Serious Dinar Speculation

For the 2nd time on this blog I’m going to post something which is ACTUALLY serious. Ha ha……no Bald Eagle shouting through the woods or gerbils sisters aunts nephews 2nd grade art teacher. I’ve mentioned on a previous post that there is one person I listen to when it comes to dinar speculation. Not because he has “sources” or “intel” but because he’s taken facts and based opinions using those facts. It seems way more realistic than any “GURU” or “Pumper.”  His name is Marcus Curtis and I’ve copied his post along with the direct link if you would prefer to visit his blog. Oh and by the way……..has no ads and makes no money. It’s a long read but again…if you are invested in the dinar this is a great read full of some opinion at the beginning but supported by facts further down the page. Enjoy!

Oh and now we aren’t just a site uncovering all the lies of the MLM cronies, we do provide some information.

End of The Dinar World  http://iraqcurrencywatch.wordpress.com/2011/05/28/end-of-the-dinar-world/

28 May

The world was supposed to end on Saturday May 21st at 6:00 PM. Almost one week ago. This was according to Harold Camping. He is president of Family Radio. This is a California-based Christian Radio station that spans to about 150 markets. Camping applies numerology to scripture to try to predict a date for biblical prophecies.

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

He predicted that the world will end once before. He said the world would end September 6th 1994. That day came and went. He then claimed he got the math wrong. Maybe he forgot to carry a 1, who knows? His latest date is strike 2. He spent millions of dollars on vehicles declaring the end was coming may 21st. The media is giving this guy way to much attention. Now that May 21st has come and gone he now says that the end will come October 21st of 2011. Camping has apologized Monday evening for not having the dates “worked out as accurately as I could have.” He now says that it dawned on him that instead of the biblical Rapture in which the faithful would be swept up to the heavens, May 21 had instead been a “spiritual” Judgment Day, which places the entire world under Christ’s judgment. The globe will be completely destroyed in five months, he said, when the apocalypse comes. But because God’s judgment and salvation were completed on Saturday, there’s no point in continuing to warn people about it.

http://news.yahoo.com/s/ap/20110524/ap_on_re_us/us_apocalypse_saturday

What a crackpot! Why does this man still have a following? First of all, you are not supposed to interpret biblical prophecy using numerology. Isaiah says line upon line and precept upon precept. The bible also says that it is not subject to private interpretation. There is a certain way scripture is supposed to be interpreted. There is a certain way scripture fits together. Numerology is not how scripture is applied.

Second a lot of atheists are grouping this guy’s teachings in with general Christian doctrine. Here is a news flash to all atheists. Most Christians do not support camping’s views and teachings. He is in error in a lot of his teachings taking great liberty with scripture. Camping has really made a mess of things and he has made all Christians look like crackpots.

There is really not much difference between Harold Camping and dinar gurus. How many times have these gurus given dates based on some secret intel or bogus information only to watch the dates they predicted come and go without any change. Mean while people charge up their credit cards and look to the dinar to bail them out from financial uncertainty. They hang on every word from these so-called gurus going from date to date. There are still people following these guys. This makes anyone who has ever invested in this look like a crackpot.

I can always tell when a suspected prediction is close because traffic on this blog increases 100 percent.

The Revalue

In the last blog post I talk about the videos that contain Shabibi’s speech to the US chamber of commerce. This speech confirmed some things I have been thinking about for a long time. I believe there is money to be made off the revalue. But what is the revalue and how will it work? I outlined one possible scenario in the last post as well. I received a lot of questions via email and as this blog was copied into the forums people addressed certain concerns. One person commented that the scenario was bogus because Iraq’s budget is met using US dollars for oil sales. So the dinar does not need to RV to a size to meet Iraq’s budget.

