How M1 and M2 is valued for Iraq

[keepmwlknfny]

There has been alot of discussion lately about the money supply and what M1 and M2 for Iraq really tells us......some think that its valued and put together differently then like the US for example, but after reading this (which is a section from one of the annual statistics report which is put together by none other then Shabibi himself) It seems that it isent much different from how its normally valued....at least thats what Im getting out of it but I could be wrong......

Just thought I would post this so it could clear up some confusion about what the numbers mean for us and our investment, so we can logically put together some options in our minds together as to what they can and cannot pull out of this rabbit hat!! Soooo after seeing this, what kind of ideas can we come up with as to how they can realistically reduce the money supply??

Methodology and Statistical Concepts Guide

Bank: The Central Bank of Iraq.

Commercial Banks: include all national (private and state-owned) and

foreign banks operating in Iraq licensed and subject to the Central Bank

of Iraq supervision including specialized and Islamic Banks, all those

banks are licensed to practice their business according to the provisions

of the Central Bank of Iraq Law and the Banking Law, most recent is the

Central Bank of Iraq Law No. 56 of 2004, Article 40, section 8 and the

Banking Law No. 94 of 2004, Article 4.

Banking System: includes the Central Bank and commercial banks

operating in the country.

Central Government: include all ministries in the country with entities

and administrations subject to it financially and administratively.

Public Institutions: include institutions or entities fully owned by the state

and independent financially and administratively and have their own

budgets.

Public Sector: includes central government and public institutions.

Private Sector: include individuals, companies and private associations.

Money Issued: is the money issued by the Central Bank of Iraq, it

consists of money in circulation with the public adding to it the cash in

vaults with commercial banks.

Reserve Money (M0): represents money issued adding to it commercial

banks deposits in Iraqi Dinar with the Central Bank of Iraq.

Money Supply (M1): represents money in circulation with the public

adding to it current deposits in national and foreign currency for the

private sector and public governmental institutions excluding central

government.

Money Supply (M2): represents (M1) adding to it quasi-money

insurances and receivables of all sectors excluding central government.

Quasi-Money: represents other deposits including fixed, saving deposits

in national and foreign currency for all sectors excluding central

government.

There was also some discussion about the auctions of the USD and what it actually does..Some were saying that its how they are reducing the money supply and that its been how they are buying back dinar off the streets, and others were saying that its used to control inflation...but it seems to me that its used to manage/determine the exchange rate of the dinar.....unless its a way to manage the exchange rate by controlling inflation?? LOL Any comments on this???

Iraqi Dinar exchange rate against the US dollar: is the price determined

by the Central Bank of Iraq through selling and buying foreign currency

auction.

[DinarDana]

Keep, Thank you for the topic and sharing. I do not feel qualified what-so-ever to comment directly to this topic, however I am extremely curious to read the discussion that may ensue. Thanks!

[keepmwlknfny]

I think part of the reason some people are getting hung up is the whole US "debt is money, money is debt" thing. You can debate that until the cows come home, but it doesn't matter, because there's no need to compare Iraqs M2 to the M2 of the US. Compare it to Kuwaits M2. Compare it to UAEs M2. Compare it to anyones M2. You'll come to the same conclusions.

You can also argue back and forth about the auctions all you want, whatever they're doing, they're not decreasing the M2. Because they're not decreasing the M2 (because the M2 gets bigger every month, according to the CBI), they're not pulling bills out of circulation, or at least not enough to make any difference whatsoever. If the CBI had pulled trillions of big bills out of circulation and either vaulted/reserved or destroyed them, the M2 would have decreased.

I agree....it seems to be pretty straight forward with whatever country you can discuss or pretty uniform across the board.....

I could never see how the auctions would reduce the money supply as well.....the numbers keep going up and have been pretty steady growing since 2002.....not to mention if they did remove a crap load of the bigger bills, there wouldnt be hardly any currency for day to day transactions....according to this report, trillions were printed in the 000's notes and there was only billions printed of anything less then 1000, and the smaller the note, the less they printed.....

