For KeepM or any other Knowledgeable Member, What Say You?

[quadraph0nic]

Great observation!! I knew that they had to increase the supply to create the demand to make the currency more valuable, but I couldn't figure out how they were going to create the demand when they are holding auctions every day.

Thanks!!

'

Their M1 is over 50 trillion dinars....yeah they gotta a long way to go

cbi.iq --> statistics --> key financials

but of course other people online who have nothing to do with the central bank iraq are more valid sources of information

[edbeach]

Networth

I looking at auction this shows they selling everyday but not buying doing a lot of selling

which is really adding up month after month not sure how many trillions that adding up which is

showing amounts under $USD

Ed Beach

[sheik]

Cerebral post. Nice job and analysis. The $27 trillion of IQD in circulation given the size of Iraq with no real economy vis-a-vis the USA's $800 billion in circulation puts it in a real simple picture. Hard to say when and what will occur in the future. Have my fingers crossed.

[RichNick123]

Richnick,

Wow....you are certainly one of the most intelligent guys here in the room. I had to read it 5 times before I got even the general jist of it (reminds me of college).

If I follow you correctly (big if), then you are stating that Iraq is struggling to have enough physical notes with value to do business...i.e., make day to day purchases...etc? There are too many people and not enough notes with value??? Which means the notes need value pumped into them or else day to day transactions are impossible??? And that more notes with this extra value are required?

Your point about the shelf life of the physical IQD is something I had not considered before. Great and well thought out post. Plus 1!

Psych,

Sorry for being cerebral, just how my cortex is wired. Here is a brief synopsis, I will keep it simple;

A. I am only dealing with actual paper Dinar in circulation. Most middle east countries refer to this as M 0. We refer to it as M 1. I am working off the actual cash value of currency in paper circulation, sitting in a bank, hid in a mattress, etc. The US has a M1 of 1.8 trillion, the EU has a M1 of 5.7 trillion, Iraq has a M1 of 20 billion.

When the US occupied Iraq they arbitrarily set the amount of TOTAL value of the Dinar at 10 billion. This was reflected in the sale and auction price of .0004. This has risen, with great regulation by the CBI, to double that or .0008. In 2004 a million dinar cost roughly 600 dollars and today it is roughly 1200.00. This has been a "managed float" of sorts.

Iraq can afford much more than 20 billion in Dinar on the market. Remember this is what the total of all paper dinar are worth, this does not include electronic funds just the paper! My research has led me to believe that the destroyed Dinar over the last 8 years, coupled with any that the CBI has artificially removed, has put us in a winning situation!

Worst case scenario; they keep the same 20 billion dollars backing the Dinar and adjust it to actual paper in circulation it will at least double again.

Mid level scenario; they add to the 20 billion an arbitrary amount, remember they will control an additional 100+ billion on thus 30th when the DFI funds are released. We know shabibbi has openly said they have 50 billion in foreign reserve. This added value to a true count of paper Dinar could triple or quadruple our value.

Best case scenario; they add to the value, we find out there are less Dinar than has been reported and I believe we could see anywhere from .13 to 1.00+.

[randalln]

In May 2003 the CPA took over the responsibility for administering the Development Fund for Iraq (DFI). Established from the earlier UN oil-for-food program, the CPA was authorized to manage the DFI, which took in approximately $20 billion in the year after the invasion. The CPA also administered $18.4 billion that the United States Congress allocated for Iraqi reconstruction in November 2003, known as the Iraq Relief and Reconstruction Fund (IRRF). By June 2004, the CPA had spent, or allocated, $19.1 billion of the DFI funds—while spending only $400 million from the IRRF. Critics suggest that Bremer selectively spent from the DFI because it was more free from accounting oversight by the Government Accountability Office (GAO).

The Central Bank of Iraq was established as Iraq's central bank by Central Bank of Iraq Law 2004 with authorised capital of 100 billion dinars.^[1] The current Governor of the Central Bank of Iraq is Sinan Al-Shabibi.

there is not 25 TRILLION

smoke and mirrors to keep the big dogs away people no investor in there right mind would believe that iraq has 6x the currency of the USA

Edited June 23, 2011 by randalln

[tommyboy]

Based on what? I have not found a single piece of information that states this. I have only seen this assertion made by other posters. That's evidence of nothing. And it seems like a dubious statement to make since $150,000,000 worth of dinar are auctioned every day by the CBI.

