256 THE BiG DROP
26) Will we be able to spend Special Drawing Rights
or SDRs?
You will not be able to use them, touch them, or feel them.
You will not be able to spend them. You will not have them.
In Philadelphia, we have something called walking around
money. SDRs are not going to be walking around money. You’ll
still have dollars, but the dollars will be a local currency, not a
global reserve currency. So, for example, when I go to Turkey,
I cash in some dollars and get some Turkish lira. I use the lira
to pay for taxis in Turkey. Then when I leave, I cash them out
again. That will be how the dollar is used.
You’ll use the dollar when you come to the United States,
but it’ll be like Mexican pesos; something you use when you
go there. The dollar won’t be the important global reserve
currency.
The SDR will be used for the settlement of the balance of
payments between countries, the price of oil, and, perhaps,
the financial statements of the 100 largest global corporations.
The impact on everyday investors will be inflationary. The
difference, however, is that, right now, if we have inflation,
everyone blames the Fed. In the future, however, you’ll have
inflation coming from SDRs. That means when people try to
blame the Fed, the Fed will say “It’s not us, it’s those guys over
there on G Street in Northwest Washington. Go blame them.”
No one even knows where the IMF is. So the SDR is just a
way to get inflation through the back door.27) Can the U.S. ever recover from the economic sit-
uation it’s in?
It is possible but it’s not likely. There are a set of policies
that would encourage growth. The key is growth. The problem
is we can’t do it by printing money. We can do it by structural
changes. But since the White House and the congress aren’t
talking to each other, I don’t see the structural changes coming.