Thread: Dinars Absorbed Into The Cbi

Originally Posted by Wm.Knowles

The exchange rate appreciated by some 12½ percent from mid-November,
reaching ID 1,290 per U.S. dollar at end-January 2007. At the same time, gross international
reserves increased to $15.7 billion at end-November.

What is interesting about this section of the above IMF report is that they have had adequate reserves to conduct the removal of currency from the economy and STILL have impressive currency reserves after having removed over 8 trillion. Impressive, since everone knows what to do about inflation, its just that few countries have the resources to do what is necessary to combat it, and decrease the available supply of currency in the market place. This is almost unheard of in the rest of the world. Thank You.

When people say you cannot compare this Iraq situation, because it has never been done before, here is a classic example. I have been searching for a couple of years and I have never seen any country execute this monetary policy. Never. No one else can do this. I don't know how they are able to do this. They are obviously getting a ton of help behind the scenes, and makes it clear a Marshall Plan type scenario is being executed.

If everyone understood how outstanding this monetary execution is, they would be even more excited about the IQD's potential. This is mind blowing. There is no way this monetary policy is being executed for a 1:.01 exchange rate. After looking at these numbers, I am convinced that anything less than 1:1 is truly for shaking out the less patient holders of IQD.

Thanks Strongtower for your research...excellent info! Thanks Wm.Knowles for you analogy.

Quote:

Hey Socata, me and my guys have been number crunching and this is what we have come up with so far in addition with your great DD and hard work. These numbers are not done but I thought you (Socata) would be interested in these figures. People say that the CBI is not taking dinar out of circulation but look at this IMF report and make your own judgement.

Interesting find !! What I would caution about the estimate of dinars extracted is that when you look at the history of the auctions on the CBI website, they list the exchange rate and the amount of dollars converted to dinars. However, you will notice that dollars coming back into the CBI in those early auctions are not listed. I can tell you that having monitored the CBI auctions for over 1.5 years, that there were many auctions that had both dinars and dollars moving in and out of the CBI on a daily basis. In fact in late '05 and early '06 the daily flow of dinars to dollars was about equal on a daily basis. I say all this just to put a bit of conservatism into our estimates. As you will recall, in January or so of this year both Michael16 and Shotgunsusie indicated they both had done research and determined that approximately an additional 4 trillion dinars had been extracted in '06 prior to our (collective) tracking of this plan which we recognized in late Sept/early Oct. I think we can easily say that the CBI has removed 1/2 of all the dinars (approximately) 21 trillion that were once in the economy. I pray that this process will not go on for much longer, I know it is not up to us, just "Stay the Course, its the difference between the Winners and the whiners" !!

Originally Posted by wellwishes

When people say you cannot compare this Iraq situation, because it has never been done before, here is a classic example. I have been searching for a couple of years and I have never seen any country execute this monetary policy. Never. No one else can do this. I don't know how they are able to do this. They are obviously getting a ton of help behind the scenes, and makes it clear a Marshall Plan type scenario is being executed.

If everyone understood how outstanding this monetary execution is, they would be even more excited about the IQD's potential. This is mind blowing. There is no way this monetary policy is being executed for a 1:.01 exchange rate. After looking at these numbers, I am convinced that anything less than 1:1 is truly for shaking out the less patient holders of IQD.

Thanks Strongtower for your research...excellent info! Thanks Wm.Knowles for you analogy.

Thank you for your comments. You are not the first astute individual who has remarked about the unseen support that Iraq has received. Since there are 27 coalition countries, the IMF and the world bank who are behind this effort, it would be expected that guidance and financial support would be there. You are also right in that an RV in the pennies would be too low when one compared their financial picture. A low RV would only to a tactic to remove currency from speculators who will sell at a low price. Like one person once said, "those who own dinar will make a lot of money, and those who hold for a while will get very rich". Thanks again.

say there is roughly 11 trillion dinar out in the streets, could they possibly do a large rv, say 1-1 ?

Originally Posted by mike brown

say there is roughly 11 trillion dinar out in the streets, could they possibly do a large rv, say 1-1 ?

11 trillion is Socata's conservative estimate. I believe it is much lower than that. CBI has stated there will be no more printing of IQD. This means lower denominations are included in the 21 trillion total. But these lower denoms would be part of what is in the CBI's possession. That is significant because you would have to further reduce Socata's approx 11 trillion in the streets by the amount of lower denoims.

What would you estimate the amount of lower denoms to be? 2 trillion? 4 trillion? And remember, as they are released, they will replace the larger denominations in volume. So there will not be a net increase in circulated currency.

Also, Strongtower's info brings to light a very interesting issue in 2004: The IQD exchanged for as high as 4000:1 and was WIDELY considered worthless. NO ONE wanted IQD, especially Iraqis. Therefore, the CBI was able to "absorb" a substantial amount of IQD because EVERYONE in Iraq wanted US dollars at that time...Even the GOI. So I believe Strongtowers figures are realistic, because in 2004 no one wanted IQD. This means the CBI had very few opportunities to sell IQD. This changed somewhat in the second half of 2005 thru 2006, when the GOI mandated the use of IQD. However, the first year and one-half was much different.

I think we are talking less than 4 trillion in circulation...Probably much less.

Originally Posted by strongtower

Hey Socata, me and my guys have been number crunching and this is what we have come up with so far in addition with your great DD and hard work. These numbers are not done but I thought you (Socata) would be interested in these figures. People say that the CBI is not taking dinar out of circulation but look at this IMF report and make your own judgement.

