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My Two Cents from a Perspective of: Opinion vs Published Intention on the IQD


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I personally like the idea of Iraqs national payment system being backed by the oil In the ground

This is a way to insure payments to anyone up to around 20 trillion dollars on a sceduled delivery

China likes buying oil for its future and not just enough for now

They want to guarentee oil supplys for their country for decades to come

Same with every country

To them an iraqi debt would be welcome

How much do you need iraq?

I'll write you a check

In return for an oil agreement for the next 50 years

I don't think its natural storage facilities are a problem

It's the security

Can they guarentee they can control iraq?

First kick the crap out of this isis group

Then build up your military and form an elite group

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Greed, Speed and Naivety are typical tools that experienced Grifters and Confidence Men might use when running either a (grab & go) short term or a (take him for everything type of) long term confidence game on a Mark.

 

A Con Man will depend on the greed of the Mark to hurry up and get in the game before the window of opportunity shuts and it’s too late. He will also count on the Mark being naïve as to the actual possibility (or not) of the outcome described.

 

To be sure of the Mark following his own greed toward the fleecing, the Con Man will typically put up a large showy front of Confidence to hide the sting.

 

Not all of the pertinent popular Opinions that I’ve gathered made that original list on the first post in this thread ~ despite its length.

 

IMO, this particular popular premise also deserves exploration:

 

Opinion: The CBI Board of Directors, including the Chairman, the Finance Committee, including the Finance Minister and the Iraqi Prime Minister, including all his other ministers have all conspired to run a Long Con on all foreign currency speculators by depending on their foreign greed to hurry up and buy lots of dinar, so that the CBI can RV the IQD up to an exchange rate against the USD which is way beyond Iraq’s capacity to support. Iraq as the Confidence Man gets rich; but so do the foreign currency speculators, even though they are supposed to be the Marks in this deal.

 

Perspective: The IQD continues to be a fiat currency which gets its value from a CBI declaration of the same and not from the speed (or volume) by which foreign currency speculators either buy or sell IQD.

 

Perspective: Both speed and volume traded are too easily controlled at CBI daily auctions of both the IQD and the USD for the exchange rate to suddenly become something that the CBI hasn’t declared it to be.    

 

Perspective: That same group of so-called conspirators, the CBI, the MOF and the GOI would all have to have very experienced confidence chaps on the payroll to be able to coordinate and run such a long-term currency con on the rest of the world.

 

Perspective: For at least the last 5 years, that same group of so-called conspirators has presented the same unified front of Neutral, Slow and Educated (as opposed to Greed, Speed and Naivety) when referring to the coming IQD RD/RV “project”.

 

Perspective: This Opinion basically calls the top brass of the CBI, the MOF, and the GOI out as greedy, liars, and thieves without any evidence to back up such an accusation against respected, elected and well known officials with reputations for integrity.

It might even border on racism with regard to how mid-eastern and specifically Iraqi officials in charge are supposedly viewed by foreign currency speculators.   

 

Perspective: This Opinion only declares that both Iraq, through the CBI, and foreign currency speculators will get rich by selling IQD holdings, but it doesn’t even begin to address how that is really possible.

 

There is at least one other Opinion that I listed in the initial post that deserves the same scrutiny for credibility and for the same reason ~ it accuses Iraqi officials of being criminally dishonest and of being responsible for disseminating false propaganda about the IQD RD/RV, but without any evidence to support that Opinion.

 

This is it:

 

Opinion: Those very public announcements stating the CBI/GOI intentions regarding the future of the IQD should be ignored; because they are mostly all smoke and mirrors and those Iraqi spokesman announcing those intentions (regardless of their reputations) aren’t really telling the truth, anyway.

“They” want to keep foreign speculators and Iraqi citizens in the dark regarding the CBI’s true intentions for the IQD so that the CBI and Iraq itself can realize the most profit from this up-coming redenomination/revaluation.

