US buying oil with RV'd Dinar??

[magawatt]

It would be a nice thought but central banks dont buy and sell currency for profit....only to manage monetary policies....and it seems China doesnt want our money anyways since they want to rid their own reserves of USD.....scary thoughts going on...we are in a time of many uncertainties....

So we sell our IDQ (which China wants) for USD.

[keepmwlknfny]

Not necessarily destroyed, but removed from circulation. As it is not being circulated, it is not considered a liability to pay an exchange to.

You have to consider currency as a form of debt. As the currency is used as legal tender throughout the nation, the banks view it as debt because if a person wishes, they should be able to exchange it for another currency if they wished to do so. Drawing it in reduced the liability of having to pay an exchange to that currency note(s). Therefore, if crude were to be given in exchange of the currency, the foreign reserves would not really be impacted. The market basis its value upon the USD which keeps the demand for the USD high. Therefore, if the UST exchanged IQD for USD & than used the existing USD to pay for crude, the demand for USD remains, the foreign cash reserve level remains the same, and the CBI reduces the liability of IQD it has to account for. Some may argue simply that they're still giving away potential wealth/revenue. Well yes they are, but they're also using that wealth/revenue to remain stable and improve their own national economy. See, as the exchange rate is increased, the citizens of their own country have increased purchasing power. (Meaning, what they had in the pocket pre-R/V will now help them buy more post-R/V as the costs of importing goods will have decreased. The Govt. can then implement the tariffs to create revenue stream from imports. As their people have more wealth, they would also implement or reform their tax structure. Now, they're receiving taxation from imports, business, and people. The importers, citizens, and busineses would not complain as they would all still benefit.

Businesses would be able to offer goods & services to people generating profits.

Importers would generate revenue from buyers

Citizens would not only have a bump in wealth, they would likely have higher chances for jobs as the market allows it. As all this goes hand-in-hand-in-hand, the economy will "BOOM."

See, foreign investors are very skeptical at the moment from setting foot and doing business for multiple reasons. The rewards do not exceed the risks.

Risks = stability, security, infastructure, and potential corruption.

I would fore-see a R/V to reduce all risks which would mean the rewards outweigh the potential risks.. Making doing business within the country reasonable.

How would it reduce risk?

Putting people to work would increase stability, reduce unemployment, and also reduce poverty

The people would demand security, which would also ultimately mean some people ousting potential security threats.

Contracting for the re-building of infastructure would be easy upon fixing those two problems.

Corruption "may" be reduced because the wealthy would be even more wealthy... However, I believe that to a certain extent corruption will always exist everywhere.

What kind of businesses would open up?

Well, at first, I would say service businesses that accommodate locals and foreigners such as hotels.

Construction companies to help rebuild the infastructure (roads, electricity, and water)

Markets for goods (clothing, tools, supplies)

Restaurants - providing food

As these businesses open, they'll require a working staff.

This is all very possible w/o a R/V, but, it would take "time" which could amounts to years and potentially decades to achieve desired results.

A R/V could give it a boost...

I'm not saying this is how it goes down, just how I see it working.

Well if the currency is not destroyed even if its pulled from circulation they still would need to be able to back it all and where they stand now they back it 100% partly due to the islamic law of banking (sharia) or something like that lol so they still would need the reserves built up a ridiculous amount if they RVd even at one dollar....I'm still curious as to the exact percentages of their revenue is held back from them....I can't imagine it being much at all seeing as how that's what they are operating from....

[Darin]

I do agree that money=debt...but the mechanics of it are actually a lot more complicated than the scenario you presented. Let's look at just a couple of the pieces of it...first for the UST to exchange the IQD for dollars it would need to grow our current M2 money supply by well over $1 Trillion...and this would have to be new money...which if we used that to buy oil it would food the market...in addition the amount would equate to roughly 10 billion barrels of oil..which would take Iraq several years to produce...and that is just to our country...what happens to the other countries that hold IQD?...do you think they will exchange them for the US dollar as well?

Now, if they take the notes out of circulation...they end up with no revenue to run the country (95% currently comes from oil sales)...Lastly, if you look at their current money supply of 27 trillion, they really need to get this back into the billions (which is where it was when the IQD was strong) and to that they would need to get rid of over 20 Trillion dinar...otherwise it won't even make a dent in their money supply.

thanks

Like I previously stated... I am not advocating this is how it "will go down" but only as how I see it working.

