The Sterling Currency Group Indictment

[EverCurious452]

I don't see much mention here on the indictment against Sterling Currency Group (DinarBanker).  I think its pretty telling, especially the part about them "knowing" an RV was not going to happen.  Since no one can know what decisions will be made in Iraq, how could they know this unless an RV is not possible (which I think is indeed the case).  I think they though so too. It doesn't cut and paste well, but go here http://www.docdroid.net/132iq/doc-2-6-9-2015-amended-complaint.pdf.html and check out pages 16-17 where the owners are sending each other emails about not wanting to go to jail for running what they know is a scam.  Money laundering is also in the list of charges but this clearly spells out the scam of claiming a huge RV is going to happen.  What do ya'll think?

 

[DinarThug]

There Were Several Numerous Page Threads About It At The Time !

But It's Somewhat Old News Now - And There Haven't Been Any Recent Updates !

[EverCurious452]

Yep, I agree nothing seems to be happening with it, but still interesting that it clearly spells out the scam around the RV.

[Markinsa]

Yep, I agree nothing seems to be happening with it, but still interesting that it clearly spells out the scam around the RV.

 

It doesn't spell anything, you got 3 people who don't know any more than the rest of us.  its all speculation.

 

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[EverCurious452]

It doesn't spell anything, you got 3 people who don't know any more than the rest of us.  its all speculation.

Well you have those people thinking that what they were doing was a scam, and being charged with fraud for doing it.   If it really is all speculation I'm not sure how the fraud charge could stick (which not having had the trial we don't know the result of course).

[Markinsa]

Well you have those people thinking that what they were doing was a scam, and being charged with fraud for doing it.   If it really is all speculation I'm not sure how the fraud charge could stick (which not having had the trial we don't know the result of course).

 

They weren't charged with selling Dinar. Money laundering and a few other things, but selling Dinar is not against the law.

 

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[EverCurious452]

They weren't charged with selling Dinar. Money laundering and a few other things, but selling Dinar is not against the law.

Of course selling Dinar is perfectly legal.  The fraud was claiming its a good investment when they knew that an RV could never happen.  "...that have used the facilities of interstate commerce in a scheme to defraud investors in the Iraqi dinar by publishing and disseminating false information about the viability of that currency as an investment"

[Markinsa]

Of course selling Dinar is perfectly legal.  The fraud was claiming its a good investment when they knew that an RV could never happen.  "...that have used the facilities of interstate commerce in a scheme to defraud investors in the Iraqi dinar by publishing and disseminating false information about the viability of that currency as an investment"

 

How can they know the RV will never happen?  They aren't God. Below is a quote from Adam, and I tend to agree with his assessment of what is happening with Sterling.

 

Hey hey happy Wednesday!

 

Let's get right to the meat and potatoes here - there's a lot going on, 

and even a little excitement building amongst my closest Iraqi contacts, 

but as of right now - no HCL, so no RV. That's the bottom line.

 

There is a lot of buzz about a couple of major dinar dealers getting shut 

down or investigated. The naysayers out there are using this as an 

excuse to continue their naysaying, but your buddy Adam is here to 

set the record straight.

 

The dinar is still NOT a scam.

 

If someone told you that you were guaranteed to be rich by last week,

it's possible that someone misled you and perhaps they were misled by 

someone else, but the dinar itself is not a "scam". There is great potential 

for the Iraqi Dinar to rise in value, be it a little or a lot, and we all have 

every right to own it, hold it, and gain from it.

 

The companies that are being investigated or shut down all have one 

thing in common, and it's something I have preached against since the 

very first time it was mentioned: Dinar Reserves.

 

To keep this real simple, "Reserve" orders have been offered in several 

different forms over the years - some 10% down, some true "layaway" 

type plans, etc etc. The fundamental similarity between them all is the

customer would send in money and not receive anything in return

other than the OPTION to convert their deposit into a full order at some

time in the future.