 

Perspective: This Opinion only declares that the CBI and Iraq itself will realize tremendous profit from declaring a new fiat value for the IQD against the USD, but does not even hint at how it can be done.

 

Perspective: Hard to conjure up a possible motivation for top Iraqi officials wanting to Con foreign currency speculators, who have done nothing but contribute to the economy by buying Iraq’s De La Rue banknotes with USD; but all the same, this Opinion directly accuses Iraqi officials of being liars who want to keep foreign currency speculators in the dark as to the CBI’s true intentions for the IQD.

 

Perspective: Of course, that conspiracy to con foreigners would have to include the 30 plus international oil companies that have so recently bid on and signed very long-term contracts for Iraqi oil (at today’s rate of exchange), but have yet to pull most of it out of the ground.

 

Perspective: After an IQD currency RV that basically raises the on-going costs of production inside Iraq as expressed in USD, what will be the reaction of those giant multi-national oil corporations? A lower oil production combined with a lower price per barrel will just about guarantee an Iraqi budget that is just too skinny to do much for the country.      

 

Perspective: The CBI has always published a fairly clear-cut plan for how it plans to proceed with the up-coming RD/RV “project”, but Opinions to the contrary never seem to explain the actual mechanics of how Iraqi and foreign currency speculators both can get rich, they just declare it; which is kind of like the fiat value declaration by the CBI ~ only different.

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Thanks Philip for the inspiration

It's nice to see the opinions section come alive again

Everyone must have an opinion and should definatly use this forum to let us know , sometimes a combination of more than one opinion

Can inspire the next opinion

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I also have a bone to pick with these Opinions that were listed on that initial post:

 

Opinion: Because Iraq is now a truly sovereign country, and out from under UN Chapter 7 sanctions, the CBI can set the exchange rate between the IQD and the USD to whatever it wants it to be; without permission or approval of the IMF, the World Bank, the Fed, the Bank of International Settlements or the Bank of England. The fact that Iraq is one of the founding member countries of the IMF doesn’t matter; the CBI can still just do whatever it wants to with its own currency.

 

Opinion: Because Iraq is so special out of all the countries in the world, the CBI will not have to follow the very same international currency and finance laws that govern all the rest of the countries associated with the IMF; even though Iraq through the CBI (which is still under IMF supervision), has been doing just that ~ right up to current day.

 

Opinion: The exchange of the old currency for the new has nothing to do with value.

During an exchange period lasting anywhere from 90 days up to two years where nobody in Iraq loses anything by just exchanging the notes, foreign investors will also be able to exchange old currency for new and then watch the value of the new notes climb against the USD (within the time limit of whatever exchange period actualizes) until such time as they will be able to cash in the new lower denomination notes for USD at no loss.

 

Opinion: Before issuing the new lower denomination IQD banknotes which will then be exchanged for the existing De La Rue notes now in circulation, the GOI will have to educate its own citizens and the rest of the world about its proposed project plan via mass media; and that education period may cause a short delay between the time the new currency is released (with its increased value against the USD) and the time when foreign speculators might actually cash in the De La Rue notes they are holding for these new IQD notes and then eventually for USD.

 

Perspective: The education portion of the CBI Party Line Plan for the IQD RD/RV “project” has been in place for at least 5 years. Everyone already knows what to expect when the project is launched.

 

Perspective: If the CBI truly is able to declare any value it wants to its own currency against the USD; without permission or approval of the IMF, the World Bank, the Fed, the Bank of International Settlements or the Bank of England, then it sure hasn’t taken advantage of that unique privilege in the last couple of decades.

Even Saddam, who certainly would do whatever he wanted inside Iraq, never bucked the Fed with his own interpretation of a fiat, non-supportable rate of exchange between the IQD and the USD ~ at least not successfully.       

 

The following chart demonstrates that Iraq, as a member country of the IMF, follows the internationally accepted Ratio of IQD Money Supply divided by CBI USD Reserves to help determine the accepted rate of exchange between the IQD and the USD, and did so even under Saddam.  

