The IMF Wants Your Retirement Nest Egg Now – to SPEND

I was watching a local late night news program the other evening. It was an interview with the Managing Director of the IMF – Dominique Strauss-Kahn – (His eye may not be on the IMF ball 🙂

What I heard in that interview is nothing short of frightening when you consider what this guy believes about economics.

Much of the interview was on the Climate Change Summit and the need to finance the underdeveloped countries to fight climate change effects on those countries. As you may know Clinton has offered to give them $100Mn of your US Dollars as an initial payment.

However this is not a one time thing. It is likely to be paid every year into the future and is likely to increase as all payments to these institutions tend to do.

The IMF is hoping to get it’s hands on this money so that it can dole it out in the form of SDRs (Special Drawing Rights) to the underdeveloped countries.

SDRs are IMF currency and basically give these underdeveloped countries a gift of your money because they can use SDRs to exchange for one of four currencies in the SDRs that are freely trading in the foreign exchange markets. This is to help them out because their own currency may not be tradable or may not be worth much against the major currencies.

Note SDRs are fiat currency and are just printed by the IMF at the direction of the US government. Just like the FED and central banks they can create money out of thin air. Until recently they only printed about $25Bn SDRs but then got approval to print $250Bn to help poor and stressed countries through the financial crisis.

Back to the interview. Mr Strauss-Kahn’s opening remarks are,

“Almost everyone recognises that this question of climate change is one of the biggest challenges mankind ever faced and at the same time nobody is happy with tax. The problem is we need resources (read  YOUR MONEY) to face this problem and if it is time and I believe it is true that future of our children and grand-children at stake. The question is that if we will be happy with a new tax.”

He then considers the fact that the developed world is in the middle of a financial crisis,

“On the other hand the questions of taxes jeopardising the recovery cannot be solved as such. It depends what you do with the money. When you send it we can eventually argue exactly on the opposite side.”

This is somewhat confusing but let’s move on. This is the important bit and why you should be concerned,

“It is a very well known argument in public finance that tax collected by the government and spent finally (I think he means fully spent here) has more affect on growth than in the private sector.

What? Is he telling us that governments spending our money are more efficient at growing the economy than the private sector? This is just plain stupid. Has he not seen the demise of the communist bloc where such logic caused their downfall?

Strauss-Kahn is in charge of the IMF and is about to become the global central bank and become very powerful with billions of your dollars given to him to redistribute by your government.

And here is his “reason” for saying that,

Just because the private sector you have a part of it that is saved as when it is collected and spent by the government – totally spent.”

He’s right about one thing. Governments spend your money. The private sector invests your money. The private sector aims to make a profit (I think that might be his “part of it that is saved”) so the investment can be maintained and grow.

Governments spend all the money they get and so will keep wanting more and more. You can bet the money will go to these underdeveloped countries and much of it will either be misallocated, misspent or disappear into someone bank account. You won’t even get to supervise all the money you are giving them.

Mr Strauss-Kahn likens the $100Mn to,

“… a stimulus but not a one off. It will be helpful for the global economy and the new growth model we have to build ….”

Note that statement – a new growth model – that is IMF-speak for redistribution of your wealth.

He mentions Soros who favours using SDRs to redistribute your wealth.

Now he does see a problem with printing all this money – inflation,

“…. inflationary effect but maybe this is the price for people to pay for the world to address this problem. It needs more study, but traditional finance will not be enough”

Traditional finance might be actually using money donated to the IMF through taxes created out of wealth and not printed out of thin air. He wants to create new money using SDRs I think – That’s non-traditional.

This is probably the most dangerous thing to your nest egg. If the IMF is able to create inflation on a global basis through printing SDRs then the poor and those on fixed incomes (Baby Boomers especially will feel it) will be the ones to suffer most. The rich, the bankers and those with secure jobs will benefit from inflation through taking out loans and using debt to offset inflation.

So you can almost guarantee that $100Bn will soon balloon to $1 Trillion as inflation takes over. Don’t all government programs end up costs 10 to 100 times the original estimate?

Until now most “foreign aid has been a very small percentage of your wealth. But as with Obamanics in the US where all government spending has to be massive this will apply to the world.

I’m not sure where growth will come from if 5-10% of the developed world’s GNP is hived off and given to the underdeveloped world and just spent. That means much less money will be available to invest and grow the world economy.

Not to mention what effect replacing the US Dollar with SDRs is going to have – Long term unknown and as usual will not even be considered.

Get your Nest Egg ready to take on inflation. That means using other people’s money like the rich do.

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