So why would anyone want to use SDRs ? This is taken from a transcript of a Peter Schiff interview of Jim Rickards.
Peter: (Jim) In your book, you lay out four possible results from the present currency war. Please briefly describe these and which one do you feel is most likely and why.
James: Yes, I lay out four scenarios, which I call “The Four Horsemen of the Dollar Apocalypse.”
The first case is a world of multiple reserve currencies with the dollar being just one among several. This is the preferred solution of academics. I call it the “Kumbaya Solution” because it assumes all of the currencies will get along fine with each other. In fact, however, instead of one central bank behaving badly, we will have many.
The second case is world money in the form of Special Drawing Rights (SDRs). This is the preferred solution of global elites. The foundation for this has already been laid and the plumbing is already in place. The International Monetary Fund (IMF) would have its own printing press under the unaccountable control of the G20. This would reduce the dollar to the role of a local currency, as all important international transfers would be denominated in SDRs.
The third case is a return to the gold standard. This would have to be done at a much higher price to avoid the deflationary blunder of the 1920s, when nations returned to gold at an old parity that could not be sustained without massive deflation due to all of the money-printing in the meantime. I suggest a price of $7,000 per ounce for the new parity.
My final case is chaos and a resort to emergency economic powers. I consider this the most likely because of a combination of denial, delay, and wishful thinking on the part of the monetary elites.
Peter: What do you see as Washington’s end-game for the present currency war? What is their best-case scenario?
James: Washington’s best-case scenario is that banks gradually heal by making leveraged profits on the spreads between low-cost deposits and safe government bonds. These profits are then a cushion to absorb losses on bad assets and, eventually, the system becomes healthy again and can start the lending-and-spending game over again.
I view this as unlikely because the debts are so great, the time needed so long, and the deflationary forces so strong that the banks will not recover before the needed money-printing drives the system over a cliff – through a loss of confidence in the dollar and other paper currencies.
I still view the SDR (maybe defined differently than today’s basket of four currencies) as a very likely option with a return to the gold standard as a long shot. Elites (international corporations, big banks and powerful politicians etc) would love the fixed 5 year currency peg of the SDR!! Why ? You can plan around it.
Oh … I guess the global elites could add gold to the SDR basket of currencies, but why ? Would that then be defined as a gold standard ?