 

Iraq’s Money Supply and Exchange Rate from 1991 until 2014:

IQD Money Supply      Foreign Exchange Rate pegged to USD           CBI (Min) USD Reserves
1991 = 24.7 billion           $1 = 10 IQD          or      $0.1000000 = 1 IQD                 $2.47 billion
1992 = 43.9 billion           $1 = 21 IQD          or      $0.0476190 = 1 IQD                 $2.09 billion
1993 = 86.4 billion           $1 = 74 IQD         or      $0.0135135 = 1 IQD                  $1.17 billion
1994 = 239 billion            $1 = 458 IQD        or      $0.0021834 = 1 IQD                 $521.833 million
1995 = 705 billion            $1 = 1674 IQD      or      $0.0005973 = 1 IQD                $421.097 million
1996 = 960 billion            $1 = 1170 IQD       or      $0.0008547 = 1 IQD                $820.512 million
1997 = 1.0 trillion            $1 = 1471 IQD       or      $0.0006798 = 1 IQD                $679.810 million
1998 = 1.3 trillion            $1 = 1620 IQD      or      $0.0006173 = 1 IQD                 $802.469 million
1999 = 1.5 trillion            $1 = 1972 IQD      or      $0.0005071 = 1 IQD                 $760.649 million
2000 = 1.7 trillion            $1 = 1930 IQD      or      $0.0005181 = 1 IQD                 $880.829 million
2001 = 2.1 trillion            $1 = 1929 IQD      or      $0.0005184 = 1 IQD                 $1.09 billion
2002 = 3.0 trillion           $1 = 1957 IQD      or      $0.0005110 = 1 IQD                 $1.53 billion
2003 = 3.8 trillion           $1 = 3500 IQD      or      $0.0002857 = 1 IQD                $1.09 billion
2004 = 12.254 trillion      $1 = 1461 IQD       or      $0.0006844 = 1 IQD                $8.38 billion
2005 = 14.684 trillion      $1 = 1470 IQD      or      $0.0006803 = 1 IQD                $9.99 billion
2006 = 21.080 trillion      $1 = 1470 IQD      or      $0.0006803 = 1 IQD                $14.34 billion
2007 = 23.523 trillion     $1 = 1232 IQD      or      $0.0008117 = 1 IQD                 $19.09 billion
2008 = 26.956 trillion     $1 = 1186 IQD       or      $0.0008432 = 1 IQD                $22.73 billion
2009 = 34.920 trillion     $1 = 1153 IQD       or      $0.0008673 = 1 IQD                $30.28 billion
2010 = 45.438 trillion      $1 = 1169 IQD       or      $0.0008554 = 1 IQD                $38.87 billion
2011 = 60.386 trillion      $1 = 1166 IQD       or      $0.0008576 = 1 IQD                $51.79 billion
2012 = 75.466 trillion      $1 = 1166 IQD       or      $0.0008576 = 1 IQD                $64.72 billion
2013 = 87.770 trillion      $1 = 1166 IQD       or      $0.0008576 = 1 IQD                $75.27 billion
2014 = 87.377 trillion      $1 = 1166 IQD       or      $0.0008576 = 1 IQD                $74.94 billion

 

http://www.cbi.iq/documents/Annual_2002f.pdf

 

Perspective: The IQD peaked in value against the petro-dollar sometime in the mid 1980’s at around $3.20 per dinar and then started falling in value in the late 1980′s even before the invasion of Kuwait and the First Gulf War began because Saddam was already busy printing too much IQD money and removing too much USD foreign currency reserves at the same time.

 

Perspective: That fall rapidly went from $3.20 per dinar to just 10 cents per dinar in 1991. 

 

Perspective: The IQD strengthened from 2003 to 2008 because Bremer and the CPA ordered that initial USD/IQD cash infusion to kick-start the economy after “Mission Accomplished” and the CBI replaced its FX reserves back to their normal levels.

 

Perspective: The Dinar hasn’t fallen from 2008-2014 because the CBI increased its FX reserves at the same rate as new money was being printed.