I know it says they are auctioning dinar, but this is really the way to control the value of the dinar and, remember, they are buying US$ to do that. The dollar is used a lot in Iraq.

[TBnhispower]

I enjoyed reading your post. However, I hear that the average family in Iraq lives off $60.00 a month. If I've done my math correctly that averages out to be 1.8 trillion for the entire country. They may have a huge wad printed and not being circulated. Of course this isn't counting the billions Maliki has stuffed in his mattress. LOL

Edited June 23, 2011 by TBnhispower

[quadraph0nic]

In May 2003 the CPA took over the responsibility for administering the Development Fund for Iraq (DFI). Established from the earlier UN oil-for-food program, the CPA was authorized to manage the DFI, which took in approximately $20 billion in the year after the invasion. The CPA also administered $18.4 billion that the United States Congress allocated for Iraqi reconstruction in November 2003, known as the Iraq Relief and Reconstruction Fund (IRRF). By June 2004, the CPA had spent, or allocated, $19.1 billion of the DFI funds—while spending only $400 million from the IRRF. Critics suggest that Bremer selectively spent from the DFI because it was more free from accounting oversight by the Government Accountability Office (GAO).

The Central Bank of Iraq was established as Iraq's central bank by Central Bank of Iraq Law 2004 with authorised capital of 100 billion dinars.^[1] The current Governor of the Central Bank of Iraq is Sinan Al-Shabibi.

there is not 25 TRILLION

smoke and mirrors to keep the big dogs away people no investor in there right mind would believe that iraq has 6x the currency of the USA

show some documentation then just because you say so don't make it so dinar expert

[tommyboy]

'

Their M1 is over 50 trillion dinars....yeah they gotta a long way to go

cbi.iq --> statistics --> key financials

but of course other people online who have nothing to do with the central bank iraq are more valid sources of information

Don't want to get in your face, but where did you get that 50 trillion figure from? I have never seen anything other that 23-27 trillion. I know the CBI article I read about 2 months ago said they were "lifting" the triple zeros at that time.

[Dalite]

'

Their M1 is over 50 trillion dinars....yeah they gotta a long way to go

cbi.iq --> statistics --> key financials

but of course other people online who have nothing to do with the central bank iraq are more valid sources of information

..........

[Dalite]

'

Their M1 is over 50 trillion dinars....yeah they gotta a long way to go

cbi.iq --> statistics --> key financials

but of course other people online who have nothing to do with the central bank iraq are more valid sources of information

http://cbi.iq/documents/key%20financial.xls

Shows 50,310 billions M1 for May 2011

59,264 billions M2

34,277 billions deposit components of M2

[Froto]

wow!!!!!!!!!!!!!!!!!!! great post lets hear the lopsters debate on this one!!!! lol j/k

This one is too easy.

The money supply did not start at 27 Trillion and then has been dwindling down from there. The audits of/on the CBI clearly show that M1 has grown to 27 trillion over the last few years. Count the CBI's obligation to the deposits the Iraqi banks have in reserve with the CBI, you are now up to 50 trillion. So the OP's first concern is quite valid.

The world's central banks are very capable of determining what their money supply consists of, go to them for the numbers.

Or just go with the calculations of somebody with Cheetos-stained fingers pounding out nonsense on his computer. It's your call.

smoke and mirrors to keep the big dogs away people no investor in there right mind would believe that iraq has 6x the currency of the USA

Good thing we are too savvy in the ways of international finance, unlike the "big dogs".

Edited June 23, 2011 by Froto

[RRSport]

This one is too easy.

The money supply did not start at 27 Trillion and then has been dwindling down from there. The audits of/on the CBI clearly show that M1 has grown to 27 trillion over the last few years. Count the CBI's obligation to the deposits the Iraqi banks have in reserve with the CBI, you are now up to 50 trillion. So the OP's first concern is quite valid.

The world's central banks are very capable of determining what their money supply consists of, go to them for the numbers.

Or just go with the calculations of somebody with Cheetos-stained fingers pounding out nonsense on his computer. It's your call.

Good thing we are too savvy in the ways of international finance, unlike the "big dogs".

