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Economic center demanding the government to unlink the Iraqi dinar to the dollar

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Economic center demanding the government to unlink the Iraqi dinar to the dollar

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BAGHDAD - Iraq Presse -19 October / October: Student Government Economic Media Center need to work on the "disengagement of the Iraqi dinar to the dollar," noting that "the current data do not indicate seriously special programs to find alternatives to the parallel development of the oil."

The head of the center Dergham Mohammed Ali in a statement received / Iraq Press / Saturday, a copy of it, "Despite the end of the crisis, shutdown the government the U.S., but there is another crisis threatening the U.S. economy is the high ceiling of the government's debt the U.S. to record levels reached to $ 17 trillion, "noting that" the U.S. economy is threatened by the new economic crises threaten the dollar zone. "

He called Muhammad Ali the Iraqi government to "study to find alternatives to the dollar in the reserves of Iraq's foreign currency basket includes Asian currencies more stable, such as the Chinese yuan and the Japanese yen as well as the euro and the British pound and other currencies are stabilizing higher than the dollar," noting that "the dollar zone is exposed to the risk of real economic not experienced since the Great Depression in the twenties of the last century. "

The Muhammad Ali that "currency auction conducted by the Central Bank of Iraq will be the beginning of the introduction of these currencies and dealing in them and traded through the Iraqi market, in addition to" put Iraq to the idea of ​​disengagement from oil exports in dollars meetings of the Petroleum Exporting Countries OPEC to protect oil prices vulnerable to price dollar universe States United's largest importer of crude oil in the world and any economic downturn سيصيبها the greatly reduce imported crude oil. " 

Muhammad Ali stressed the need to "move in this direction, considering that current data do not indicate seriously special programs to find alternatives to the parallel development of oil to replace it in the budget for Iraq to protect the Iraqi economy from price fluctuations in the global oil market." Q ended

Edited by yota691
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Nice find. Float it. If Iraq can see this big problem with the dollar,  you would think the US would too and do something. 

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Perhaps before the next debt crises in a few months. We are getting closer....

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I don't have the link, but in a previous article posted here at DV...They stated that they were going to put the dinar on the open market prior to the next "world crisis", they were referring to the next deadline of the US debt ceiling ...I believe in January. So, if they actually stay the course...we will see the dinar being traded on the open market prior to Jan. 2014. Persoanlly I believe we will see it prior to the end of the year. Many other have different points of view, but that's why they're called opinions! God bless! (If I can locate that article..I will post it)

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Thanks Yota, Maybe the November 1st meeting that's scheduled will reveil the nature of this matter.

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The u.s. dollar fell to the lowest level in eight months against the euro and a basket of currencies, Friday 18 October, by expectations likely to defer a decision to reduce monetary stimulus in the United States. Analysts predicted that concerns about negative consequences to the u.s. economy and keep the Federal Reserve on monetary stimulus program puts pressure on the dollar, allowing the euro to rise to 1.4 dollars. The dollar index, which usually refers to the strength of the u.s. currency against the basket of currencies, to 79.4, lowest level since February. The euro recorded its highest level since February, when he approached the peak of 2013 at 1.37 dollars. The dollar also dropped by 0.1 percent against the Japanese currency to 99.01 yen after record Thursday, the highest level in three weeks at 99 yen.

 

 

They are watching us. Thanks Yota,

 

 

 

http://www.microsofttranslator.com/bv.aspx?from=ar&to=en&a=http%3A%2F%2Fwww.burathanews.com%2Fnews_article_215382.html

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Gm yota, I have been waiting for the alarm to go off in Iraq.  I know myself here in the US, we may be  in a precarious situation, but Iraq does bare some exposure to the decline in value of the dollar.  Being that the US has tremendous power over Iraq, (strategic framework agreement), I'm sure there could be extreme pressure on Iraq to keeps it's currency pegged to the dollar.  I do believe this is something we need to watch closely, since Iraq has not chosen their exchange rate regime, and they have been in the process of signing numerous trade agreements with BRICS nations, including India in which they came right out and said there was a possibility they would finance trade in their own currencies.

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I wonder when Iraq will start changing their foreign reserve dollars to another currency.

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I don't have the link, but in a previous article posted here at DV...They stated that they were going to put the dinar on the open market prior to the next "world crisis", they were referring to the next deadline of the US debt ceiling ...I believe in January. So, if they actually stay the course...we will see the dinar being traded on the open market prior to Jan. 2014.

Persoanlly I believe we will see it prior to the end of the year. Many other have different points of view, but that's why they're called opinions! God bless! (If I can locate that article..I will post it)

Hope you're right.

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Nice find. Float it. If Iraq can see this big problem with the dollar,  you would think the US would too and do something. 

That isn't the agenda of the people that own and operate the UNITED STATES OF AMERICA CORPORATION.  They don't care about us.  It's all for their gain and profit.

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Couldn't they just buy gold with the reserves and just have it be commodity backed by gold

Wait commodity backed

Hmm

Oil is a commodity too

No wonder they have economists calling to back the dinar with oil "(instead)" of the dollar

They have lots of oil

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one more...Iraqi Economic Media Center urges the government disengagement dinar to the dollar

Source: 

  • BAGHDAD - Iraq's Ahmad
Date: 21 October 2013

Economic Media Center demanded the Iraqi government to the Iraqi dinar disengagement U.S. dollar, pointing out that current data do not indicate the seriousness of programs for creating parallel development of alternatives to oil.

The head of the center Dergham Mohammed Ali, in a statement, said that although the end of the crisis, closure of government the U.S., but there is another crisis threatening the U.S. economy is the high ceiling of the government's debt to record levels reached 17 trillion dollars, noting that the U.S. economy is threatened by crises, economic New threaten the dollar zone.

He called on the Iraqi government to study alternatives for the dollar in the reserves of Iraq's foreign, a basket of currencies including Asian currencies more stable, such as the Chinese yuan and the Japanese yen, as well as the euro and the pound sterling and other currencies with the stability of the top of the dollar, pointing out that the dollar zone is exposed to the risk of real economic did not exposed since the Great Depression in the twenties of the last century.

