Enoch commentary on Foreign currency reserves

[lgraham]

I have consistently believed that the CBI foreign currency reserves would be the key to the RV of the IQD. Please read the thoughts here from Enoch 8. He does not even give consideration to the DFI funds that must be included at a future date. I plan on putting together a post next week that demonstrates how The IQD will become a foreign currency reserve for other countries in the near future.

All the best,

Lgraham

Announced that the Iraqi Central Bank Consultant Dr. Mohammad Saleh said that the appearance of the central bank reserves reached $ 50 billion, and pointed out that this reflects a positive monetary policy for the protection of the Iraqi dinar in the region.

Saleh explained in an interview with “Radio Sawa” The reserves amounted to $ 50 billion, which reflected the monetary policy for the protection of the national currency in the region and form a cushion against any internal or external vibrations.

Saleh added that the CBI in connection with cash management reform in the coming years, pointing out that the GDP will double, especially in the field of oil and other activities and, therefore, Cluster current monetary and specifications are not commensurate with the stage of prosperity and economic development can.

The economists emphasized that the pursuit of a number of European and Arab states to invest in Iraq will support the value of the dinar in the future.

LINK

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Enoch8 Commentary:

Putting the new figures together.

Part I

Even the most hard core lopster out there, could not make a legitimate argument, that .000865 is not based on only 50% of the $43 Billion Reserves claimed previously. ($43 Billion divided by 27 Trillion in circulation, are the earlier publications from both CBI and the IMF is using only about 50% of the value of the reserves to support the Program, Defacto Rate, $.000865. The REER, (Real Estimated Exchange Rate) in IMF Public Information Notice published Feb 10, 2010, reflects 292 vs 1170, which is the DeJure Rate, mentioned also by the IMF, stating that Iraq is using a Defacto Conventional Peg, and has a 2 rate system. The REER as of Dec 2009 shown by the IMF is $.00342, about 200% of the Reserves, that were at that time, $43 Billion.

Earlier this year, in March, we talked about the fact that the 2010 budget, approved was based on $62.50 Oil. Now that increase is hitting the books. This year, they are planning a 2011 Budget based on $70 Oil, that is expected to be well over $100 per barrel in 2011. So, here we go again.

$50 Billion, In Reserves, will increase even the Program Defacto Rate, at 50%, even in the worst nightmarish argument the most hard core lopster could make, not including removal of much of the 27 Trillion, and even without the additional investments into Iraq, as this article suggests….. and not including doubling the economy….. you can figure the REER to be at the worst possible scenario…… on the world exchange, to be revised to 250 % of the Reserve for the REER Value, because Iraq last month was decreased from 25% Fractional Reserve, in lending requirements, to 20%.

So….. here is how that information figures…… plan on about double, that Reserve, at the point of an RV, to a minimum of $100 Billion, based on the projections of doubling the economy,,,(Which is under estimating it by 10 times, in my opinion…), but go with that. 20% Fractional Reserve Requirement means you can multiply that by 5 times, to an estimated $500 Billion as the basis for the REER of the same 27 Trillion.

$500 Billion divided by 27 Trillion IQD = $.0185….. which is almost 2 cents…. even without removal of zeros. Seems like we have been here before, haven’t we? LOL

Stay with me here. I am nowhere near done running this.

OK….. CBI has stated all year long, they plan on removal of the large bills from circulation. They have stated they have only about $7 Trillion in the combined Stock and Quazi Stock….. the M2.

That means that about 70% of the zeros are already removed, because they are now in the reserves of other countries and supported by the investments of those countries an converted into Oil, Gold, Natural Gas, Banking Programs and numerous other investments into Iraq, further increasing their Reserves and Increasing the Value of the remaining M2.

Here is the preliminary math, before any further removal of IQD, which does not yet include, adding the 5 items listed by the IMF, in page 31 of the most recent addendum to Article XIV SBA, that Non Convertible Currency, Non Mint Precious Metals, Non Liquid assets, IE OIL and Natural Gas,,,, etc, etc, Lending Interest, OFAC Blocked Accounts and Frozen Assets, etc, etc……

Part II

Take the same $500 Billion figure we just did in part I, and use the last reported M2…. to get a new figure for the REER that would likely be the IMF Art. VIII rate.

$500 Billion divided by 7 Trillion IQD, is just over 7 cents, $.0714 and we still have not removed any more zeros than what is already removed. Remember…. 70% have already been removed.

I do not usually endorse F26, but he is partly right about that, just in a different way of saying it.

Now…. We are not yet done.

Once the IMF places Iraq and CBI back into Article VIII, meaning they have a Convertible Currency, there are estimates all over the ball park, as to how much that is figured in the amount remaining of OFAC Frozen and Blocked assets and Saddam Money and Gold, after the Paris Club is settled with BIS who is the overseer of the settlements with Raafadin and Ramadi along with the other debts, in UN Chap VII. Those figures will add several Hundred Billion to those Reserves, after the debt settlements. Also, the Non Mint Prcious Metals would get added to these figures.