 

Perspective: Iraq has definitely been affected by chronic inflation in the last 24 years and anyone would be foolish to pretend that it hasn’t been.

 

Inflation is the reason gold was once $20/oz. but is now $1,300/oz.

Inflation is the reason why bread used to be $0.08 per loaf, but is now over $1.00.

Inflation is the reason you could once buy a family car for $800 in the 1940′s, but now it costs well over $15,000, etc…

 

Opinion: The CBI seems to have a handle on Iraqi inflation now and so the more USD FX reserves it can accumulate over and above the minimum necessary for the published exchange rate, the better it will be for speculators waiting for the exchange rate to be sustainably better than 1:1166.

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IMO, these following two Opinions may need extra special scrutiny by all foreign currency speculators in order to determine the Opinion’s inherent credibility; and also to allow any speculator to come to his own informed conclusion about the IQD.

 

First One:

Opinion: The probable scenario for the upcoming redenomination/revalue will be that the existing high denomination De La Rue IQD banknotes will have their value raised; plus at the same time new IQD currency of smaller denomination notes will be put into circulation and with the same new RV exchange rate that the higher denomination notes are given. People will continue to trade in their De La Rue high denomination notes for USD cash and eventually, only the 25,000 notes will be pulled from circulation while all the rest of the existing higher denomination De La Rue notes from IQD10000 on down will be left in circulation to co-exist indefinitely with the newer lower denomination notes which will be in denominations all the way down to IQD 1.

 

Perspective: Removing only the IQD25000 De La Rue banknotes from circulation and adding even more new notes to the circulating currency would seem to add to the Iraqi Total Money Supply, not reduce it, as per the CBI Party Line plan for the “project”.

 

Perspective: This Opinion is at direct odds to at least 5 years of CBI Party Line propaganda that states that when new currency is issued it will be for the purpose of exchange with the old currency in a neutral profit event in order to remove the old from circulation.

 

Perspective: The denominations the CBI means to leave in circulation would add up to a total volume of IQD that allows the Iraqi Money Supply to be counted in Billions, not Trillions of dinar.

 

Perspective: Giving the new currency notes the same exchange rate as the existing De La Rue notes would be counter-productive to the plan of exchange because the two sets of banknotes would be 3 zeros apart in denomination and with the same exchange rate would be 3 zeros different in value when expressed in USD.

 

Perspective: The CBI management are veterans of an Iraqi IQD RV, because they have already experienced the change over from Saddam’s Picture fiat IQD to De La Rue fiat IQD with 3 more zeros on the face. Now, they have published a definite plan to go back to currency without so many zeros and with the latest in languages and security protocols. This Opinion ignores that history.     

 

Perspective: This Opinion ignores the (24) year long history of Iraq, as a member of the IMF, conforming to the internationally established way of determining the exchange rate between the IQD and the USD and also ignores the fact that the IQD has been and still is pegged to the USD aka the Petro Dollar aka the currency of liquid gold.

 

Second One:  

Opinion: There are USD millionaires who have purchased US$ Millions worth of IQD and are now holding IQD Billions and they should know what they are doing, since they are already USD millionaires.

If millionaires who can afford to speculate with US$ Millions think that there is a chance to make a profit speculating on the IQD, then it should be all right for the less well-heeled speculator, shouldn’t it? After all, these millionaires didn’t make their millions by being stupid about money, did they?

 

Perspective: This Opinion equates being a USD Millionaire with being smart and with being particularly smart with money and further with being sufficiently informed about foreign currency speculation. No way to prove that.

 

Perspective: Every Millionaire as a Human being is different and the paths to get to be a millionaire are as varied as the Human beings themselves. This would indicate that it would be very difficult to determine whether or not those particular millionaires who have chosen to speculate with US$ 1 Million or more on IQD are indeed smarter than the average person or not; yet this Opinion insinuates that it’s true.

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  • 2 weeks later...

This Topic was started to try to de-bunk some of the more blatant but popular misunderstandings about how fiat currencies work.