He stressed that the currency auction conducted by the Central Bank of Iraq will be the beginning of the introduction of these currencies and dealing in them and traded through the Iraqi market, in addition to Iraq put the idea of ​​disengagement from oil exports in dollars in the meetings of the Petroleum Exporting Countries "OPEC" to protect oil prices vulnerability to price the dollar, that the United States is the largest importer of crude oil in the world, and that any a سيصيبها economic downturn will significantly reduce imports of crude oil. Stressing the need to move in this direction, given that the current data do not indicate the seriousness of special programs to find alternatives to the parallel development of oil to replace it in the budget for Iraq to protect the Iraqi economy from price fluctuations in the global oil market. It is noteworthy that Iraq is a country unilateral yield depends largely on oil to finance public budget, and the contribution of oil more than 90% in the GDP of the country.

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from hammer911

 Economists: can not unlink the dollar for the Iraqi dinar

 

20-10-2013 | (Voice of Iraq) - comment.PNG Add a comment -

 

Despite the announcement the White House end of the crisis closure of government the U.S. but there is another crisis threatening the U.S. economy is the high ceiling of the government's debt the U.S. to record levels reached 17 trillion dollars, a large sum difficult to deal with in the absence of indicators for the U.S. economic recovery is Mihdd crises economic New threaten the dollar zone.
Center Economic Media said in a press statement received PUKmedia, a copy of it, the need for monetary policy in Iraq and in cooperation with the Iraqi government on the transfer of Iraq from the dollar zone, which is exposed to the risk of real economic not experienced since the Great Depression in the twenties of the last century, which would require a study to find alternatives to the dollar in the reserves of Iraq's foreign currency basket includes Asian currencies more stable, such as the Chinese yuan in addition to the euro and the pound sterling and the Japanese yen and other currencies are stabilizing higher than the dollar in addition to promoting the transformation of the phenomenon of dollarization in the Iraqi market to a basket of currencies this through drawers partial start these currencies in the currency auction and encourage the Iraqi market traded through payment in these currencies, especially for imports coming from countries that are trading those currencies.
Center, a member of the Finance Committee announced parliamentary Najiba Najib said the current Iraqi currency with limited categories does not correspond with the budget for Iraq and not be encouraging for investors so Aztron to trading foreign currency, "the dollar."
Najib said in permit for PUKmedia, on Sunday, "that if there were coins from class 200 or 250 thousand was an encouraging motivation to improve monetary policy."
He stressed that "the current form without studying hard and without reform the economic and financial system in Iraq and the current currency denominations disengagement of the Iraqi dinar to the dollar."
MP Najib confirmed that the "disengagement of the Iraqi dinar to the dollar needs to raise the value of the Iraqi dinar and the plans, strategies and clear and the use of some economists."
For his part, professor of economics at the University of Sulaymaniyah Khaled Haidar said delinking the dinar from the dollar is possible that the Iraqi economy is unilateral ie, that Iraq exported oil and imports most of its needs from abroad any dollar against Iraq in all cases to crises.
He said Haider told PUKmedia, said on Sunday that "Iraq he can seek to reduce the link dinar to the dollar by increasing domestic production and reduce imports from abroad, leading to bridge the growing demand caused by increased purchasing power relative in addition to increasing the number of population in the country."
The White House has issued on the first of October, the current orders to federal government departments partial cease to operate, after Congress failed to reach an agreement on the budget for the new year.
The Congress approved the U.S. on October 17 current, a bill ending partial closure of the government departments and sparing Washington defaults on its debt, and hours before the deadline to raise the debt ceiling to 16.7 trillion dollars, but facing Washington risk of defaults.
Several countries have warned of the impact of oil closures U.S. government on the financial dealings of her country and its income from oil and especially that dealing with the United States directly.
Iraq has a yield unilateral country depends on oil dramatically in the financing of public budget and the contribution of oil more than 90% in the GDP of the country.

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THE PETRODOLLAR SYSTEM: A BRIEF OVERVIEW: 1974 – 2012

Written by Chris Clancy on Thursday, 18 October 2012. Posted in OpinionChris Clancy

 

A COMPLETE UNDERSTANDING OF THE WORLD ECONOMIC SYSTEM'S FUNCTIONING OVER THE PAST 40 YEARS IS ONLY POSSIBLE IF YOU STUDY AND COMPREHEND THE IMPLEMENTATION, DEVELOPMENT, AND FATE OF THE PETRODOLLAR SYSTEM.

petrodollar_experiment.001_3cdb166024ceb

The petrodollar story has a little bit of everything. Hope, ambition, political intrigue, mystery, treachery, greed, deceit, betrayal, despair, poverty, envy, wealth, frustration, anger, courage, rage, conflict, revenge, retribution and more and more and on and on it goes ….

I’m sure there’s a great book to be written or movie to be made — one which uses the petrodollar as its backdrop. A minor epic perhaps. All that’s needed is a bit of romance — but just for artistic licence — because there’s nothing romantic about what actually went on. 

It’s a story which hasn’t finished yet — but it will — and the ending’s not likely to be a happy one.

Long after its demise historians will refer to it as an experiment. It may even go down in history as “The Petrodollar Experiment”, perhaps followed by a subtitle which reads something like, “Fiat Money’s Last Hurrah!” — which would be an apt and fitting epitaph by itself.

But time will tell. 

What follows is a base document which I hope will not only inform, but will also raise interest in a subject which, inspite of its critical importance, has received little attention in the MSM.

It splits quite well into three parts. 

Part 1 — Where it came from and how it worked

Following WWII an international system was set up whereby the USD became the world’s reserve currency. Each USD was backed by a fixed amount of gold. The deal was that any country which held USDs always had the option of exchanging them for gold. The idea was to create greater confidence and stability in international trade — which it did — for about twenty years. 

This agreement put the USA in a particularly advantageous position; not dissimilar to a commercial bank operating a fractional reserve banking system. 