[Dalite]

On the auctions, remember if they are buying dollars, they are most likely selling dinar.

If they are selling dollars, they are most likely buying dinar.

I say most likely, as I am not sure which other currencies would be in circulation.

So those that claim that they are only selling dollars need to realize they aren't selling dollars, and taking dollars for payment.

There are some here that claim the dinar is not sold by the CBI.

I believe it is fair to say the 16 to 21 bank average is located in Iraq, and the auctions keep the dinar in circulation, but I don't know if it is reasonable to assume that Dinar haven't been purchased by banks abroad.

Some folks say our dinar was hand carried out of Iraq, or purchased from neighboring countries.

That may be, but I can't imagine BOA or any of the banks that were selling Dinar getting it through the grey market.

So, I would guess it is fair to say that Shabibi moves Dinar in or out of the CBI, according to demand, to balance the money supply, and to control inflation.

You can't achieve those goals with a one- way path.

I, for one, would like to have a full understanding of this, and I welcome logical alternatives; if they have a factual basis.

[Texas1]

On the auctions, remember if they are buying dollars, they are most likely selling dinar.

If they are selling dollars, they are most likely buying dinar.

I say most likely, as I am not sure which other currencies would be in circulation.

So those that claim that they are only selling dollars need to realize they aren't selling dollars, and taking dollars for payment.

There are some here that claim the dinar is not sold by the CBI.

I believe it is fair to say the 16 to 21 bank average is located in Iraq, and the auctions keep the dinar in circulation, but I don't know if it is reasonable to assume that Dinar haven't been purchased by banks abroad.

Some folks say our dinar was hand carried out of Iraq, or purchased from neighboring countries.

That may be, but I can't imagine BOA or any of the banks that were selling Dinar getting it through the grey market.

So, I would guess it is fair to say that Shabibi moves Dinar in or out of the CBI, according to demand, to balance the money supply, and to control inflation.

You can't achieve those goals with a one- way path.

I, for one, would like to have a full understanding of this, and I welcome logical alternatives; if they have a factual basis.

The Bank I purchased some through, get their dinar/dong from a dealer out of Tampa..............not sure if that is what you were referring to by grey market.

[NWGUY]

Great information Keep! It has always been confusing for me on this subject. Thank you for your effort!

GO RV!!

[Darin]

I think part of the reason some people are getting hung up is the whole US "debt is money, money is debt" thing. You can debate that until the cows come home, but it doesn't matter, because there's no need to compare Iraqs M2 to the M2 of the US. Compare it to Kuwaits M2. Compare it to UAEs M2. Compare it to anyones M2. You'll come to the same conclusions.

You can also argue back and forth about the auctions all you want, whatever they're doing, they're not decreasing the M2. Because they're not decreasing the M2 (because the M2 gets bigger every month, according to the CBI), they're not pulling bills out of circulation, or at least not enough to make any difference whatsoever. If the CBI had pulled trillions of big bills out of circulation and either vaulted/reserved or destroyed them, the M2 would have decreased.

Well, your actually wrong in the M2 not decreasing.

If you reference a CBI financial document..

In 2011, It was decreasing since Januaray or 2011 and had an up-tick in May of 2011. I think June was released as well and it had an increase as well. But, to argue your satement, it's not "ALWAYS" increasing....

My other main argument on the monetary base system is different countries use a broader base.

For example, M0, M1, M2, M3

or M0, M1, M2, M3, & M4

Seems w/ the CBI all we see is M1 & M2.

As for KeepM -

JMW posted a nice link on how they value that information

Sources = Uses

When I initailly read it, I thought Sources + Uses = M1

That was not the case, Sources = Uses = M1

If you look at a financial document, you will notice that.

[Dalite]

The Bank I purchased some through, get their dinar/dong from a dealer out of Tampa..............not sure if that is what you were referring to by grey market.

