Dollars For Dinars - Greatest Article I've Ever Read

[TrinityeXchange]

I must say that I have not been in this investment for anytime just over a year. There are a lot of articles I missed but I am grateful to Breitling that this archived article was brought to my attention. If there was ever any proof that CBI is into heavy currency manipulation and maintaining an extreme dirty float, this article is the nail in the coffin. This article will express to everyone that the IQD is eXtremely undervalued and held down or controlled specifically for certain economic purposes by the CBI to be released into its true value at the proper time.

Link

On April 29, Jay Garner, the retired lieutenant general who headed the reconstruction effort in Iraq at the time, reported to Washington that the payments had lifted the mood of people in Baghdad during those first few confusing days. Even more important, a collapse of the financial system was avoided.

This success paved the way for the second stage of the plan. In only a few months, 27 planeloads (in Boeing 747 jumbo jets) of new Iraqi currency were flown into Iraq from seven printing plants around the world. Armed convoys delivered the currency to 240 sites around the country. From there, it was distributed to 25 million Iraqis in exchange for their old dinars, which were then dyed, collected into trucks, shipped to incinerators, and burned or simply buried.

The new currency proved very popular. It provided a sound underpinning for the financial system and remains strong, appreciating against the dollar even in the past few months. Hence, the second part of the currency plan was also a success.

The story of the currency plan is one of several that involved large sums of cash. For example, just before the war, Saddam stole $1 billion from the Iraqi central bank. American soldiers found that money in his palaces and shipped it to a base in Kuwait, where the U.S. Army’s 336th Finance Command kept it safe. To avoid any appearance of wrongdoing, American soldiers in Kuwait wore pocketless shorts and T-shirts whenever they counted the money.

Later, U.S. forces used the found cash to build schools and hospitals, and to repair roads and bridges. General David Petraeus has described these projects as more successful than the broader reconstruction effort.

But that wasn’t the only source of dollars. Because the new Iraqi dinar was so popular, the central bank bought billions of U.S. dollars to keep the dinar from appreciating too much. As a result, billions in cash accumulated in the vaults of the central bank. Later, with American help, the Iraqi central bank deposited these billions at the New York Federal Reserve Bank, where they could earn interest.

[am i reading this right?!! this is the true essence of a dirty float. not that a dirty float is bad but just saying that the cbi purposely has been holding the value of the iqd down. for all who need a little help on definition of dirty float here you go:

Dirty Float - A system of floating exchange rates in which the government or the country's central bank occasionally intervenes to change the direction of the value of the country's currency. In most instances, the intervention aspect of a dirty float system is meant to act as a buffer against an external economic shock before its effects become truly disruptive to the domestic economy.

so the cbi have been actively manipulating the value of the dinar preventing it from appreciating naturally in value. regardless of the rate, this tells me that the cbi is withholding a lot of true information from the general public concerning the dinar. i highly believe that no one knows what is really in circulation. no one knows what the true numbers are because it is being scientifically manipulated by the money changers supreme, the cbi.]

Finally, when Iraq started to earn dollars selling oil, the United States transferred the cash revenue to the Finance Ministry, where it was used to finance government operations, including salaries and reconstruction. Many of these transfers occurred in 2004, long after the financial stabilization operation had concluded. Iraqi Finance Ministry officials had already demonstrated that they were serious about keeping the controls they had in place. The 360 tons mentioned by Henry Waxman includes these transfers as well as the 237.3 tons shipped in 2003 during the stabilization.

[this says it all. these controls (dirty float of the currency) has been maintained as a matter of monetary policy. what is the true value of the dinar? who knows. but one thing i do know is that it certainly aint $1200 to the $1 usd. another thing i know, I SHOW AS HECK AINT SELLIN! be blessed my friends.]

One of the most successful and carefully planned operations of the war has been held up for criticism and even ridicule. As these facts show, praise rather than ridicule is appropriate: praise for the brave experts in the U.S. Treasury who went to Iraq in April 2003 and established a working Finance Ministry and central bank, praise for the Iraqis in the Finance Ministry who carefully preserved payment records in the face of looting, praise for the American soldiers in the 336th Finance Command who safeguarded the found money, and, yes, even praise for planning and follow-through back in the United States.

[SocalDinar]

Thanks Trinity, very powerful stuff!

He had a Good show today!

