Adam Montana

The book ended up taking a ton more time than I originally expected, and judging by the sales so far - respectable people don't mind paying someone to do hard work that benefits them. Actually, I did. I just didn't leave them up for YOU to see. I don't need to prove anything to you. I posted the first Dinar-ification picture, check the thread and my profile. VIP members see no ads. Yeah, I think you're right.. you've harassed me enough. Free speech is one thing, what you've been doing is plain disruptive.

Thanks Lambert. You'll get the link on Friday!

Thanks for your order, Kent. I'm sure you'll be pleased at the content. Regarding Sherlocks posts, I'm not sure if they went missing - I personally thought he had intelligent posts. I didn't agree with everything he said, but I respect his opinion, he seemed to present it in a non-bashing way and I appreciate that.

Who's posts?

that's awesome

"... The GOI discussions may simply be on... " That explains it all... all we can do is speculate, no matter which side of the fence you are on

wil PM me your address and I'll send you a keyboard lol

It contains a lot of references to what has happened to other currencies. The article talks about things that happened in the past, and provides some valuable information that you can use to understand the current situation better.

Two words: check dates.

lol That's one of the subjects that will be expanded on at a later date, this is just one topic.

I love the comments in here The baseball card comment is nominated for "best post in a basher thread 2010".

VI. Conclusion After looking at the evidence for how the United States sets up currency and exchange rate systems in newly established regimes, it appears that in each case they set up the system in place in the U.S. at the time. In Germany and Japan at the end of World War II, it was the Bretton Woods system of fixed exchange rates. In Afghanistan in 2002 and Iraq in 2003, it was an independent central bank with floating exchange rates (and significant central bank intervention). The major worry the United States has to deal with in the Iraq exchange rate system is the confidence of international investors. Now that the United States has handed over sovereignty to the interim Iraqi government in June 2004 and elections have taken place in early 2005, security will be critical for maintaining investor confidence. If the transition does not go well, or there is internal instability, the value of the currency could plummet unless the Federal Reserve is prepared to buy a significant amount of dinars to keep the currency from falling. So far, the currency has held its value. References A Tricky Operation. The Economist. 26 June 2004. pp. 73-74. Argy, V. International Economics. 1994 Routledge: New York. DeRosa, David. Iraq’s Central Bank Faces Stability Question. Bloomberg.com. 27 February 2004. Frankel, J. (2003). A Crude Peg for the Iraqi Dinar. Financial Times, 13 June. Hanke, S. H. (2003). An Iraq Currency Game Plan. The International Economy. 17(3). 81-83. Hanke, S. H. On Dollarization and Currency Boards: Error and Deception. Journal of Policy Reform 5(4). 203-222. Hanke, S. H., and Schuler, K. (1999). A Monetary Constitution for Argentina: Rules for Dollarization. Cato Journal 18 (3). 405-419. Krugman, P. and Obstfeld, M. International Economics, 5 th Edition. Harper-Collins: New York. 2000. United States Congress, Joint Economic Committee (2003). Argentina’s Economic Crisis: Causes and Cures. http://www.cbiraq.org/cbs2.htm http://www.cbiraq.org/cbs6.htm http://afgha.com/?af=article&sid=14687