 

Where the businesses got in trouble is right there in capital letters: OPTION.

 

As registered Money Service Businesses, they are all under a microscope 

at all times, and the alphabet gangs do not play around when it comes to 

things that involve OPTIONS.

 

As successful business people, these companies should have all known 

better... but I think greed probably got the best of them and suddenly their 

brains stopped working, and they never paid a good attorney to look at 

their business model and make sure they were staying within the law.

[pocono]

E.C.

 

A stronger argument for you,while the Sterling case winds through the courts, might be the BHgroup. The trials,convictions and in the case of Rudy Coenen the guilty plea are a matter of public record. The sentences speak for themselves..Huebner has a release date sometime in 2021,Emmenecker in 2017 and Coenen would have been released in 2019 but he passed away in prison last April.

 

You can expect someone to claim the convictions are for charges related to a non-existed hedge fund..That's only partially true..They were convicted of over 30 counts with only 5 related to the hedge fund.

[EverCurious452]

How can they know the RV will never happen?  They aren't God.

Because the exchange rate of a pegged currency is constrained by the ratio of reserves to the money supply.  

E.C.

 

A stronger argument for you,while the Sterling case winds through the courts, might be the BHgroup. The trials,convictions and in the case of Rudy Coenen the guilty plea are a matter of public record. The sentences speak for themselves..Huebner has a release date sometime in 2021,Emmenecker in 2017 and Coenen would have been released in 2019 but he passed away in prison last April.

 

You can expect someone to claim the convictions are for charges related to a non-existed hedge fund..That's only partially true..They were convicted of over 30 counts with only 5 related to the hedge fund.

Thanks for the update on the BHgroup.  I think its a good example too, but many just focus on the hedge fund aspect so in that respect I thought the Sterling case was more straight forward.  But, of course we have to wait for it to be resolved one way or anohter.

[Markinsa]

Because the exchange rate of a pegged currency is constrained by the ratio of reserves to the money supply.  

 

And that means what as it relates to Iraq?

 

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[EverCurious452]

And that means what as it relates to Iraq?

Last time I checked (which was quite a while back) that they could raise the rate by about 15%.

[Adam Montana]

Last time I checked (which was quite a while back) that they could raise the rate by about 15%.

 

There is no law or global regulation that limits how much a currency can go up or down. Your source on that number of 15% is simply wrong.

[EverCurious452]

There is no law or global regulation that limits how much a currency can go up or down. Your source on that number of 15% is simply wrong.

Total agreement that no global regulations are at play here, and the exchange rate certainly can go down as far as Iraq wants but I think there is a limit on how high it can go based on what the CBI can support.  That limit is roughly their total reserves divided by the IQD money supply and that ratio usually has been about 15% higher than the current rate.   If the exchange rate were to be set way past that limit the CBI would not have nearly enough dollars to exchange for the import demand that such a huge (and now vastly more valuable) money supply would generate.  At the much dreamed about 1:1, an 80T IQD money supply can not be backed by the $80B USD of reserves that were backing it at 1166:1 (and could back it at 1000:1 which is about 15% higher).

[Adam Montana]

Total agreement that no global regulations are at play here, and the exchange rate certainly can go down as far as Iraq wants but I think there is a limit on how high it can go based on what the CBI can support.  That limit is roughly their total reserves divided by the IQD money supply and that ratio usually has been about 15% higher than the current rate.   If the exchange rate were to be set way past that limit the CBI would not have nearly enough dollars to exchange for the import demand that such a huge (and now vastly more valuable) money supply would generate.  At the much dreamed about 1:1, an 80T IQD money supply can not be backed by the $80B USD of reserves that were backing it at 1166:1 (and could back it at 1000:1 which is about 15% higher).

 

I don't venture into the Lopster tank very often for this exact reason. I feel like I'm having a conversation with someone who has a limited understanding of the fundamentals and simply refuses to accept anything other than what they choose to believe.

