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Open Market Operations aka "Currency Auctions"


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"Open market operations" are monetary policy tools that affect directly the monetary base; the monetary base can be expanded or contracted using an expansionary policy or a contractionary policy, but

Unfortunately we don't have access to those figures at this time. What we can do is try to figure out how much U.S. dollars is sold at a "typical" currency auction. Once we find those numbers, we f

First -At the horizontal level: delete the three zeroes -Transfer of 30 trillion dinars to $ 30 billion by deleting three zeros from the current currency and replace it with a new currency making it easier to handle arithmetic with numbers are less numerous on the level of the accounts of the federal budget, budgets of banks and companies as well as balancing family cash (individuals) without arranging any change or change of income or monetary wealth of the people, the natural and moral as well as the lack of impact on the contracts and obligations between natural persons and legal entities all. It generates a so-function sports homogeneous degree zero Homogenous Function of Degree Zero, as long as the amount of new money covers the smaller number in the package of commodity exchange in the same old money with the largest number. 20 Mil can you explain this just asking no bashing.

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First -At the horizontal level: delete the three zeroes -Transfer of 30 trillion dinars to $ 30 billion by deleting three zeros from the current currency and replace it with a new currency making it easier to handle arithmetic with numbers are less numerous on the level of the accounts of the federal budget, budgets of banks and companies as well as balancing family cash (individuals) without arranging any change or change of income or monetary wealth of the people, the natural and moral as well as the lack of impact on the contracts and obligations between natural persons and legal entities all. It generates a so-function sports homogeneous degree zero Homogenous Function of Degree Zero, as long as the amount of new money covers the smaller number in the package of commodity exchange in the same old money with the largest number. 20 Mil can you explain this just asking no bashing.

May I.

Its basically the LOP which when he says "Homogenous Function Degree Zero" its basically saying that there is no change to valuation. It serves nothing to really strengthen the currency and is only a smoke screen to what really needs to be going on.

An RV may be very close as this so called LOP may never need to happen if much of the money supply has been taken back via the auctions and whatever other mechanisms they have.

;)

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May I.

Its basically the LOP which when he says "Homogenous Function Degree Zero" its basically saying that there is no change to valuation. It serves nothing to really strengthen the currency and is only a smoke screen to what really needs to be going on.

An RV may be very close as this so called LOP may never need to happen if much of the money supply has been taken back via the auctions and whatever other mechanisms they have.

;)

Thanks for that explanation I sure hope your right I know ppl have said in the end would be confusion lots of smoke and mirrors.

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May I.

Its basically the LOP which when he says "Homogenous Function Degree Zero" its basically saying that there is no change to valuation. It serves nothing to really strengthen the currency and is only a smoke screen to what really needs to be going on.

An RV may be very close as this so called LOP may never need to happen if much of the money supply has been taken back via the auctions and whatever other mechanisms they have.

wink.gif

While it is possible to remove currency from circulation through these methods, everythng seems to be pointing to just the opposite....seems like a never ending cycle of selling USD, buying Dinar, selling dinar and buying USD....

In the end, the dinar seems to always make it back out into the streets instead of being pulled in and destroyed. They could also reduce the money supply by selling treasuries and bonds but that doesnt seem to be happening either because the financial statements and audits from the CBI show the money supply steadily growing

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While it is possible to remove currency from circulation through these methods, everythng seems to be pointing to just the opposite....seems like a never ending cycle of selling USD, buying Dinar, selling dinar and buying USD....

In the end, the dinar seems to always make it back out into the streets instead of being pulled in and destroyed. They could also reduce the money supply by selling treasuries and bonds but that doesnt seem to be happening either because the financial statements and audits from the CBI show the money supply steadily growing

This is true, for the time being. The above article states that the Government of Iraq will transition to 100% e-government via Smart Cards sometime next month. I think this is huge, and it would in fact be possible to pull a huge chunk of dinar out of circulation through the currency auctions.