 

I’ve seen these misunderstandings stated as “authoritative” fact in chats and forum topics which are supposedly meant to educate and guide folks who apparently don’t want to bother educating themselves about the subject.

 

I’ve gathered the more popular “truisms” and expressed them here as the Opinions that they really are.

 

The Perspectives that analyze these opinions are basically just a listing of known facts ~ which mostly don’t quite match realities with the opinions.

 

I suppose if folks want to stop by this thread and contribute comments or post streams of consciousness that have obviously misunderstood the contents already posted, then that’s all part of the freedom of speech thing.

 

However, it might be more helpful and more appreciated by some if contributions stayed on Topic ~ somewhat.

 

For example, when I see statements made in chats or in forum topics and comments that promote the idea that a fiat currency like the IQD (where the rate of exchange against the Euro and the USD is tightly controlled by daily auction) could actually be affected by a sudden demand on Iraqi natural resources such as oil or gold, or by a sudden expression of foreign Speculator greed, or by CBI/GOI greed, or greedy Iraqi people, then I have to question the credibility of the author.

 

A statement like that doesn’t make any sense at all.

 

If it’s expressed with authority as if it were true, then it could potentially be very un-beneficial to anybody that believes it and is counting on it.

 

It’s true that the price of oil per barrel will definitely affect the budgets of all countries where the main source of income is the exportation of oil (including Iraq) but affecting the budget is not anywhere near the same thing as changing the rate of exchange between currencies. 

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Philip...agree with the above.  I am treating the Dinar as though it is an undervalued currency and being artificially held low the same as I might trade in an undervalued stock...it is for me simply a high-risk potentially high reward move that I hope will work out in my favor...counting on Iraqi greed and the fact they are resource rich to support a real rate of 1IQD=1USD someday, but would be perfectly happy at .01+...its a risk, but you never know...you also never gain by not having risk in any endeavor...imho...thanks for the post...

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wbus984

 

You are exactly right in IMO.

 

The IQD is at present an undervalued currency and for the sake of being the cheapest dinar in town for exports, including oil, the CBI is deliberately keeping it that way. That’s one of its chartered duties as of the signing of the 2004 Charter.

 

With its current IQD Money Supply/USD Reserves Ratio of IQD 90 Trillion/USD 90 Billion the CBI could easily bump the exchange rate against the USD up to 1:1000 but it hasn’t ~ on purpose.

 

The base unit of the Iraqi dinar is called a fil, just as the base unit of the USD is called a cent, just as the base unit of the JPY is one yen and just as the base unit of the Chinese renminbi (RMB) is a yuan.

 

As everyone knows by now an in your face example of an undervalued currency deliberately kept that way is the RMB of the People’s Bank of China (PBC).

 

Just like the PBC is feeling now, the CBI will eventually feel pressure to raise the value of its IQD against the petro-dollar so that all of its oil exporting neighbors can also have a sustainable chance to continue to live high on the hog of oil.

 

Counting on Iraqi greed and the fact that Iraq is resource rich to eventually raise the value of the IQD against the USD or against the Euro just doesn’t make any sense at all with a fiat currency backed by nothing to start with.

 

The CBI has so far continued to keep its IQD exchange rate against the USD and the Euro low enough to defeat a couple of decades of chronic inflation; while it still remains the cheapest exporter in the region.

 

If only the Internationals could just have at it without all this pesky tribal interference and what not that keeps going on over there ~ interfering with the bottom line.

However, if you consider prices at the pump, there does seem to be a kind of glut on the market right now; so maybe the Internationals don't mind waiting for that Iraqi light sweet crude that's so easy to extract.

 

IMO, the entire middle-east oil exporting cabal is poised to switch from using hydrocarbon (oil) as a combustible fuel to using oil to extract Hydrogen Power and Carbon Fiber. The demand for oil is not going to go away.

 

The Saudi Royal Family and others in the region already export Oil and Gas; but, are also already well into the process of developing the first serious generations of Solar, Wind and Hydrogen power for export.  

