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December
24
2019

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

Chris Powell, GATA

Dear Friend of GATA and Gold:

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:

https://en.wikipedia.org/wiki/London_Gold_Pool

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:

http://www.gata.org/taxonomy/term/21

The memorandum can be found in PDF format in the public library at the CIA's internet site here --

https://www.cia.gov/library/readingroom/document/cia-rdp85t00875r0016000...

-- and at GATA's internet site here:

http://www.gata.org/files/CIA-memo-SDRs.pdf

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
[email protected]

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Powell has been managing editor of the Journal Inquirer, a daily newspaper in Manchester, Connecticut, since 1974. He began working at the paper when he left high school in 1967. He writes a column about Connecticut issues that is published in a dozen other newspapers in the state and Rhode Island and often appears on radio and television public-affairs programs in Connecticut.

From 2004 through 2009 he was legislative chairman of the Connecticut Council on Freedom of Information. In 2006 he was inducted into the Academy of New England Journalists by the New England chapter of the Society of Professional Journalists and the New England Society of Newspaper Editors.

In addition to the Connecticut Council on Freedom of Information, he is a member of the Connecticut, Manchester, and Vernon historical societies and the Churchill Centre.

 

 

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