Valéry Giscard d'Estaing famously referred to it as an “exorbitant privilege”, way back in the 1960s. 

Which is what it was.

And one which was open to abuse.

Which is what happened.

Whilst it was understood that America would have to “put the dollars out there” in order for the thing to work, no-one foresaw the massive increases in government printing and spending which would be required to fund, amongst many other things, the escalating cost of the war in Vietnam.

By the late 1960s it became pretty obvious that the volume of USDs floating around the globe was far in excess of the amount of gold which should have been available to back them up. What then ensued, after a series of financial scares and crises, was the equivalent of a bank run — let’s call it a gold run — with the French leading the charge. 

The outflow of gold from Fort Knox reached such alarming proportions that Richard Nixon was forced to call a halt to convertibility on August 15, 1971. This was supposed to be a temporary measure. 

But as Milton Friedman would say:

“Nothing is so permanent as a temporary government program.”

And so it was. 

The dollar, no longer backed by anything, became a pure fiat currency and soon began to lose value against other currencies. OPEC continued to price its oil in USDs but then saw it was losing money and started to consider using other currencies, or even gold.

A new big idea was urgently required in order to restore the USD to its former position.

Move aside Machiavelli — enter Henry Kissinger! 

The story goes that in 1973 Nixon dispatched him to Saudi for a series of secret high-level talks.

By the end of it, one year later, a deal was made:

“Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it — not even a pretense of gold convertibility! …This gave the dollar a special place among world currencies and in essence backed the dollar with oil.” - Ron Paul.

As the most powerful member of OPEC, Saudi soon roped in the other members.

Marin Katusa pulls things together in this article:

“By 1975 all of the members of OPEC agreed to sell their oil only in US dollars. Every oil-importing nation in the world started saving their surplus in US dollars so as to be able to buy oil; with such high demand for dollars the currency strengthened. On top of that, many oil-exporting nations like Saudi Arabia spent their US dollar surpluses on Treasury securities, providing a new, deep pool of lenders to support US government spending.” 

He continues: 

“The "petrodollar" system [as it came to be called] was a brilliant political and economic move. It forced the world's oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world's oil for free, since oil's value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars.”

Put simply, if countries wanted to buy just about anything from other countries, not just oil, they needed to have USDs. If they couldn’t borrow them they had to go out and earn them! 

The power and privilege which this conferred on the USA would not be relinquished easily.

Why did OPEC leaders agree to this?

There were two main reasons.

The first is to do with the nature of cartels. The only way the thing would work long-term (i.e. the only way to deter individual members from cheating) was to ensure all trade took place in a single traceable currency. At the time the USD fitted the bill; under this agreement it would again become to be the world’s safest, most stable and most trustworthy medium of exchange. 

The second was that America promised protection to OPEC leaders against foreign invasion or domestic uprisings. The system remained in place, unopposed and unchallenged, for the next twenty five years. 

Throughout this period, unbelievable wealth from oil sales continued to flow, almost exclusively, to the elites in the OPEC countries — and little has changed on this score

One can only imagine the resentment, frustration and anger felt by ordinary people in the Middle East, when they compared their situation and their non-development, to countries like India and China over the same period. Their hatred festered, not just for their rulers, but for every successive American administration which kept their subjugators in power. 

But nothing lasts forever.

In the year 2000, the first major challenge to the petrodollar system was launched by Saddam Hussein.

If one had any doubts that by this time American foreign policy was primarily about protecting the petrodollar system, then what happened subsequently would have laid them to rest.

Part 2 — When and why it started going wrong

Let’s continue the story with another quote from Marin Katusa, not only someone who knows what he’s talking about, but someone who can actually write:

“Until November 2000, no OPEC country had dared to violate the US dollar-pricing rule, and while the US dollar remained the strongest currency in the world there was also little reason to challenge the system. But in late 2000, France and a few other EU members convinced Saddam Hussein to defy the petrodollar process and sell Iraq's oil for food in euros, not dollars.” 

This was not only the first direct revolt against the petrodollar system but also something which started a ball rolling:

“In the time between then and the March 2003 American invasion of Iraq, several other nations hinted at their interest in non-US dollar oil trading, including Russia, Iran, Indonesia, and even Venezuela.”

When the invasion did happen, the reason given was Saddam’s alleged possession of Weapons of Mass Destruction.

As we all know now, this was a complete fabrication. 

In reality, the invasion was supposed to accomplish two things. First, to undo any damage done to the petrodollar system; and second, to act as a deterrent to others who tried to break away.

As things turned out it failed in both respects. It was too late. The cat was out of the bag. 

The next four quotes come from this article.

“The system would be [directly] challenged a second time, this time by Libya. In February of 2009, Muammar Gaddafi was elected the chairman of the African Union and would continue the effort to create the United States of Africa, which among other things, would include a unified currency, a dinar based on gold. Gaddafi went so far as to suggest that the African nations’ oil trade would be switched from the dollar to this new gold currency.”

This challenge was far more dangerous than the first. Had he been allowed to go ahead the USD would almost certainly have collapsed. Like Saddam he also got the treatment — only this time it was far more swift — and far more brutal. The excuse for the intervention was another lie — i.e. “humanitarian” reasons — go here for the background.

The third challenge actually started in 2003 — when Iran announced its intention to abandon the petrodollar system — and has been ongoing ever since.

“Early in 2008, Iran launched a new commodity exchange known as the Iranian Oil Bourse. The intent was to allow for Iranian oil to be priced and traded with multiple currencies. As the system was ramped up, initially the exchange limited its trade to secondary petroleum products, with crude oil to be added “when the system was ready.” Iran … announced it would be ready on March 20, 2012.  This was a declaration of war on the petro dollar!”

In response:

“The U.S. along with the EU then implemented a defense. Just prior to the expansion of the Iranian exchange, on March 17, the EU carried out orders to expand sanctions against Iran by removing Iranian banks from the international bank-wire transfer system known as SWIFT. Furthermore, any banks caught doing business with Iran would be sanctioned as well. It seems Iran’s entire international commerce engine has been halted and its oil industry crushed.”