First let me say I was in no way implying that Iraq’s budget is paid for using dinars. I was comparing the currency supply in the event of a lop to what circulates in Iraq. If you expect the dinar to be taken seriously you will need a supply that will replace a lot of what the dollar is currently doing simply because the dinar competes with the dollar for purchasing power. I will go into more details about the mechanics of this thing. I hope to address the many questions that were asked. I will use the same scenario, but I will change a few things. All rates are examples only. So let’s begin with this article that appeared in the N.Y. times on February 27th 2007

Billions Over Baghdad

February 27th 2007
By John B Taylor
Stanford, California

EARLIER this month, the House Committee on Oversight and Government Reform held a hearing that criticized the decision to ship American currency into Iraq just after Saddam Hussein’s government fell. As the committee’s chairman, Henry Waxman of California, put it in his opening statement, “Who in their right mind would send 360 tons of cash into a war zone?” His criticism attracted wide attention, feeding antiwar sentiment and even providing material for comedians. But a careful investigation of the facts behind the currency shipment paints a far different picture.

The currency that was shipped into Iraq in the days after the fall of Saddam Hussein’s government was part of a successful financial operation that had been carefully planned months before the invasion. Its aims were to prevent a financial collapse in Iraq, put the financial system on a firm footing and pave the way for a new Iraqi currency. Contrary to the criticism that such currency shipments were ill-advised or poorly monitored, this financial plan was carried out with precision and was a complete success.

The plan, which had two stages, was designed to work for Iraq’s cash economy, in which checks or electronic funds transfers were virtually unknown and shipments of tons of cash were commonplace.

In the first stage, the United States would pay Iraqi government employees and pensioners in American dollars. These were obtained from Saddam Hussein’s accounts in American banks, which were frozen after he attacked Kuwait in 1990 and amounted to about $1.7 billion. Since the dollar is a strong and reliable currency, paying in dollars would create financial stability until a new Iraqi governing body was established and could design a new currency. The second stage of the plan was to print a new Iraqi currency for which Iraqis could exchange their old dinars.

The final details of the plan were reviewed in the White House Situation Room by President Bush and the National Security Council on March 12, 2003. I attended that meeting. Treasury Secretary John Snow opened the presentation with a series of slides. “As soon as control over the Iraqi government is established,” the first slide read, we plan to “use United States dollars to pay civil servants and pensioners. Later, depending on the situation on the ground, we would decide about the new currency.” Another slide indicated that we could ship $100 million in small denominations to Baghdad on one week’s notice. President Bush approved the plan with the understanding that we would review the options for a new Iraqi currency later, when we knew the situation on the ground.

To carry out the first stage of the plan, President Bush issued an executive order on March 20, 2003, instructing United States banks to relinquish Mr. Hussein’s frozen dollars. From that money, 237.3 tons in $1, $5, $10 and $20 bills were sent to Iraq. During April, United States Treasury officials in Baghdad worked with the military and the Iraqi Finance Ministry officials — who had painstakingly kept the payroll records despite the looting of the ministry — to make sure the right people were paid. The Iraqis supplied extensive documentation of each recipient of a pension or paycheck. Treasury officials who watched over the payment process in Baghdad in those first few weeks reported a culture of good record keeping.

On April 29, Jay Garner, the retired lieutenant-general who headed the reconstruction effort in Iraq at the time, reported to Washington that the payments had lifted the mood of people in Baghdad during those first few confusing days. Even more important, a collapse of the financial system was avoided.

This success paved the way for the second stage of the plan. In only a few months, 27 plane-loads (in 747 jumbo jets) of new Iraqi currency were flown into Iraq from seven printing plants around the world. Armed convoys delivered the currency to 240 sites around the country. From there, it was distributed to 25 million Iraqis in exchange for their old dinars, which were then dyed, collected into trucks, shipped to incinerators and burned or simply buried.

The new currency proved to be very popular. It provided a sound underpinning for the financial system and remains strong, appreciating against the dollar even in the past few months. Hence, the second part of the currency plan was also a success.