41. During 2004, the CBI has relied on foreign exchange auctions as the principal instrument in the conduct of monetary policy. The CBI has utilized the foreign exchange auction to manage liquidity in the system, to absorb excess dinars, as well as to provide foreign exchange to private sector activity. To allow for more flexibility in managing monetary policy, the CBI is in the process of broadening its set of monetary policy instruments. The CBI Board recently approved the creation of a lender-of-last-resort facility and an overnight standing credit/deposit facility, and has issued new regulations making the reserve requirement regime more flexible. The banking facilities should be in operation by October 1, 2004, and the reserve requirement regulation should be implemented by no later than December 1, 2004. Similarly, the newly introduced auction of treasury bills will help stimulate the development of a secondary market for these securities, which will enable the CBI to conduct open market operations. Moreover, in order to facilitate the formation of an appropriate benchmark interest rate, we will provide an adequate environment for the private sector's banks to increase their participation in the treasury bills auctions.


Iraq -- Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding, September 24, 2004

So far we have calculated all auctions for 2004 and came up with these numbers. 2004 reveals that the CBI bought 7,057,884,146,000 There are still unaccounted numbers for 2005-2006 Sept.

If 7 trillion was bought in 2004 and 8 trillion was bought from 10/06 - 4/9/07 that equals 15 trillion and we know 21 trillion was circulated. so 6 trillion is out there and we haven't counted from 1/05 through 9/06. It is my guess that there is NOT even 1 trillion in circulation as we thought. This is going to get interesting and now see no reason why it can't move directly to .97 but, it is up to Iraq to reval their system.

In short if 8 trillion were bought from 10-06 to 4/9/07 and 7 trillion bought in 2004. We now need to count all of 2005 and 9 months of 2006. This means 21 months of buying data needs to be counted. We are talking billions in circulation not trillions.

I will say that I am an experienced stock trader and with my knowledge of how stocks work and what dilution does. I see that it looks like dinars keep being printed but it contradicts with what is happening to their currency and economy. If Iraq keeps printing currency meaning dilution, then why has the dinar climbed from 4000-1270. and inflation was cut down to around 30%. What we are reading or seeing is a major contradiction. I have read where the dinar fell from $3.00 to .31 because Saddam started a printing frenzy. Then why are we not seeing this happen now. I'm not trying to pull a rabbit out of my hat but facts are facts. Something is not being reported right.

To be fair, this was a response to my thoughts on this issue.
FROM ANOTHER POSTER NOT ME
For Iraq and any fixed exchange rate country there are 2 parts to the exchange rate equation. One is money supply (m2), the other is Foreign Currency Reserves.
Iraq had practically zero in foreign currency reserves because Saddam had taken it all. The NID started at 4000:1 because of that lack of reserves. So even as Iraq increased money supply they were able to improve the exchange rate because they were increasing foreign currency reserves at a faster pace... ratio wise of course.
The perfect example is what’s going on in Kuwait and other middle eastern countries. We’ve seen the articles lately about pressure to raise the exchange rates in those countries. That pressure is not because they are reducing money supply, it’s because they have been increasing foreign currency reserves for the last couple years because of higher oil prices.

You make a valid point for the high RV. I too believed the CBI has been pulling dinar out for much longer than anyone realizes. Also since there has been no direct correlation to the exchange rate increase and the removal of excess dinar, thereby establising that the CBI ultimately is holding back on the rate purposely. My guess is much like Wm. knowles has stated many times, a target circulation level is established and we are racing toward it.I agree we could be in the billions and not trillions as far as circulation goes. You can't trust the official record nor is it in the CBI's interest to announce to the world through the record that they are about to make a major adjustment. I always founds it intersting that folks try to declare the official record as transperancy. Nice work.

Originally Posted by Wm.Knowles

The exchange rate appreciated by some 12½ percent from mid-November,
reaching ID 1,290 per U.S. dollar at end-January 2007. At the same time, gross international
reserves increased to $15.7 billion at end-November.

What is interesting about this section of the above IMF report is that they have had adequate reserves to conduct the removal of currency from the economy and STILL have impressive currency reserves after having removed over 8 trillion. Impressive, since everone knows what to do about inflation, its just that few countries have the resources to do what is necessary to combat it, and decrease the available supply of currency in the market place. This is almost unheard of in the rest of the world. Thank You.

This might be the most perfect explanation as to why Iraq will never lop their currency, they have the money to buy up the excess. lops are for loser countries that can't.......

Originally Posted by arpking

Heard from a friend just minutes ago. He is from Iraq, still has family over there. He is heavily invested in Dinar...... his quote " I don't know what is going on, but it is getting harder and harder to obtain Dinar over there (in Iraq), I take this as a good thing".

No predictions, no dates, just thought I would share this information. Not even sure if it is relevant, so it is what it is.

By the way...... my friend has over 35 million Dinar in his safe, and has been getting them sent to him from his family for a long while now, so he is up to speed on this investment, I just hope it all means something positive.
Good day.

There are serveral reasons for the Dinars to be getting Harder to get.
1. 20% interest rates makes it profitable for investors, but harder on local Iraqi because it tightens the moneysupply.
2. They keep taking Dinars from circulation at the auctions.

Bye the way Roll club Rocks.

Originally Posted by wciappetta

This might be the most perfect explanation as to why Iraq will never lop their currency, they have the money to buy up the excess. lops are for loser countries that can't.......

You nailed it, BIG TIME!!!!!!!!!!!!!!!!!!

so is there is no way to find out how much dinar is printed, in circulation, and held by the cbi?