 

For example - this:

 

 

 

the CBI would not have nearly enough dollars to exchange for the import demand that such a huge (and now vastly more valuable) money supply would generate.

 

Your entire argument is flawed because of that one detail. You are ignoring the fact that the CBI does not need to have "dollars" to support their exchange rate any more than the USD needs gold to back IT's exchange rate.

 

We are talking about a fiat currency, which does not need physical reserves to support it... however, Iraq DOES have physical reserves to support a rate even as high as a dollar.

 

I'm not arguing that they will RV at $1, but I am stating that they could RV at $1, regardless of how many physical dollars they have in their vaults.

 

If you really believe that no more than a 15% increase is possible, I have to question your motives for even being on this site. Why are you wasting your time here? 

[SocalDinar]

Mike Maloney on fiat currencies

 

[EverCurious452]

I don't venture into the Lopster tank very often for this exact reason. I feel like I'm having a conversation with someone who has a limited understanding of the fundamentals and simply refuses to accept anything other than what they choose to believe.

I don't think its particularly complicated and that I do understand it, but its always wise to acknowledge the possibility of being wrong.

 

For example - this:

 

Your entire argument is flawed because of that one detail. You are ignoring the fact that the CBI does not need to have "dollars" to support their exchange rate any more than the USD needs gold to back IT's exchange rate.

 

We are talking about a fiat currency, which does not need physical reserves to support it... however, Iraq DOES have physical reserves to support a rate even as high as a dollar.

Sure the USD and the IQD are both fiat currencies (as are all currencies these days) but that only means that the physical notes or coins do not have intrinsic value like say a gold coin would have at least the value of that much gold. But the USD is a floating currency and the IQD is a pegged currency, which are very different things.

 

The USD is used globally for all sorts of transactions and as a reserve currency (for counties like Iraq). The exchange rates are market driven on exchanges all over the world and not by our central bank (the Fed). The Fed can try and influence a particular rate by buying or selling dollars like anyone else, but such influence is pretty small. The USD stays relatively stable due to the faith that a dollar will buy about the same amount tomorrow as it buys today.

 

The IQD on the other hand is used only in Iraq and the entire market is the CBI. So the rate banks downstream from the CBI use is tethered to the rate (the peg) that the CBI sets. Pretty much all exchanges eventually go through the CBI. Its value remains stable due to the reserves that back the currency.  If the exchange rate could be much higher than the ratio of the reservers to the money supply, why do we see this limit observed for all pegged currencies (some fudge factor in backing all of M2 or only M1 and part of the nox-ondemand portion of M2, but generally its a true statement).

 

I'm not arguing that they will RV at $1, but I am stating that they could RV at $1, regardless of how many physical dollars they have in their vaults.

Understood, 1:1 is just an example, and I'll continue with it.  Can you explain how that would work? In 2013 Iraq had about $60B worth of imports and 66T IQD were exchanged by the CBI (not directly but through down stream banks) and their reserves were replenished by the MOF doing the reverse exchange (buying IQD with USD) from oil revenue, which was about $70B USD so reserves grew by about $10B USD and the money supply grew by about 11T IQD.  So the imports were covered at the 1166:1 level.

 

Now if Iraqi's are told your saving (whether its 100,000 IQD or 10,000,000 IQD) are worth 1000x as much as they were yesterday, they are going to want to buy a lot of stuff. I think its very conservative to say that imports would go up by 10x, so $600B USD worth (which would them also be 600B IQD, a tiny part of their 80T money supply). So as that 600B IQD comes in for exchange to buy imports, the CBI still only has the $80B USD it had before and its still being replenished by the same oil revenue (on exchanges by the MOF) as before. Where does the other $520B USD come from?

 

If you really believe that no more than a 15% increase is possible, I have to question your motives for even being on this site. Why are you wasting your time here?