[Elixirbaby]

Just listened to his audio on this article right before you posted this. I'm kind of giddy right now.

[nemesis760]

Followed the link, says

April 1, 2007

hoover digest » 2007 no. 2 » iraq

Am i missing something?

[Laid Back]

I found this article in another site.

Good info.

Retired State Dept economist:

In our 40+ year career as a Retirement Consultant we have been blessed to meet some very talented professionals. One of them is a retired State Dept. economist who introduced us to the IQD investment in 2005. He had worked on the original plan to install a new monetary system for Iraq after the 2003 invasion.

He had originally indicated that the plan was for the IQD to achieve financial parity with the USD over a 7-10 year period from the introduction of the new system. At that time the USDs use would be completely discontinued and it would be replaced by the IQD for in-country use and international exchange. The variable factor in the timetable would be the political environment.

I visited with him recently and got an update on several issues:

1. He indicated the original time table was proceeding on a fast track due to the financial management skills exhibited by the CBI and the Finance Ministry in

a. controlling the rate of inflation,

b. controlling the value of the IQD in a declining economic environment and

c. implementing a digital banking system both internally and externally, but the variable was still the political environment.

Like most economist he doesnt talk in absolutes (i.e. rate/date) but in probabilities. His knowledge base is pretty current since he is still part of a subsection of the original group that Iraq, State Department and IMF financial people bounce things off of.

2. We raised the issue of the large number of IQD reported as being in circulation (current estimates are at 25 Trillion). He indicated this was mostly made up of (1) in country physical currency, (2) the foreign currency reserves of the central banks around the world which are electronic, (3) currency that had been printed but not released (i.e. small denomination bills) and (4) privately held physical currency sold to increase the foreign currency reserves.

The export oil revenues are still under the control of the UN supervised DFI, and Iraq only gets roughly 30% of the fair market value of the oil they are selling, which is to be used only for budgetary expenditures. Since Shabbi, the head of the CBI, knew he couldnt get anymore cash flow out of the controlled revenue system the IMF/UN had him under, he opened a currency sales window at the daily auctions to tap into the wallets of the worlds speculators. Worked pretty good, since hes built his foreign currency reserves to over $50 billion USD.

3. We then moved to the removal of big bills (the ones with the 3 zeros on them) and he said that this activity was always built into the plan. The activity was to begin as soon as Iraq had implemented a modern digital financial system (i.e. bank branches, credit/debit cards, ATMs, direct wire transfers etc.). The removal of the large bills in-country would be the reverse of the process that was used to remove the pre-2003 currency with Saddams picture on it. The example was a 25,000 IQD=$25USD/pre-rv note would be brought into the bank and exchanged for a 25 IQD note=$25 USD post/rv. The 25,000 IQD note would then be destroyed removing it from the currency in circulation account. I told him a lot of people would call that a LOP and he laughed, saying they are partially right, because 25,000 IQD was being lopped from the currency in circulation account, but the only reason for this process was to improve money handling ability at all organization levels, and reduce the actual physical currency in use in all areas of the Iraq economy.

Interestingly enough, he said this activity could happen in-country without an approved RV rate being released to the International financial system. I asked how much physical IQD did he estimated was in circulation in-country, and he said probably less than had been originally introduced in 2003 which was about $4.5 billion USD worth at an exchange rate of 2000 IQD = $1 USD, because there has been a continuous process of not replacing the larger bills as they wore out. In fact this has resulted in currency shortages in some areas.

4. The next obvious question was how would the removal of the large bills with the three zeros work outside of Iraq, because of the number of world speculators holding IQD.

He indicated, the amount of IQD held by speculators was relatively minor (less than 10%) compared to the IQD held as foreign currency reserve by the central banks of a number of major countries (US, China, England & France were the largest) with major financial interest in Iraq. He didnt have an exact estimate of speculator holdings but ventured an educated guess of 750,000 individuals worldwide with the majority in the US. Estimated value of their holdings $1.5 Trillion – $1.7 trillion IQD.

Maybe this will help, Pt 2

5. Before discussing the planned process of how currency exchange would take plan after the IQD was released as an international tradable currency, he asked if I remembered my economics 101 and what the real purpose of currency is? Yes teacher I replied, its a medium of exchange that facilitates the orderly distribution of goods and services among individuals, companies, countrys etc. The often used example, is the use of currency allows an automobile dealer to exchange a new mustang GT (composed of many diverse parts each with its own individual market value) for the cash down payment + bank financing check of a proud new owner, and each has received equal market value at the moment of exchange.