That would be a grey market purchase.

I do thank you for the information.

Anything we share or learn here only helps to untangle some of the misunderstandings, or isolate what we can't determine.

[xxxgator]

the auctions are there so Iraq can reel in the influx of usd.Why? Would you as a country want a currancy that is only recognized as having value in that country? Of Course Not! you would tell that country you'll take The payment in the worlds reserve currancy USD.Why Usd ? Because it can be used in any country in the world as payment.Iraq can't buy from other countries in Iqd they have to convert to To Usd . The payment goes to the receiving country and then is converted to their currancy through forien exchange.The entire reason for the forex market is right their in a nutshell.It is one big cycle,that's why it's so important for them to become an internationally traded currancy is so important.It will give them the ability to trade with the world with greater ease, and make products cheaper, because the risk to doing buisness is reduced so cost's will come down.

IThe only way you can reduce the money in circulation is to physically remove it or declare it has zero value and will not be accepted as payment.

The auctions absolutely do not reduce money supply in iraq.They actually reduce Usd and increase dinar .

What i think some of you miss is the cbi may putting more dinar into the Iraq economy but they are receiving Usd and making a profit as the trade off is made.By doing this, they have simply traded the type of curranncy in circulation, not flooded the country with free Dinar but a equal trade so to speak,but actually the dinar gains strength this way.The direct oppisite example is the usa we print money and put it into circulation and at the same time borrow money [sell bonds and pay interest to china on borrowed money] to pay for our debt which makes our money worth less every time.Iraq is making money every time it converts usd on it's small spread or [difference between theirbuy and sell rate].

[motox565]

Great information Keep! It has always been confusing for me on this subject. Thank you for your effort!

GO RV!!

I remember back in the day ...... MM17, SE ... ect, debating personal interpretation of Iraq M's. I looked it up, and from that point their gibberish almost sounded English.

Check it out...

http://en.wikipedia.org/wiki/Money_supply

Edited July 21, 2011 by motox565

[Darin]

Fine, bigger every year, rather than every month. Month to month there are fluctuations, year end to year end, it has increased every single year. Since 2004 it has quintupled.

So? M2 is M2. I don't really care what their M3 or M4 is, why should I? Does knowing what their M3 is change what their M2 is? No.

Well with your first comment.. That idea that it can decrease consecutively month to month is postiive news....

And I am sure you don't care about the Ms, I was just making a general statement...

Debt reduction reduced liabilities which help increase the value of the dinar as well.

I think in Jan 2011 - they wre at 6,000 billion (6T) if I recall correctly.... Reduce that figure and it is more positive news.

[TFK]

If you listen to the top three posters in this string, you'll find they're all lopsters. Not sure why they're still invested if all we're going to do is double or tripple our money after all these years, as well as all the stress following this investment incures.

If you believe them, you should probably sell and buy gold or silver or just invest in some nice blue chip mutual funds and get on with your lives. Seriously!

Wants some really good advice people? Once any of these guys start to post, move on to another topic. You'll just get depressed reading their mono-topic, LOPPING & Re-denomination! Extremely boring and you'll have a bad day!

Lets face it. We're all in this thing to win big. I'm sick of hearing people say they got into this thing as a long term investment and they never thought they could get rich overnight. We're all here because we WANT to get rich and we believe/believed it will rv bigtime. It hasn't been overnight, but we will gain alot of wealth when this drops!

It all depends on how much dinar you hold whether or not you will be rich or have some extra cash to help out around the house. $5.00 it won't be. $0.10, probably!

Start shooting -'s at me, but you all know in your hearts it's true!

[keepmwlknfny]

If you listen to the top three posters in this string, you'll find they're all lopsters. Not sure why they're still invested if all we're going to do is double or tripple our money after all these years, as well as all the stress following this investment incures.

If you believe them, you should probably sell and buy gold or silver or just invest in some nice blue chip mutual funds and get on with your lives. Seriously!

