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KRsouthern

42 trillion in circulation preventing RI/RV?

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It seems true there is 40 plus trillion IQD in circulation in and out of Iraq. My take is that deletion of zeros, as discussed by GOI and CBI immediately reduces the value of the notes out in circulation to 40 plus billion IQD, and the efforts of the CBI in removing the 000 notes will further decrease the amount of notes in circulation, along with the current destruction of damaged notes, increase of bank usage and electronic systems payments creating/forcing bank usage. The currency reserves, gold, and oil Iraq possesses seems adequate to cover that value. 

Is my logic flawed? Some seem to argue the 40 plus trillion IQD in circulation is too much for Iraq to handle. I disagree in that in country circulation is considered to be in the area of 5 trillion, converted to 5 billion IQD after deletion of zeroes. Upon RI/RV In country dinar remains a dinar, no problem there the way I see it, value of purchasing goes up, price of commodities remains the same.  Out of country the trillions held by countries will also reduce to billions and be traded for oil credits, citizens of those countries will be exchanged per the international exchange rate and paid by their country of citizenship, US Treasury paying USA citizens the exchange rate by electronic exchange for the most part, cash being restricted to certain amounts. Then the notes we hand in will be destroyed, our government receiving the oil credit. Makes sense and seems logical to me. PLease corrects my understanding of the situation. 

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No one seems to argue against those that say having 40 plus trillion IQD  in circulation precludes an ri/rv, so I just wanted to open up a discussion about it....  and it has also been said that that 40 plus trillion is more than all the other currencies combined in circulation , which after a bit of study I conclude is HOG WASH. There seems to be about 2 trillion of usd in circulation, which after deletion of IQD zeroes is far above the 40 billion IQD. Allowing 5 billion that is in Iraq after RV, I would say there is plenty USD for our exchange, considering  that maybe 10 % of exchange will be cash. I would think 90 % will be on paper/digital in the bank. So if there is 30 billion to be exchanged, at $3, then $120 billion will be needed to cover the IQD, leaving 800 Billion USD. Further;, USA is not the only country with IQD, Considering the oil credits at $30 /barrel, 4 billion barrels needed from iraq spread over ten years , no problem at pumping 4 million bpd. And at $50-70 per barrel on the daily market, USA is making money to further cover exchanges and accumulate NO DEFICIT. What do you think?

 

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7 hours ago, KRsouthern said:

It seems true there is 40 plus trillion IQD in circulation in and out of Iraq. My take is that deletion of zeros, as discussed by GOI and CBI immediately reduces the value of the notes out in circulation to 40 plus billion IQD, and the efforts of the CBI in removing the 000 notes will further decrease the amount of notes in circulation, along with the current destruction of damaged notes, increase of bank usage and electronic systems payments creating/forcing bank usage. The currency reserves, gold, and oil Iraq possesses seems adequate to cover that value. 

Is my logic flawed? Some seem to argue the 40 plus trillion IQD in circulation is too much for Iraq to handle. I disagree in that in country circulation is considered to be in the area of 5 trillion, converted to 5 billion IQD after deletion of zeroes. Upon RI/RV In country dinar remains a dinar, no problem there the way I see it, value of purchasing goes up, price of commodities remains the same.  Out of country the trillions held by countries will also reduce to billions and be traded for oil credits, citizens of those countries will be exchanged per the international exchange rate and paid by their country of citizenship, US Treasury paying USA citizens the exchange rate by electronic exchange for the most part, cash being restricted to certain amounts. Then the notes we hand in will be destroyed, our government receiving the oil credit. Makes sense and seems logical to me. PLease corrects my understanding of the situation. 

Thanks for your post and welcome to DV KRsouthern,

 

I agree with your comment.

 

This is how I see it,

With the currency reserves at $87 billion dollars, the gold reserves at 96.5 Tons, inflation+/-2% plus Oil, gas and other

natural resources Iraq possesses they can cover the 42 trillion IQD in circulation by 247%

 

Iraq is on the verge of an open market economy and soon we will see the real market value of the dinar.

 

Go Iraq

Go open market economy 

Go dinar

Go $1:1

 

 

 

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6 minutes ago, Laid Back said:

Thanks for your post and welcome to DV KRsouthern,

 

I agree with your comment.

 

This is how I see it,

With the currency reserves at $87 billion dollars, the gold reserves at 96.5 Tons, inflation+/-2% plus Oil, gas and other

natural resources Iraq possesses they can cover the 42 trillion IQD in circulation by 247%

 

Iraq is on the verge of an open market economy and soon we will see the real market value of the dinar.