They haven't done it yet, but I strongly believe that this "e-government" transition is going to be the starting point to withdrawing physical notes from circulation. This is only my opinion.

90%-95% of Iraq's GDP is through oil, which is government related. So I believe they could technically withdraw 90% of their currency from circulation if ALL of the government expenditures, salaries, pensions, etc... are now going to be electronic. They only have about $11 Billion of their entire GDP through the private sector, so only 12.7 trillion dinars is necessary to be out on the streets.

Keep is right when he says that all of the indicators are pointing in the other direction, however, I believe they will start withdrawing currency from circulation very soon!

Key Factors Which Would Prove They Are Headed In That Direction:

1) No new printing of IQD notes

2) Transition to "e-government"

3) More citizens use commercial banking

If we see the above 3 happen then we can expect to see a huge difference in the amount of currency in circulation. Again, this is only my opinion.

It looks as though they are trying to pass a law which will help the average Iraqi citizen feel more comfortable using bank accounts for daily use. Again, this is another huge step forward in my opinion.

Only 30% or so of the Iraqi citizens use banks at this time, if they can increase this % then this will also give them the ability to withdraw physical currency from circulation if they chose to do so.

The following was brought to my attention by another member a few days ago:

I had one of my employees' father translate a Press Release from the CBI that was posted two days ago that several people thought they translated it but they were wrong, It was in a pdf that could not be copied or converted that could be translated. I posted it yesterday in that thread but no one person showed any interest in it. I personaly thought it had one thing that no other article has told us to date, here it is and I would like your opinion on it.

The below was dated 12-9-2011.

The Iraqi Central Bank asked Congress to remove 3 zeros from the currency so that instead of the money being worth millions it's worth a smaller amount to make it easy on the money market for the peoples goods ( best interest of the people).

In 2007 the Iraqi business men stopped putting money in the bank because Sadam Hussain used to freeze their money with or without any reason.

Now the new Government is asking business people to consider using the Iraqi Central Bank by support from Congress to make it secure ( Like FDIC)

They are looking forward to it and say it's the best for the consumer so their money will be more secure.

They are asking congress to pass this law (FDIC)

Link to article;

http://sotaliraq.com...ws.php?id=25946

Now all we need to find out is if they are printing new currency still...

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hey buddy, sorry for being a dickkk to you last week. very good break down everyone. they do destroy the notes when they come back in to the cbi's possession. they have been buying back a large amount of dinar, just like i have saying for months. (i have been wrong on alot also) the cbi has been setting up for this to rv for some time now. great job, this is the best breakdown-chat-non kindergarten chatter that has ever been on this site.....thanks.

when iraq rv's, there money rv's as well, them covering a rv will be no problem, i just hope you guys can see this now. there are more factors involved than a rv-lop, iraq needs a private sector built, if iraq lops it makes worthless money just as worthless. some seem to forget, iraqs dinar should be worth at the least jordan-bahrain. iraq is 3rd in oil-2nd in natural gas-and have minerals and alot of gold.... my point is that shabbs would of rd'd a long time ago, everything is being set up for a straight up revalue.

WELL Put Sonny....

I am a writer and former English professor, and I could not have said it better myself.

I would go on to say we can get lost in the fear, and then examine the minutia too much, and generate more fear...

Just remember the big picture: Iraq is not running this thing. They are like a criminal/creditor, at the mercy of the intl' banking / political community

When the time is right, they will release the RV

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People have been TRYING to TELL you this for 2-months!

Not sure what words you're trying to put in my mouth. Your statement above makes no sense and who are these people? Nobody's said anything to me. Most of us that have been in this thing for years know that the CBI auctions are almost always selling USD's for dinars and other foreign currencies, but mostly dinar. It's really important that you understand that too. This is how they control their money supply, grow their reserves and most importantly control their inflation! You... yes you yourself, can read all about it on the CBI wesite. I'll even give you the link...

http://cbi.iq/docume...policy_en_f.pdf

The guy or "Dude", (I see this word offends you... tough)... said that the CBI is selling dinars to the currency dealers we deal with at the daily CBI Currency Auctions. This is not true. Those dealers suppliers, buy their dinar from local banks in Iraq and ship them through Jordan to North America and Britian.