However:

JapanChina, India and Turkey are among the countries who’ve been dependent on Iranian oil to some degree. Various discussions have been taking place between Iran and its trading partners on the possibility to enlist trade for other commodities such as gold or grain.” 

One cannot help being cynical about the timing of the sanctions and the reason given — Iran’s nuclear ambitions.

Be this as it may, the history of sanctions is that they may bite at first, but never really pan out as planned — if at all. Those against Iran will go the same way. Further, there’s little doubt that many other countries will be encouraged to also find different ways of paying for their oil. 

Which brings us to something else which has been going on increasingly over the previous ten years or so. 

I refer to the growth in “currency swap” agreements — especially in the last two years. Not only a quicker and cheaper method of doing things but also a way out of America’s stranglehold on international trade and everything else to do with the USD.

This trend is not going to change.

Which brings us to the heart of the matter.

The only thing which keeps the American economy going is debt. The only thing which attracts lenders is the strong dollar. The only reason for the strong dollar is the petrodollar system.

As demand for the USD drops, the government won’t receive enough money to pay all its bills, interest rates start to rise and then all sorts of horrible things begin to happen.

That the dollar will collapse is inevitable. 

But what will it mean?

Marin Katusa, ending on an optimistic note, does not consider its demise will be such a disaster. As I’ve stolen so much from him in this essay already, I see no reason to stop now.

So here’s some more:

“2012 might end up being most famous as the year in which the world defected from the US dollar as the global currency of choice. Imagine the rest of the world doing the math and, little by little, beginning to do business in their own currencies and investing ever less of their surpluses in US Treasuries. It constitutes nothing less than a slow but sure decimation of the dollar.

That may not be a bad thing for the United States. The country's gargantuan debts can never be repaid as long as the dollar maintains anything close to its current valuation. Given the state of the country, all that's really left supporting the value in the dollar is its global reserve currency status. If that goes and the dollar slides, maybe the US will be able to repay its debts and start fresh. That new start would come without the privileges and ingrained subsidies to which Americans are so accustomed, but it's amazing that the petrodollar system has lasted this long. It was only a matter of time before something would break it down.”

The key point in this quote is where he writes about, “a slow but sure decimation of the dollar”. If this indeed is what happens we are left with some hope — not much — but at least a glimmer that the road ahead will not be quite so bad.

However, if this is not what happens — and the dollar collapse is sudden — then the future is grim.

And there’s no way of sugar-coating it.

But, as mentioned, there is still a glimmer of hope. 

To understand the what and the why, we need to take a few steps back in time; to something which happened back in the 1980s — on September 22nd 1985 to be precise — in the Plaza Hotel in New York City.

Part 3 — Where are we now and what happens next?

Let’s first pick up where we left off. 

In the first half of the 1980s the USD appreciated to the point where American exporters were having a very hard time of it. The driving forces behind the over-strong dollar were the petrodollar system itself and high interest rates.

Through a concerted campaign of protests and lobbying, exporters eventually spurred the White House into action.

To cut a long story short, finance ministers from the worlds leading economies at the time, met in the Plaza Hotel in New York City in September 1985. They reached an agreement; by acting in concert they would bring about a controlled fall in the value of the dollar. This would be done by actively intervening in currency markets around the world. 

The agreement became known as the Plaza Accord.

Over the next two years things did not work out exactly as planned, but they did achieve their primary objective — a significant devaluation of the USD against its major foreign competitors.

The crucial point is that this agreement was not made in secret — was not made behind closed doors. Their intentions were announced in advance and then carried out in an orderly fashion and in such a way that it did not lead to financial panic in world markets.

However, there is something to bear in mind — this particular method of devaluation was only possible for the USD — simply because of its unique position as the world’s reserve currency. 

Not so for other countries and their currencies.

Fast forward to present day America. 

As laid out in Part 2, the petrodollar system is beginning to come apart. 

The USA is bankrupt and has been so for a very long time. No big secret here. The only reason foreigners continue to lend, thereby putting off the day of reckoning, is because of the petrodollar system. But the more this system weakens, the more downward pressure there is on the dollar and the closer the USA gets to a belated sovereign debt crisis.

Such a crisis happens when a government cannot repay its debts to foreign lenders. 

Once it gets underway events usually move very quickly.

To deal with the situation, governments have a few options, but almost invariably choose to default. This means lenders will usually not get all of their money back — in some cases they get nothing.

Also, if governments choose the default option, creditors have no recourse in law. They must suffer any losses.

What form the default takes depends on the circumstances and what agreements, if any, are reached. For example, a country could choose to repudiate all or part of the debt. Alternatively they may choose to restructure their debts in some way through devaluation, alteration of terms and conditions or some combination thereof.

If the worst comes to the worst they may choose, or even be forced, to print their currency out of existence! 

There is absolutely nothing new in any of this. The number of countries who have found themselves in a such a position over, say, the last hundred years is quite staggering. In fact, if a continental-type gold cup were to be awarded, it would have to go to the countries which comprise Central and South America!

See here for yourself. 

Needless to say, these countries have not disappeared, they are still with us — but they all had to face consequences for their defaults. Not least the immediate plunge into recession which followed and the fact that people will always think twice before ever lending them money again.

However, the fact remains — one way or another — these countries came through it. 

At which point the average reader in America may start to wonder — what’s all the hand-wringing about — why not just repudiate the lot?

Screw you, we ain’t payin’! 

Tempting as it may be to think like this, especially given the hatred which so many countries bear against America, such a sudden move would be catastrophic. Not just for America but for the global economy. Whereas other countries can stiff whoever they like and start again, America is not like “other countries”. If it were to default everyone else would have to “start again” as well. 

Nobody needs a degree in economics to figure out why.

America is still far and away the most powerful economy on the planet. It is also the world’s greatest consumer. To put it bluntly, if the American economy goes down the toilet it takes everyone else with it.

No. 

Default by the USA is not an option — it’s not in anyone’s economic interest — it’s a negative sum game.