 

Plenty of desert space to do it in, too.

 

If the Saudis can pay to have a 600 KM fence whipped up on the Iraqi border to keep evil-doing ISIS “tearists” out within just a few months; they can probably find a way to pay for the separation of the hydrogen and carbon molecules in the hydrocarbon of the oil they continually pump out of the ground.

 

Both Iraqi Oil and Iraqi Gold are lying very near the surface and therefore are way easier to extract than most places around the globe ~ and that’s not even considering the Iraqi Natural Gas resources available.

 

A minimum of 30 International Corporations have already bid on, and signed contracts for a % of all the oil and natural gas they can extract and sell via the Baghdad pipeline. It probably wouldn’t be much of a step for those same global outfits to dominate the extraction of Iraqi precious metals and Iraqi minerals ~ whatever they turn out to be.

 

Extraction is just another word for taking, and the Internationals already know how to do that.

 

If the GOI can eventually think far enough ahead to at least copy the Saudi Royal Family in its pursuit of an alternate source of power derived right from its own abundant source of oil; then Iraq will certainly be a force to be reckoned with in the future. As long as the neighbors keep approving and helping out with what the GOI and the CBI attempt to do.

 

The ISX looks great from that angle, however the IQD exchange rate against the Euro and the USD will still come from a fiat declaration by the CBI and that declaration will have everything to do with the IQD Money Supply vs the USD/Euro Reserves and not much at all to do with Natural Resources or Greed ~ otherwise the neighbors wouldn't approve and the declaration (fiat) would not be respected.

 

Or, at least that's the way its been since 2004.

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I had  studied  this  section ,  and as the numbers roll out ,   it makes me think  "  how  is  it  that  Kuwait  has  such  a high value  in it`s currency  " ?   it is  of the same  playing field  I think ,  { I m f  ,   world bank  }   Saudi Arabia  ,  it as  a value  I think  of  .25  or  .27   .........   why would it be such  a  reach ,  to have  Iraq dinar  to come out  in a range of    ..10 cents   ?  from  the chart  of the central bank  the  cash flow  was   half  what it   is  now   with  holdings  and   backing .....  so it  really seems  like  they could  easily  come out  and  put   the .10 cent mark  on the value   and  pull  big notes  in ,  wait  for the dust to settle  and   let  the  new  notes  roll out .....      the  whole  article  is  a good read  with opinions ,  and  prospectus ......   thanks  for the time  in bringing  this  over  .....      

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I had studied this section , and as the numbers roll out , it makes me think " how is it that Kuwait has such a high value in it`s currency " ? it is of the same playing field I think , { I m f , world bank } Saudi Arabia , it as a value I think of .25 or .27 ......... why would it be such a reach , to have Iraq dinar to come out in a range of ..10 cents ? from the chart of the central bank the cash flow was half what it is now with holdings and backing ..... so it really seems like they could easily come out and put the .10 cent mark on the value and pull big notes in , wait for the dust to settle and let the new notes roll out ..... the whole article is a good read with opinions , and prospectus ...... thanks for the time in bringing this over .....

How many Kuwaiti dinar are in existence ?

How many dinar did iraq have when they had a 3 dollar dinar ?

I think iraq had 28 billion dinar with around 40 billion dollars in their reserves

By the mid 1980s iraq spent its reserves fighting a war with Iran so nothing backed the dinar any more

Then saddam invaded Kuwait so iraq was sanctioned and never could pay off the debts from the war with Iran up to the day in 2003 when iraq was invaded

Iraq was broke

Since then they earned money but spent it all but around 80 billion dollars that the cbi keeps in the reserves to back the dinars value or pay its debts

So backing trillions of dinar with 80 billion dollars is going to be about 1166 exchange rate

So if iraq only had 25 billion dinar with 80 billion reserves they too could have a $3.20 dollar dinar that's backed up 100% by foriegn reserves

Edited by dontlop
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