CIA memo explains how IMF’s Special Drawing Rights were meant to displace gold


by Chris Powell, Gold Seek:

Our friend Stuart Englert, who is writing a book on gold price suppression, calls attention to a declassified 1970 Central Intelligence Agency memorandum asserting that the Special Drawing Rights of the International Monetary Fund were created in 1967 in large part to reduce the world’s demand for gold and particularly to reduce exchange of U.S. dollars, the world reserve currency, for gold.

The creation of SDRs corresponded with the troublesome increase in offtake from the London Gold Pool, through which the United States and seven allied governments in Western Europe dishoarded metal from their reserves to hold the official dollar-gold exchange rate at $35 per ounce. The pool collapsed in March 1968:

The CIA memorandum, whose author is not identified, is titled “Special Drawing Rights: Paper Gold in Action” and says SDRs were were meant to provide international “liquidity” and “reserves” — that is, money — without a requirement for gold backing.

The memorandum says “excess dollar holdings of foreign central banks can now be used to purchase SDRs where formerly the only alternative to holding dollars was to demand gold from the United States and risk a monetary crisis.”

Of course that is what happened when the London Gold Pool collapsed two years prior to the writing of the memorandum.

“Unlike reserve currencies,” the memorandum says, “SDRs cannot be extinguished by being exchanged for gold — they can only be traded among central banks. And unlike gold there are no private uses for SDRs that compete with their use as an international currency.”

The memorandum is more evidence that it is the longstanding policy of governments to diminish gold’s historic function as independent money, money capable of competing with government money, and thus to suppress gold’s price and remove the monetary metal as an impediment to government power. As such the memorandum will be placed in GATA’s documentation file here:

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