I doubt the US Govt would flood their market with IQD. They would hold it, and use it over time... Spreading it out in parts. So, in a sense, even the US citizens who cash-out, their IQD would go to the same funds that hold the IQD that the govt had. So, when we cash out, the CBI doesn't pay out "for a certain amount of time.."

The logistics would work like this.. Think of it as a 1:1 R/V for simplicity

Lets say the UST has $4T in IQD (Also $4T in USD value based upon 1:1 R/V)

Lets say every month they buy 40,000,000 in barrels at $100/barrel

That equals $4,000,000,000 in USD value

The US send to the CBI $2 billion in IQD for exchange of USD

The US than sends $4 billion in USD for the 40 million barrels.

CBI receives the $2 billion back to replenish their reserves + $2billion in USD for revenue

If they did this monthly, it would take roughly 2,000 months to remove all $4 trillion USD

(Roughly 167 years) - But, we have to also account for increase in production & market set price of barrels (What if it reaches $200/barrel and they're producing at 10,000,000+ barrels per day? )

Also, upon being a recognized currency, it could be considered a liquid asset backing the USD.

So, with that said, we would see a boost in our own foreign cash reserves (Which at the moment only sits at $150 billion)

So many different ways....

Well if the currency is not destroyed even if its pulled from circulation they still would need to be able to back it all and where they stand now they back it 100% partly due to the islamic law of banking (sharia) or something like that lol so they still would need the reserves built up a ridiculous amount if they RVd even at one dollar....I'm still curious as to the exact percentages of their revenue is held back from them....I can't imagine it being much at all seeing as how that's what they are operating from....

Basically to answer that question is I think they're only allowed to draw from the DFI to meet their budgetary expenditures.

Long-story short, they can't dip into it any reason above that.

I've heard or read that they're only receiving a small % of the revenues... Why else would we be seeing the DFI grow?

Well if the CBI holds them, they wouldn't really be a liability.. But why not remove them if possible? Less money to be liable for means the ability to increase the value.

f they move from Art. XIV to VIII, they wouldn't need to back it 100% with liquid assets (they could do it with non-liquid assets as well)

Great thread, Keep. When I started buy dinar I never believed that IQD would be used for the purchase of oil for the reasons already addressed, i.e. petrodollars. Since I have never seen anything other than rumors regarding the UST holding dinar, which I also believe is just the runmor morphing of the $5 bn we flew out of Iraq for their safekeeping into magical IQD reserves, I think its the Fed Reserve that has that money and was giving them $120 million per year in interest too. it was always my opinion that we would build up reserves from the IQD we all hold and any additional, if needed, that our government would acquire through trade w/ Iraq that did not include oil .

I would be dumbfounded, but not surprised, if the U.S. did not supply the largest quantity of imports to Iraq after liberating the country from dictatorship. I do see Russia, China and France dipping their beaks into Iraqs need for trade goods even though they all sit on the U.N Security Counsel and were going to vote to release Saddam from the sanctions of the 90's just prior to the invasion. So IMO, our dinar will never see Iraq again unless they do in fact redemominate. That would be the worst case scenario that has been in play since the beginning and would be a good reason why the UST has no current IQD reserves.

A little off topic, but wouldn't it be a great benefit for companies to get into Iraq right now while their currency is so cheap? A low exchange rate benefits the exporting nation and aside from oil bought with petrodollars, Iraq is going to be an importing nation for the near future. A high rate in relation to the exporting nation would be to their benefit. Instead of waiting for a RV, I would be getting over there right now if I were providing them imports and take advantage of the lower cost and greater profit margin of doing business with them while their currency is so low in comparison to the dollar.

As for your little off-topic:

They're basically advertising, campaigning, and so forth for investors to do that.

Shabs did it in D.C.

Hillarious recently did it as of June 3rd

If your a business owner, you may not see them profitable until their people have wealth.

Why set up hotels if citizens would never use them.

Why set up restaurants when no one has the money to purchase foods

Than there are the concerns of stability, security, and infastructure. The media does a great job in talking all that down.

But, imagine the investors who took the risk and it R/Vs? The ones in there first would profit the most & expand the fastest.

Imagine having a boost in wealth or income and no where to spend it..

Also, upon a R/V, as investors move in - they would need to exchange their national currenty for IQD to deal within the country (i.e., purchase land, pay taxes, pay employees, etc)

[AZ Native]

AZ Native, on 05 June 2011 - 10:40 PM, said:

To be truthful because, I do not want to be coy, I will call him back tomorrow to get the specifics. Will post again tomorrow, after the conservation. Is that good for you? NO BS.

keepmwlknfny:

Yea of course.....interested in hearing what he had to say.....

keepmwlknfny: I have to reply that I called back my friend and he said he thinks he got it off of the "Erbil" agreement, now I've looked high and low and cannot find that statement I can only guess it's was his own interpetation of what he read).

