A recent article in Forbes has suggested that the Trump Presidency has three options regarding the international monetary system. One option is to continue with the dollar as the primary reserve currency. Most readers will be aware of the challenges from such a continuation. The growing imbalances within the existing system are creating the need for a structural change. So this really is not an option worth considering.
The second option which Forbes suggests is to use the Special Drawing Right (SDR) of the International Monetary Fund (IMF) as the global reserve asset. This concept has been thoroughly reviewed and explained JC Collins on his Philosophy Of Metrics web site and does provide a viable path forward pending what solutions and protections are put forward to address concerns over loss of sovereignty.
A third option which Forbes puts forward is the return to a new gold standard. This option has also been discussed and reviewed on Philosophy Of Metrics in the article The Greatest Deal of All Time – A Trump Gold Standard and on the Republican Party of Canada site with the article An Incremental Return to Gold-Backed National Currencies – And Why A Supra-Sovereign SDR Reserve Asset May Just Make That Work.
Both articles taken together provide a focused picture on the possible solution of gold-backed national currencies being used in conjunction with the SDR to re-balance the international monetary framework.
There are some key people in the Trump Administration, as discussed in the first article, who are positioning policies which will facilitate the transition to a partial gold support for the dollar. This will be called a new gold standard regardless of the percentage or depth of gold support.
It has been noted that the recent communiqué from the IMF no longer mentions the need to resist protectionism. This is revealing in that it aligns with the previous discussions we have had since 2015 about the Trump platform representing a “New Modern Nationalism” which will be used to sell the transformation of the international monetary system and manufacture the domestic support for major policy changes back home in America.
These changes include everything from devaluing the dollar and forcing the appreciation of the Chinese renminbi. Both of these have been openly discussed in the last few months and will continue to be discussed as more of the geopolitical challenges of this transformation are sorted out on the international stage.
Where Forbes defines option two and three as an either /or decision, I would suggest that it will be a combination of both. The new nationalism which is sweeping across the world will enhance a re-negotiation of trade deals and encourage fundamental changes to the existing dollar based exchange rate arrangements. This will force a drastic shifting of wealth and access to resources in the world. It is that reason more than anything else which is the source of the ongoing geopolitical tension in the world.
Readers can reference the POM article The Great War for Eurasia for a better understanding.
The number one concern with the concept of using the SDR as the international reserve asset in place of the USD is that it would mean the loss of sovereignty for nations. The SDR system taken to its ultimate corrupted form would mean that once sovereign nations no longer have control over their domestic money supply. This is not necessarily true as discussed in the linked articles above. Though it could be true if proper controls and policies are not put in place through re-negotiated trade deals and exchange rate arrangements.
For many this risk is too great and the SDR framework would have some huge hurdles to overcome. This will also depend on how it is sold to the mass populations of each nation. Some countries will absorb the change without little hesitation as they would stand to gain and be better positioned.
But there are nations, such as America, where an SDR system could be perceived as detrimental based on the fact that the US dollar has in essence been the international reserve asset since at least the end of the last world war. This “loss of power and influence” is being packaged and sold as Trump’s new nationalism and the BREXIT vote. Their is a high probability that Marine Le Pen will also be elected in France this weekend as previously predicted here on POM.
Behind the scripted media presentations on a possible new gold standard will be the fine print on the role of the SDR in the international monetary system. The use of domestic currencies, such as the USD, to balance global trade, will need to be avoided.
When Trump said in a speech that he is against a “global currency” and a “world government” most alternative media interpreted that to mean that he is against globalization. But globalization is only changing hats and will continue under the new modern nationalism with re-negotiated trade deals and the use of the SDR to balance global trade.
This has been the objective all along.
Such a role for the SDR could be presented as not being a global currency because it is only used for trade purposes and no one is walking around with SDR in their wallet or in their bank accounts.
The realities of a Trump Presidency are now settling in on the American people. There has been some flip-flopping and the continuation of the existing American foreign policy, which is evident in the bombing of Afghanistan and the missile strike in Syria. Outside of which establishment people are holding the reins, it would appear that not much has changed regarding Anglo-American policies and strategies.
The post How Rothschild Inc. Saved Donald Trump provides some explanation for the emerging Trump realities. Taken at first by many as wrong, the article itself is proving extremely accurate considering it was written last summer and before people were named to the Trump administration. Wilbur Ross, former Rothschild Inc. executive who was discussed in the linked POM article, is now the Secretary of Commerce and will be instrumental in forming the new American economic and trade policies.
That should be the biggest clue to all that the ongoing international strategies are continuing with the Trump Presidency. There is no reason to think that this will also not apply to the call for a larger role for the SDR.
A partial gold standard for the USD and other major currencies acting as the front man could very well direct attention away from the SDR background and deeper changes to the international monetary framework. Understanding the fundamentals of this transformation is the best thing we can do to grasp and predict what is to come next.