The story of the currency plan is one of several that involved large sums of cash. For example, just before the war, Saddam Hussein stole $1 billion from the Iraqi central bank. American soldiers found that money in his palaces and shipped it to a base in Kuwait, where the United States Army’s 336th Finance Command kept it safe. To avoid any appearance of wrongdoing, American soldiers in Kuwait wore pocket-less shorts and T-shirts whenever they counted the money.

Later, American forces used the found cash to build schools and hospitals, and to repair roads and bridges. Gen. David Petraeus has described these projects as more successful than the broader reconstruction effort.

But that wasn’t the only source of dollars. Because the new Iraqi dinar was so popular, the central bank bought billions of United States dollars to keep it from appreciating too much. As a result, billions in cash accumulated in the vaults of the central bank. Later, with American help, the Iraqi central bank deposited these billions at the New York Federal Reserve Bank, where they could earn interest.

Finally, when Iraq started to earn dollars selling oil, the United States transferred the cash revenue to the Finance Ministry, where it was used to finance government operations, including salaries and reconstruction. Many of these transfers occurred in 2004, long after the financial stabilization operation had concluded. Iraqi Finance Ministry officials had already demonstrated that they were serious about keeping the controls they had in place. The 360 tons mentioned by Henry Waxman includes these transfers as well as the 237.3 tons shipped in 2003 in the stabilization.

One of the most successful and carefully planned operations of the war has been held up in this hearing for criticism and even ridicule. As these facts show, praise rather than ridicule is appropriate: praise for the brave experts in the United States Treasury who went to Iraq in April 2003 and established a working Finance Ministry and central bank, praise for the Iraqis in the Finance Ministry who carefully preserved payment records in the face of looting, praise for the American soldiers in the 336th Finance Command who safely kept found money, and yes, even praise for planning and follow-through back in the United States.

http://www.nytimes.com/2007/02/27/opinion/27taylor.html

I have talked about dollarization in previous blog posts. Dollarization occurs when the inhabitants of a country use foreign currency in parallel to or instead of the domestic currency. The term is not only applied to usage of the United States dollar, but generally to the use of any foreign currency as the national currency.

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

In addition to everything stated in the above article. Iraq also gets US dollars from oil sales. This is because Iraqi oil is sold in US dollars. After the revalue Iraq’s oil will continue to be sold in US dollars not dinars. In addition to this soon the DFI funds will be released dumping even more US money into Iraq. So the question remains. Why would the US go through all the trouble to remake the dinar at great expense and with new security features? Why not just use the dollar? What is the endgame to this plan? These are all very good questions.

The major advantage of dollarization is promoting fiscal discipline and thus greater financial stability and lower inflation. It has become evident to me that Shabibi’s primary concern is inflation. This is the number one concern he had in the videos. He will not do anything that threatens inflation. He is very cautious concerning this matter.

The point I was making in the last blog post was if Iraq lopped their currency. It would not be a sufficient enough value to be taken as a serious global currency. The dollar would still be the dominate currency in Iraq. So the question remains. Why even use the dinar and why go to the expense to implement it? I think there is more to this plan and we are just seeing a part of it

It is also important to note that in all of the lops I studied; when dollarization is present it increases the chances that the people will abandon their currency and use foreign currency. This happened in Nigeria. People began to abandoned the Naira because of a forced lop.

There is currently around 27 trillion dinar printed. Out of that no one knows just how much dinar is in circulation. There are debates about how much currency is actually in circulation. Some say that Iraq has withdrawn 80 percent of the dinar. Some say that Iraq withdrew 70 percent of the currency supply. For the purpose of this example let’s take 80 percent of 27 trillion out of the equation. That leaves 5.4 trillion. So let’s suppose there is really only 5.7 trillion in circulation. What happens if we go to bed and wake up and the next day and the dinar is suddenly worth 3 dollars to one dinar? That puts a value equal to 16.2 trillion in US dollars in circulation for about 30 million people. That is bigger than the US M3 money supply. What effect do you think that will have on inflation?

