Thread: Finally beginning REAL reval speculation

Originally Posted by Ialdoboath

Backing the dinar with oil CAN NOT BE DONE. Assume a barrel of oil is 60 dollars.

Of this, the PSA partner will collect, say, 30% or about 20 bucks.

According to the HCL, the remaining $40.00, less costs for drilling etc, is to be distributed to the people of Iraq.

There simply is no money set aside by the HCL to allow the GoI to back the dinar. Oil can jump start the economy, and give the people an income, but the revenues from the sale of oil are all spoken for. None of it will go to the CBI to back the dinar.

Please tell me if I am wrong in this. I do still believe in an rv, but the idea of using oil to back the dinar simply does not make sense to me.

Hey, Ialdoboath

They would not use actual oil to back the Dinar but they would demand
payment for oil in Dinar.

Arkie.

Originally Posted by Arkie

Hey, Ialdoboath

They would not use actual oil to back the Dinar but they would demand
payment for oil in Dinar.

Arkie.

True dat, Arkie.

I agree... being paid in dinar would drastically increase demand, ergo huge reval.

Was just saying they could not use it to back the CBI rate directly as the monies were not there.

Glad to be wrong. Please cancel any Ebay dinar auctions you may have started after reading my last post.

Originally Posted by Arkie

Hey, Ialdoboath

They would not use actual oil to back the Dinar but they would demand
payment for oil in Dinar.

Arkie.

Sad to say it took me this long to get an understanding on the “HCL” thing. I can see where this just wont work if all the remaining funds go to the people. In Alaska, the oil sharing revenues for the residents is just a small part while the bulk goes to the operation of the State of Alaska.

Schools, ho*s*p*i*tals, police, fire, sanitation, and other government operations must be funded. If the bulk of the money goes into the pockets of the people the life style would not change by much. It is going to take a long time to rebuild Iraq, but I think you will see a great place to visit and/or vacation after it all comes together.

DesertWolf

Originally Posted by Ialdoboath

Backing the dinar with oil CAN NOT BE DONE. Assume a barrel of oil is 60 dollars.

Of this, the PSA partner will collect, say, 30% or about 20 bucks.

According to the HCL, the remaining $40.00, less costs for drilling etc, is to be distributed to the people of Iraq.

There simply is no money set aside by the HCL to allow the GoI to back the dinar. Oil can jump start the economy, and give the people an income, but the revenues from the sale of oil are all spoken for. None of it will go to the CBI to back the dinar.

Please tell me if I am wrong in this. I do still believe in an rv, but the idea of using oil to back the dinar simply does not make sense to me.

The dinar can be "backed" by oil if Art IV is compliant. In accordance with Section 2 of Art IV, Iraq can choose to back its currency with oil. Since Iraq has a great deal of oil they most certainly would choose oil until such time that the free market economy could support a floating exchange rate.

My thought

Section 2 of Article 4 of the IMF Articles of Agreement:

Section 2. General exchange arrangements

(a) Each member shall notify the Fund, within thirty days after the date of the second amendment of this Agreement, of the exchange arrangements it intends to apply in fulfillment of its obligations under Section 1 of this Article, and shall notify the Fund promptly of any changes in its exchange arrangements.

(b) 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.

(c) To accord with the development of the international monetary system, the Fund, by an eighty-five percent majority of the total voting power, may make provision for general exchange arrangements without limiting the right of members to have exchange arrangements of their choice consistent with the purposes of the Fund and the obligations under Section 1 of this Article.

Top notch post. Thank you.

Originally Posted by EJAMM

The dinar can be "backed" by oil if Art IV is compliant. In accordance with Section 2 of Art IV, Iraq can choose to back its currency with oil. Since Iraq has a great deal of oil they most certainly would choose oil until such time that the free market economy could support a floating exchange rate.

My thought

Section 2 of Article 4 of the IMF Articles of Agreement:

Section 2. General exchange arrangements

(a) Each member shall notify the Fund, within thirty days after the date of the second amendment of this Agreement, of the exchange arrangements it intends to apply in fulfillment of its obligations under Section 1 of this Article, and shall notify the Fund promptly of any changes in its exchange arrangements.

(b) 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.

(c) To accord with the development of the international monetary system, the Fund, by an eighty-five percent majority of the total voting power, may make provision for general exchange arrangements without limiting the right of members to have exchange arrangements of their choice consistent with the purposes of the Fund and the obligations under Section 1 of this Article.

Originally Posted by EJAMM

The dinar can be "backed" by oil if Art IV is compliant. In accordance with Section 2 of Art IV, Iraq can choose to back its currency with oil. Since Iraq has a great deal of oil they most certainly would choose oil until such time that the free market economy could support a floating exchange rate.

My thought

Section 2 of Article 4 of the IMF Articles of Agreement:

Section 2. General exchange arrangements

(a) Each member shall notify the Fund, within thirty days after the date of the second amendment of this Agreement, of the exchange arrangements it intends to apply in fulfillment of its obligations under Section 1 of this Article, and shall notify the Fund promptly of any changes in its exchange arrangements.

(b) 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.

(c) To accord with the development of the international monetary system, the Fund, by an eighty-five percent majority of the total voting power, may make provision for general exchange arrangements without limiting the right of members to have exchange arrangements of their choice consistent with the purposes of the Fund and the obligations under Section 1 of this Article.

Has there ever been a country that used oil as backing for their currency?

Originally Posted by Fidgets Father

Has there ever been a country that used oil as backing for their currency?

USA is backed by OIL!

the dollar's value is essentially backed by oil, which allows our Treasury to simply print money as needed to finance our debt. Since accounting makes no allowance for fiat money, the General Accounting Office has been unwilling to certify our nation's financial statements for several years. We can operate this way only while our dollar is the world's preeminent reserve currency; without dollar preeminence, there is hell to pay.

You're all talking like they need to back every dinar with something of value but that's not so. The world operates on fiat money now. They don't have to back their whole circulation - only 2 or 3 months of GDP or something. Essentially, countries just have to appear to be solvent - as long as they can meet exchange demands and keep some reasonable reserves, they are ok. I just wish we had more accurate figures so we could guesstimate - I'd enjoy that!

Originally Posted by Raditz

USA is backed by OIL!

So you have visited our Kalifornia Beaches durning the summer months...

DesertWolf