Is there a simple truthful explanation to reducing the $ supply

[Negative Arbitrage]

So speculating --we all agree there is less than 30 trillion Iraq dinar. By reducing the money supply from 30 trillion to 30 billion. I would guess there is 10 trillion outside Iraq. There is no reason for me to explain what i think i am looking for what you know and not something from the dinar 101 Q and A book. If the knowledge of your answer comes from anything you have been told from any site conference call or dealer etcetera please leave your opinion some where else.

[frank02546]

Where do you get ten trillion from? I have been looking for the amount of dinar outside Iraq for a long time, but haven't been able to find anything other than a wide range of amounts that aren't backed up with any sort of data.

[keepmwlknfny]

The CBI posts its financial statistics on its website.....thats what I go by until there is evidence showing those numbers are completely falsified....

According to them, they have over 25 trillion dinar outside its banks (in circulation)

The amount in circulation has been steadily growing since 2003 and shows no signs of slowing but somehow and some way people are taking as fact that Iraq has been pulling dinar out of circulation...

Edited March 2, 2012 by keepmwlknfny

[MD34]

The CBI posts its financial statistics on its website.....thats what I go by until there is evidence showing those numbers are completely falsified....

According to them, they have over 25 trillion dinar outside its banks (in circulation)

The amount in circulation has been steadily growing since 2003 and shows no signs of slowing but somehow and some way people are taking as fact that Iraq has been pulling dinar out of circulation...

Not sure what the smiley face has to do with statement...

[keepmwlknfny]

Not sure what the smiley face has to do with statement...

I was laughing because the statement that Iraq has been and is currently removing currency from circulation has become repeated as absolute fact no ifs ands or buts about it....

I find it funny because there is absolutely no evidence that this is actually the case.....the money supply has been doing nothing but going up

[MD34]

There are allot of 'absolute facts' being repeated because they make 'absolute' sense.

An 'Absolute' answer would be welcoming I'm sure to all...

Keepm I appreciate your resolve....Good Man.

[Patriotic_mess]

Keep I got the joke and it gave me a chuckle.

I don't think the amount outside of Iraq really matters. Say the US has three trillion IQD, I don't think they would ask Iraq to cash that entire amount, I think they would keep it and use it to back our own currency. But really who knows how much is outside the country, the CBI certainly isn't going to tell us and I think it's much less than we think.

[keepmwlknfny]

Keep I got the joke and it gave me a chuckle.

I don't think the amount outside of Iraq really matters. Say the US has three trillion IQD, I don't think they would ask Iraq to cash that entire amount, I think they would keep it and use it to back our own currency. But really who knows how much is outside the country, the CBI certainly isn't going to tell us and I think it's much less than we think.

And you might be right but regardless of where the currency is, Iraq has to be able to back it....especially being a pegged currency

[Negative Arbitrage]

And you might be right but regardless of where the currency is, Iraq has to be able to back it....especially being a pegged currency

If we are pegged dollar to dinar they can back it up with the same B/S ours is backed up with .Iraq could back there dinar up with straight up easy math mostly oil exports, . Now the USD is backed up by a complexity of many forms of math some are not even in tEnglishish dictionary.

[dvforumuser]

If we are pegged dollar to dinar they can back it up with the same B/S ours is backed up with .Iraq could back there dinar up with straight up easy math mostly oil exports, .

Iraq gets maybe $100B in oil revenue. Iraq says their currency is more than 100% backed up now by the $60B in dollar reserves at the CBI. So if the dinar gets even a 10x (to 1 penny) RV, then they would need 10x the dollar reserves, or $600B. Oil exports can not possibly supply that, even if you ignore the fact that their oil revenue all goes to fund the government. RV's of 100x or 1000x are obviously even more problematic.

[George Hayduke]

I was laughing because the statement that Iraq has been and is currently removing currency from circulation has become repeated as absolute fact no ifs ands or buts about it....

I find it funny because there is absolutely no evidence that this is actually the case.....the money supply has been doing nothing but going up

Why would the IQD increase in value from 1170 to 1165 if there are more IQD's? I'm not saying there isn't an increase in the amount of IQD's, I'm just wondering why the value didn't go down.

Could the fact that the IQD increased in value be evidence that the actual number of IQD's was less or, could it be indicative of something else; say a snap shot of a reassessed GDP ? I’m not saying I know but, it seems to me if it is the latter, then the prospective and potential value of the IQD, even though the money supply is growing, is greater than what we’ve been assuming.

GH

[TXNOLE]

Iraq gets maybe $100B in oil revenue. Iraq says their currency is more than 100% backed up now by the $60B in dollar reserves at the CBI. So if the dinar gets even a 10x (to 1 penny) RV, then they would need 10x the dollar reserves, or $600B. Oil exports can not possibly supply that, even if you ignore the fact that their oil revenue all goes to fund the government. RV's of 100x or 1000x are obviously even more problematic.

Why? Who owns the dinars that we sell at RV time? Iraq? or the US Treasury? Help me understand why this is a problem, thanks!