This is an important concept because the value of a particular currency may be defined by the value of what the currency can be exchanged for, instead of the usual underlying economic indicators.

The complete discussion was rather lengthy so heres the executive summary of how the exchange should work with IQD owned by a US speculator:

1. IQD is released internationally with an exchange rate of $1 USD = 1 IQD

2. IQD is exchanged by Mr. & Mrs. X at Bank Y. Their exchange value is credited to their designated financial account, Bank Y forwards the IQD currency to the Federal Reserve and Bank Ys account is credited at the bank private exchange rate. Yes, the banks will have a private rate and then they will add their profit spread to come up with their public rate. By law this bank spread could be as high as 8%, but it will be a competitive marketplace and the banks know investors will shop around. There is a possibility that there might even be a three rate structure (i.e. Treasury Rate – Bank Private Rate – Bank Public Rate) imposed, but he had no input on that subject.

3. The Federal Reserve adds the value of the exchanged IQD to their foreign currency reserve accounts and destroys the actual physical currency under agreement with the CBI, which serves to reduce the total IQD physical currency in circulation. This build up of the foreign currency reserve accounts serves to strengthen the USD in the marketplace, because heretofore the US has never held significant foreign currency reserves, because there wasnt any country whose currency was perceived as being equal to or stronger than the USD.

The IQD with its commodity (oil+others) base, potential for agriculture growth and aggressive private development growth, has the capability to become the most valuable currency in the world in the 10 years after its revaluation and approval as an internationally recognized currency. Other countries have lots of oil, but they cant feed themselves, they operate under a monarchy or religious tribunal and they have no private development system in place.

4. Mr. & Mrs. X tithe to their church, local charity etc. which stimulates activity in that sector. They pay off their debts, making currency available for re-lending by their creditors. They buy a new house and car which stimulates their local economy and set up a conservative investment portfolio which adds capital to the investment markets. They also pay their estimated taxes which increases the cash flow to the US Treasury.

5. The Federal Reserve under a controlled redemption plan supervised by the IMF, will use its foreign currency reserve IQD account to buy oil for the national strategic reserve, DOD reserves, other country reserves as part of international support agreements or resell it to private oil companies etc.

This gives the Federal Reserve a powerful market force capability to control the supply/price of imported oil which has far-reaching economic and national security implications.

The economics of this scenario look like this, using the exchange of a 10,000 IQD Note with a two-tier 2% bank exchange spread as an example:

1. Mr. & Mrs. X get $9,800 credited to their non-interest bearing checking account.

2. Bank Y gets a $10,000 credit to its Federal Reserve account, and by adding the $200 profit to their capital account, allows them to increase their lending cap by $2,000 under the 10% fractional banking model.

3. The Treasury gets $3,500 in estimated taxes in the quarter after the exchange, because Mr. & Mrs. X are now in the rich category and get to enjoy the 35% tax bracket. This lowers the net cost of the IQD exchange to the US financial system to $6,500 USD (i.e. $10,000 out – $3,500 in).

4. The Feds designated agent, at some point, orders $10,000 worth of oil from Iraq. Payment will consist of a 10,000 transfer from the Feds foreign currency reserve IQD account to the IRAQ Oil payment account at the CBI. Even though the world spot price of oil is defined in terms of USD, the actual transaction may take place in any internationally recognized currency agreed to by the parties. For example, Iran only accepts Yen from Japan for their oil orders, because they dont want USD in their foreign currency reserves.

5. The $10,000 order is filled with 200 barrels of oil based on the spot price on the date of the sale (for this example we used a $50 USD spot price). What does it cost Iraq to produce the oil to fill this order? Well they have negotiated productions agreements for $1.50 USD/barrel. From that price $.50 USD goes to the national Iraqi oil company who is the partner in the field the oil came from. Out of the remaining $1.00 the other oil field partners have to pay the Iraq government a profit tax of $.35 USD (35%). The net cost to Iraq to produce a barrel of oil used in this scenario is $.65 USD. (i.e. $1.50 – .50 – .35)

6. The transaction is completed with the Federal Reserve exchanging foreign reserve credits which are equal to 10,000 IQD (which had a net acquisition cost of $6,500 USD) for 200 barrels of oil (which has a net cost to produce of $130 USD.