to examine the viable options the U.S. had in choosing 7 exchange rate regimes for Afghanistan and Iraq. Specifically, we will explore the systems of Bosnia-Herzegovina and Argentina. Under the Dayton/Paris Treaty, the currency and exchange rate system in Bosnia most closely resembles a true or orthodox currency board system. Recall that in orthodox currency board systems, central banks do not have the ability to sterilize currency fluctuations. The Bosnian currency board system was established on 1 August 1997 with a fixed exchange rate of one convertible mark (BAM) to one Deutsche Mark (DM). At the introduction of the euro, this equated to 0.511, an exchange rate still in effect today. In Argentina, Economy Minister Domingo Cavallo introduced reforms in 1991 which pegged the Argentine australes to the U.S. dollar at a rate of 10,000 australes to one dollar. In January of 1992, Argentina converted to a new currency, the peso, which was exchanged at 10,000 australes. Thus, the government established the peso at one-to-one with the U.S. dollar (U. S. Congress, 4). The economic crisis in Mexico in 1994 initially lead to worries that Argentina would devalue the peso, just as Mexico did with their peso. This particular threat to the convertibility system subsided, but the system was not able to survive its next shock. The Asian financial crisis started in 1997 with many small Asian countries suffering attacks on their currencies. This prompted an attack on Russia’s currency, the ruble. The currency crises made investors less confident about investing in developing countries in general. On the heels of the Russian crisis, Argentina’s neighbor Brazil initially withstood a currency crisis of its own. However, in 1999, a new currency crisis hit Brazil, causing the Brazilian government to float their currency, the real. The real then quickly depreciated against other world currencies. That, in combination with the increasing strength of the dollar, led to a dramatic decrease in competitiveness of Argentine products on the world market. Some experts suspect that these problems were then exacerbated by the unconstructive policies of successive Argentine governments, leading to the dramatic crisis of 1999 and beyond. On 21 June 2001, Domingo Cavallo, again acting as Economy minister under Fernando de la Rua, received approval from the legislature to change the mix of currencies to which the Argentine peso was pegged. Instead of being pegged at one peso per dollar, the peso would be pegged to a 50-50 mix of dollars and euros. 8 At the time, global investors were worried that that such a switch would be the equivalent of a currency devaluation, since the dollar was stronger than the euro. However, the policy would not take effect until the euro reached parity with the dollar, which occurred in July 2002. On 6 January 2002, the government of Eduardo Duhalde ended the convertibility system of fixed exchange rates and allowed the peso to float freely against other currencies. The exchange rate currently stands at 2.92 pesos to the dollar (as of March 2005). In summary, under the currency board system of Argentina in the 1990s, the exchange rate was never truly fixed, but was instead pegged to the dollar. There was, however, some room for flexibility in the exchange rate. Now we will look at what the U.S. decided to implement in Afghanistan and Iraq. V. Current Nation Building Experiences A. Afghanistan In January 2003, the government of Afghanistan established a new currency called the afghani. The exchange rate from the old afghani to the new afghani was 1 new afghani equal to approximately 110.45 old afghanis. In addition, the government, in collaboration with the United States, adopted a floating exchange rate regime for the country. According to the Memorandum of Economic and Financial Policies between the Afghanistan government and the International Monetary Fund of 24 March 2004, “The government believes that a floating exchange rate regime remains the appropriate choice for Afghanistan, given the potential for large structural changes in the near future and the associated difficulties in projecting demand for the Afghani.” However, ever since January of 2003, the exchange rate between the afghani and the dollar has been 42.785 afghanis = $1. This leads us to presume that the Afghan Central Bank (and presumably the U.S. Federal Reserve) have been very active in the foreign exchange markets keeping the afghani stable. In fact, in the same Memorandum of 24 March 2004, the Afghan government states, “DAB’s [Da Afghanistan Bank, Afghanistan’s central bank] weekly auctions will primarily focus on achieving the monetary growth targets, but will try to prevent large and undesirable exchange rate movements.” This definitely hints that exchange rate stability is a high priority. 9 B. Iraq With Iraq, there appeared to be three possible ways to manage the currency: use a currency board system, dollarize (establish the dollar as the local currency), or let the currency float against other currencies. The first option the Coalition Provisional Authority (CPA) had for Iraq was a currency board system. In this case, there would be a currency board which would manage the exchange rate between the Iraqi dinar and a particular anchor currency. As was briefly stated above, the major aspects of a orthodox currency board system are: “1) a fixed exchange rate with an anchor currency, 2) no restrictions on exchanging currency board currency into the anchor currency at that exchange rate, nor discriminatory exchange rates, and 3) net foreign reserves equal to 100 percent or slightly more of the currency board’s liabilities of a monetary nature” (Argy, 19). There are a few problems with using a currency board to manage the Iraqi currency. First, it would not allow flexibility in using monetary policy to solve the country’s economic woes. Second, as Jeffrey Frankel states in the 13 June 2003 edition of the Financial Times, “it means giving up the automatic depreciation that a floating currency would experience at times when the world market for the country’s exports were weak.” In the case of Iraq, this would involve the price of oil. When the price of oil falls, investors have the incentive to remove their investments from the exporting country’s currency, causing it to depreciate and thus making all of that country’s exports relatively cheaper and more attractive. In the case of rigidly fixed exchange rates, the currency would not be allowed to fall and the country would not be allowed to become more competitive on the world market. In that same vein, fixing the dinar to the dollar (or even the euro) would allow for the possibility of one of the same problems experienced in Argentina described above. If the dollar or euro increased in value, that would force the dinar to appreciate and Iraq would lose international competitiveness. The second option the CPA had was to “dollarize” the economy. This would entail using the U.S. dollar as the sole currency of Iraq. Like an orthodox currency board, this would eliminate monetary policy as a tool. In addition, the Iraqi government would lose seignorage, which would instead go to the United States, since the U. S. would be printing the dollars. A further disadvantage of the dollarization strategy is that it could spread fears of U.S. imperialism. With all the instability and anti-Americanism in the Middle East, having the dollar as the currency of Iraq might make matters worse. Furthermore, if there were an increase in interest rates in the U.S., that could lead to slower economic activity in Iraq and possibly, a crisis. However, a major benefit of dollarization would be reduced currency risk. With the dollar as the currency, interest rates would be kept low. This would be extremely beneficial to the Iraqi population due to the increased likelihood of investment in infrastructure and business. The system that the CPA eventually chose was a floating exchange rate system. In practice, the system appears to be a managed float. In this system, the Iraqi dinar is free to move against all other currencies according to the laws of supply and demand. A report on the Iraqi economy by the International Monetary Fund in October 2003, states “The Iraqi economy’s heavy reliance on oil (a commodity that is subject to wide price variations), the near complete openness of the economy as well as the uncertainty surrounding the fiscal picture and the limited availability of foreign exchange reserves suggest that, as a long term strategy, a flexible exchange rate regime is appropriate in these circumstances” (19). The IMF opinion definitely has merits, although the problem of limited foreign reserves could definitely be overcome by the U.S. Federal Reserve. Since the introduction of the new Iraqi dinar in October 2003, the exchange rate with the dollar has been remarkably stable. In fact, from 21 January 2004 to about 21 January 2005, the exchange rate had basically been fixed at $1 = 1460 dinars. Since the end of January 2005, the dinar has been allowed to float a bit more, with an average exchange rate of $1 = 1524 dinars. In summary, in both Afghanistan and Iraq, the U.S. has established floating exchange rate systems with significant central bank interventions in order to maintain stable exchange rates with the dollar.

