russia are calling for the implementation of this very same system, and resource rich countries like Canada and Australia also supporting the IMF restructuring, not to mention currency swap agreements with China and the establishment of renminbi trading hubs, the transition becomes imminent.
America will cry victim. It has become the hostage to a world which it held hostage since 1944. It’s karma has come full circle. – JC Collins