[keepmwlknfny]

If we are pegged dollar to dinar they can back it up with the same B/S ours is backed up with .Iraq could back there dinar up with straight up easy math mostly oil exports, . Now the USD is backed up by a complexity of many forms of math some are not even in tEnglishish dictionary.

Not quite..........being pegged to the USD almost makes it more of a necessity to rely on reserves to determine a currencies value....

The USD is completely different.....its value mostly comes from the faith behind it for what it is.....

Why would the IQD increase in value from 1170 to 1165 if there are more IQD's? I'm not saying there isn't an increase in the amount of IQD's, I'm just wondering why the value didn't go down.

Could the fact that the IQD increased in value be evidence that the actual number of IQD's was less or, could it be indicative of something else; say a snap shot of a reassessed GDP ? I’m not saying I know but, it seems to me if it is the latter, then the prospective and potential value of the IQD, even though the money supply is growing, is greater than what we’ve been assuming.

GH

Its because the dinar is on a programmed rate and is not showing its true value....so even though the money supply is growing, the rate is staying the same....

[jmw]

Why would the IQD increase in value from 1170 to 1165 if there are more IQD's? I'm not saying there isn't an increase in the amount of IQD's, I'm just wondering why the value didn't go down.

Could the fact that the IQD increased in value be evidence that the actual number of IQD's was less or, could it be indicative of something else; say a snap shot of a reassessed GDP ? I’m not saying I know but, it seems to me if it is the latter, then the prospective and potential value of the IQD, even though the money supply is growing, is greater than what we’ve been assuming.

GH

Mostly because their foreign currency reserves increased...the US dollar's value is driven by market forces that have a "belief" in it's value...Iraq is on a "crawling peg" so it is pegged to the dollar but does move based on what they can back it with (liquid assets) since it is pegged to the dollar they have to purchase every dinar offered at the current exchange or change the exchange...that is why it is backed 100%. It can not be backed by the potential...so oil is only valuable once they get it out of the ground and sell it. Currently they use their oil revenue to fund 90% of their government so there isn't a lot left over to add to foreign reserves.

http://cbi.iq/documents/key%20financial.xls

this is the link to show their current money supply...

[WorkerBee]

Not quite..........being pegged to the USD almost makes it more of a necessity to rely on reserves to determine a currencies value....

The USD is completely different.....its value mostly comes from the faith behind it for what it is.....

Its because the dinar is on a programmed rate and is not showing its true value....so even though the money supply is growing, the rate is staying the same....

Since their money supply is growing wouldn't that mean the value would decrease? What we saw was an increase. How is that possible?

[George Hayduke]

Thanks Keep and JMW, I appreciate the answer and the link.

JMW, I don't know if you highlited certain cells to indicate a significance related to your answer or if they are highlited just because... I'm not an accountant but I am assuming the spread sheet is a CBI document. My hat is off to you if you generated the data for your own use; if so, you are truly a Jedi Grand Master Dinarian.

I'm not going to bug you too much, but with regard to the Growth rate (Base Money)from previous month, that cell inidcates [-40.54] for Jan 2012. It also indicates a Growth rate (Base Money) from previous six months as [5.86].

Are those figures percentages or amounts?

In either event it is a positive.

Thanks again for your help.

[keepmwlknfny]

Since their money supply is growing wouldn't that mean the value would decrease? What we saw was an increase. How is that possible?

Like jmw said the reserves have also increased so they do have some room to move....they are backing the currency by more then 100%

[WorkerBee]

Like jmw said the reserves have also increased so they do have some room to move....they are backing the currency by more then 100%

Ok, I'm the student on the short bus. So the increase in their reserves is outpacing thier increase in money supply? The demand for dinar is greater than their increasing debt? If not, how are the reserves increasing at a rate that outpaces their debt? Sorry, I know you are a new Dad and are busy, but if you have the time to indulge me, I would very much appreciate it.

[dvforumuser]

Why? Who owns the dinars that we sell at RV time? Iraq? or the US Treasury? Help me understand why this is a problem, thanks!

You exchnage at a bank, the bank exchanges (maybe through a 3rd part) eventually with the Fed (not the UST). So the Fed ends up with the dinars and will want to exchange them for dollars with the CBI. The Fed may keep some of them as it keeps foreign currencies of a number of countries, but that is based on trade and the need for exchanges. i.e. If a company wants to buy wine in France, it must pay in Euros, not dollars. The fed has about $150B in foreign currencies. DinarBanker alone has sold over 100 B dinars. The only thing we want to buy from Iraq is oil and that is paid for in dollars not dinars (oil is unusual in that way). So it seems very unlikely that the Fed would simply keep them since there is no trade with Iraq. So they will want to send most of them to Iraq for exchange. Where will Iraq get the $100B to send back? They have $60B USD in reserves. The income they get from oil (lets round up and say its $100B) is used to pay for the Iraq budget (which for 2012 is $117B USD worth). So where will they get the $100B from those cashing in from DinarBanker sales? Of course that is far from all the dinars out there.

Further what about imports? If iraqi's have their wealth multiplied by 1000x they are going to buy buy buy! The guy who has saved up his dinars to buy a $1,000 used motorcycle, now has a million dollars and can buy a nice BMW not to mention a ton of other stuff. So the Iraqi BMW dealer needs to exchange his dinars for Euros to buy cars. Where does Iraq get them?