III. Historical Nation Building Currency Systems The United States had the opportunity to set up currency systems in both Germany and Japan following World War II. In 1944, world leaders met at Bretton Woods, New Hampshire and established a new world currency and exchange rate system. This system would come to be known as the Bretton Woods system of fixed exchange rates. In addition, at Bretton Woods, the leaders also created the International Monetary Fund (IMF) and the World Bank. The leaders created the IMF specifically in order to manage the system of fixed exchange rates which they established. The Bretton Woods system of fixed exchange rates would survive from 1945 until 1971, when the United States left the gold standard and let the dollar’s value float against other 6 currencies. (This occurred mainly due to the persistent balance of payments deficit by the United States which led to investors decrease their holdings of dollar assets.) The basics of the Bretton Woods system were as follows: the U.S. dollar was adopted as the main currency in the world (i.e. the reserve currency); the value of a dollar was set at 1/35 of an ounce of gold; and exchange rates between the dollar and the various world currencies were fixed at specific levels. The United States had the lead role in setting up the new German and Japanese currency systems, in 1944 and 1949 respectively, and sought to bring those two currencies back into the world economy as soon as possible. In order to do that, the U.S. brought both countries into the newly established Bretton Woods system. In order to avoid a repeat of the hyperinflation seen during the interwar period, the occupying powers, led by the United States, decided to establish a new currency, the Deutsche Mark (DM), to replace the existing Reichsmark. The occupying powers wanted to give Germany a fresh start by creating a brand new currency. The U.S. transitioned Germany to this new currency by establishing a fixed exchange rate between the old and new currencies. This was set at one-to-one, and everyone in Germany was given a starting sum of 40 DM. In addition, the Bretton Woods system set the exchange rate between the dollar and the DM as well. The decision to place Germany on a fixed exchange rate system seemed obvious: during the interwar years, Germany had had a floating exchange rate, allowing hyperinflation to roar out of control. This resulted from a lack of confidence in the governing regime and the exorbitant amount of currency that was printed in order to fund the government. The U.S. believed that including Germany in the fixed exchange rate system would bring Germany the economic stability that it did not have in the interwar years. With the Dodge Plan of 1949, the United States did for Japan what the Marshall Plan did for Europe. The U.S. brought Japan out of occupation and into the world system of Bretton Woods, with a fixed exchange rate set at $1 =

