IMF: The Freemasons Of Global Finance

These days, the need to dictate power and authority are mostly associated with forming strategic alliances in all forms. In the global world of finance, economy or politics following an old adage: ‘birds of the same feathers flocks together,' seem to be a common practice.

From G7 to G20: How it happened?

Ever wondered about the informal gathering of heads, that once started and named the G7’s then the G8’s, and finally to what we call it today, the G20 countries? Would there be any differences in the increment of these numbers?

Let me put it metaphorically, in a form of a short story concerning the morphing of the G7’s to the G20 countries; imagine the group of G8 countries as a fishing boat in the middle of the Ocean. One fine day, the fishermen of that G7 boat got a shock of their lives when they have seen a great white shark for the first time. They thought to themselves that, it would be totally impossible to catch and bring that shark onto their boat, as it may topple it.

Hence, the G7 crew decided to switch to a bigger boat that would house more space and equipment to accommodate the capture of that Shark they have just seen. The G7 countries were once thought to be made of the world’s most advanced economies, but that shark was China, so they needed more countries to now form a coalition with the ‘shark,' not against it. But why? Well, perhaps it’s another old saying ‘If you cannot beat them, then join them.' That is the story of how the G20 came about. But you may then ask, what have the G20 countries got to do with the International Monetary Fund (IMF)?

Ties binding G20 & IMF

Before we even talk about the IMF, those woken up on the 1^st of October 2016 may have not found anything noticeably different. Correct? Like you and me till date would still have the so called ‘greenbacks’ in your pocket, some of you may still be paid in dollars, and it still be worth something.

The dollar replaced the British pound sterling as the world’s dominant currency about 100 years ago, but it was a slow and steady process that took place from 1914 right up to 1944. It didn’t happen instantly, nor will the World’s Money called the Special Drawings Right (SDR) owned by the IMF, taking over the Dollar be doing the same.

So why then talk about the IMF? The Panic of 2008 changed everything we knew about the IMF. Central banks around the world expanded their balance sheets enormously like how the Fed’s balance sheet exploded from $800 before the crisis to about $4 trillion today, for example. The only financial institution with a balance sheet capable enough to counteract to such a crisis is the IMF. As we may know it, the IMF acts as the “world’s central bank.” If the Central Banks were to collapse, my guess is that the IMF would be the only once issuing massive amounts of SDRs to keep the international monetary system from falling apart. The consequence is the end of the dollar as the leading global reserve currency. That’s why the function of Yuan that was included in the SDR basket as of 1^st October may all be some sneaky ‘forward planning’ but more to protect the so-called ‘birds of the same feathers’ form collapsing or provoking another gargantuan financial crisis by keeping the peace with the ‘Shark’ which in this case, is China.

SDR as a currency

The nature of things nowadays is that the IMF is the only institution that can print and distribute these SDR’s. Only its member states that are within its elite “basket” can freely exchange SDR as currency. SDR’s are most often used to take loans or make repayments made by the IMF. They are also used by its member’s central banks to sell in order to help currency reserves during times of economic crisis.

Apparently, there is a possibility of a “private sector” version of SDRs, called M-SDRs. The IMF has published a technical paper introducing the concept of a private SDR market. In the IMF’s vision, private companies and corporations can issue bonds nominated in SDR's.

G20, IMF, China…Gold?

Until now, one may notice a string of words like G20 Countries, the IMF, and China. Are they linked, you may ask? Definitely, as these keywords may form a powerful unit, responsible for changing the mechanics of today’s monetary policy. The course of things or even the core purpose of an organization like the IMF today may have changed from the time it was formed.

For example, the IMF is now gone back to its original mission of lending to rich countries predominantly to European countries where the bulk of its money are directed to. It’s not on the radar of the IMF at all to be assisting poorer countries like Botswana, Mali or Jamaica but why is this so? To put it simply the more it associates with richer countries, the more it could get its help form bigger, richer more influential countries like the ‘shark’ they have spotted, China. This is very simply why a new lending spree requires new sources of funding for the IMF itself.

Once we have connected the dots of which country or power associates with whom then we may find their ultimate Gold of forming this so-called synergy. The answer to that is no longer a mystery, and that has to do with the accumulation of Gold. The best way to evaluate a ‘shadow-Gold- standard’ among some countries is to use the ratio of gold to the gross domestic product (GDP) which can be calculated using official figures compared across these countries to see where real gold power resides. These countries which include countries that the IMF is forming strong alliances with are potentially the big winners that form the real center of gold power in the world.

As previously mentioned the IMF prefers to bail out rich countries and a big portion of them are made up the nineteen nations of the Euro zone which issues the Euro and mainly because their gold as a percentage of GDP is over 4 percent. This brings us back to an interesting fact about China where its official gold reserves as of July 2015 were at 1,658 tons, but from various other resources, it hinted a chance for China to have accumulated its Gold stock closer to 4,000 or even 5,000 tons till date. China in this scenario may be in high gear to accumulate Gold so that it will have a comparable ratio to the United States and Europe. In the case of a financial collapse, the Gold to GDP ratio will be critical in forming the basis for any monetary reset and the new ‘rules of the game.'

In summary in any monetary reset, countries that formed an alliance as we could see happening nowadays would be the ones setting and the rules and dictate the rest of the world. The amount of Gold a country possesses would be akin to poker players on a round table aiming at accumulating as many chips possible to gain the upper hand in the game. In this case, Gold functions like a pile of poker chips in this context which does also mean that one’s voice at the table is going to be a result of the size of one’s Gold hoard.