Therefore the downward slide in the dollar must be managed in such a way as to try and ensure there is no sudden collapse

Which brings us back to the Plaza Accord.

Can it be done again? 

Agreed, it was a long time ago. And yes, the reasons are very different this time — to slow down the slide in the dollar — rather can bring it about. Also, much has happened between then and now — so many things have changed greatly — not least the economic rise of China.

But what other option is there — do nothing and wait until the SHTF?

Hardly.

Two questions to finish with. 

First. If it were possible to again manage a controlled fall in the USD, would this be enough to avoid disaster? 

Not by itself — no — it is a necessary condition but not a sufficient one. Other things need to be going on at the same time, which work together to bring down the overall size of the debt — down to a level which is at least manageable. 

The Romney/Ryan approach aims to achieve this by growing the economy using supply-side policies. 

The current administration, totally bereft of ideas, offers nothing more than more of the same. 

Go here for the background. 

Second. As the petrodollar system collapses and the USDs role as reserve currency erodes, what will emerge to replace it?

Crystal ball time …

In the short to medium term, “currency swap” agreements may develop into something a bit more ambitious — perhaps resembling an idea floated by Lord Keynes at Bretton Woods — the Bancor — and maybe, for a time, variations on this will operate on a regional basis.

Who knows?

However, in the end there can only be a return to the one true world currency — the currency of choice, freely made by people over thousands of years — I refer of course to gold.

When asked if he would see a return to the gold standard in his lifetime, Peter Schiff replied quite simply, “Yes, I will — it has to happen.” 

I take this as a prediction. 

Given his track record, I wouldn’t bet against it.

Edited by yota691
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BAGHDAD - ((eighth day))

Called banking expert Majid picture, today, to strengthen the Iraqi dinar and turn it into a currency is possible to deal at the international level, not just local.

He said the picture: that local الضروف and international inappropriate disengagement of the Iraqi dinar to the U.S. dollar, ruling out the success of the disengagement of the Iraqi dinar to the dollar being tied to the global system and the development of local industries and agriculture, then the right conditions will be available disengagement dinar to the dollar.

He stressed: the need to find a new global monetary system instituting various currencies, which Maysay him the International Monetary Fund and the World Bank and the Organization of the century in order to create economic stability of the global monetary.

 

He called Economic Information Center, the government need to work on the disengagement of the Iraqi dinar to the dollar, indicating that the current data do not indicate seriously special programs to find alternatives to the parallel development of the oil. (AA)


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October 19, 2013 12:13 PM   Last Updated: October 19, 2013 12:13



 


 

 

 

 




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The crisis budget and raise the debt ceiling in the United States to undermine confidence in the management of Washington's fiscal and dollar as a global reliable, but some analysts in Asia confirmed not a substitute for the greenback. criticized China and Japan, the largest owners of U.S. Treasury bonds, deactivation policy in Parliament and have warned of that defaults on payments, which avoided the United States in the last minute, was سيزعزع the global economy and threaten their investment large in American debt amounting to 2.4 trillion dollars, according to Al-Hayat newspaper of London. and reached Representatives Americans the night before yesterday an agreement timer to raise the debt ceiling, but «political confrontation blew up the credibility of the greenback as a reserve currency reliable global, after he began to suffer because of printed frequent currency», as the newspaper «a Ostralian», in reference to the plan of the Federal Reserve the U.S., «Central», to buy bonds to $ 85 billion a month . paper warned that «if Washington was unable to bear burdens, Vsapadr others to fill the void, stressing that« the Chinese authorities eager to play its currency a bigger role in the market shares of reservists world, regarding appeals to Beijing openly American politicians to raise the ceiling religion of their country However, the relative stability of its currency, the yuan is happy implicitly ». called the agency «Xinhua» Chinese official to «the world is Mtamrk», while criticized the «Global Times» inability to rely on the United States, warning that the situation of the country as a superpower is now threatenedAnd confirmed in an article that «China has an enormous capacity to compete with the United States due to this the sheer volume of the national debt means a certain level of influence».faced Dollar numerous challenges since the occupation status of the pound sterling in a base currency in world trade over the past century.And China has taken initiatives to enhance the status of the yuan in trade exchanges, but the currency can not be converted freely to other major currencies, what hinders any challenge to the dollar. was U.S. President Barack Obama denounced the consequences of confrontation in Congress that led to the paralysis of government lasted two weeks, pointing out that « Nothing has damaged the credibility of the United States in the world and our place in front of other countries more than a scene in which تابعناه in the past few weeks ». and ended the standoff between Republicans and Democrats, hours before the deadline with the adoption of law that extends the ability of the U.S. Treasury to borrow until 7 February next, including provides funding to the government until mid-January (January) next year. But the agreement received some sort of delivery amid the realization that the world has become a hostage crisis similar a few months later. The Institute's chief economist said «if the any of Research in Tokyo Susumu Doehara the that« the settlement of not only a delay to resolve the problem, nor the world can only be welcomed and hoped to arrange their own house United States ».





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from hammer911

 Economists: can not unlink the dollar for the Iraqi dinar

 

20-10-2013 | (Voice of Iraq) - comment.PNG Add a comment -

 

Despite the announcement the White House end of the crisis closure of government the U.S. but there is another crisis threatening the U.S. economy is the high ceiling of the government's debt the U.S. to record levels reached 17 trillion dollars, a large sum difficult to deal with in the absence of indicators for the U.S. economic recovery is Mihdd crises economic New threaten the dollar zone.

Center Economic Media said in a press statement received PUKmedia, a copy of it, the need for monetary policy in Iraq and in cooperation with the Iraqi government on the transfer of Iraq from the dollar zone, which is exposed to the risk of real economic not experienced since the Great Depression in the twenties of the last century, which would require a study to find alternatives to the dollar in the reserves of Iraq's foreign currency basket includes Asian currencies more stable, such as the Chinese yuan in addition to the euro and the pound sterling and the Japanese yen and other currencies are stabilizing higher than the dollar in addition to promoting the transformation of the phenomenon of dollarization in the Iraqi market to a basket of currencies this through drawers partial start these currencies in the currency auction and encourage the Iraqi market traded through payment in these currencies, especially for imports coming from countries that are trading those currencies.

