The Dollar's Death Knoll

It may be taught in future history or economic classes that the United States dollar died as the international monetary standard on September 2, 2009. On that day the International Monetary Fund [IMF] announced through its leader, Dominique Strass-Kahn, that it had signed a "Note Purchase Agreement" and that this action was "the first in the history of the IMF". This agreement calls for Communist China through its People's Bank of China to buy from the IMF notes that the IMF would repay over a period of time at a designated interest rate. The face value of the notes could be up to the amount of SDR 32 billion that is about $50,000,000,000.00 [$50 billion] and would be repaid not in dollars but in an amount calculated in the said SDR.

SDR stands for Special Drawing Rights which is not a "coin or a currency" but an international monetary standard determined and published by the IMF. This SDR calculation is made through a "basket" of national currencies which are today the euro, the dollar, the pound sterling and the Japanese yen. As of today one SDR is equal to $1.56.

Some facts need to be tied together. In March of 2009 the Zhou Xiaochuan, governor of the People's Bank of China, publicly urged that the US dollar no longer by recognized as the international monetary standard and that the IMF's Special Drawing Rights [SDR] become the new international standard. Less than two months ago Communist China and the United States had high level meetings which focused on the huge debt China holds over the US and China's concern about the value of the dollar that would repay that debt. This American debt is over $800 billion. The results of this conference were many pledges of American payment and many assurances of American liquidity and, most important, a promise from the US that it would promote Peking's role in the IMF.

The actions of the IMF as celebrated by Mr. Strauss-Kahn, an avowed socialist from France, demonstrate that Peking's role has begun to be established and will continue to grow. Besides being the number one creditor of the United States of America, Communist China has now also become the number one creditor of the International Monetary Fund.

The impact on America of this September 2nd act will be disastrous on the efforts of our nation to escape this recession and resume our role as the economic leader of the world. How far away can the demand from Communist China be for all future US Treasury obligations to be framed in such a fashion so that repayment is not in the form of the dollar, no matter what its international value may be, but rather by the SDR? From there, it is obvious that a strongly urged request will come from Peking that all past US Treasury obligations be amended so that payment of those debts also be calculated in the SDR fashion. Communist China has such a huge hold on America that a refusal to pay by such a formula is not a possibility. The rest of the world will quickly follow the Peking lead and the dollar will be replaced by the SDR as an international monetary standard. The outcome will be that our existing governmental debt will increase by over 50% if only today's SDR controls.

If all this comes to pass, Obama's goal to globalize the economy; deemphasise the dollar; and have socialism be the world economic system is a step closer. This President and his policies have to be confronted, opposed and after 2012 revoked.