TC987

After following Doc's teachings for a while, I will try to relay what this means. The USD has been the primary currency of trade in Iraq for a while. In order for the IQD to become the primary or sole currency used in the country the USD has to be removed from the picture. As the need or use of the USD decreases then there is less of a need of the individual banks getting USD cash from the CBI. The cash portion of the auction is one of the most important pieces of the exchange because of this fact. The electronic transfers are not considered as significant because they have to convert IQD to USD (as the world reserve currency) before they can pay for imports, etc. Hope this helps.

If I'm not mistaken this article with "93 billion" was debunked as an error, as other articles came out at the same time stating "93 Trillion" which places the price per dinar back at the .000855 rate that it has been for the last several years. It is a positive step that the cabinet is approved, and that the economy in general is improving. The stronger Iraq is the stronger their currency will grow ~ JMHO

I wonder if it was just a typo. I could see 12 banks participating, or even 28, but 128 banks does seem a bit high ~ JMHO. The total volume seems to be back up to where it was or little higher from a couple of weeks ago, but the cash portion is still what Doc31 would call a near zero day as it only makes up 2.45% of the activity.

Daily Exchange Rates Date Market Price Auction Price Volume (000 USD) Cash Trans. 1583 05-May 1,215 1,170 14,933 4,883 10,050

Just FYI to everyone that is thinking about placing their money in a non-interest bearing account because it is fully insured, you can also use what is called the CDARs program, which is available at most banks now. These accounts are interest bearing CD type accounts and are FDIC insured up to $50 million as of right now anyway. Some banks do not participate, but a lot of banks do. I'm sure 5/3 participates since it is a larger bank. CDARs interest rates are usually competitive or better than most market rates. The way the CDARs program works is you go in and deposit your $50 million after cashing in. The bank places the funds in the CDARs program. The CDARs program then splits your funds up into multiple groups of whatever the max FDIC insurance at that time (right now it is $250,000) for interest bearing accounts. The CDARs program then "sends" each bundle of $250,000 to several of its participating banks, until the full balance is distributed and safe. But the participating banks send back that same amount in deposits from a different customer. The CDARs program keeps up with where all of the money is at all times, and the interest rate that is being received at each bank. But you only receive one statement from your bank showing the total interest earned from the CDARs program. The best part is, that if you chose to liquidate and get out of the program, you just go back to your bank, tell them you are withdrawing the funds, and they give it to you. You don't have to wait for all of the other banks to wire the money back to your bank. This is just an alternative to the non-interest bearing account. Although this is not fully insured, I don't know that I would ever put $50 million or even all of my money in one bank after cashing in. The CDARs program provides safety by splitting the money up. I would hate to know that I waited all this time to cash in, I made my deposit at my favorite bank, and then the FDIC came in an closed it down. I know the non-interest bearing accounts are fully insured right now, but the FDIC is only obligated to pay you back. They are not required to do so within your timeframe. It can take a long time to sort out large accounts like that. Take it for what it is worth. I am a bank auditor by trade so I am speaking from experience not opinion.

I would think if it was because the value of the dollar is dropping so dramatically, that they would have to acquire more dollars to function. But if they are placing less reliance on the dollar all together, their need for it would decrease. However, I don't know everything and anything is possible in Iraq

If I understand Doc31's posts correctly, the fact that the CBI is using USD so little means that they are relying more heavily on their own currency. For a long time they were primarily relying on the USD which is why the currency auctions used to be huge like 18-20% of the total volume, when the total volume was in the 300,000,000 range. So with them obtaining/using less and less of the USD their worthless currency is what they are relying on. They can only do that for so long. As Doc says it's like they are under water and breathing through a reed straw. When they can't stand it anymore, they sometimes come up for slightly larger gasps of air. Ultimately, if they are not obtaining any more USD, then they will have to rely on their own currency. When that happens their currency will have to have real purchasing power. Peace

Actually, only 13 banks participated in the auction. Normally there are 18-22 or so banks participating. So there are still a good bit fewer banks participating. http://www.cbi.iq/index.php?pid=CurrencyAuctions Also, this was still a low day cash transaction day, only $3,119m which amounts to 5.9% of the total volume. This percentage is a little higher than it has been lately but that is only because the total volume is still dramatically down from a week ago (roughly 1/3 from a week ago). This is still a good sign in my opinion. JMHO