Center, a member of the Finance Committee announced parliamentary Najiba Najib said the current Iraqi currency with limited categories does not correspond with the budget for Iraq and not be encouraging for investors so Aztron to trading foreign currency, "the dollar."

Najib said in permit for PUKmedia, on Sunday, "that if there were coins from class 200 or 250 thousand was an encouraging motivation to improve monetary policy."

He stressed that "the current form without studying hard and without reform the economic and financial system in Iraq and the current currency denominations disengagement of the Iraqi dinar to the dollar."

MP Najib confirmed that the "disengagement of the Iraqi dinar to the dollar needs to raise the value of the Iraqi dinar and the plans, strategies and clear and the use of some economists."

For his part, professor of economics at the University of Sulaymaniyah Khaled Haidar said delinking the dinar from the dollar is possible that the Iraqi economy is unilateral ie, that Iraq exported oil and imports most of its needs from abroad any dollar against Iraq in all cases to crises.

He said Haider told PUKmedia, said on Sunday that "Iraq he can seek to reduce the link dinar to the dollar by increasing domestic production and reduce imports from abroad, leading to bridge the growing demand caused by increased purchasing power relative in addition to increasing the number of population in the country."

The White House has issued on the first of October, the current orders to federal government departments partial cease to operate, after Congress failed to reach an agreement on the budget for the new year.

The Congress approved the U.S. on October 17 current, a bill ending partial closure of the government departments and sparing Washington defaults on its debt, and hours before the deadline to raise the debt ceiling to 16.7 trillion dollars, but facing Washington risk of defaults.

Several countries have warned of the impact of oil closures U.S. government on the financial dealings of her country and its income from oil and especially that dealing with the United States directly.

Iraq has a yield unilateral country depends on oil dramatically in the financing of public budget and the contribution of oil more than 90% in the GDP of the country.

Read more: http://dinarvets.com/forums/index.php?/topic/163867-economists-can-not-unlink-the-dollar-for-the-iraqi-dinar/#ixzz2iJePEnVK

THE PETRODOLLAR SYSTEM: A BRIEF OVERVIEW: 1974 – 2012

Written by Chris Clancy on Thursday, 18 October 2012. Posted in OpinionChris Clancy

 

A COMPLETE UNDERSTANDING OF THE WORLD ECONOMIC SYSTEM'S FUNCTIONING OVER THE PAST 40 YEARS IS ONLY POSSIBLE IF YOU STUDY AND COMPREHEND THE IMPLEMENTATION, DEVELOPMENT, AND FATE OF THE PETRODOLLAR SYSTEM.

petrodollar_experiment.001_3cdb166024ceb

The petrodollar story has a little bit of everything. Hope, ambition, political intrigue, mystery, treachery, greed, deceit, betrayal, despair, poverty, envy, wealth, frustration, anger, courage, rage, conflict, revenge, retribution and more and more and on and on it goes ….

I’m sure there’s a great book to be written or movie to be made — one which uses the petrodollar as its backdrop. A minor epic perhaps. All that’s needed is a bit of romance — but just for artistic licence — because there’s nothing romantic about what actually went on. 

It’s a story which hasn’t finished yet — but it will — and the ending’s not likely to be a happy one.

Long after its demise historians will refer to it as an experiment. It may even go down in history as “The Petrodollar Experiment”, perhaps followed by a subtitle which reads something like, “Fiat Money’s Last Hurrah!” — which would be an apt and fitting epitaph by itself.

But time will tell. 

What follows is a base document which I hope will not only inform, but will also raise interest in a subject which, inspite of its critical importance, has received little attention in the MSM.

It splits quite well into three parts. 

Part 1 — Where it came from and how it worked

Following WWII an international system was set up whereby the USD became the world’s reserve currency. Each USD was backed by a fixed amount of gold. The deal was that any country which held USDs always had the option of exchanging them for gold. The idea was to create greater confidence and stability in international trade — which it did — for about twenty years. 

This agreement put the USA in a particularly advantageous position; not dissimilar to a commercial bank operating a fractional reserve banking system. 

Valéry Giscard d'Estaing famously referred to it as an “exorbitant privilege”, way back in the 1960s. 

Which is what it was.

And one which was open to abuse.

Which is what happened.

Whilst it was understood that America would have to “put the dollars out there” in order for the thing to work, no-one foresaw the massive increases in government printing and spending which would be required to fund, amongst many other things, the escalating cost of the war in Vietnam.

By the late 1960s it became pretty obvious that the volume of USDs floating around the globe was far in excess of the amount of gold which should have been available to back them up. What then ensued, after a series of financial scares and crises, was the equivalent of a bank run — let’s call it a gold run — with the French leading the charge. 

The outflow of gold from Fort Knox reached such alarming proportions that Richard Nixon was forced to call a halt to convertibility on August 15, 1971. This was supposed to be a temporary measure. 

But as Milton Friedman would say:

“Nothing is so permanent as a temporary government program.”

And so it was. 

The dollar, no longer backed by anything, became a pure fiat currency and soon began to lose value against other currencies. OPEC continued to price its oil in USDs but then saw it was losing money and started to consider using other currencies, or even gold.

A new big idea was urgently required in order to restore the USD to its former position.

Move aside Machiavelli — enter Henry Kissinger! 

The story goes that in 1973 Nixon dispatched him to Saudi for a series of secret high-level talks.

By the end of it, one year later, a deal was made:

“Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it — not even a pretense of gold convertibility! …This gave the dollar a special place among world currencies and in essence backed the dollar with oil.” - Ron Paul.

As the most powerful member of OPEC, Saudi soon roped in the other members.

