Rents to riches IMF , WORLD BANK natural resources

[dontlop]

They borrow from the natural resources assets

http://www.imf.org/external/np/seminars/eng/2013/fiscalpolicy/pdf/rajaram.pdf

They call them rents

Not loans

You rent the asset based on production figures

If Iraq shows it can produce 150 billion in oil per year

What's to stop them from obtaining 1.5 trillion loan over ten years to invest right back into its infrastructure

Which includes its currency

Read up

Or we can say oh no all Iraq has is 80 billion in reserves that's all they got they must do this or that

When opertunities are all over the place to do what ever they feel like doing

Which may be getting their oil production figures up

[dontlop]

Energy and Mineral Resources

In this section, the methodology used in the estimation of the value

of nonrenewable resources is described. At least three reasons lie

behind the diffi culties in such calculations. First, the importance of the

inclusion of natural resources in the national accounting systems has been

recognized only in the last decades, and although efforts to broaden the

national accounts are being made, they are mostly limited to international

organizations (such as the UN or the World Bank). Second, there are no

private markets for subsoil resource deposits to convey information on the

value of these stocks. Third, the stock size is defi ned in economic terms—

reserves are “that part of the reserve base which could be economically

extracted or produced at the time of determination”—and, therefore, it is

dependent on the prevalent economic conditions, namely technology and

prices.6

Despite all these diffi culties, dollar values were assigned to the stocks

of the main energy resources (oil, gas, and coal7) and to the stocks of

10 metals and minerals (bauxite, copper, gold, iron ore, lead, nickel,

phosphate rock, silver, tin, and zinc) for all the countries that have

production figures.

Where is the wealth of nations

World. Bank

Measuring Capitol for the 21st century

http://siteresources.worldbank.org/INTEEI/214578-1110886258964/20748034/All.pdf

Chapter 13: Money and Banks

http://www.oswego.edu/~edunne/200ch13.html

.

The New Iraqi Dinar (NID) - a free floating currency - was introduced in January 2004 together with a new monetary control system. There are no restrictions or taxes on the purchase or sale of currency; the CBI carries out a regular currency auction in order to stabilize the exchange rate, which now stands around 1300 NID to the US $. The NID is fully convertible and there are no restrictions on capital flows.

http://www.iraqitic.com/iraqiTIC_policyEnvironment_en.php

Money as debt

Full length documentary

No body has to do anything

But the can

The rents aren't even loans they are access to finances because of their assets

The oil producing country's are in a class of their own especially in the sand of the Middle East where its cheap to obtain sweet light crude

Edited February 8, 2014 by dontlop

[dontlop]

Chapter 13: Money and Banks

Chapters 13, 14, and 15 examine the role of money in the economy, which includes the governments role in determining how much money is in circulation. Modeling the role of money is crucial to building a model of the macroeconomy. In this chapter we look at the functions, measures and creation of money.

I. What is money?

A. Defining the functions of money

To put is simply, money is anything commonly accepted in exchange for goods or services. Throughout the history of the world, many things have served at money: gold, silver, cows, horses, cigarettes, and more. Money has several functions:

Money is a medium of exchange. Money is accepted in exchange for goods and services. This is the main function of money. In the absence of a medium of exchange we would be stuck bartering for stuff we want. This is inefficient because it requires a double coincidence of wants. I have to want what you are trading, and you have to want what I am trading. In our large and complex economy, that is pretty unlikely.

Money is a store of value. Money can be used to hold your wealth, and used later to purchase something. In times of high inflation or political instability, money may not be a good store of value. The U.S. dollar is considered to be an excellent store of value, but the Russian ruble is a lousy one.

Money is a standard of value (or unit of account). Money is the benchmark used to measure value. If I tell you the price of a product, you immediately know how cheap/expensive it is, and can compare that value to other products.

There are two types of money: commodity money and fiat money. Commodity money is money with its own value as a good. Gold coins are commodity money because the gold is worth something. Fiat money has no value other that given to it as money. The U.S. dollar today is fiat money. A $10 bill is worth something because the federal government says so, and because we accept it in exchange for goods and services. Fiat money is more efficient because commodity money has an opportunity cost: the gold in a gold coin could be used for something else, like jewelry.

B. Measuring money

Money comes in many different forms and these differ in terms of how easily they convert to cash. The U.S. has four measures of its money supply:

M1 = currency in circulation + checkable deposits + traveler's checks

M2 = M1 + savings deposits + small time deposits (CDs < $100,000) + money market mutual funds

M3 = M2 + large time deposits + other stuff

L = M3 + other stuff

These measures get larger and larger because they include the measure below it. M1 contains the most liquid assets, i.e. assets easily converted to cash. We add assets less and less liquid assets for the broader measures of money. The most-watched measures of the money supply are M1 and M2.

However, the behavior of these two measures of money can be quite different. As the graphs below show, M2 has grown much faster than M1.