To learn about this wild difference of views on the subject. If I'm wrong I'd like to understand where is my error in thinking.

Edited September 13, 2015 by EverCurious452

[Adam Montana]

 

 

But the USD is a floating currency and the IQD is a pegged currency, which are very different things.

 

 

Yes, the IQD is pegged. So what? 

 

What is the IQD pegged to? The USD.

 

Therefore, the IQD is also a floating currency, because of what it is pegged to.

 

At some point in every single one of these debates, I get bored with pointing out simple concepts like this, and decide I have better things to do... I've reached that point here. It's obvious that there is a good reason for you to be confined to the lopster tank. 

 

In a few weeks, months, years, or decades... one of us will be able to say without a doubt that the other was wrong.

 

Until then, it's all speculation, and I'm very happy with my position on the dinar I hold in my safe.

 

Best regards to you, but I will not say I hope you are right with your negative and narrow outlook on the subject.

 

[EverCurious452]

Adam and Markinsa, thanks for the conversation.

[Adam Montana]

[RVPleaseToday]

Iraq is a mess. Until it is no longer a mess, the value of Iraqi dinar will not increase. We wait.

[EverCurious452]

Iraq is a mess. Until it is no longer a mess, the value of Iraqi dinar will not increase. We wait.

If the RV is and always has been impossible as I've spelled out (I think convincingly) in this thread, then things like the HCL and Iraq security issues and general stability and on and on are all just excuses used by the RV hopeful to explain why it has't happened.  The list of such things could be never ending.

 

dateline 2075: "If Iraq would only sign on to the Mars trade deal then we could RV!" :-)

[rockfl9]

WOW EC! You got Adam to visit the tank. If he becomes a regular we will have to spruce the place up.

But I am going to agree with him That the MOF/CBI can set the exchange rate at any value they want.

The reason being that the IQD is an INTERNAL CURRENCY used only for commerce in Iraq. Iraq will continue to use USD for all external transactions.

I believe they have told the BIS that it will NEVER exchange any IQD for dollars outside of Iraq. I remember there was a suspicious meeting between the BIS and Shabibi just before the "lift the zeros" plan was announced. 

[Texstorm]

This time next year I'll be smoking Cuban cigars and the tank will be a very quite place. LOL 

[EverCurious452]

WOW EC! You got Adam to visit the tank. If he becomes a regular we will have to spruce the place up.

But I am going to agree with him That the MOF/CBI can set the exchange rate at any value they want.

The reason being that the IQD is an INTERNAL CURRENCY used only for commerce in Iraq. Iraq will continue to use USD for all external transactions.

I believe they have told the BIS that it will NEVER exchange any IQD for dollars outside of Iraq. I remember there was a suspicious meeting between the BIS and Shabibi just before the "lift the zeros" plan was announced. 

:-)  If you think that, then please answer my question a few posts back, when Iraqis go to buy more imports with their new found wealth where will those dollars come from?  These are exchanges INSIDE Iraq.

 

You might be right If no exchanges other for imports are allowed (as they try to do now) AND only the current level USD of imports are allowed (and that would include ALL imports, so parts and services etc).  So it would really be yes the exchange rate is higher but no you can't actually spend any of it.  So why bother?   It would also likely generate a huge black market from people trying to get around such controls.  That would effectively be a redenoination, but much more complicated so again why do it?  A LOP does the same thing and is clean and easy.

 

WOW EC! You got Adam to visit the tank. If he becomes a regular we will have to spruce the place up.

But I am going to agree with him That the MOF/CBI can set the exchange rate at any value they want.

To perhaps make it more clear, I'd restate that as "the MOF/CBI can set the exchange rate at any value they can support".   Exchanges for imports are the big problem.

 

 

This time next year I'll be smoking Cuban cigars and the tank will be a very quite place. LOL 

I'd make a bet with you on that but I don't think its ethical to bet when you know the outcome.

Edited September 14, 2015 by EverCurious452