Marin Katusa pulls things together in this article:

“By 1975 all of the members of OPEC agreed to sell their oil only in US dollars. Every oil-importing nation in the world started saving their surplus in US dollars so as to be able to buy oil; with such high demand for dollars the currency strengthened. On top of that, many oil-exporting nations like Saudi Arabia spent their US dollar surpluses on Treasury securities, providing a new, deep pool of lenders to support US government spending.” 

He continues: 

“The "petrodollar" system [as it came to be called] was a brilliant political and economic move. It forced the world's oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world's oil for free, since oil's value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars.”

Put simply, if countries wanted to buy just about anything from other countries, not just oil, they needed to have USDs. If they couldn’t borrow them they had to go out and earn them! 

The power and privilege which this conferred on the USA would not be relinquished easily.

Why did OPEC leaders agree to this?

There were two main reasons.

The first is to do with the nature of cartels. The only way the thing would work long-term (i.e. the only way to deter individual members from cheating) was to ensure all trade took place in a single traceable currency. At the time the USD fitted the bill; under this agreement it would again become to be the world’s safest, most stable and most trustworthy medium of exchange. 

The second was that America promised protection to OPEC leaders against foreign invasion or domestic uprisings. The system remained in place, unopposed and unchallenged, for the next twenty five years. 

Throughout this period, unbelievable wealth from oil sales continued to flow, almost exclusively, to the elites in the OPEC countries — and little has changed on this score

One can only imagine the resentment, frustration and anger felt by ordinary people in the Middle East, when they compared their situation and their non-development, to countries like India and China over the same period. Their hatred festered, not just for their rulers, but for every successive American administration which kept their subjugators in power. 

But nothing lasts forever.

In the year 2000, the first major challenge to the petrodollar system was launched by Saddam Hussein.

If one had any doubts that by this time American foreign policy was primarily about protecting the petrodollar system, then what happened subsequently would have laid them to rest.

Part 2 — When and why it started going wrong

Let’s continue the story with another quote from Marin Katusa, not only someone who knows what he’s talking about, but someone who can actually write:

“Until November 2000, no OPEC country had dared to violate the US dollar-pricing rule, and while the US dollar remained the strongest currency in the world there was also little reason to challenge the system. But in late 2000, France and a few other EU members convinced Saddam Hussein to defy the petrodollar process and sell Iraq's oil for food in euros, not dollars.” 

This was not only the first direct revolt against the petrodollar system but also something which started a ball rolling:

“In the time between then and the March 2003 American invasion of Iraq, several other nations hinted at their interest in non-US dollar oil trading, including Russia, Iran, Indonesia, and even Venezuela.”

When the invasion did happen, the reason given was Saddam’s alleged possession of Weapons of Mass Destruction.

As we all know now, this was a complete fabrication. 

In reality, the invasion was supposed to accomplish two things. First, to undo any damage done to the petrodollar system; and second, to act as a deterrent to others who tried to break away.

As things turned out it failed in both respects. It was too late. The cat was out of the bag. 

The next four quotes come from this article.

“The system would be [directly] challenged a second time, this time by Libya. In February of 2009, Muammar Gaddafi was elected the chairman of the African Union and would continue the effort to create the United States of Africa, which among other things, would include a unified currency, a dinar based on gold. Gaddafi went so far as to suggest that the African nations’ oil trade would be switched from the dollar to this new gold currency.”

This challenge was far more dangerous than the first. Had he been allowed to go ahead the USD would almost certainly have collapsed. Like Saddam he also got the treatment — only this time it was far more swift — and far more brutal. The excuse for the intervention was another lie — i.e. “humanitarian” reasons — go here for the background.

The third challenge actually started in 2003 — when Iran announced its intention to abandon the petrodollar system — and has been ongoing ever since.

“Early in 2008, Iran launched a new commodity exchange known as the Iranian Oil Bourse. The intent was to allow for Iranian oil to be priced and traded with multiple currencies. As the system was ramped up, initially the exchange limited its trade to secondary petroleum products, with crude oil to be added “when the system was ready.” Iran … announced it would be ready on March 20, 2012.  This was a declaration of war on the petro dollar!”

In response:

“The U.S. along with the EU then implemented a defense. Just prior to the expansion of the Iranian exchange, on March 17, the EU carried out orders to expand sanctions against Iran by removing Iranian banks from the international bank-wire transfer system known as SWIFT. Furthermore, any banks caught doing business with Iran would be sanctioned as well. It seems Iran’s entire international commerce engine has been halted and its oil industry crushed.”

However:

JapanChina, India and Turkey are among the countries who’ve been dependent on Iranian oil to some degree. Various discussions have been taking place between Iran and its trading partners on the possibility to enlist trade for other commodities such as gold or grain.” 

One cannot help being cynical about the timing of the sanctions and the reason given — Iran’s nuclear ambitions.

Be this as it may, the history of sanctions is that they may bite at first, but never really pan out as planned — if at all. Those against Iran will go the same way. Further, there’s little doubt that many other countries will be encouraged to also find different ways of paying for their oil. 

Which brings us to something else which has been going on increasingly over the previous ten years or so. 

I refer to the growth in “currency swap” agreements — especially in the last two years. Not only a quicker and cheaper method of doing things but also a way out of America’s stranglehold on international trade and everything else to do with the USD.

This trend is not going to change.

Which brings us to the heart of the matter.

The only thing which keeps the American economy going is debt. The only thing which attracts lenders is the strong dollar. The only reason for the strong dollar is the petrodollar system.

As demand for the USD drops, the government won’t receive enough money to pay all its bills, interest rates start to rise and then all sorts of horrible things begin to happen.

That the dollar will collapse is inevitable. 

But what will it mean?

Marin Katusa, ending on an optimistic note, does not consider its demise will be such a disaster. As I’ve stolen so much from him in this essay already, I see no reason to stop now.

So here’s some more:

“2012 might end up being most famous as the year in which the world defected from the US dollar as the global currency of choice. Imagine the rest of the world doing the math and, little by little, beginning to do business in their own currencies and investing ever less of their surpluses in US Treasuries. It constitutes nothing less than a slow but sure decimation of the dollar.