So, I have to chalk it up to be a "RUMOR" my bad for making a statement I could not prove. Just letting you know.

[jmw]

Like I previously stated... I am not advocating this is how it "will go down" but only as how I see it working.

I doubt the US Govt would flood their market with IQD. They would hold it, and use it over time... Spreading it out in parts. So, in a sense, even the US citizens who cash-out, their IQD would go to the same funds that hold the IQD that the govt had. So, when we cash out, the CBI doesn't pay out "for a certain amount of time.."

The logistics would work like this.. Think of it as a 1:1 R/V for simplicity

Lets say the UST has $4T in IQD (Also $4T in USD value based upon 1:1 R/V)

Lets say every month they buy 40,000,000 in barrels at $100/barrel

That equals $4,000,000,000 in USD value

The US send to the CBI $2 billion in IQD for exchange of USD

The US than sends $4 billion in USD for the 40 million barrels.

CBI receives the $2 billion back to replenish their reserves + $2billion in USD for revenue

If they did this monthly, it would take roughly 2,000 months to remove all $4 trillion USD

(Roughly 167 years) - But, we have to also account for increase in production & market set price of barrels (What if it reaches $200/barrel and they're producing at 10,000,000+ barrels per day? )

Also, upon being a recognized currency, it could be considered a liquid asset backing the USD.

So, with that said, we would see a boost in our own foreign cash reserves (Which at the moment only sits at $150 billion)

So many different ways....

Darin...thanks for the diligence in addressing each of us...I respect your premise and agree that I neither of us know how this will go down...but if it is okay lets look at the numbers on your example...i get that it is just an example but I haven't found any numbers that actually work....

You use 4 trillion that will end up in the US Treasury which will be a value of $4 trillion US dollars...now our current money supply is roughly $9 Trillion...that is every printed note and electronic currency for every man, woman and child in the US. Now the Treasury is going to have to buy them from us and they don't have the money to do it so they are going to have to print new (yes it will be electronic) but that would still grow our money supply by almost 50%...

Inflation has a direct correlation to the money supply...that kind of increase would be staggering and unsustainable...

your numbers take 167 years to get the US squared away....what happens to all of the other countries that hold IQD...

Part of the challenge is to not look at it through our own eyes only...surely we aren't the only ones that have invested in IQD?

I appreciate your help in trying to figure out how we cash out...frankly it makes my head hurt trying to get something to work.

[The G-Man]

Darin: How does the fact that no country can exchange their dinar for 6 months figure in all this?

[sandyf]

Thanks for starting a great topic Keep!...some great responses on both sides of the argument...I have always had issues with..."the US will use the dinar to purchase oil"...for the exact reasons Keepm has expressed....It also doesn't work as "credit" against oil purchases...and at $33 per barrel? Here is why...in the simplest terms..it would mean that Iraq would not be getting any revenue for their oil...ever...lets look at their production which is currently less than 3 million barrels per day...so for the year they are able to produce roughly 1 billion barrels...lets say the US alone (remember there are several other countries that are said to have large holdings of dinar) has 1 trillion dinar (which is a very low estimate for what we as speculators hold) and the dinar RV's to 1 to 1 which means we have $1 trillion in credit and using $33 per barrel they would owe us 30 billion barrels of oil...

Iraq's oil production makes up 95% of it revenues...but they are going to owe us 30 years worth of production on credit...meaning they get no revenue at all...and that is just for the US...there are other counties that are rumored to have dinar as well...so how can Iraq survive with this strategy?

So I would agree that the dinar we hold or the Gov't holds can't be exchanged for oil...and if not how does the CBI cover it...it is the CBI's debt...and at the end of the day they have to cover it.

It's a great debate and discussion!

A couple of others I would like to get into would be to discuss the removing of the zeros....and peoples claims that this is just removing the large notes from circulation and that they have been doing this for a while.

Also, peoples claims that we can use fractional reserve banking to cove the cost of the RV.

Thanks for starting the tread Keep!

I would agree at todays figures. Remember that this is a long term plan, 30 years +, and they plan to increase production to over 10 million barrels a day.

Also there has been much talk of other revenue, gas and other investments.