Simply put, it cost Iraq $130 USD from their foreign currency reserve accounts to redeem the value of 10,000 IQD, which goes into their operating accounts. At the same time the US got $10,000 worth of oil for a net cost of $6,500. Thats how it was originally planned for Iraq to RV at 1 IQD = 1 USD, with the variable being the political element (i.e. UN Sanctions, GOI actions, IMF actions, World Bank actions etc.)

Now lets really stir the pot by:

a) Having the DFI ($280+ Billion USD) plus other frozen assets (estimated at $100 billion) turned back to Iraq and added to their foreign currency reserve, bringing it up to $430+ billion USD.

Then change the current fractional IQD reserve requirements of 100% to 15%. That just raised the total potential money supply value to $2.8 Trillion (430 billion/ 15), while at the same time the total physical IQD in circulation is being reduced by removing the large bills with the 3 zeros.

c) Also execute the plan Iraq announced to increase oil production from 2+ million barrels/day to 10 million barrels/day with the resulting revenues flowing directly to the Iraq treasury.

d) To add a little more intrigue have the CBI continue to use its sales window to market oil futures and Forex contracts. They have shown they can generate significant cash flow in the private market, think of their impact in public markets.

We leave it to your analytical ability to determine how high of an RV exchange rate IRAQ can really support.

GO RV

[PacoTaco]

I am just as excited I was was when I first invested in the IQD!

[srdedeaux]

Sorry I'm just wondering what's new in all this information? Go RV When Ever! B)

[Chartman17]

I'm going to take your post home and read it, analyze it, digest it, and puke it out on a piece of paper. Then I'm going to draw a bunch of lines around, to, through, and by each point. I hope it comes out as a pretty picture...

Chartman17

[Butifldrm]

Thanks Trinity, lately Iv'e been feeling kind of down about this whole thing. I believe in my heart we are where we stand today because of the ego's and corrupt power mongering of the men who run the Iraqi government. I believe that the Authors of the pan foresaw a Iraq at this time as being so much further ahead than they are now. I am not giving up hope though and thank you and Breitling for the great information. Keepin my chin up Buti.

[WorkerBee]

The story of the currency plan is one of several that involved large sums of cash. For example, just before the war, Saddam stole $1 billion from the Iraqi central bank. American soldiers found that money in his palaces and shipped it to a base in Kuwait, where the U.S. Army’s 336th Finance Command kept it safe. To avoid any appearance of wrongdoing, American soldiers in Kuwait wore pocketless shorts and T-shirts whenever they counted the money.

Later, U.S. forces used the found cash to build schools and hospitals, and to repair roads and bridges. General David Petraeus has described these projects as more successful than the broader reconstruction effort.

Read more:

I'm confused, wouldn't this "found" money have been the old Saddam dinars that were destroyed or buried? Since he stole it before the war? How could this old money have been used to pay for anything? I'm not sure I'm reading this correctly.

[dontlop]

But that wasn’t the only source of dollars. Because the new Iraqi dinar was so popular, the central bank bought billions of U.S. dollars to keep the dinar from appreciating too much. As a result, billions in cash accumulated in the vaults of the central bank.

Read more:

if they bought billions of dollars .. did they buy them with dinars ?

if they bought billions of dollars from the us .. the us must have trillions of dinars in the us what do ya think ?

[WorkerBee]

But that wasn’t the only source of dollars. Because the new Iraqi dinar was so popular, the central bank bought billions of U.S. dollars to keep the dinar from appreciating too much. As a result, billions in cash accumulated in the vaults of the central bank.

Read more:

if they bought billions of dollars .. did they buy them with dinars ?

if they bought billions of dollars from the us .. the us must have trillions of dinars in the us what do ya think ?

If they did indeed buy billions of dollars wouldn't it have been an even exchange for dinar? Value in value out. This article doesn't sit right with me. Something is wrong here.

[dontlop]

If they did indeed buy billions of dollars wouldn't it have been an even exchange for dinar? Value in value out. This article doesn't sit right with me. Something is wrong here.

