Guest views are now limited to 12 pages. If you get an "Error" message, just sign in! If you need to create an account, click here.

Jump to content

  • CRYPTO REWARDS!

    Full endorsement on this opportunity - but it's limited, so get in while you can!

Will the CBI Try Dinar QE?

Soledad
 Share

Recommended Posts

Soledad Newbie

Soledad

Posted
Posted

IF THIS HAS BEEN POSTED, PLEASE DISREGARD, THANKS

 

 

Posted on 24 March 2015 . Tags: CBI, Central Bank of Iraq (CBI), dinar, Dinar Exchange Rate, IQD, iraqi dinar, Ministry of Finance, Money Supply, re-denomination, re-valuation, Redenomination, revaluation, Treasury Bills

 

By Mark DeWeaver.

This year the Ministry of Finance (MoF) is set to sell IQD 11 trillion in new debt to the state sector banks, thereby partially filling the hole in the central government budget left by the recent collapse in oil prices. The new issuance should bring total treasury bills outstanding to IQD 18 trillion, a 156% increase over the end of last year and more than double the previous peak level of November, 2010.

 

T-bill issues of this magnitude could potentially provide a sizable boost to money supply growth. Consider what would happen if the state banks didn’t keep any of the new bills on their balance sheets but instead sold all of them to the CBI (Central Bank of Iraq). The central bank would pay the banks by crediting their reserve accounts, thereby monetizing the increase in government debt by “printing” new money. (Such operations are allowed under Article 26, Section 2 of the CBI Law.)

 

The resulting IQD 11 trillion increase in base money (commercial bank reserves + cash in circulation) could increase Iraq’s M2 money supply by as much as IQD 15 trillion (assuming the current M2 multiplier of 1.37 times). (M2 includes base money and commercial bank deposits.) That would be a 17% jump, a dramatic acceleration from December’s year-on-year M2 growth of just 3.3% to growth rates last seen in 2013. (See Chart.)

 

Engineering a monetary stimulus of this magnitude might be a good policy for the government to pursue. With GDP growth at a multi-year low (see my last post) and year-on-year inflation dropping to -0.41% in January, why shouldn’t the CBI attempt its own version of “quantitative easing?”

 

Yet it is far from clear that the government has any such plan.

 

This year’s T-bill sales will not be unprecedented. From April, 2009 – April 2010, total T-bills outstanding rose by IQD 7.2 trillion—the same 17% of initial base money that IQD 11 trillion would represent today. And none of those earlier T-bills were sold to the CBI. In fact, the central bank hasn’t had any T-bills on its balance sheet since March, 2006.

 

If this precedent is repeated, this year’s new issuance will have no impact on the money supply at al

  • Upvote 2
  • Downvote 2
Link to comment
Share on other sites
skeetdog Mentor

skeetdog

Posted
Posted

Yea, but at least I'll stand up to be negg'ed...not like the cowards that don't have the decencies to reply or maybe they just can't express themselves...That's cool too...I would rather have ten Tigers than a thousand cats...Neg away...Hell, I got more rubies than this a couple days ago with ol' LGD...Have a Great Day ''DB''...I don't sweat the small stuff...Live strong and die well... 

  • Upvote 5
  • Downvote 1
Link to comment
Share on other sites
SocalDinar Proficient

SocalDinar

Posted
Posted

Evened you Skeetdog.

 

Thanks Soledad..


Quantitive easing = printing more money....... That would be the worst possible thing they could do.

Sure would be going in the wrong direction Machine.

 

Always hated he idea of them increasing debt to pay old debts.

 

Thats following the Feds ponzi scheme to he Tee

 

Its really hard to get out of it and back in the black paying off the old debt + INTEREST!

  • Upvote 2
Link to comment
Share on other sites
dinarbeleiver Explorer

dinarbeleiver

Posted
Posted

Yea, but at least I'll stand up to be negg'ed...not like the cowards that don't have the decencies to reply or maybe they just can't express themselves...That's cool too...I would rather have ten Tigers than a thousand cats...Neg away...Hell, I got more rubies than this a couple days ago with ol' LGD...Have a Great Day ''DB''...I don't sweat the small stuff...Live strong and die well...

I like you skeetdog your like my grandad. Old school and does not mix your words, honest and stands up for their beliefs. Don't take any prisoners and stand up for what you believe in especially your roots. For that I completely respect you !

And I plused oned you

  • Upvote 3
Link to comment
Share on other sites
DWitte Newbie

DWitte

Posted
Posted

Hey Skeetr, I gave you a plus up also.  This is a place to learn and that is done by listening to other peoples values.  Whether they are agreed with or not you can still learn from them. I certainly have.  When the drinks come around, I'll just have a Pepsi.  My drink of choice for life.

  • Upvote 1
Link to comment
Share on other sites
TrinityeXchange Newbie

TrinityeXchange

Posted
Posted

i am not an economist first of all.  however i do not believe that reserve currency is of concern when we talk money supply (as far as our investment is concerned) and the relationship to goods and services.  the reserve currency is not considered when we are talking "note count" (M * V = P).  there is nothing for us to be concerned about here.  it is actually positive news because this is the money that banks will use to stimulate the economy through loans.  and loans are not considered in the note count either in case there are concerns.  

  • Upvote 5
Link to comment
Share on other sites
Guest
This topic is now closed to further replies.
 Share
Go to topic listing

  • Recently Browsing   0 members

    • No registered users viewing this page.


  • Testing the Rocker Badge!

    Take This Quiz

  • Live Exchange Rate

×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.

  I accept