The CBI is buying dinars and some other foreign currencies from all the local banks that want to buy dollars, because that is all their customers seem to want at this point. And who blames them. You need a bag of money to buy basic daily items. The USD is the currency of choice in Iraq. Buying consumer items of greater value, as many newspaper articles have told us, most Iraqi's use USD's.

The auctions are almost $200M USD's sold every day now. That's a hell of a lot of dinars being turned in daily. That's what... 234 billion dinars a day bought by the CBI. Holy crap... almost a trillion a week! It wouldn't take long to shrink the money supply and they've been doing this for years, but never at this high a level. Inflation is starting to spiral out of control and that is why Iraqi's are dumping their dinars for dollars. A revalue is seriously needed. There is no other way to control an economy growing at 10-12% GDP yearly! just imagine how fast they will grow when it's much more than oil that makes up the GDP!!

Here's the link to the daily news stories telling the who, what, where and when... of the currency auctions. I suggest you read them. Very self explanitary.

http://en.aswatalira...e&id=144856&l=1

Not sure why you took a swipe at me. I have no problems with you other than you don't have your head totally rapped around this thing yet. Keep reading and listening! There's a hell of a lot smarter people than me on here and that is where you'll learn the most. mellow.gifbiggrin.gif

I brought all this up a few weeks back as well. CBI Currency Auctions @ $200M USD sold a day can bring in $1B in dinars a week. Whats that, 1.17T dinar a week! Even if they had 30T dinar in cirrculation at some point in time, (still don't think it's that high now), it would only take 6 months to remove every friggin dinar there is. Just how far along they are in this venture to shrink money supply is anybodies guess.

I bet we're close to that magic number where they will RV what's left and bring the smaller denoms on to the scene sometime thereafter!!! cool.gif

To continue to think they have 30T dinar in cirrculation is preposterous!! Eat some crow lopsters! I hope it makes you sick! tongue.gif

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Contraction of the money supply... The actual figure will always be up for debate, in my opinion.

I have heard the life cycle of a physical note to be:

* Roughly 90 days to a point where the average is 1.5 years per note.

The CBI must spend a good amount of money to print the new notes over & over. Those costs have to add up. Moving to the digital world would help reduce that costs & maybe get more faith in the banks.

More faith in the banks may reduce printing costs, a stronger banking sector, and may help compete & defeat dollarization.

I would also have to believe that it going digital would help against counterfeitting (counterfeits).

But overall, I have heard differing stories from people I value their input...

I've heard theories that the money supply is near 31 trillion..... And others where it may be more around 7 trillion.

Both offer great arguments on how that may be..

I would love to get a report on the amount of USD being used in their country in their economy. I would imagine, as dollarization is less of a threat, the USD would be pulled from the streets. Which would also help build reserves for local branches and the actual central bank itself.

Wait & see, I guess.

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I am going to add the following news article to this thread, this was posted earlier today by member trooper:

http://dinarvets.com/forums/index.php?/topic/86062-iraqs-private-banks-setting-growth-records-attracting-foreign-investors/page__gopid__690483entry690483

Iraq's private banks setting growth records, attracting foreign investors

CPI Financial

A resurgent oil economy, projected GDP growth at more than 12 per cent and a record level of foreign investment point to signs that the private banking industry in Iraq is looking at substantial growth, a new report on Iraqi banking says.

The analysis, conducted by Ahmad Saleh, senior research analyst at IraqiXchange, also indicates that for the first time in the modern era, bank deposits in Iraq accounted for more than half of the money supply.

"Iraq's economy is growing out of its wartime difficulties quickly and transitioning from a centralized economy to one that is market-based," says Saleh, an Iraq native and veteran North American banking analyst.