LOL great post as always

[Psych]

http://cbi.iq/documents/key%20financial.xls

Shows 50,310 billions M1 for May 2011

59,264 billions M2

34,277 billions deposit components of M2

This is going to be tough to read... but here you go. This is in billions of Iraqi Dinar. Some of the dates I had to add in manually...and some of them didn't show up. I also added in the highlighting. This is from the CBI website....It's interesting to note that the M1 and M2 have both increased significantly since 2002.

So, apparently there appears to be more physical currency in circulation now than ever before...if I am interpreting this correctly. How does this jive with the claim that there are no triple zero notes out on the streets?

[Dalite]

This is going to be tough to read... but here you go. This is in billions of Iraqi Dinar. Some of the dates I had to add in manually...and some of them didn't show up. I also added in the highlighting. This is from the CBI website....It's interesting to note that the M1 and M2 have both increased significantly since 2002.

Please interpret....thanks!

I am not the one to interpret... I am in the re evaluate mode myself, as I had accepted the forum fact of 27T, with all of Saleh's press releases indication contraction.

All I can throw out here is there seems to be adequate reserves to support a lot of financial gamesmanship.

I know the Federal Reserve has lost the game of control, long before they started to substitute the printing of money for employment and production.

I hope that Iraq doesn't set themselves up now, for that kind of outcome in the future.

[keepmwlknfny]

KeepM,

This is a serious question based on research I have done and I would love your input. Here goes;

I agree totally that Iraq CANNOT RD with 24-27 trillion Dinar in the M0 float. I believe there are a couple of variables I have been really looking at.

1. Under Sharia banking the value of the Dinar must be backed by something of intrinsic value; gold, silver, oil, property etc.

2. Iraq has only 20 billion of actual value in the paper Dinar that is, or has been, in circulation. 25 trillion X .00089 = 22,250,000,000.

3. That amount of actual Dinar value is way below surrounding countries.

A. Kuwait is valued at 3.60 per Dinar but only has 18.12 billion in paper Dinar. This equals 65 billion USD.

B. Saudi Arabia has a low value but has 166.9 billion in currency equal to 46 billion USD.

C. UAE is worth only .13 USD and they have 68.76 billion in currency worth 9 billion dollars; they also only have a population of 5 million where Iraq has 30 million.

Now this is where it gets interesting, two key points so please stick with me! suppose due to the release of the DFI fund, on the 30th, Iraq then backs the dinar with a large enough amount to raise the value? Say they add an additional 80 billion dollars, which they now have, and you would then divide the 25 trillion into 100 billion to get a new valuation; 100 billion divided by 25 trillion equals .004 or 4 thousand per million. Iraq cannot continue to function on only 20 billion total value of cash in their M0 for a country of 30 million.

NOW COMES THE EXCITING PART!!

Did you know that the paper currency that the Dinar is printed on has a finite shelf life? Are you aware that a bill printed in 2003-2004 cannot last forever? Is anyone here aware of the lifespan of US currency? If not let me help you a little, these are from the US treasury itself so I think they can be trusted?

1. A 1.00 bill lasts only 21 months

2. A 5.00 bill lasts only 16 months

3. 10.00 bill 18 months

4. 20.00 bill 24 months

5. 50.00 bill 55 months

6. 100.00 bill 89 months

Now can any reasonable person think that the bills in circulation in Iraq, with no heat and air condition, constantly trading hands in harsh elements and environment, can last over 7 years?.. There has got to be substantial destruction of many of those notes in country and the middle east. I know our uncirculated bills are in pristine condition but what about the Iraqi carrying them in his waistband in 110 degree heat and exchanging them daily in the market place?

If only half are no longer viable bills, destroyed, lost, no longer usable then the valuation is a guess that nobody can come up with except those inside the CBI!! Just sayin I don't believe that 25 trillion number worth squat. Comments please!

[HYDRANT]

THIS WAS VERY GOOD-----YOU HAVE DONE SOME GOOD RESERCH HERE

[keepmwlknfny]

KeepM,

This is a serious question based on research I have done and I would love your input. Here goes;

I agree totally that Iraq CANNOT RD with 24-27 trillion Dinar in the M0 float. I believe there are a couple of variables I have been really looking at.