Wants some really good advice people? Once any of these guys start to post, move on to another topic. You'll just get depressed reading their mono-topic, LOPPING & Re-denomination! Extremely boring and you'll have a bad day!

Lets face it. We're all in this thing to win big. I'm sick of hearing people say they got into this thing as a long term investment and they never thought they could get rich overnight. We're all here because we WANT to get rich and we believe/believed it will rv bigtime. It hasn't been overnight, but we will gain alot of wealth when this drops!

It all depends on how much dinar you hold whether or not you will be rich or have some extra cash to help out around the house. $5.00 it won't be. $0.10, probably!

Start shooting -'s at me, but you all know in your hearts it's true!

Stop whining......if you don't like what the truth brings out then maybe you should be apart of a more imaginative forum lol.....none of us are here only hoping to double or triple our money hahahaha if you used your brain its not hard to figure that out.....

If you want to learn something factual, you should maybe pay attention to these kinds of threads because of the good discussions that come of it....if its too much for you to handle some of the truths that point out some of the fabricated forum facts, then your more then welcome to stick to okies fables!

[Darin]

If you listen to the top three posters in this string, you'll find they're all lopsters. Not sure why they're still invested if all we're going to do is double or tripple our money after all these years, as well as all the stress following this investment incures.

If you believe them, you should probably sell and buy gold or silver or just invest in some nice blue chip mutual funds and get on with your lives. Seriously!

Wants some really good advice people? Once any of these guys start to post, move on to another topic. You'll just get depressed reading their mono-topic, LOPPING & Re-denomination! Extremely boring and you'll have a bad day!

Lets face it. We're all in this thing to win big. I'm sick of hearing people say they got into this thing as a long term investment and they never thought they could get rich overnight. We're all here because we WANT to get rich and we believe/believed it will rv bigtime. It hasn't been overnight, but we will gain alot of wealth when this drops!

It all depends on how much dinar you hold whether or not you will be rich or have some extra cash to help out around the house. $5.00 it won't be. $0.10, probably!

Start shooting -'s at me, but you all know in your hearts it's true!

No kidding, right?

If they were to R/D (1000:1), and increase the value 15% to match the USD.

Prior to even cashing out you would likely not be coming out ahead if you purchased through a dealer at inflated prices.

Now, once the value increases high enough to claim a so-called profit, you have to incur spread & fees through a local bank.

The winners? Those that bought in cheap, and long ago....

Ideally, right now, if you were to firmly believe that the IQD was only going to R/D (1000:1) and match the dollar.

You would be better of selling your stash on e-bay for a measely profit...

[Moto144]

I agree....it seems to be pretty straight forward with whatever country you can discuss or pretty uniform across the board.....

I could never see how the auctions would reduce the money supply as well.....the numbers keep going up and have been pretty steady growing since 2002.....not to mention if they did remove a crap load of the bigger bills, there wouldnt be hardly any currency for day to day transactions....according to this report, trillions were printed in the 000's notes and there was only billions printed of anything less then 1000, and the smaller the note, the less they printed.....

It appears that much of the day to day transactions are happening with US dollars, questioning just how much (or little) dinar in is local hands anyway.

[edbeach]

TFK

I believe you are correct on this thing coming in low

Its my opinion they will start this out between $0.10 to $0.30 not in the dollars that a lot of people are saying as well as the Guru's.

Even coming in low we have made a good return for our money not rich but healthy return.

They will keep this down for 3- 6 months and start increasing this til they get rid of large bills leveling off to around equal to the

US dollar getting people cashing in large bills then bring out the new bills. From that point increasing to 2-3 dollars or more. This way

they have made tons of money without giving away the house now being in a excellent position on world wide currency markets.