Let’s say the dinar goes to 1 dollar. That is equal to 5.4 trillion US dollars. Inflation still becomes a major problem. This is of course assuming that there is just 5.4 trillion dinar in circulation. How much dinar is there outside of the boarders of Iraq? This is another good question.

If you think prices will not change on the store shelves inside Iraq and you think this will affect imports only consider this. If you can buy something in dollars or dinar and imports drop but items like food remain the same, why buy these local products using dinar? Why not go and exchange your dinar for dollars and make your purchases that way? This will make your dinar go a lot further. This will only serve to strengthen the dollar and weaken the dinar. So the question remains; what is the end game here?

Iraq has two choices. It can risk a lop and substantially raise the currency supply after the lop, or it can contract the dinar supply through a multi revalue process using a set of fix rates as the GDP rises over time. As I see it three things need to happen before the dinar can revalue at a rate above one dollar.

1. Security needs to improve

2. The amount of US dollars in Iraq needs to be drawn down a little further.

3. The dinar supply needs to be contracted.

The dinar amount can be contracted through a multi-revalue process with fixed rates. I explained this in the last blog post. Let me give you another example of how it could work. I will use simple numbers to illustrate. I am in no way endorsing these rates. This is merely an example of one scenario.

Let’s say the dinar revalues to 1 penny. Banks in Iraq take their dinar to currency auctions and trade in on their investment. During a 1 month period the CBI takes in 1 trillion dinars. Then the CBI raises the rate once again to 10 cents and takes in 2 trillion in a two month period and issues about 100 billion dinar during this time.

The 100 billion issued at a value of 10 cents is equal to the value of the trillion dinar they took in the first month when the rate was 1 penny. So CBI was able to raise the value of the dinar and contract the currency supply all at the same time. So now two months later they raise the rate to 50 cents. Because they took in 2 trillion at 10 cents, they only need to issue 100 billion at the new rate to break even and thus pay for the Revalue through this multi rate process. When all is said and done the rate will wind up somewhere between 1.13 and what ever the current value of the euro is for 3 years. (This is according to the minister of planning’s report)

Of course this is a simple overview. I have no idea what the rates will be or when any of this will happen. This is just one scenario. It may not play out this way at all, but this is the only way I can see an RV taking place with trillions of dinar in circulation.

Another scenario would be that Iraq revalues the currency one time to a desired rate and reduces the money supply after the revalue. This is currently the main belief. I see two problems with this. First this kind of revalue would cost Iraq dearly, and second there is a risk of inflation, at least until Iraq can contract the currency supply.

I find this scenario harder to believe as time goes on. Of course the real key here is how much dinar is in circulation. If the dinar was contracted enough to do this, the dollar would fill in the gap until the dinar got to the adjusted rate. But I believe this is unlikely. I have looked in history. I can not point to one time in history where a currency revalued like the gurus predict the dinar will in one night. If you look at Kuwait you will discover their currency was as low as 5 cents at one point. They did not get to a value of over 3 dollars in one RV. The fact is no country has ever done this. To believe this not only requires a lot of faith. You must admit this is not a normal or even practical behavior for currency.

I am not saying the dinar will not revalue and the rate will not be substantial. I am saying that the rates will not be over $1.00 overnight without a substantial contraction of the currency supply. Of course this could happen when the lower denominations are released, but that raises another question. Will there be a time limit to trade in your dinar?

Exactly how much time would we have to trade in our dinars? I personally believe we would have 2 years and during this time the new lower denominations will coexist with the current 25,000 dinar notes. I get this time frame from the many articles I have read about lower denominations and articles quoting the minister of finance over the past 2 years.

The more I think about it the more I conclude that the dinar may just revalue several times until it gets to the desired rate and the currency supply will be contracted in the process.