1. Under Sharia banking the value of the Dinar must be backed by something of intrinsic value; gold, silver, oil, property etc.

2. Iraq has only 20 billion of actual value in the paper Dinar that is, or has been, in circulation. 25 trillion X .00089 = 22,250,000,000.

3. That amount of actual Dinar value is way below surrounding countries.

A. Kuwait is valued at 3.60 per Dinar but only has 18.12 billion in paper Dinar. This equals 65 billion USD.

B. Saudi Arabia has a low value but has 166.9 billion in currency equal to 46 billion USD.

C. UAE is worth only .13 USD and they have 68.76 billion in currency worth 9 billion dollars; they also only have a population of 5 million where Iraq has 30 million.

Now this is where it gets interesting, two key points so please stick with me! suppose due to the release of the DFI fund, on the 30th, Iraq then backs the dinar with a large enough amount to raise the value? Say they add an additional 80 billion dollars, which they now have, and you would then divide the 25 trillion into 100 billion to get a new valuation; 100 billion divided by 25 trillion equals .004 or 4 thousand per million. Iraq cannot continue to function on only 20 billion total value of cash in their M0 for a country of 30 million.

NOW COMES THE EXCITING PART!!

Did you know that the paper currency that the Dinar is printed on has a finite shelf life? Are you aware that a bill printed in 2003-2004 cannot last forever? Is anyone here aware of the lifespan of US currency? If not let me help you a little, these are from the US treasury itself so I think they can be trusted?

1. A 1.00 bill lasts only 21 months

2. A 5.00 bill lasts only 16 months

3. 10.00 bill 18 months

4. 20.00 bill 24 months

5. 50.00 bill 55 months

6. 100.00 bill 89 months

Now can any reasonable person think that the bills in circulation in Iraq, with no heat and air condition, constantly trading hands in harsh elements and environment, can last over 7 years?.. There has got to be substantial destruction of many of those notes in country and the middle east. I know our uncirculated bills are in pristine condition but what about the Iraqi carrying them in his waistband in 110 degree heat and exchanging them daily in the market place?

If only half are no longer viable bills, destroyed, lost, no longer usable then the valuation is a guess that nobody can come up with except those inside the CBI!! Just sayin I don't believe that 25 trillion number worth squat. Comments please!

Good questions you have, I see you really thought this out......

To answer your question, you have to take the USD value out of the equation because that involves adding the exchange rate into the mix, which doesnt influence or affect anything in country in terms of how much they have in circulation......remember the physical money supply when saddam was in power was only 25 billion....that more then enough of a physical supply....but that of course doesnt electronic funds either which adds alot more money to the equation.....Iraq right now has about 59 trillion total in their money supply.....that is whats backed up 100% right now with the 50 billion in reserves, so for them to stick with sharia and raise the value of the dinar without reducing the money supply, they will need to seriously dump everything they can muster up into the reserves.....you say 25 billion or so of a physical money supply is too low for Iraq to survive, but thats not what countries survive off of....thats usually in the hands of the citizens anyways.....but thats basically what the physical supply was for decades im sure with saddam in power and they were able to fully function as a country.....not really much of a difference now

Now about the bills life span......what do you think that the most of us got when purchasing dinar?? Do you think the bills we got were original bills that were printed in 2003 that have been untouched just sitting around? Of course not.....bills that have been damaged, torn, destroyed have been replaced.....its not like they only printed these notes once and kept their fingers crossed they would last for 8 years.....its the same situation in our country.....we come out with a new design of bills, a mass amount is printed, but it doesnt stop there....they do keep printing....just as the CBI keeps printing, which the financial indicators support exactly that because the physical money supply outside the banks has steadily kept growing and growing since 2003

Sonny1, you say shabs said he removed 15 trillion? Would love to see your evidence on this one sir......I have never found anything supporting the idea of bills being removed from circulation, only evidence supporting just the opposite....

[wicked93gs]

As in every other country, new bills are printed as the old ones wear out...btw the 25k dinar would be equivalent to the 20 dollar bill with a 24 month life. If they werent replacing 25k notes and in fact were removing even more from circulation you would have a severe money shortage...which you dont, just ask any boots on the ground. If there were that much of a shortage there I can say for sure that we would not be able to get these "3 zero" bills as cheap as we currently can....think about it, you are already paying $1200 for $850 worth of currency in the US...if the supply was lower, what do you really think you would be paying?