Also, however much IQD, the CBI holds in Reserves, will then be convertible and added to that amount. That is several Trillion worth in Dollars value. Currently under Art. XIV SBA they are not allowed to include IQD in the Reserves, because it is not convertible, YET. LOL How funny is that!!!

Also….. you could add other futures, treasuries and lending assets to this Reserves amount under Art VIII that are not allowed to be used under Art. XIV agreements.

I have no earthly idea, what exactly these amounts might be, but have figured all year, that these Reserves would support just over $1.00 maybe a significant amount more, and without any further removal of IQD, that is not replaced immediately, by the smaller bills.

This is in now way a prediction of $1.13….. but is it not true, the Ministry of Planning told us that as a model number 4 years ago? Well that 3 year projection has been over for over a year. Who knows for sure, where that will come out at now? Anything else is unsubstantiated and is 100% speculation. I think we can almost prove conclusively, it is over a Dollar…. sorry but I could not prove any more than that. But I also cannot disprove it either.

Do you see it?

They can cover just over a dollar right now and the zeros are already removed!

Get it ? ~ How cool is this?

[lumpsum]

I''m glad there are people like you here to help sift through the economics at work here. Let me know if you need just a so so personal trainer in Belize.

[ktlamm]

Thanks for the post. This what I have been trying to say LOL God bless. This makes more sense than ever.

[Trimark]

That is a very, very interesting post. Thanks for posting it lgraham.

I'm looking forward to reading your foreign currency reserve post next week.

[Zekiel]

That is a very, very interesting post. Thanks for posting it lgraham.

I'm looking forward to reading your foreign currency reserve post next week.

Same here! Love to hear that Graham. Looking forward to it.

[DollarBill]

Gotta give this a big thumbs up. I love these analytical posts!

Thanks!

DB

[Knightraven]

I sit and watch ,never say much.That was some of the best educational post yeat. A true moment for reality. Good work .

[Chief V]

Here's a post from Enoch08 in April of this year....

Enoch08 Post: 1D 4/12/10 (Currency Economics)

April 13, 2010 • Posted in CHATS / POSTS

Read more: http://dinarvets.com/forums/showthread.php?18119-Enoch08-Post-4-12-(very-intersting)#ixzz0l4u6cpjr

Enoch’s Law and Energy/Currency Economics

The last 3 months, I have been running numerous possible and viable mathematics calculations, on IMF REER and Exchange Rate Methodologies, use by International Banking and the IMF for valuations of currencies.

I want you to understand, that all methodologies are based on economics ‘Theory’. That is a fact, and is stated in the IMF document entitled “Real Estimated Exchange Rates” at the IMF.

Anyway, using numerous sources, including the IMF, CBI, CIA and GOI Ministry of Finance and Planning documents, and reports given by these agencies, I have ran many possible calculations on economics models, and have come up with some interesting data.

The estimates I have are consistent with and ERM at about $.20 to .36 as an initial rate, and can easily be driven to about 1.50 or higher, over the course of about a year or more, just as has been suggested in some recent articles, an opinions of some of the Ministers and MPs in Iraq.

I would say, further, that it is entirely possible, IF the IMF does not ‘Freeze’ the rate, it could go much much higher than 3.22, but would be temporary and very unstable at rates higher than that, unless they withdraw and reduce the currency supply back to significantly less than 6 Trillion IQD in circulation, which I believe is part of the ‘Plan of Action’, in the ‘Post DFI and agreement with the UN per Article VII and with the IMF per Article VIII agreements.

Utopia and I were up late last night and calculated a potential, and viable strategy, that I believe Iraq plans to use, in the ‘Process’ over the entirety of 2010 and part of 2011 to increase the value to the ‘Planned Rate’. {I do not know that rate, but could be post Saddam or Post War rates, ranging from 2.50 to 3.50, but could also be a plan to settle into ranges of the MOP feasability study and contract models, ranging from 1.13 to about the average of the British Pound, which was the traditional value, since about 1917.}

The methodology we discovered last night shows a potential starting value of this ‘Process’, at as much as .36 and would progress it’s way up, on a “1/2 to 2 1/2% banded Peg”, which if allowed to go unchecked or regulated or frozen…. could be driven as high as rates even over $10.

At this point, I want to ‘Bust’ a couple of 100% ‘Myths’, concerning the free market and low rates initially.

Many have said, often, “If Iraq comes in too low, the speculators would bankrupt the country, because they would drive the prices and value through the roof and Iraq could not recover from that.”

It is probably true that the Market and Foreign exchange, forex and other markets, would indeed, drive the value exponentially, if they come in low. However, it is 100% false, that Iraq would suffer from that. The fact is, that Iraq would profit greatly from that, just as would any other trader profits on the spreads, the more it moves, the more times that spread is made, by CBI and the GOI, just as would it be also true of the Forex marketers and brokers, (Exchange Bankers). The fact is this….. those values are not paid for by Iraq, but by the people using the currency, and they as well benefit from the values being driven up, with purchasing power given. The companies and other markets, benefit as well, because real value of labor and commodity is increased as the purchasing power is increased.