II. Banks and the Creation of Money

The currency you hold in your wallet was literally created by the U.S. Dept. of the Treasury, Bureau of Engraving, in Washington D.C. and the coins at mints in Philadelphia and Denver. However, most money in circulation is created by transferring balances electronically. When a bank makes a loan, it simply credits an account and that account is counted in M2. So banks have the power to create money.

We can demonstrate money creation through the use of a T account that shows a banks assets and liabilities. A bank's assets are the way a bank uses its funds. A bank's liabilities are the sources of a banks funds.

Suppose I empty my son Timmy's piggy bank (actually his bank looks like a Noah's Ark, but I digress...) and start a savings account for him. Suppose there is $100 in change in the piggy bank (it's a big bank). The banks balance sheet will change when I open the account:

Note that assets must equal liabilities.

The bank receives the $100 in coins and puts it in their vault, increasing its assets by $100.

The bank opens my son's account, which is a liability, since Timmy can withdraw the money at any time.

Note how this has changed the money supply. M1 has fallen by $100 because the coins are out of circulation, but M2 has remained unchanged because savings deposits have increased by $100, offsetting the decrease in M1.

U.S. banks operate on a fractional reserve banking system. This means that banks are required to keep only a fraction of deposits on hand to satisfy withdrawals. The bank then lends out the remaining fraction of deposits. The assets kept by the bank are known as reserves. Banks are required by law to keep a certain % of deposits as reserves. This is known as the required reserve ratio.

Back to our example, suppose the required reserve ratio is 20%. This means the bank must keep $20 of Timmy's deposit, but can lend out the other $80:

Suppose the bank uses the $80 to loan to Bob, crediting Bob with $80 in his account. With $180 in deposits, the bank must keep 20%, or $36 and is free to lend the excess:

Suppose the bank lends the excess $64 to Ed, increasing deposits to $180 + $64 = $244. Required reserves are (.2 x $244 = $48.80):

The bank can then lend the $51.20, and the process continues. But look at the T-account above, and you see that Timmy's deposit and the banks use of it has increased the money supply, M2 by $244 which is $144 MORE than the initial $100 increase in bank reserves

If we carried this example through, how much money can be created from the initial $100 in reserves? This depends on the required reserve ratio.

the money multiplier = 1 / (required reserve ratio)

and

potential deposit creation = initial excess reserves x money multiplier

In our example, there was an initial deposit of $100, so initial excess reserves are $80. The money multiplier is 1/.2 = 5. Then total deposit creation is 5 x $80 = $400. The $100 deposit creates $400 in new lending capacity (see table 13.4, page 266 for a demonstration).

The money multiplier allows use to calculate only potential money creation. In reality, money creation may be smaller because

the loans are spent, causing deposit balances and bank reserves to fall

banks may keep some excess reserves in addition to the required reserves

As we have seen in this example, banks are not only a safe place to store money, but they act as a financial intermediary, transferring money from savers (by accepting deposits) to borrowers (by making loans).

In the next chapter, we take a look at the largest regulator of banks and financial markets in the U.S., the Federal Reserve System.

FYI: Related Links

A Comparative Chronology of Money from Ancient Times to the Present Day

The History of Money A brief discussion of commodity vs. fiat money by the Federal Reserve Bank of Minneapolis

Dollars and Sense: Fundamental Facts about U.S. Money From the Federal Reserve Bank of Atlanta

[stealthwarrior]

overanalyzing will fry your brain.information is good.too much information is not good.

[Rockymtnhi]

The point is they would have no way to pay that loan of say $1.5T back even if someone were to extend it. They need every dollar they get from oil production and then some to run the country.  They have no annual excess to pay principal/interest on a huge loan like that.  Remember this country is a run down mess.  They don't even have sufficient electricity to run the place.  Now Al Qaeda is blowing the place up again.  Not going in the right direction.  I would take those rose colored glasses off. 

 

If Iran gets the bomb and nukes Israel all neighboring countries like Iraq will glow for years.  As much as I want to see an RV I'm not sure how they would pull it off.

[dontlop]

The point is they would have no way to pay that loan of say $1.5T back even if someone were to extend it. They need every dollar they get from oil production and then some to run the country.  They have no annual excess to pay principal/interest on a huge loan like that.  Remember this country is a run down mess.  They don't even have sufficient electricity to run the place.  Now Al Qaeda is blowing the place up again.  Not going in the right direction.  I would take those rose colored glasses off.  If Iran gets the bomb and nukes Israel all neighboring countries like Iraq will glow for years.  As much as I want to see an RV I'm not sure how they would pull it off.

Well I shouldn't of used the word loan

It's just backing for their currency

The backing isn't necessary unless they default

The reserves at the cbi right now will most likely never be used for anything

It's only their for collateral

The oil is there for collateral

Same thing

The reserves at the cbi are being invested with the bank of international settlements so Iraq can make money off those assets as well as use them for backing for the reserves

The oil can serve the same purpose as dollars in a reserve account

It's just incase

I don't see Iraq in any need to touch their reserves ever

They are running trade surpluses

There is no deficit in cash in Iraq

There are surpluses every year now

If they have a deficit then they can tap the reserves or borrow from the IMF to maintain the dinar rate

Or they can increase oil production till there is no deficits

Sdr is there to borrow for that very reason to maintain exchange rates

Special drawing rights

Iraq sure is auctioning off a lot of dollars to the banks to be broke

What are they buying the dollars with ?