A. Orthodox Currency Boards An orthodox currency board system is one where there is an established exchange rate between the local currency and an “anchor” currency. The currency board uses the nation’s foreign reserves to keep the exchange rate at that same level. Under the system, there is absolutely no role for a central bank. As an example, suppose the Iraqi dinar is pegged to the U.S. dollar at an exchange rate of 2000 dinars = $1. If there is a loss of confidence in the dinar and investors want to sell their dinars, then the currency board would have to buy those dinars at the board rate. Thus, in a strict currency board system, the board must theoretically hold enough of the anchor currency (dollars) to cover all of the domestic currency (dinars) in print. The result of a loss of confidence in the local currency is typically a reduction in the domestic money supply. Investors losing confidence in the dinar would exchange their dinars for dollars. This would result in the board (who bought the dinars) holding less foreign reserves. Since the currency board would then be holding more dinars, the supply of dinars in circulation in Iraq would fall. This would presumably have a contractionary effect on the domestic money supply and the Iraqi economy, perhaps leading to even less confidence in the economy. This cycle is partially offset in Iraq, however, because dollars are also in common use as currency. Instead of the usual decrease in money supply, we would simply see a shift from one form of accepted currency to the otherThe purpose and goal of a currency-board system is a “way to import anti-inflation credibility from the country to which the domestic currency is pegged” (Krugman and Obstfeld 2000). So, for example, in countries with a history of hyperinflation or countries with limited or no history with monetary policy (e.g. Baltic countries), this may be a way of boosting initial international confidence in their economies. However, in this type of system, there is no monetary policy to speak of since the board does not hold or deal in any domestic assets. In times of financial distress, there is no central bank to lend currency to domestic financial institutions. In a financial crisis, the government would have to have an expansionary fiscal policy. It could do this by spending money or possibly having deposit insurance for its banks. This would mean that if the banks went under, the government would have to use its taxation power to pay back depositors. B. Hybrid Currency Boards Hybrid currency boards, on the other hand, are basically currency boards with a central bank. The local currency is again pegged to an anchor currency such as the dollar; however, the central bank is able to keep the money supply in the local country at a certain level by sterilizing the currency board’s transactions. According to Krugman and Obstfeld in International Economics, “Central Banks sometimes carry out equal foreign- and domestic-asset transactions in opposite directions to nullify the impact of their foreign exchange operations on the domestic money supply” (473). To continue with the example previously mentioned, when there is a loss of confidence in the Iraqi economy, investors will reduce their holdings of Iraqi dinars, thus causing the domestic money supply to decrease. However, with their increased holdings of dinars, the central bank could purchase government bonds or other government assets. This would pump the dinars back into circulation, thus sterilizing the effect of the loss of investor confidence In the system of floating exchange rates, the value of a currency is solely determined by the supply of and demand for that particular currency. Unlike the currency board system, this system does not limit the ability of central banks to influence the value of a currency through open market operations. With a floating exchange rate system, central banks can intervene in the currency markets and influence the value of the world’s currencies. Even though the value of a currency such as the dinar can move, the movement can be limited by the central bank of Iraq or the U.S. Federal Reserve. The exchange rate can be managed in order to maintain a relatively stable exchange rate in tumultuous times, as we will see later in the paper. The danger of having a central bank is the prospect of political influence in the currency process. In order to fund its programs, the government may be forced to print money. The undisciplined printing of money can lead to tremendous bouts of inflation. With high inflation comes increased incentive to print more money, causing a vicious cycle. Now that we have looked at the three most common types of exchange rate systems we can look at what the United States has done in the past when faced with the opportunity to set up a monetary system in a different country.

