Serious Question re RV vs LOP

[MrFnHappy]

Let me add that IMO, enoch's theory has a serious flaw in respect to the DFI.....I'm quite sure that (a) there isn't nearly as much money in the fund as many espouse, and ( b ), they will never use it as reserves.

Edited July 7, 2011 by MrFnHappy

[dinarck]

Let me add that IMO, enoch's theory has a serious flaw in respect to the DFI.....I'm quite sure that (a) there isn't nearly as much money in the fund as many espouse, and ((, they will never use it as reserves.

Back to the IMF allowing Iraq to monetize it's proven oil reserves. I am not saying that it couldn't happen because I simply don't know but why couldn't the USA monetize theirs? That would pay off our debt at the least. Same with every po-dunk sink hole country around the world. Ok we have 400 billion in diamonds somewhere in the ground. Write us a check. Like I said I don't know really how it works so was hoping you might shed some light since you seem to have more knowledge about the subject. Thanks.

[drox]

Correct me if I am wrong, but wasn't part of Enoch8's theory based on the CBI monetizing the Iraqi oil as part of their 'non-liquid assets'? If so, I would like to find one country that has been allowed by the IMF to use their oil supply in this manner. I would also like to see something that would even allow the CBI to claim the oil as an asset of their own.

I am not against it happening the way some people have claimed is an inevitability - but many countries have been in the situation like Iraq, and when they deflated their monetary system levels back to manageable sizes, all did it in the same manner - and none of them did in the manner that some people now claim is inevitable for Iraq.

In regards to claiming oil as a non-liquid asset to value their currency, I have yet to find any country that has been able to use their oil supply in such a manner. Iran has recently spoke about redenomination of their currency, but why do that if they could just monetize their entire oil supply. Why wouldn't Venezuela do it since they claimed larger reserves than Saudi Arabia late last year, albeit a lesser quality oil.

I understand Enoch8 has his theory of how they could do it, but since there has been nothing put forward that the theory is a possibility under IMF guidelines then it's really not an explanation of how it will work. JMO.

Sorry just saw this. I agree with you. Oil certainly is an asset and it may provide some strength arbitrarily for sure. But...I don't think they can use that opportunity asset as to value their currency at a higher rate at all. I am no expert though.

Not to mention that the IMF already is profiting from the set-up they created in negotiating the Paris Club arrangement. The world has Iraq over a barrel already! They created "production sharing agreements" for Iraq's oil that basically means they have control over most of Iraq's oil production. They essentially "share" it. These agreements can last 30 or 40 years. Iraq loses 10's of Billions of Dollars each year because of these agreements. The IMF has already assured that the elite in society are benefiting from Iraq through this long term PSA's. I think E8's theory is a stretch to say the least but I like the effort. Hope he right though! I think he would be better suited concentrating on how to stabilize the country, reduce unemployment by 20%, improve security, and stop corruption. That will get the money and economy flowing.

[MrFnHappy]

Back to the IMF allowing Iraq to monetize it's proven oil reserves. I am not saying that it couldn't happen because I simply don't know but why couldn't the USA monetize theirs? That would pay off our debt at the least. Same with every po-dunk sink hole country around the world. Ok we have 400 billion in diamonds somewhere in the ground. Write us a check. Like I said I don't know really how it works so was hoping you might shed some light since you seem to have more knowledge about the subject. Thanks.

I believe it would be securtize oil, then monetize the securities...

Unquestionably, it's a stretch, but based on what I posted from the IMF, it appears conceivable.

First, an asset backed security, or certificate has to be created. These are typically derived from "accounts receivables" from banks, credit card co's, and other credit providers. In this case we want to use oil as the asset, wherein a PERCENTAGE of KNOWN oil reserves are put up at a PAR value (say, $60/bbl).

Typically, the owner of the accounts receivable paper sells it to a specially created trust, which repackages it as securities with a minimum denomination of $1,000 and a term of five years or less. The securities are then underwritten by brokerage firms who reoffer them to the public (monetized).

Although I can no longer find the article, I think it was 2008, when I read that several countries were calling for putting a "par" value/bbl on oil reserves for this purpose. Venezuela was one of those countries.

Honestly, I think the chances of this are "Slim and None", and "Slim" is on vacation......but I believe it theoretically, "could" be done.

Edited July 7, 2011 by MrFnHappy

[HopefulTxn]

Actually, I think they can, (I've been following the IMF for years now) but my question is, why would they want to make speculators wealthy at their expense when they can rd, at what is a comparatively small expense, get back their dinar, and then increase the value.

Under an international monetary system of the kind prevailing on January 1, 1976, exchange arrangements may include (i) the maintenance by a member of a value for its currency in terms of the special drawing right or another denominator, other than gold, selected by the member, or (ii) cooperative arrangements by which members maintain the value of their currencies in relation to the value of the currency or currencies of other members, or (iii) other exchange arrangements of a member's choice.

I understand what you are saying, but as much as I have looked through the IMF site, I have not been able to find anything that specifically allows monetization of resources such as oil. I can completely understand their statement on a resource such as gold, as it has been an international currency throughout history and will continue to be.

But one thing that gold has that oil does not is the stability in market value. Gold prices generally remain stable, not dropping in value by huge amounts - or if there are declines in its value, it is a slow steady process allowing country's to shift more focus to other assets for economic stability.

Oil, on the other hand, can be a very volatile commodity having swings of value of over 1/2 it's value in very short periods of time based on it's trading history - which, granted is JMO, would completely negate it's usefulness as a product that can sustain the value of a monetary system without serious consequences because of that volatility.

Like everyone else, I would love to see Iraq be able to do this, as it would seriously increase the options that Iraq has. However, I have been searching through IMF documents for a while, and have yet to find one mention that specifically outlines this possibility.

[dinarck]

Thanks fnhappy and hopeful for your insights.