[Froto]

http://cbi.iq/documents/key%20financial.xls

Shows 50,310 billions M1 for May 2011

59,264 billions M2

34,277 billions deposit components of M2

Dalite,

It seems from some of your posts that you try to use accurate information. We do appreciate that.

A lot of people might not realize that what you wrote (59,264 billions M2) is in fact "59.264 Trillion M2" (59,264,000,000,000) .

Just clarifying that M2 is in fact 59 Trillion IQD.

[keepmwlknfny]

This is going to be tough to read... but here you go. This is in billions of Iraqi Dinar. Some of the dates I had to add in manually...and some of them didn't show up. I also added in the highlighting. This is from the CBI website....It's interesting to note that the M1 and M2 have both increased significantly since 2002.

So, apparently there appears to be more physical currency in circulation now than ever before...if I am interpreting this correctly. How does this jive with the claim that there are no triple zero notes out on the streets?

Thats exactly the point....it doesnt....it actually disputes any claims that any bills have been removed from circulation.....

Shabbs said they sucked 15 trillion back in. This Thing is done it will RV in the next 2 weeks. I liked your post

That would back up the older "3 zeros" article, I believe it was said that they were in the process of the lifting of the 3 zeros, so if they were in the process then the large bills or "3 zeros" were being taken in slowly, still leaving enough for the citizens. IMO.

The process mentioned in all the zeros articles was the process of putting the plan together......they havent started removing anything from circulation....those numbers are going up.....they have been putting together this plan for years and making sure everything else is in place to facilitate a change in currency and its value.....a redenomination, just like a RV, takes years of planning when you are building yourself from the ground up as in Iraqs position.....

[Dalite]

Dalite,

It seems from some of your posts that you try to use accurate information. We do appreciate that.

A lot of people might not realize that what you wrote (59,264 billions M2) is in fact "59.264 Trillion M2" (59,264,000,000,000) .

Just clarifying that M2 is in fact 59 Trillion IQD.

Thanks for making it clear.

At that time of the morning, I started to add the zeros, but decided to transpose as entered in the CBI spreadsheet.

I went back a few times myself to be sure that it was a comma, not a period...

It was an eyeopener, as I had never taken the time to actually find out for myself...

[429]

Good questions you have, I see you really thought this out......

To answer your question, you have to take the USD value out of the equation because that involves adding the exchange rate into the mix, which doesnt influence or affect anything in country in terms of how much they have in circulation......remember the physical money supply when saddam was in power was only 25 billion....that more then enough of a physical supply....but that of course doesnt electronic funds either which adds alot more money to the equation.....Iraq right now has about 59 trillion total in their money supply.....that is whats backed up 100% right now with the 50 billion in reserves, so for them to stick with sharia and raise the value of the dinar without reducing the money supply, they will need to seriously dump everything they can muster up into the reserves.....you say 25 billion or so of a physical money supply is too low for Iraq to survive, but thats not what countries survive off of....thats usually in the hands of the citizens anyways.....but thats basically what the physical supply was for decades im sure with saddam in power and they were able to fully function as a country.....not really much of a difference now

Now about the bills life span......what do you think that the most of us got when purchasing dinar?? Do you think the bills we got were original bills that were printed in 2003 that have been untouched just sitting around? Of course not.....bills that have been damaged, torn, destroyed have been replaced.....its not like they only printed these notes once and kept their fingers crossed they would last for 8 years.....its the same situation in our country.....we come out with a new design of bills, a mass amount is printed, but it doesnt stop there....they do keep printing....just as the CBI keeps printing, which the financial indicators support exactly that because the physical money supply outside the banks has steadily kept growing and growing since 2003

Sonny1, you say shabs said he removed 15 trillion? Would love to see your evidence on this one sir......I have never found anything supporting the idea of bills being removed from circulation, only evidence supporting just the opposite....

So here's what I don't understand about the system and sharia law. Sharia law requires 100% tangible assets -- got that. But are all the banks and the CBI required to be in compliance with sharia law? Here's the headline and part of a news post from yesterday morning with the link:

Most private banks in Iraq hit capital target

According to the central bank website, Opec oil producer Iraq has seven state-owned banks, 23 private banks, and eight Islamic private banks.