Dinars

The dinars are just pieces of paper that the cbi guarentees an exchange rate those pieces of paper are backed by something that is never used

It sits in a pile at the bank of international settlements collecting interest

Obviously those dinars are good for it just on the word of the cbi that they are good

Its fiat backed by fiat

Pegged to fiat

It's by decree worth what it is

The reserves are just collateral till Iraq recieved its credit rating from the bis

It's all in the credit rating

[sandfly]

THANKS

[dontlop]

Natural Resource-Backed Structured Finance

I.Introduction

China is an energy-consuming country. Natural resources are crucial for China national growth, people's livelihood, economic and social development, national security. Given the looming gap between supply and demand, a key point of China's energy strategy is to ensure supply.

II.Services

(I) Definition

The arrangement of a loan using structured finance based on the long-term sales and purchase contract of natural resource products concluded between overseas borrower and domestic companies.The borrower's future sales revenue stated in the sales and purchase contract is used as the primary source to repay the loan.

(II) Target Clients

1. Borrower or its parent company is an international energy producer with rich reserve and high sales revenue;

2. Buyer is a large energy company in China;

3. Borrower or its subsidiaries subcontracts the engineering projects to Chinese companies.

III.Features

(I) Get large ICBC loan secured by the revenue generated through selling natural resources to Chinese companies under long-term contract;

(II) Loan amount after deducting principal and interest can be transferred back to exporter, no impact to the daily operation of the company;

(III) support Chinese companies to get natural resources or engineering contract.Loan can be used for different purposes, for general use or urban construction project of Chinese companies;

(IV) Tax, laws, commercial terms related to the loan can be arranged through ICBC's global branch network;

(V) Widely applied in the procurement of oil, natural gas, coal, metals, natural resources,or used with project finance or capital loan for overseas investment.

IV.Steps

(I) Borrower (authorized subcontract company, counterparty stated in the sales and purchase contract) submits application to ICBC;

(II) Check the creditability of borrower's company and the documentation given, discuss main terms and conditions. If agreed, ICBC issues to borrower letter of interest, letter of intent, and signs authorization letter;

(III) Discuss with borrower the terms of loan agreement (guarantee agreement), account agreement. ICBC proceeds due diligence and internal approval. Sign loan agreement with the borrower;

(IV) Before loan drawdown, borrower and domestic company (counterparty) sign commercial contract (oil trade contract and/or engineering subcontract);

(V)Borrower submits documentation stated in the loan agreement before drawdown.

Could Iraqs bilateral , trilateral , and multilateral trade agreements be structured to pay. For Iraqs currency revaluation

Resource-Backed Investment Finance in Least Developed Countries

https://blogs.worldbank.org/growth/resource-backed-investment-finance-least-developed-countries

http://www.piie.com/publications/briefs/moran5126.pdf

http://www.thedialogue.org/PublicationFiles/TheNewBanksinTown-FullTextnewversion.pdf

http://www.ide.go.jp/English/Data/Africa_file/Manualreport/cia_11.html

Critical to China’s economic successes in Africa has been the important use of the country’s state backed banking institutions. Under-pinning the aggressive buy-out of foreign resource companies, mineral and energy reserves and large institutional investment projects in the continents oil and infrastructure sectors, are a phalanx of state funding agencies supported by massive national reserves of accumulated liquidity of over US$2 trillion, ready to be shifted into the global market at a moments notice.

Edited February 17, 2014 by dontlop

[dontlop]

So what china is doing is giving loans to resource backed company's or country's and makes purchase contracts for those minerals oil and gas so they can pay back the loans with oil gas and minerals

They are giving loans on oil in the ground to insure future energy supply for their country

They will give you the money now

Then on some future date they get oil or minerals

They buy oil futures

I'd like to see Iraq sell them 5 trillion worth right now

Then Iraq has 5 trillion to build a private sector infrastructure that will always produce income for Iraqs future beyond its oil infrastructure

Iraq can revalue their currency with 5 trillion dollars backing it

lol

Edited February 17, 2014 by dontlop

[dontlop]

This is nothing it doesn't mean anything at all what we need is a button to push and all the terrorists with billions of stolen dinar will become billionaires just as long as we can get rich they don't care of the terrorists get their rv too

I'm sure there will be hundreds of millionaire terrorists too

They will rv

Its gonna be a miracle

I'm sure those terrorists in Iraq have more dinar than most of us

Security has nothing to do with it

If they could just kill all the terrorists then they can push the button

That's the deal

[dontlop]

Bump

[dontlop]

The Chinese want every drop of oil