"With credit accounting for more than one-third of bank revenue and deposits at record levels, our analysis identifies attractive and specific investment opportunities in the Iraqi banking sector," Saleh says.

HSBC of London, Qatar National Bank and National Bank of Kuwait are among those with stakes in Iraqi banks, and more financial institutions are following.

"We are very optimistic about Iraq over the next three to five years," says Dennis Flannery, Citi's country head for Iraq and a former U.S. financial attaché who previously worked at the World Bank and Bank of America. "Our feeling is that good progress is being made, and we expect to see really significant increases in the GDP in coming years -- really significant."

The Middle East and Africa banking sector is second only to Asia's in growth potential, according to the 2011 Barclays Corporate Global Banking Survey of 200 top banking and insurance services executives.

Influenced by the World Bank and the International Monetary Fund, the Iraq government is phasing in an increased capitalization requirement for all banks.

"The hope," Emirates Bank investment strategist Irfan Chaudhry tells IraqXchange, "is that new capital requirements will bring consolidation, increased investment and more interest from foreign banks."

The Iraq banking analysis is available through IraqiXchange by contacting Saleh.

http://www.iraqdirec...s.aspx?id=16937

This is the THIRD major factor that I listed a few weeks back which could greatly impact the amount of physical currency in circulation. You will notice this from what I posted a little more than half way down page 8 of this thread.

Key Factors Which Would Prove They Are Headed In That Direction:

1) No new printing of IQD notes (not sure about this yet...)

2) Transition to "e-government" (this will be implemented sometime next month)

3) More citizens use commercial banking (already happening now!)

If we see the above 3 happen then we can expect to see a huge difference in the amount of currency in circulation. Again, this is only my opinion.

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Unfortunately we don't have access to those figures at this time.

What we can do is try to figure out how much U.S. dollars is sold at a "typical" currency auction. Once we find those numbers, we figure out how many auctions are going on during a months time. Then we could have a very rough estimate as to how much currency they could bring in during a one month time frame.

Let me give it a shot.

**Disclaimer: Do not take this at face value. This is only an EXAMPLE I am using to make it easier with the numbers.

$100,000,000 ($100 Million Dollars) = 116,950,000,000 Iraqi Dinars (roughly 117 billion dinars)

It is safe to say that an average currency auction that takes place in Iraq ranges anywhere from $60,000,000 being sold up to $200,000,000 USD being sold. I am not exactly sure but let's go with an average of $100,000,000 per auction. I think we are safe to say that is an "average" currency auction.

So if they are able to bring in roughly 117 Billion Dinars per auction. they would need about 10 auctions to bring in a Trillion Dinars. That would be roughly 2 weeks.

2 weeks for 1 Trillion Dinars. So the CBI could technically bring in 2 Trillion Dinars a month right?

24 trillion in one year's time.

They have been doing these auctions for quite some time now. Like for years and years... I think it is safe to say that if they wanted to remove physical currency in circulation they could do it using the methods they are using on a daily basis. Simple as that.

Who can prove they are not using Contractionary Policy to decrease their Money Base via Open Market Operations aka Currency Auctions? Anybody?

based on these numbers wouldn't ALL OF THE DINARS, 30 trillion, already be long gone???

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I just joined DV, but remember reading this post several weeks ago. Because it answers almost every question that I had, and because I find it so encouraging, I read it almost every week. 20 Million Dinar, a ton of research went into this and I appreciate your hard work. Plus one to you sir. Wish I could give you a plus five!

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Awesome post. It's great to see some rationality for a big return on this investment. Some of the news articles lately have been pretty depressing and this is a nice lift. I just wonder when we'll ever see a rate on the positive side of 1170. It's great to know that they can do this, the big questions are will they? and when?

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great post; great info and sound logic. Thanks 20Mill

if USA won't vote you for president, come on down under, and be our head of state...hahaha!

as far as our Aussie political "leaders" are concerned....man...we've got us a bunch of mud-slingin', whining name-calling kids as Leaders...it's pityful to behold.

anyway...good job, thanks again.

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