I would like to share with you some lessons in Economics, that is a bit more advanced, than Econ 101, Supply and Demand. It is a concept used by the power drivers of the world banking cartels and even the infamous Kabals, dating back to Mayor Amschel Rothchild, in Energy Economics, as shown in “Silent Weapons for Quiet Wars”

http://www.lawfulpath.com/ref/sw4qw/index.shtml

Now, if you dare to follow the theory of Energy Currency Economics and to understand the concept that Currency is Energy and Power, just as is Voltage and Amperage, I will tell you a mystery…..

Enoch’s Rule: Money is Energy. Currency = Power.

Enoch’s Law: “Energy produced into a state of oversupply, reduces the cost of power, because the cost of the power it takes to produce energy, is also reduced.”

What I am saying here is more simple than you may think. It basically proves, that an increase of money supply and purchasing strength,is not inflationary. It simply increases the production of more power at a lesser cost of the labor it requires to produce it.

In other words, it reduces the cost of the labor it takes to produce more money, by increasing the amount of things of value produced by that labor, meaning, the worker enjoys greater purchasing strength, per hour of labor, requiring more money= energy to be in circulation.

Here is what I am driving at concerning Iraq.

*In 1984, there was about 25 Billion IQD in circulation at the rate of $3.22 per Dinar…. about $80 Billion in purchasing strength.

Oil was about $15 per barrel.

**In 2010, there is about 23 Trillion IQD in circulation at .000865 per Dinar…. about $20 Billion in purchasing strength.

Oil is over $85 per barrel.

Here is where it gets really good…. (stay with me on this and you will understand why it is good that Iraq starts at a lower rate and progresses higher, than starting high and freezing the rate.)

OK…. we need to consider the following:

1. Assuming that the population of Iraq is the same as in 1984, which I imagine it is significantly higher, (which would increase demand for additional liquidity, that was $80 Billion);

2. Assuming oil production then was about the same as today, (which the estimated projections are significantly higher, and would also increase the projected purchasing strength of the M0, M1 and M2s);

3. Assuming the world demand and per capita income and volume of GDP is the same as 1984, (which is projected to be way over those rates, maybe as much as by 10 times and would also increase the demand for additional liquidity in the market);

4. Assuming World Demand for Iraqi commerce and money is the same as 1984, (which is absurd, it would increase exponentially and there will be additional demand for additional liquidity and increase the value if more is not added to circulation):

Now we can get to the good part.

Assuming 1-4 above without factoring in additional demand for more liquidity, all things in 1984 being equal to today, the current value of IQD in circulation is a minimum of 4 times undervalued. Todays rate = 1170/.000865. Multiply that by 4 = 292/.00346 (3.5/10ths of a cent.) Stay with me now…. lol

Oil is 85% of the Iraq economy, so it is safe to estimate, that the price of oil is a good determining factor of inflation by world economics compared to Iraq. Oil is currently projected at about 6 times that of prices in 1984. Multiply 292/.00346 x 6 = 49/.02 (2 cents)…. whippy! lol

Now, you can start considering those missing factors in items 1 – 4 above, and take a reasonable estimate of increasing the per capita income by a minimum of double, and redouble, that by the GDP, Reserves etc. and create a demand to liquidity ration, without yet factoring the outside world demand and arrive at $.04 and .08 per IQD.

Then factor in additional external market demands outside of Iraq by a minimum of double, and you now have a basis for $.16 per IQD.

Any reasonable economist, would predict, that those demands and market forces would easily create more than double that this year, and does not yet include the aspect of removing IQD from circulation. That would set a 2010 basis for and ERM at about $.32 or .33.

Now…. I would imagine, that the market forces are going to be significantly higher than these estimates, and they can remove currency from circulation, by up to 90% which would over the course of time, increase the buying power both of the overall supply but the individual IQD by 10 times. $3.20 to $3.30, but would take a series of increases over the coming months, in and ERM with a Banded Peg Mechanism, as was told by Okie’s friend, who also has the IMF contact who gave that intel last week!

Read more: http://dinarvets.com/forums/showthread.php?18119-Enoch08-Post-4-12-(very-intersting)#ixzz0l4tbqrUD

[Pilgrim]

While I like the overall direction of conservative thought here, I need to ask or clarify for me at least one thing. When you state " fractional banking requirements" in reguards to a central bank, to me that is counter intuitive. It's the central bank that sets the requirement for the in country banks not for itself as if it does not already control the volume of currency in the market place with the printing or destruction of currency. Please correct me if off base here, I assume they ( cbi) are under no such regulations unless self impossed and that just makes little sense. I welcome the discorse.

[bobby_cahill]

WOW

Bookmarked this one!

Thanks for bringin it over and thanks Chief for the add

Semper Fi

[letsroll]

And the coaster slows down with some sanity again !!! Great Info thanks for posting it .........

[Butifldrm]

WOW! I will probably reread this a few times. Great Post Igraham and ChiefV. Sure boiled those Lopsters.