..

nah if they bought those dollars with dinars to hold down the dinars value ..they sold those dinars for 2000 dinars for a dollar ..or what ever the rate was at the time they bought them .. so one billion dollars would cost 2 trillion dinars ..or what ever the rate was ..

[WorkerBee]

..

nah if they bought those dollars with dinars to hold down the dinars value ..they sold those dinars for 2000 dinars for a dollar ..or what ever the rate was at the time they bought them .. so one billion dollars would cost 2 trillion dinars ..or what ever the rate was ..

Exactly, whatever the rate was at that time. An even exchange at the going rate at that time right? The lowest exchange rate I remember ever reading about was 1400 (14??) per dollar. Or are you saying Shabibi sold his dinar at a discount in order to get USD?

[dontlop]

what ever the rate was when and if this actually did happen

[DinarThug]

[this says it all. these controls (dirty float of the currency) has been maintained as a matter of monetary policy.]

C'mon Shabbi ! Enough With All This Dirty Talk And Just Do The Dirty Deed !

:D

Thx For The Great Post + The Analysis T-eX !

[supergirl]

Good stuff! Thanks.

[Alex38]

Love Breitling

[SocalDinar]

If they did indeed buy billions of dollars wouldn't it have been an even exchange for dinar? Value in value out. This article doesn't sit right with me. Something is wrong here.

I think you are right here Workerbee, but the USD was already in use and somewhat trusted by the people. ( It was working ) . I think what he's saying is as they put dollars into circulation the dinar rate was manipulated down. Lots of articles out about counterfeit currency causing less demand for IQD and could be manipulating the rate down. I believe more trust in a money ( gold ) would have accomplished this same goal.

And now the CBI will sell gold.

[Polishfloridian]

THANKS TRINITY.....

Very encouraging article to me personally.

Art

[doctor robbins]

But that wasn’t the only source of dollars. Because the new Iraqi dinar was so popular, the central bank bought billions of U.S. dollars to keep the dinar from appreciating too much. As a result, billions in cash accumulated in the vaults of the central bank.

Read more:

if they bought billions of dollars .. did they buy them with dinars ?

if they bought billions of dollars from the us .. the us must have trillions of dinars in the us what do ya think ?

They took US dollars into Iraq and paid people with them. Then when they issued the IQD they bought some of those dollars back from Iraqis so that the IQD wouldn't appreciate too much.

In the first stage, the United States would pay Iraqi government employees and pensioners in American dollars. These were obtained from Saddam Hussein’s accounts in American banks, which were frozen after he attacked Kuwait in 1990 and amounted to about $1.7 billion. Because the dollar is a strong and reliable currency, bringing in dollars would create financial stability until a new Iraqi governing body could be established and design a new currency. The second stage of the plan was to print a new Iraqi currency for which Iraqis could exchange their old dinars.

[Bunk]

Why counterfeit Dinar when it is so cheap to buy as is ?? Maybe for after the rv ?? I don't get it ..

Is there not plenty of Dinar still out there that could be bought ??

Are there people in the oasis with their printing presses ??

[Dalite]

They took US dollars into Iraq and paid people with them. Then when they issued the IQD they bought some of those dollars back from Iraqis so that the IQD wouldn't appreciate too much.

Not only that, they also paid the Warlords on a regular basis to keep them from blowing things up and killing the citizens.

When you are dealing with mercs, the USD is king; for everything else, there is Dinar..

The Dinar was weakened by Saddam over printing and declaring an unrealistic value.

By the time these Billions hit the ground, the Dinar had sunk to a low of around 4000:1, and was finally on the upswing.

When you have that low of a country's monetary value, it must be controlled as things improve to prevent too fast a rise which would just offset the work being done to reduce hyperinflation.

The currency auctions still perform a similar duty.

[tedro]

Really good article, it speaks to actual facts, as opposed to the usual Guru BS and misinformation out of Iraq. THANKS Brietling, thanks Trinity........it indeed is one of the best informative articles ever........in my humble opinion it certainly helps solidify the reason to be in this investment!!

[King Bean]

I'm going to take your post home and read it, analyze it, digest it, and puke it out on a piece of paper. Then I'm going to draw a bunch of lines around, to, through, and by each point. I hope it comes out as a pretty picture...

Chartman17

....and if you see a DATE and RATE in all that scrawl.......please give yourself an awesome GURU NAME and post that info immediately!!! Inquiring minds want to know.