Make sense?

[GotSix]

Mostly because their foreign currency reserves increased...the US dollar's value is driven by market forces that have a "belief" in it's value...Iraq is on a "crawling peg" so it is pegged to the dollar but does move based on what they can back it with (liquid assets) since it is pegged to the dollar they have to purchase every dinar offered at the current exchange or change the exchange...that is why it is backed 100%. It can not be backed by the potential...so oil is only valuable once they get it out of the ground and sell it. Currently they use their oil revenue to fund 90% of their government so there isn't a lot left over to add to foreign reserves.

exactly.....just like your boy "dvforumuser" says all the time it's "economics 101"; however, when are you guys ever going to realize...that based on the daily CBI auctions being reported...they are decreasing their currency supply by constantly (on an everyday basis) increasing their foreign currency reserves...now that is truly "economics 101" & not some unverifiable spreadsheet

Edited March 7, 2012 by GotSix

[dvforumuser]

however, when are you guys ever going to realize...that based on the daily CBI auctions being reported...they are decreasing their currency supply by constantly (on an everyday basis) increasing their foreign currency reserves...now that is truly "economics 101" & not some unverifiable spreadsheet

If they are decreasing their money supply, then they are buying dinars by selling dollars thus also decreasing their foreign reserves (by spending them). To increase their foreign reserves via auctions they would have to be buying dollars, by selling dinars, which also increase the money supply. There is no way via an auction to both decrease the dinar money supply and increase their dollar reserves.

[PUNT18]

These are all good insights and I appreciate everyone's comments.

The one thing that I have been trying to figure out is the use and calculation of the DFI funds. The last time I remember seeing those figures, I believe the amount was around $250B. I also think that was approximately 9-12 months ago.

With interest and additional contributions that number is most likely higher than that at this point. I am NOT saying that the DFI balances are enough to justify a large RV, but should they not be considered in this type of conversation?

No matter when the transfer to Iraq actually happens, those funds ultimately belong to Iraq, do they not?

Right or wrong, Just sharing a thought.................

GO RV!!!

:D :D

[dvforumuser]

DFI was both confiscated Iraqi funds in the US, and 5% of oil revenue I think. So lets round up and say its been going on for 10 years. Since oil revenue in 2011 was only about $60B, DFI can not possibly be as big as $250B, more like $25B.

[keepmwlknfny]

Ok, I'm the student on the short bus. So the increase in their reserves is outpacing thier increase in money supply? The demand for dinar is greater than their increasing debt? If not, how are the reserves increasing at a rate that outpaces their debt? Sorry, I know you are a new Dad and are busy, but if you have the time to indulge me, I would very much appreciate it.

We are all on the short bus together lol.....

The way I understand it is that the higher the reserves a country holds, the higher the backing a country has behind its currencies value....

So normally if the money supply is going up dramatically, but the reserves are not matching the growth then technically the money supply can get inflated....or if the money supply goes up and the reserves go down....this is what happened with Iraq in Saddams era....

Now in Iraqs current situation having a "programmed" or "locked" rate I dont know all the specifics as to what they are allowed to or able to do but both the reserves and the money supply are growing together.....at what rate Im not sure....have not tried to break it down that way but that would be interesting to see the comparison. In either case the 1166 we see now is being held artificially....so is it too high or too low? I dont know exactly.....BUT if you just look at the total money supply which is over 60 trillion dinar (60 billion USD) and compare it to their international reserves that back the currency (which they have stated is between 80-90 billion USD) then you can see they have way more then what they need to cover the money supply (at the 1166 rate)....in fact if they are only required to back whats in circulation (25+ trillion) then they actually have like closer to 3 times over what they need which gives them plenty of room to play with to raise the value of the dinar.....

Am I just rambling or did I answer what you were wondering?

These are all good insights and I appreciate everyone's comments.

The one thing that I have been trying to figure out is the use and calculation of the DFI funds. The last time I remember seeing those figures, I believe the amount was around $250B. I also think that was approximately 9-12 months ago.

With interest and additional contributions that number is most likely higher than that at this point. I am NOT saying that the DFI balances are enough to justify a large RV, but should they not be considered in this type of conversation?

No matter when the transfer to Iraq actually happens, those funds ultimately belong to Iraq, do they not?

Right or wrong, Just sharing a thought.................

GO RV!!!

:D :D

The 250 billion was the total accumulated through that account since 2003.....

There was only about 15 billion or so physically handed over to Iraq when the DFI expired......

http://www.iamb.info/pdf/IAMB--Final_Report_revised_2011__English_.pdf

page 16 shows the totals for the DFI...as of dec 2010 there was only 7 billion.....

[MrFnHappy]

The DFI was nothing more than a "checking account" for the GOI. It was set up to receive all proceeds from oil sales. The DFI was monitored by by the IAMB. Iraq could withdraw whatever amount they desired, but the purpose had to be disclosed, and the use of the funds monitored by the IAMB.

Again, all proceeds from the sale of oil went into this, but none were, or are going to be used to increase the CBI reserves.