Notice from the President on the Continuation of the National Emergency with Respect to the Stabalization of Iraq

http://www.whitehouse.gov/the-press-office/notice-national-emergency-with-respect-stabilization-iraq

Is The US Currency Supply Contracting?

In earlier blog posts I talked about fractional reserve banking as a means to expand the currency supply. Basically it works like this. We take our debt public and private and monetize it using our base M2 money supply. I have given several examples of this in previous blog posts. The following videos are economics 101

For more information about how this works let’s look at a section from the roller coaster Ride series. Here is an excerpt from the Rollercoaster Ride part two.

Someone walks into a bank and opens a savings account for 25,000. We will call him Bob. If there was a reserve limit of 10 percent then the bank would be required to hold 10 percent of the money, but it could loan out the rest. This means the bank would keep 2,500 dollars and loan the rest out. The next day I walk on to a car lot to buy a new car. I finance 22,500 from the same bank that Bob has his savings account with. Because the bank has 22,500 from Bob’s account. They can finance the loan and charge me interest. The crazy thing is that the money they use to finance the car is made up electronically when I get approved for the loan! It does not come out of the existing money Bob put in yesterday! It is newly created money with interest! The bank has the right to make that loan and create that money because Bob opened up a savings account yesterday!

Now add the 25,000 with the 22,500 you get 47,500. Now the money that was loaned out is deposited in the car dealer’s account. The bank that has the dealers account can now loan 20,450 dollars. When it loans this amount it will also be newly created money. So far the total money in this example is 67,450.00. This money was created and expanded by 42,950.00, and on it goes.

Since there is now no reserve limit, the initial deposit can be expanded to 75,000 using this example. Now there are no limits. Under Fractional Reserve Banking the debt is monetized and the money supply is expanded. This is not calculated using M’s or GDP. GDP simply tracks the flow of money. GDP In and of itself is not a very good gauge to determine how much money is in the money supply. It’s like looking at a trickle on one side of a dam, and then trying to calculate how much water is on the other side!

http://iraqcurrencywatch.wordpress.com/2011/01/02/the-rollercoaster-ride-part-2/

So now we see how every loan adds currency to the money supply. So it stands to reason that when debt is paid off money is taken out of circulation. Take the collapse of the housing bubble, Unemployment, bankruptcies, people paying off debt due to fear in the economy. These are all examples of the money supply shrinking. It could very well be the reason behind QE1 and QE2.

http://www.bullsource.com/mike-maloney-get-out-of-stocks-and-into-physical-precious-metals/

http://wealthcycles.com/blog/2011/04/13/deflation-likely-before-hyperinflation

Rabbit Hole Update

When the wikiLeaks documents surfaced the real reason behind the lack of US border control surfaced.

http://www.alipac.us/article-6304-thread-1-0.html

Personal Update

I have written a few more articles for Jerry Robinson and the Follow The Money organization. The latest article goes into the dangers with retirement accounts like the 401k, 401b, and IRAs. Read the article here.

http://ftmdaily.com/bailout-nation/guest-editorial-my-401k-dilemma/

As most people are aware of I have been posting on this blog a lot less than I use to. My hours at my job have increased. In addition to this I have a lot of other personal projects in the works taking even more time. Even though I have not posted here as much as I use to, I will still try to post make a blog post a minimum of once a month. I still try to monitor comments here on a regular basis and answer questions when asked, so feel free to add your 2 cents or ask a question. If the comment is an advertisement it will not be approved. No advertising is allowed on this blog.

I am in the middle of a few recording projects. I started another blog to highlight my music. You can check it out here.

http://marcuscurtis.wordpress.com/

I am still recording music for this blog. There are some videos available and some guitar lessons. You can also see guitar theory through adobe sheets I made on my computer. You can hear some of my music while watching the videos. Audio files will be available as soon as I am done recording. The blog is not listed in search engines yet, but you can preview it through the link above. These are things I was going to do once the dinar Revalued. I decided to start these projects now. Playing music is really what I love to do.