That may not be a bad thing for the United States. The country's gargantuan debts can never be repaid as long as the dollar maintains anything close to its current valuation. Given the state of the country, all that's really left supporting the value in the dollar is its global reserve currency status. If that goes and the dollar slides, maybe the US will be able to repay its debts and start fresh. That new start would come without the privileges and ingrained subsidies to which Americans are so accustomed, but it's amazing that the petrodollar system has lasted this long. It was only a matter of time before something would break it down.”

The key point in this quote is where he writes about, “a slow but sure decimation of the dollar”. If this indeed is what happens we are left with some hope — not much — but at least a glimmer that the road ahead will not be quite so bad.

However, if this is not what happens — and the dollar collapse is sudden — then the future is grim.

And there’s no way of sugar-coating it.

But, as mentioned, there is still a glimmer of hope. 

To understand the what and the why, we need to take a few steps back in time; to something which happened back in the 1980s — on September 22nd 1985 to be precise — in the Plaza Hotel in New York City.

Part 3 — Where are we now and what happens next?

Let’s first pick up where we left off. 

In the first half of the 1980s the USD appreciated to the point where American exporters were having a very hard time of it. The driving forces behind the over-strong dollar were the petrodollar system itself and high interest rates.

Through a concerted campaign of protests and lobbying, exporters eventually spurred the White House into action.

To cut a long story short, finance ministers from the worlds leading economies at the time, met in the Plaza Hotel in New York City in September 1985. They reached an agreement; by acting in concert they would bring about a controlled fall in the value of the dollar. This would be done by actively intervening in currency markets around the world. 

The agreement became known as the Plaza Accord.

Over the next two years things did not work out exactly as planned, but they did achieve their primary objective — a significant devaluation of the USD against its major foreign competitors.

The crucial point is that this agreement was not made in secret — was not made behind closed doors. Their intentions were announced in advance and then carried out in an orderly fashion and in such a way that it did not lead to financial panic in world markets.

However, there is something to bear in mind — this particular method of devaluation was only possible for the USD — simply because of its unique position as the world’s reserve currency. 

Not so for other countries and their currencies.

Fast forward to present day America. 

As laid out in Part 2, the petrodollar system is beginning to come apart. 

The USA is bankrupt and has been so for a very long time. No big secret here. The only reason foreigners continue to lend, thereby putting off the day of reckoning, is because of the petrodollar system. But the more this system weakens, the more downward pressure there is on the dollar and the closer the USA gets to a belated sovereign debt crisis.

Such a crisis happens when a government cannot repay its debts to foreign lenders. 

Once it gets underway events usually move very quickly.

To deal with the situation, governments have a few options, but almost invariably choose to default. This means lenders will usually not get all of their money back — in some cases they get nothing.

Also, if governments choose the default option, creditors have no recourse in law. They must suffer any losses.

What form the default takes depends on the circumstances and what agreements, if any, are reached. For example, a country could choose to repudiate all or part of the debt. Alternatively they may choose to restructure their debts in some way through devaluation, alteration of terms and conditions or some combination thereof.

If the worst comes to the worst they may choose, or even be forced, to print their currency out of existence! 

There is absolutely nothing new in any of this. The number of countries who have found themselves in a such a position over, say, the last hundred years is quite staggering. In fact, if a continental-type gold cup were to be awarded, it would have to go to the countries which comprise Central and South America!

See here for yourself. 

Needless to say, these countries have not disappeared, they are still with us — but they all had to face consequences for their defaults. Not least the immediate plunge into recession which followed and the fact that people will always think twice before ever lending them money again.

However, the fact remains — one way or another — these countries came through it. 

At which point the average reader in America may start to wonder — what’s all the hand-wringing about — why not just repudiate the lot?

Screw you, we ain’t payin’! 

Tempting as it may be to think like this, especially given the hatred which so many countries bear against America, such a sudden move would be catastrophic. Not just for America but for the global economy. Whereas other countries can stiff whoever they like and start again, America is not like “other countries”. If it were to default everyone else would have to “start again” as well. 

Nobody needs a degree in economics to figure out why.

America is still far and away the most powerful economy on the planet. It is also the world’s greatest consumer. To put it bluntly, if the American economy goes down the toilet it takes everyone else with it.

No. 

Default by the USA is not an option — it’s not in anyone’s economic interest — it’s a negative sum game.

Therefore the downward slide in the dollar must be managed in such a way as to try and ensure there is no sudden collapse

Which brings us back to the Plaza Accord.

Can it be done again? 

Agreed, it was a long time ago. And yes, the reasons are very different this time — to slow down the slide in the dollar — rather can bring it about. Also, much has happened between then and now — so many things have changed greatly — not least the economic rise of China.

But what other option is there — do nothing and wait until the SHTF?

Hardly.

Two questions to finish with. 

First. If it were possible to again manage a controlled fall in the USD, would this be enough to avoid disaster? 

Not by itself — no — it is a necessary condition but not a sufficient one. Other things need to be going on at the same time, which work together to bring down the overall size of the debt — down to a level which is at least manageable. 

The Romney/Ryan approach aims to achieve this by growing the economy using supply-side policies. 

The current administration, totally bereft of ideas, offers nothing more than more of the same. 

Go here for the background. 

Second. As the petrodollar system collapses and the USDs role as reserve currency erodes, what will emerge to replace it?

Crystal ball time …

In the short to medium term, “currency swap” agreements may develop into something a bit more ambitious — perhaps resembling an idea floated by Lord Keynes at Bretton Woods — the Bancor — and maybe, for a time, variations on this will operate on a regional basis.

Who knows?

However, in the end there can only be a return to the one true world currency — the currency of choice, freely made by people over thousands of years — I refer of course to gold.

When asked if he would see a return to the gold standard in his lifetime, Peter Schiff replied quite simply, “Yes, I will — it has to happen.” 

I take this as a prediction. 

Given his track record, I wouldn’t bet against it.

 

So when your leader says we can take on more debt - raise the debt ceiling.....you should be concerned.

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