They did say nexrt year wanted to start selling bonds they would have plenty of capital for this. IMP

[xxxgator]

moto : most of the usd is coming in via investment from other nations ! they have to pay in Usd. That is then auctioned off to the CBI Or the Cbi makes Exchange From iqd to Usd so the local buisness like there new cell phone company can make purchaces out of country.These are great for iraq! If they were to rv over the value of the usd without collecting all the usd by the auctions alot of iraqi companies and Gov would be holding alot of Usd worth less than the newly revalued dinar.I beleive this is one of the aurgument's behind paying attention to when the auctions stop.It is also why i beleive to get out from under the dominating Usd presence they have to rv at an equal exchange value to the USD or close or they will never be able to have an internationally recognized currancy.The usd would stay dominate in .

[dinardarius]

Everything I read here at Dinarvets is a RUMOR with different amounts of truth, Rumors have a little truth and the news has more truths, what % is an unknown until after the RV. Meanwhile the "intell is swell" and entertaining.

So this post Information to me is PROPAGANDA from Shabibi, just as he said under his breath a few months ago.

Bush put this together to make money to pay off the war and thensome and bought 400 million USD worth that sits in the tresury, I wonder if Obama bought some Dinars for the USA with the remaining stimulas that has not been spent? so I say no lop, no lop!

The report about the iraqies selling their Dinars for USD is scarey example of propaganda gone wrong, I wonder what will happen here in the USA when post RV all the people find out they could have been rich but were not told.

Keep keepum comen

[bluejay]

Great info, very educational for me, but at the same time I strongly feel that any government-(country) can do what it wants when it wants to, they have no rule book they make up the rules as they go, I'm not trying to be a smart @*#, thats just my bottom line to the whole thing. But I do appreciate the hard work done by Keep & many others for I would no nothing about this stuff if not for there efforts, so Thanks...

[PD46]

Thanks for the post keepmwlknfny.

[jmw]

There was also some discussion about the auctions of the USD and what it actually does..Some were saying that its how they are reducing the money supply and that its been how they are buying back dinar off the streets, and others were saying that its used to control inflation...but it seems to me that its used to manage/determine the exchange rate of the dinar.....unless its a way to manage the exchange rate by controlling inflation?? LOL Any comments on this???

thanks Keepem....on the auctions...from what I can tell it is a little of both...since Iraq has a fixed exchange they have to buy and sell to maintain the fixed price however, if they buy enough or sell enough it creates inflationary pressures....due to the demand or lack of demand for the currency.

[Darin]

thanks Keepem....on the auctions...from what I can tell it is a little of both...since Iraq has a fixed exchange they have to buy and sell to maintain the fixed price however, if they buy enough or sell enough it creates inflationary pressures....due to the demand or lack of demand for the currency.

I think a slang term for this is "Dirty Float"

Which means the CBI conducts transaction purposely to maintain a stable rate.

[PD46]

I think a slang term for this is "Dirty Float"

Which means the CBI conducts transaction purposely to maintain a stable rate.

Agreed. It's the necessary evil until they get the rate / value changed.

[Darin]

Agreed. It's the necessary evil until they get the rate / value changed.

ya - which is why I don't put too much faith into the auctions.....

it's all manipulated

cash portions interest me though..

Its just a big circling of dollars & dinars.

[jmw]

I think a slang term for this is "Dirty Float"

Which means the CBI conducts transaction purposely to maintain a stable rate.

Dirty float is a little different...

A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime wherein a currency's value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold.

A fixed exchange rate is usually used to stabilize the value of a currency against the currency it is pegged to. This makes trade and investments between the two countries easier and more predictable, and is especially useful for small economies where external trade forms a large part of their GDP.

Managed float regime is the current international financial environment in which exchange rates fluctuate from day to day, but central banks attempt to influence their countries' exchange rates by buying and selling currencies. It is also known as a dirty float.

In an increasingly integrated world economy, the currency rates impact any given country's economy through the trade balance. In this aspect, almost all currencies are managed since central banks or Governments intervene to influence the value of their currencies.