Sam's Exchange: IMF, or the Incredible Monetary Fudge

© Photo : Source: Sam BardenSam Barden
Sam Barden - Sputnik International
The arrest of the Head of the International Monetary Fund, Dominique Strauss-Khan, in New York over the weekend on sex charges, could go down as the biggest event in modern monetary history.

The arrest of the Head of the International Monetary Fund, Dominique Strauss-Khan, in New York over the weekend on sex charges, could go down as the biggest event in modern monetary history.  Whether Strauss Khan is found guilty of the alleged sex charges or not is not really the point.  The point is control and influence over the supply of money globally.  The IMF is an intergovernmental organization that oversees the global financial system, by following the macroeconomic policies of its member countries.  Its member countries number about 187, but the Anglo-American cable dominates the IMF.  The IMF’s objective is to stabilize international exchange rates and develop economic growth through loans to member countries, usually poorer ones.  These loans always have conditions; increasingly viewed as punitive.  The absence of Strauss-Khan at the Greek Sovereign Debt crisis talks this week will surely increase the likelihood of European debt default.  The Incredible Monetary Fudge that is the current fiat monetary system could soon be finished.

The global monetary system is broken.  The world needs a system of basis.  Since the U.S. dollar is the world’s only reserve currency, and is literally printed out of thin air, there is no longer a basis.  Of course there is much speculation, literally, that gold and silver will become the new standard and that currency will again be backed by gold and silver.  This is not a view I hold, not least because it has been proven that the gold standard is not sustainable in the modern world.  When we are talking about a system of basis, actually we need a system of value.  Whilst gold is in demand, it does not necessarily have value.  The current value of gold for example, is largely based on the fact that speculators are betting on the fact that currency will be based on a gold standard again, and that this will somehow mean that gold will have a higher value.  This is of course all based on the fact that the world gold markets are transparent, accessible to all and not subject to manipulation.  The world’s gold markets are neither transparent, nor accessible to all and are absolutely subject to manipulation.  So a return to the gold standard is unlikely to create a monetary system of basis or fair value.

In establishing a new monetary system, not based on debt as the current one is, but based on value, we need to find a basis which has value, and will also promote efficient use of the world’s dwindling supply of natural resources.  The logical answer is to move towards an energy based system of value.  Goods and services should be based on energy inputs against outputs.  We could use such measures as a kilojoule of energy used, or a barrel of oil, or a kilowatt-hour, or a cubic meter of gas. 

How can we move from a system of imbalance, where we have huge debtor nations and creditor nations, to a system of balance?  Under an energy-based system, efficiency would mean that the ultimate goal would be to always be in balance.  Therefore, penalties or taxes would accrue when budgets are either in surplus or deficit.  Under an energy standard, a balanced budget would mean energy inputs and outputs have been efficient, and no resources have been wasted, unlike the current monetary system, which is anything but balanced.  The global community would also need to regulate and control the new system, on a fair and equitable basis, something which appears not to have been the case under the fiat monetary system.  To move to a more balanced global system based on energy, we would need a general rise in consciousness levels.  We are seeing this happen already.  The social revolutions sweeping the globe at the moment, via facebook, Linkedin, Wikileaks, twitter and others are all based on real time peer to peer media, and represent a general rise in social consciousness levels.   So, on this basis, the change, or transformation from one system to another is already underway.

The arrest of Dominique Straus-Khan on sex allegations charges looks like another stage of the transformation process.  It means that the Head of the IMF has been sidelined during critical European debt restructuring talks, and that it will likely increase the likelihood of debt defaults.  Rather than the world going into a protracted default situation, the outcome could include debt write downs, which in itself will bring the debtors and creditors into balance, giving a starting point for the movement from one system to another.  Let’s not forget that the current fiat system is not backed by anything, so the reality of balancing budgets between nations is nothing more than an accounting procedure.  The end of the Incredible Monetary Fudge could be sooner than we think.

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Global Markets are anything but integrated. What if we had a paradigm shift in the way we think, the way we actually do business with each other, between nations. Balanced global trade can only occur if we have transparent, accessible, efficient markets, with standardized contracts and on a standardized platform of global exchange. We are on the cusp of achieving this, although most people cannot see it. Sam’s Exchange aims to give its readers a clearer view and a platform for discussion. Markets, trade and economics are in fact nothing more than the result of our thoughts and actions expressed in numbers, not the reverse.

Sam Barden is CEO of SBI Markets General Trading LLC, a Dubai-registered trading and advisory company. Barden, 39, has worked in the global financial markets for more than 17 years in Europe, Russia and the Middle East. He has advised and executed strategic transactions for both the government and private sector, in particular in energy and commodity markets, advising various energy producing nations on their strategic market developments and interaction. He holds a degree in economics and finance from Victoria University, Melbourne, Australia.

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