IMF warns 'asset bubble' & suggests 'dump dollar', G-8 to discuss

Written by Global Citizen

Thursday, 7 June 2007

Record high stock and real estate prices, that can't be sustained by fundamentals, have prompted IMF to issue an advice to Asian economies "Dump Dollar".

And when IMF suggested 'dump dollar', they didn't mean dump dollar in forex markets and get euro or something else as forex reserves. They literally meant it, for a change, this time. Their research showed that dumping dollar in forex markets would result in the collapse of global forex market itself.

For a long time a few countries, notably the U.S., have had the prerogative to produce money; and poor Asian economies was entrusted with the task of producing goods by sweating their cheap labor. However that money the poor Asian economies earned in exchange of their goods and services eventually gets recycled in their domestic economies, thereby raising all kinds of asset prices as the supply of money, be through trade surpluses or through other FDI/FII related inflows.

The IMF say they have now found a solution to this problem that baffled the Central Bankers and policy-makers in emerging nations on how to handle the situation before it blows up as a full-fledged crisis.

A spokesman announced: 'Dump these dollars. You export goods and services to the U.S., however the money you receive should be dumped back to the oceans. You allow investment bankers and foreign entities to own real assets in your countries against dollar-denominated paper assets, however rather than using those paper-denominated dollar assets for any further utility value; dump it to the oceans as soon as you receive the currency against your exchange of physical goods or assets. That's the only way we can protect the U.S. economy; and thereby your individual economies. At any cost; we should not challenge the fundamental premise of global monetary system that gives the right to produce money to the U.S. and you the right to produce goods. If money produced is too much irrespective of the unsustainable deficits and consumption of the Americans; prudence monetary policy suggests dumping that money back'.

With rising commodity prices, the U.S. Treasury is complaining that it costs more than a penny to manufacture a copper-plated zinc cent that replaced the pre-1982 copper cent. The gold standard has long been abolished; even maintaining copper or zinc standards became difficult to sustain. At a price of $3.42 per pound for copper and zinc at $1.50 per pound, the pre-1982 copper cent contains 2.204 cents worth of copper metal. Presumably with the rapid rise in price for zinc, the US Mint plans to find another alternative to replace the copper-plated zinc cent. Just the scrap zinc in a cent is worth 0.9 cents. With the costs of manufacturing and distribution, the net cost to produce one cent is about 1.23 cents, significantly higher than the face value of the coin.

Explaining above challenges, the IMF has said how the U.S. has innovated to handle the potential future problem whereas exporting Asian economies have only mastered to produce goods and services even more competitively and add more dollars to their reserves. 'Paper dollars don't cost like it does for the metallic-penny and any amount can be printed on same amount of paper. So after you hand over your goods and assets to the American consumers so that they can consume even more and own more assets everywhere else globally; allowing American bombers to bomb Iraq and other future targets better; Asian economies should dump these dollar-denominated paper bills. Anyway the dollar is not something like gold that has any physical value. It has become a nuisance for your economy, get rid of it at the earliest. And the asset bubble problem will automatically be solved. Your economy would be sustained as American monopoly and leadership is sustained.'

Immediate opposition to this proposal has been forthcoming from various organizations. The United Nations Framework Convention on Climate Change (UNFCCC) has warned that dumping dollars and dollar denominated assets, at its current rate of excessive inflows, into the oceans would further escalate the rising water level of the oceans. A spokesperson of the UNFCCC stated: 'The rapid increase in pollution is anyway an indirect result of increased money supply, and conspicuous blatant consumerism. However we still believe we can tackle that with timely actions from the G-8 and other nations. But if you add this new twist of dumping back this thing called dollar and dollar denominated bills back to the ocean now; it immediately becomes unmanageable.'

IMF sources, in response to the UNFCCC comment clarified: 'We talked about dumping whatever comes out from the US Federal Reserve; and ocean could have been one of the possible places to dump it. If that escalates rising water levels to unmanageable ones; we can think about dumping these dollar denominated bills in land itself. However then people may come and steal them; so elaborate security arrangement needs to be taken up in those dumping ground to ensure the purpose gets solved.'

Greenpeace activists, however, have warned about the polluting tendency that's been observed where dollars have been dumped. And that has already raised public opinion against any such venture near their locality; and China, in-spite of all authoritarian power, have not been able to locate any possible dollar dumping ground till news came in last.

When media persons asked the Federal Reserve Board, on their standpoint to this challenge, they declined to comment. However, when a journalist from Xinhua hinted "why not the Federal Reserve Board makes their backyard as the dumping ground for dollars, both for dumping and for security reasons", The Federal Reserve Board issues this statement: 'We have been dealing with this matter; and we know the levels of hazards. You ask your government in Beijing to dump their toxic nuclear waste in our backyard, fine. Go ahead and you would have our full cooperation. But don't ask us to dump dollars and dollar denominated bills in our own backyard. They are much more toxic than nuclear waste; and unlike nuclear waste, they are fluid, and have easy mobility. We want to exist a few more years and complete our present assignments, such as spreading this toxic malice in the form of money all over the world. The end is near…very near. We want to see our job is done; as our forces get their job done in Iraq to deal with the other part.'

As no possible solutions emerged; the IMF, the UN and the Federal Reserves have jointly asked the ongoing G- 8 forum in Heiligendamm to find an acceptable solutions on how dollar and dollar denominated bills can be dumped physically to save global economy; and to help protect the environment as well.

The story above is a satire or parody. It is entirely fictitious.

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