Only time will tell the viability but in the meantime we should be openminded. Been good info on this thread.

[jmw]

I would agree at todays figures. Remember that this is a long term plan, 30 years +, and they plan to increase production to over 10 million barrels a day.

Also there has been much talk of other revenue, gas and other investments.

Only time will tell the viability but in the meantime we should be openminded. Been good info on this thread.

Thanks Sandy....I agree that is their goal and as they move towards that we should see movement in the value of the dinar (I just don't think it will be an overnight 1000% jump)...event at 10 mbpd they would have 3 billion barrels per year and at $100 per barrel gives them a $300 billion US dollar equivalent...still note enough.

[detroitjazzman]

[quote ..

Sit on your bum. Have a beer. Be nice to old people. And wait and see.

So Keep.....does this mean you now have to be nice to me???

[keepmwlknfny]

So Keep.....does this mean you now have to be nice to me???

Wait i thought you were 25?? j/k Yea i guess so!! Ill play nice....as I usually do unless someone comes at me sideways out of no where!

[sheik]

Keepmwlknfny- That was a great post. Your assessment is spot on IMO.

[Dalite]

Has anyone considered that the movement of Dinar ( at face value) outside of Iraq is being viewed as retirement of debt, and nothing else?

The Federal Reserve, through the UST is looking for any way possible to keep issuing debt. It is necessary to keep the economy afloat

China is desperately trying to shed the inflation riding on the USD debt they are stuck with. Then they may be able to move the toxic US debt.

Iraq is trying to retire the Sadam era hyper inflation still riding on the Dinar. This is necessary for them to restore value; whatever the endgame.

Unfortunately, within Fiat currencies, redistribution of wealth means sharing of debt.

If you have to hold something that stinks, you can try to remove the added stench of inflation.

[keepmwlknfny]

Has anyone considered that the movement of Dinar ( at face value) outside of Iraq is being viewed as retirement of debt, and nothing else?

The Federal Reserve, through the UST is looking for any way possible to keep issuing debt. It is necessary to keep the economy afloat

China is desperately trying to shed the inflation riding on the USD debt they are stuck with. Then they may be able to move the toxic US debt.

Iraq is trying to retire the Sadam era hyper inflation still riding on the Dinar. This is necessary for them to restore value; whatever the endgame.

Unfortunately, within Fiat currencies, redistribution of wealth means sharing of debt.

If you have to hold something that stinks, you can try to remove the added stench of inflation.

That's an interesting way to look at it but makes sense about iraq needing to rid themselves of the saddam era hyperinflation tied in with the bills we currently hold.....

[Hypersnail]

Yeah I don't see any chance in hell of the U.S. ever allowing anything but USD to be traded for oil for any reason or circumstance. The U.S. situation in Libya isn't because Gaddafi shot his people. Its because he wanted to trade something other than US dollars for his countries oil. To think otherwise is insane. OMG Did Saddam want to trade something other than dollars for his oil? The only thing that i can say is hope for the best with the dinar situation that's all we can really do. In the end we don't have any control over the situation. I would say also that with QE3 on the way Gold and silver will probably be on the up. RV SOON!!!!!!!

[Dalite]

Yeah I don't see any chance in hell of the U.S. ever allowing anything but USD to be traded for oil for any reason or circumstance. The U.S. situation in Libya isn't because Gaddafi shot his people. Its because he wanted to trade something other than US dollars for his countries oil. To think otherwise is insane. OMG Did Saddam want to trade something other than dollars for his oil? The only thing that i can say is hope for the best with the dinar situation that's all we can really do. In the end we don't have any control over the situation. I would say also that with QE3 on the way Gold and silver will probably be on the up. RV SOON!!!!!!!

Also adding fuel to the fire, Saudi Arabia again came to our rescue by voting to keep their output up, rather than following the other OPEC members to cut output and increase prices.

Looking back to 2003, they were the only OPEC member vowing to retain the USD for OPEC purchases.

You have to keep up with what is going on, and compare to the past to get a glimpse of what the future may hold.

OPEC is no friend of the USD. Based on what the Federal Reserve has removed from the value of the USD, I can't say that I blame them.

BTW, Gaddafi is planing his own, gold backed, currency to be the OPEC mainstay.

They all know the USD is in peril, and are finding the easiest way to defeat the US is to collapse the economy.

It's not like Wall Street, Mortgage Banks and the Federal Reserve have done anything to make it difficult for an attack on the system to occur.

In the grand scheme of things, they would be foolish to take any other approach.