I was looking for some more info on what I talked about in chat this morning and stumbled across this gem... the author did a fantastic job of talking about Iraq and the decisions everyone has been making regarding the value of their currency. It's long, but if you read the entire thing you WILL gain knowledge. John C. Hansen, Ph.D., Captain, U.S. Air Force Assistant Professor of Economics Department of Social Sciences United States Military Academy West Point NY 10996 Christopher Watrud, MBA, Major, U.S. Army Assistant Professor of Economics Department of Social Sciences United States Military Academy West Point NY 10996 Abstract In light of the many different exchange rate regimes existing today and in the recent past, the United States decided to establish an independent central bank and an apparent managed floating exchange rate in both Afghanistan and Iraq. The central banks have responsibility for issuing the new afghani and dinar and maintaining their stability. Effective arguments could be made for a currency board, a peg to some other asset (the dollar, the euro, the price of oil, or a combination of the three), or a free-floating exchange rate. By looking at the performance of currency boards and pegs in current developing countries, we can find many serious problems. Long term currency stability in Afghanistan and Iraq will best be served by a floating exchange rate system, provided the countries can get through the initial stages of transition I. Introduction In the 2000 presidential election campaign, George Bush stated that it was not the business of the United States to build nations, a position resulting from the dreadful U.S. experience in Somalia and the extended use of military personnel in Bosnia. His views on nation building changed, however, with the terrorist attacks on September 11, 2001. Since the Taliban regime in Afghanistan had been sheltering the Al Queda terrorist group, the Bush administration took quick action and removed the Taliban from power. The United States worked through the loya jirga, or grand council, to establish a new government under President Hamid Karzai. Next, the U.S., enforcing United Nations Resolution 1441, invaded Iraq and toppled the regime of Saddam Hussein. As official occupiers of Iraq, the U.S. and its coalition partners established the Coalition Provisional Authority to run the country until an interim government could be selected. In both of these situations, the countries were in tatters and their economies needed to be reformed or perhaps even reestablished. Under the influence of the U.S., both of these countries established new currencies and new exchange rate systems. As Krugman and Obstfeld

We now have 59 verified Dinar holders. I had 70+ requests this morning, denied about half. CLICK HERE to read updated requirements to join the "Dinar-ified" group. Thread closed. Continued here: http://dinarvets.com/forums/showthread.php?t=5857

I wish I had time! I'll be addressing this soon.

don't forget to request access in your user control panel!

public announcement - if you don't want to prove you have dinars, you don't have to. Negative posts in this thread will be deleted. I'm not interested in the negatives. Carry on.

upload it at http://www.imageshack.us and they will give you the forum code to post it here.

That's a great question, Dave! The answer lies in a definition: http://en.wikipedia.org/wiki/Internet-Troll An even better question is this: Since there's nothing wrong with owning Dinars, and posting a picture is free, then why would anyone be hesitant to prove that they are a legitimate investor? I'm happy to see more and more REAL investors on here. It's going to make my life a LOT easier - I can simply ignore the TROLLS and pay attention to the INVESTORS.

I'll count it. Dinar-ified! Nice! See, gang? It's not that hard, or too much to ask. Get Dinar-ified!

http://imageshack.us/

Can't see the picture.