by James Rickards
Why the political urgency to include the yuan in the special drawing rights (SDR) if China does not meet the usual requirements? The answer is that a new global financial panic comes closer by the day.
These panics happen every five–eight years almost like clockwork. Look at the financial panics in Mexico (1994), Russia/LTCM (1998), Lehman/AIG (2008) and you get the idea. Another panic in 2018, if not sooner, is a near certainty.
The next panic will be bigger than the central banks’ ability to put out the fire. The only source of bailout cash will be the SDR. But a massive issuance of SDRs will require cooperation by China.