What is sad, is that most (like 99%) of Americans don't understand the U.S. monetary system - even a little bit. The Fed is a private company. The U.S. congress surrendered the U.S. rights to create money to the Fed. So the Fed controls the monetary policy for us. But this truly is raping of the U.S. citizen. First the congress surrendered the right to create money. So the Fed creates the money. Then the Fed bills the U.S. gov't for the right manage the money. Then the Fed also earns interest off of the banks that it lends the money to. Meanwhile, the U.S. gov't taxes the U.S. citizen in order to pay the interest that it owes for borrowing money from the Fed, because we surrendered the right to control our own money. Thomas Jefferson and Andrew Jackson were staunchly opposed to a banking system where the U.S. gov't surrenders its ability to control the monetary policy. Although the Federal Banking System was defeated. After years of waiting the Federal Reserve was created for the same purpose. If you want to understand the U.S. monetary policy and history there are two must read books: 1) The Coming Battle and 2) The Creature from Jekyl Island. The Creature from Jekyl Island explains the creation of the Federal Reserve and its primary purpose of bailing out "too big to fail" companies and then passing that cost on to the American Citizen. Both are excellent books and I highly recommend them. They are very hard to find as they are no longer being printed. However, I recently saw a post providing an internet link for The Coming Battle in pdf format. So if you can search and find it, it is worth it.

Exactly! Depending on the time of the day of the wire transfer a wire transfer is immediately sent from one bank to the next. However, the receiving bank may not make the funds available until the following day depending on when their cutoff time is. Most banks will send domestic (within the U.S.) wires up until 4:00pm EST. However, if your bank has a cutoff of 2:00pm EST then they may not show those funds in your account until the following business day, because they won't be processed until the next business day. I recommend everyone call their bank to notify them of an incoming wire (especially if it is a LARGE incoming wire). If it is a large incoming wire, the receiving bank has the right to freeze the transaction to ensure that it is not a terrorist transaction, or fraudulent transaction. So if you notify them that it is coming, you are less likely to experience any problems. Then after Ali, or TY or whomever sends the wire, you should be able to call you bank and confirm they have received it. If it is after their cutoff time then they can still tell you that they received the wire, and that the funds will be available the next business day. Hope this helps ~ Peace

As always Doc, thanks for the post!

Wow! And if you look at the detail of the currency exchange only 7 banks participated (instead of the normal 15-20) and it is a ZERO cash day. They have not had a zero cash day since December 2, 2010. May all be coincidence, but I definitely want to believe it is more, and all on a Monday too

Not sure why someone would give you -1 for your opinion. +1 to even you back out. Peace

Great Post! Thanks for the history lesson, and looking forward to history repeating itself

No banks in Alabama are selling the IQD either.

Well said, Mr. Rich

shedguy - Special Drawing Rights have been there for a while. This has something to do with the IMF. All central banks have special drawing rights from the IMF (if I understand this correctly). The special drawing rights is a way that the IMF equalizes all countries currencies into one value so they can lend on an equal basis to that country. Again, I am no expert in this so I may have missed the boat completely on what they are, but they have been on the CBI website for a while.

As a Bank Auditor I want to confirm that Basel II refers to the minimum amount of capital that a bank is required to maintain. For example if the minimum requirement for a bank is 10%, then that bank has to maintain 10% of its average assets. So if the bank's balance sheet shows an asset balance of $1billion, then that bank is required to have $100million in equity. There are some small adjustments to arrive at the ending balance, but this is a simplistic example. The Basel II agreement increased the minimum % requirement for banks world wide. They have not been implemented world wide, but all bank's will eventually have to comply with this requirement or run the risk of being closed.

My apologies to you Miny. Although I did direct the comment toward you, I was speaking in general that lately there have been a lot of Newbies that signed up "Today" and posted as if they are the worlds leading authority. I did overlook that you brought this from another site. So again, I do apologize for directing the comment toward you.

I thought this was more humorous than some other junk that is out there. Jokes like this help lighten the mood - or should, Everyone is watching this way too closely if it is causing them to react and say place negative comments for simple little jokes like this one.

I love it when Newbies who joined Today talk with such great authority, and are such leading economists

Very Well Said!

I agree that they would not want to RV after making the currency tradeable. Otherwise, you would have huge fluctuations in gains that each individual would recognize. Granted Iraq would not be concerned with our gains, but it just doesn't seem logical to RV after making the currency tradeable. I think the RV will occur prior to the currency becoming tradeable, that way the currency is as stable as it will ever be.

Thanks for bringing this over. I'm kinda like the author - skeptically optimistic. With so much information/mis-information, you have to be very careful not to react to your emotions.