SDR - New World Money

[gfp927z]

The SDR solves the 'Triffin Dilemma' -


Rickards points out that having one country's currency as the world's reserve currency can only work for a limited time because of 'The Triffin Dilemma' (link below). The dilemma is that the country with the reserve currency (US dollar) must run continual trade deficits in order to get the reserve currency into the hands of the countries of the world so it can function in world trade. However, a country that runs constant trade deficits eventually will go bankrupt, so therein lies the rub.

As the bankruptcy process runs its course, a new currency hopefully emerges in time to take on the role of world's reserve, the way the US dollar replaced the British Pound Sterling after WW II. For the dollar, the replacement is going to be the SDR, and the dollar will then be relegated to being just another 'local' currency for use within the US, the way the Mexican peso functions within Mexico. But unfortunately for us, the dollar will have much less purchasing power than currently, hence the need to diversify into gold, real assets, other currencies, or SDRs if you can get them (Rickards apparently knows a way for us small fry to get SDRs).

The beauty of the SDR is that it's not issued by a country, but by the IMF. The need to run endless trade deficits to disseminate the currency around the world (which eventually leads to bankruptcy for the issuing country) is not a problem for the IMF since it is not a country. So the SDR solves the age old 'Triffin Dilemma' -


https://en.wikipedia.org/wiki/Triffin_dilemma