Link:

The article specifies 8 Islamic private banks apart from the 7 state-owned banks and the other 23 private banks. So will all the banks be required to abide by sharia law or just the 8? And if the answer is all, why did the previous article even point out the 8? The question I have here is will the other 30 banks and the CBI engage in fractional banking?

Iraq has a long time history of not being compliance with sharia law. For all the evil that he personified, Saddam Hussein placed an arbitrary value on the IQD so that it wouldn't devalue after Iraq's invasion and subsequent expulsion from Kuwait or Gulf War I. That of course would not be banking in accordance with sharia law. Mr. Hussein allowed and defended other religions in his country, i.e., Christianity. Mr. Hussein allowed the people to buy and consume alcohol. Mr. Hussein allowed women to be educated and work outside the home. Certainly Mr. Hussein was what we might call a progressive. Obviously certain elements of the Iraqi society would like for their country to be an Islamic society. But how closely does their society follow sharia law and why would we expect that now?

So let's go with some reverse logic -- just my random thoughts so obviously there is no link. Let's just say for a moment that the Iraqi people do entirely adopt sharia law when it comes to banking. We know that the US employs a fractional banking system. Much of Iraq's reserves are based in the global reserve -- read USD.

So what is the value of 1 USD to someone who observes sharia law? Say for example that the US fractionalizes the USD at 10%. Does this then, in the eyes of sharia law, mean that 1 USD really has an intrinsic value of only $0.10? And if so, how does that then compare to the IQD?

I have more questions here than I have answers. I don't know the right responses. I don't understand sharia law nor am I condemning it -- it's just a difference of culture.

Sorry to get off on a tangent.

[af4mi]

According to a currency dealer I have personally spoken with, the currency has a life expectancy of less than 90 days. Wouldn't this give Shabs great opportunity to 'do his thing' with the big bills.....? After the population has had some period of illumination?

[odogtriever]

So here's what I don't understand about the system and sharia law. Sharia law requires 100% tangible assets -- got that. But are all the banks and the CBI required to be in compliance with sharia law? Here's the headline and part of a news post from yesterday morning with the link:

Most private banks in Iraq hit capital target

According to the central bank website, Opec oil producer Iraq has seven state-owned banks, 23 private banks, and eight Islamic private banks.

Link:

The article specifies 8 Islamic private banks apart from the 7 state-owned banks and the other 23 private banks. So will all the banks be required to abide by sharia law or just the 8? And if the answer is all, why did the previous article even point out the 8? The question I have here is will the other 30 banks and the CBI engage in fractional banking?

Iraq has a long time history of not being compliance with sharia law. For all the evil that he personified, Saddam Hussein placed an arbitrary value on the IQD so that it wouldn't devalue after Iraq's invasion and subsequent expulsion from Kuwait or Gulf War I. That of course would not be banking in accordance with sharia law. Mr. Hussein allowed and defended other religions in his country, i.e., Christianity. Mr. Hussein allowed the people to buy and consume alcohol. Mr. Hussein allowed women to be educated and work outside the home. Certainly Mr. Hussein was what we might call a progressive. Obviously certain elements of the Iraqi society would like for their country to be an Islamic society. But how closely does their society follow sharia law and why would we expect that now?

So let's go with some reverse logic -- just my random thoughts so obviously there is no link. Let's just say for a moment that the Iraqi people do entirely adopt sharia law when it comes to banking. We know that the US employs a fractional banking system. Much of Iraq's reserves are based in the global reserve -- read USD.

So what is the value of 1 USD to someone who observes sharia law? Say for example that the US fractionalizes the USD at 10%. Does this then, in the eyes of sharia law, mean that 1 USD really has an intrinsic value of only $0.10? And if so, how does that then compare to the IQD?

I have more questions here than I have answers. I don't know the right responses. I don't understand sharia law nor am I condemning it -- it's just a difference of culture.

Sorry to get off on a tangent.

Great questions I have asked myself. I hear KeepMs debate but I know our currency is fractional. I don't have the economics background or education to answer these questions but I don't see that Iraq needs to fully back their dinar. We don't with the usd. It seems to me they really only need to back their currency that is out of country. Anyone else follow this logic?