 

Go Iraq

Go open market economy 

Go dinar

Go $1:1

 

 

 

wut he said

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KRS and Laid Back both have interesting assumptions which may or may not occur.

 

I am certain that when the Rate eventually is to move that it will be in the 3.00 + range, as to stabilize with Kuwaits and  Saudi Arabia’s and this is exactly why it will return to its old value.

Good Fortunes To All!

Le Plus Grand’

16843E86-830F-4534-90C2-EF9FC7FA78DC.jpeg

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9 hours ago, Carrello said:

Exchange rates today to the US Dollar: Kuwait $3.29, Saudi Arabia $0.26 cents.

I will be happy with a dinar value in between Kuwait and Saudi Arabia value.

 

Go iraq

Go RV

Go Sooner than later

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On 9/30/2019 at 12:12 PM, Laid Back said:

Thanks for your post and welcome to DV KRsouthern,

 

I agree with your comment.

 

This is how I see it,

With the currency reserves at $87 billion dollars, the gold reserves at 96.5 Tons, inflation+/-2% plus Oil, gas and other

natural resources Iraq possesses they can cover the 42 trillion IQD in circulation by 247%

 

Iraq is on the verge of an open market economy and soon we will see the real market value of the dinar.

 

Go Iraq

Go open market economy 

Go dinar

Go $1:1

 

 

 

lets hope its soon...LOL....sometime before March would be good

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6 hours ago, screwball said:

lets hope its soon...LOL....sometime before March would be good

Lets hope its In the first quarter of 2020.

 

Go RV 

Go Sooner than later

Go $1:1

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I found this article in another site. 

Good info. ;)

Retired State Dept economist:

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

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

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

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

a. controlling the rate of inflation,

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

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

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

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

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

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

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

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

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

Maybe this will help, Pt 2

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Now lets really stir the pot by:

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

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

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

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

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

GO RV

 

found and posted by laidback in 2012....

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Anither reminder....thanks Tiffany

 

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

Link

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

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

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

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

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

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

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

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

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

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

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

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

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17 minutes ago, screwball said:

We then moved to the removal of big bills (the ones with the 3 zeros on them) and he said that this activity was always built into the plan. The activity was to begin as soon as Iraq had implemented a modern digital financial system (i.e. bank branches, credit/debit cards, ATMs, direct wire transfers etc.)

Screwball, Thanks for posting the article.

 

The CBI is actually working on a modern digital financial system.

 

- IBAN ... International bank account number

- RTGS... Real time gross settlement 

- ICBS... Integrated computerized banking System

- ISO certified 

- E Banking 

- Mobile Banking

- AML / CFT.... Anti money laundering / counterfeit terrorism 

- ATM / POS / E-Card

- Financial inclusion

 

Go RV

Go $1:1

 

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Thanks Laid Back. You always provide an education and sound views as to the situation in Iraq, whether we like it or not. Reality can be like a rash: appears out of no where, bothers you, and you can't get it to go away.

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3 hours ago, Carrello said:

Thanks Laid Back. You always provide an education and sound views as to the situation in Iraq, whether we like it or not. Reality can be like a rash: appears out of no where, bothers you, and you can't get it to go away.

Thanks for your input Carrello,

We all know CBI is on charge of monetary policy, lately I have been paying attention to what CBI is doing,

I can clearly see they are moving towards an open market economy 

2016-2020 CBI development plan is to implement a modern digital financial system. 

This step will increase the confidence of the world in Iraq financially and economically ,as a result of the reforms

undertaken by the government and the Central Bank of Iraq,

 

Go CBI

Go open market economy 

Go RV 

Go $1:1

 

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 “He had worked on the original plan to install a new monetary system for Iraq after the 2003 invasion.”

 

Wow, thanks for that info Laid Back. 

 

And Screwball.... Shabibi said up to $16 if my memory is correct!!!

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4 hours ago, KRsouthern said:

 “He had worked on the original plan to install a new monetary system for Iraq after the 2003 invasion.”

 

Wow, thanks for that info Laid Back. 

 

And Screwball.... Shabibi said up to $16 if my memory is correct!!!

i know he said atleast $5 but $16 who knows cant recall that far back...

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8 hours ago, KRsouthern said:

 “He had worked on the original plan to install a new monetary system for Iraq after the 2003 invasion.”

 

Wow, thanks for that info Laid Back. 

 

And Screwball.... Shabibi said up to $16 if my memory is correct!!!

 

3 hours ago, screwball said:

i know he said atleast $5 but $16 who knows cant recall that far back...

I recall both of those numbers being spoken...... 3+ I’m happy 😆 

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