Trinity's Take: You Are a Savvy Investor

[TrinityeXchange]

Hello my friends.  I decided to do a small piece on economics to spur dialogue and thinking around the soundness of our investment.  This might spill over into a few small pieces on economics and Iraq, so stay tuned.  The first thing I want to interject is the normal play of economic markets and how it is that Iraq is doing the exact opposite. 

 

For all who are not aware, the world has entered a very troubling time and especially for those of us who labor everyday for money.  We are seeing the signs of what appear to be a global currency war between nations.  Some of the major players are China, Japan, Europe and now even Australia is threatening to enter the fray.  In a nutshell this is what it looks like.  The competition among nations to keep their export output high has become sharp.  So sharp in fact that countries have resorted to doing what is taboo, manipulating their currency’s exchange rate in order to gain competitive export advantage. 

 

Let me explain.  You have country A who sells automobiles, country B who sells automobiles and country C who import automobiles.  A & B have an equal share of the market and their currencies are on par 1:1 exchange rate.  Country A, in order to entice country C to buy from them devalues its currency.  This in turn means a discount for Country C (the importer) because country C’s money now gets a bump in value when measured against A’s exchange rate.  So country C turns its auto imports toward A and no longer buys from B.  The swelling capital inflow to country A, because of this new monetary policy, is causing its currency to gain value especially with its goods and services getting such a fantastic response in its auto exports market.  But this is exactly what A does NOT want to happen….preferring keep the money depreciated at all cost to continue enjoying the upswing in auto exports.  And so (read carefully)

 

Country A prints more of its own money and uses it to buy foreign reserves

 

The printing of more of its own money inflates the money supply and suppresses the value of the currency.  This in turn keeps country C interested in continuing to import from country A at these fantastic discounted rates.  There is an adverse effect to this game of devaluing the currency, the loss of purchasing power; it becomes more expensive to purchase foreign assets with a cheapened currency (Country A's imports become more expensive).  Who typically feels the pinch of more expensive imports??  The citizen of course! When Joe Citizen goes to purchase that television, some produce, or any other marketable item not made/produced in country, he is shocked at how prices have gone up. 

 

However there is one caveat, country B is not so happy about what country A has done stealing its share of the market and all and now begins plans of its own to interject similar monetary policy.  And so what we have on our hands is the makings of currency war.  Now imagine this happening between 3-4-6-8 major export countries of the world and quickly we can begin to realize the makings of 1930 all over again.  The big corporations demand the government keep exports moving and the citizen must work even harder longer hours to maintain status quo because of the cheapened money. 

 

So where does Iraq fit into all of this.   Well we just witnessed for quite some time currency auctions but let’s put the auctions into a new light, the light of this scenario that we just explained.  Iraq has been going in the complete opposite direction from the rest of the world. 

 

Iraq has been buying IQD with foreign reserves.    

 

I am going to let that sink in a little bit longer my friends.   …….   Yes!  I wrote it right.  Iraq has been doing the exact opposite of everyone else.  While others are printing up more of their money to buy foreign reserves, Iraq has been using their foreign reserves to buy up its own money.   Where others are reducing purchasing power, Iraq has been strengthening purchasing power. 

 

Some of you don’t even realize that God has helped you hedge against what appears to be a looming global financial emergency.  You have transferred some of your wealth out of your country’s devalued money into a country intending to increase the value of its currency.  You are a savvy investor after all   

 

Side note – Some will argue with me that the US dollar is actually gaining value and I will agree with you but it has not been by design.  The US’ full intent through its quantitative easing project has been to destroy the value of the usd however the US has been losing the battle against Japan and China and as a result the dollar gained strength.  It is fully expected that the US will ramp up its efforts to cheapen the dollar as US corporations are upset about their ability to compete.  (read more 1) (read more 2)

 

[siberian_shaddow]

Much appreciated Trinity, its always wonderful to read your input. And its nice that you break it down for all to understand. plus 5 for you

[tedro]

Thanks Trinity.........Good Job !!

[FlyHi]

The contrarian approach  ....what a good description of Iraq's CBI buy backs 

 

Some share market investors swim against the flow too. It's a bit like the salmon battling upstream to answer a higher call to procreate and give birth to a new generation.

 

We indeed might be privileged to be part of this new group...shunned, ridiculed and mocked by main stream financiers and supposed "astute" investors

 

Maybe, just maybe, we are part of a bigger plan 

[Freedomwish]

Maybe, just maybe, we are part of a bigger plan 

 

Yep. 

 

Many thanks Trinity!! 

[boosterbglee]

Thamks Trinity, always enjoy reading your works of art! 

 

Seems logical and maybe, just maybe we can all be savvy investors! 

[Saintsfan]

Thank you TX for the easy read understanding. Global economics is def not my strengths....but as usual I feel like a genius after reading your explanation.

[TrinityeXchange]

thank you my friends for your kind words and feedback.  i appreciate you.

[hi-five]

Thank you, TrinityeXchange.   I appreciate reading your posts and gleaning from your knowledge.   Kudos to all of us who were brave enough to scratch below the dinar scam surface and find the real truth of the plan. 

[moneysoon]

Way the go TrinityX, make it plain!.

[umbertino]

Grazie for sharing. Interesting in the least

[Mrs. Silence Dogood]

Thanks for making that easy to understand. I hope we have invested well!!