The Global Currency Reset Part 1 - By Marcus Curtis

The Global Currency Reset Part 1
By Marcus Curtis
 
17Feb
 

 
When you look at the mechanics of money and you consider how the exchange process works you begin to see certain rules that govern all money. The Federal Reserve released a book way back in the early part of the 20th century called Modern Money Mechanics. Let me give you an example of some of the physics that govern currency. The more currency a nation has in circulation the less it is worth. The less currency a nation has in circulation the more it is worth. This is one of the rules that apply to anything that is being used as a medium of exchange. Be it fiat currency or even gold.
 
https://archive.org/details/ModernMoneyMechanics
 
When you look at the dinar and compare it to the mechanics of money there is no way that the currency can gain value. A lot of people are expecting this currency to revalue and create a financial windfall that will set them up for the rest of their lives. There have been revalues and they are not uncommon. In all of history there has never been a revalue above 50 percent. A revalue can only be done by a central bank. A revalue is a policy decision that is enacted to fight inflation. The typical revalue is between 3 to 7 percent. The largest one I have seen is about 30 percent. Revalues only happen to currencies that are pegged. Floating currencies don’t revalue because the market determines their value not the central bank. So the belief that drives dinar sales and the speculation in this currency is that it will revalue and people will be made wealthy from this revalue.
 
The problem is that when you consider how money actually works and money mechanics in general then you begin to realize that this belief is impossible. There are a few major problems behind the dinar and the money mechanics involved to make this happen.
First the dinar is currently valued at 1166 dinar to one U.S. dollar. If the dinar was to move to a value of just 1 U.S. penny then that would be a 1,000 percent revalue. Second Iraq’s M1 money supply is over 71 trillion dinar. This is the main reason the dinar is valued so low. If there was less currency in circulation then the dinar would be worth more. Third the dinar requires a reserve to back it and give it value. The reserves used that backs the dinar is the U.S. dollar. There are not enough U.S. dollars in Iraq’s reserves to back the dinar to even a penny. There are not enough reserves to move the dinar beyond 15 percent.
In spite of the impossibility of this ever happening and the improbability due to the actual way money really works, people get around it by saying the buzz words Global Currency Reset or GCR. Even though something like the expected revalue of the Iraqi dinar has never happened in the entire history of money, and given the fact that the laws that govern money mechanics makes this impossible. People still believe in the revalue due to their belief in this coming GCR event. Portions of the Global Currency Reset could be considered a conspiracy theory depending on which definition you believe.
 
When you Google the words Global Currency Reset a whole host of websites and blog sites come up promoting it or debunking it. There are also many definitions to the term Global Currency Reset. Some of these aspects blend together and people pick and choose which part of this theory they choose to believe. It is important to note that not everyone that believes in a Global Currency Reset believes everything that is written about this so-called coming dinar revalue. So for the sake of clarity let me go over just some of the definitions of GCR that are out there. Dinar speculators are mixed about these different definitions. Some of them only believe part of this theory and people tend to choose the parts that make the most sense to them. Let’s look at just some of the definitions of GCR
 
 
“NESARA is an acronym for the proposed National Economic Security and Reformation Act, a set of economic reforms suggested during the 1990s by Dr. Harvey Barnard. Barnard claimed that the proposals, which included replacing the income tax with a national sales tax, abolishing compound interest on secured loans, and returning to a bimetallic currency, would result in 0% inflation and a more stable economy. The proposals were never introduced before congress, and the only congressman known to have commented on the bill is Ron Paul, dismissively, and through a spokesman.” (From Wikipedia)
 
I checked the congressional record for the 1990’s. Then I did a search through the entire data base. This is what the search result said. “NESARA does not occur in the data base.” Then I did a search for National Economic Security And Reform Act. It was not in the congressional record at all. This means that this bill never came before congress. Don’t take my word for it. Look it up yourself
 
http://www.gpoaccess.gov/crecord/index.html
http://memory.loc.gov/ammem/amlaw/lwcr.html
 
This means that if NESARA never came before congress then it never became law!
 
But, NESARA took on a life of it’s own. It has become a cult-like conspiracy theory promoted by Shaini Goodwin. She claims the act was actually passed with additional provisions. She also claims George W Bush and the Supreme Court have kept it hidden. In 2000 Barnard decided to release his proposal for NESARA on the internet. Soon after this a person known as the Dove of Oneness began posting about NESARA on internet forums. The Dove of Oneness has been identified as Shaini Goodwin. She was a former student of The Ramatha School of Enlightenment. Founded by Judy Zebra Knight aka Judith Darlene Hampton. Basically these are new age beliefs! Knight has appeared on U.S. TV shows such as Larry King, The Merv Griffen Show, and MSNBC. Her teachings have attracted people like Shirley MacLaine and Linda Evans. Among the bazaar teachings is the belief that a convert to this teaching is god!
 
http://en.wikipedia.org/wiki/Ramtha#Ramtha
http://en.wikipedia.org/wiki/NESARA
 
Goodwin has embellished and added to NESARA. She makes references to white knights. Most of whom are high-ranking military officials who have been struggling to have the NESARA law implemented despite opposition from George Bush.
Barnard became aware of Goodwin’s description of NESARA before his death in 2005. He denied that NESARA had been enacted into law or even had been assigned a tracking number, and he condemned Goodwin’s allegations as a disinformation campaign. Since Goodwin began commenting on NESARA, other Internet-based Conspiracy theorist have attached itself to NESARA giving this whole thing a life of it’s own.
 
NESARA will attach itself to a legitimate thing to gain credibility. NESARA can be found in the fair tax movement, It has shown up at tea party events, and on occasion hides at those functions probably looking for converts. It has also attached itself to Something called CMKX, and it talks about the payout of CMKX. Using terms like global settlements and referencing the white knights. NESARA has attached itself to the revalue of the Iraqi dinar as well. These white nights are the men who will implement this supposedly secret law.
This opens up a whole new world as to why the dinar has not revalued yet! The term Global Currency Reset and Global Settlements first began with NESARA. According to current NESARA doctrine, when the dinar revalues then the government will make the CMKX pay out. This will cause the white nights to enforce the law, and the entire world resets, Then space aliens will show up on planet earth and introduce themselves. I am not making this up! This is what they believe! They believe that we are being watched right now. As soon as all this stuff happens Aliens will fly here in their spaceships.
http://www.nesarasucks.com/
 
Investigators who have researched Goodwin’s claims found that she began commenting on NESARA in connection with Omega Trust, a fraudulent investment scheme whose creator, Clyde Hood, was on trial at the time. According to Goodwin, Omega Trust investors would receive their returns after NESARA was announced. Goodwin repeatedly predicted that the NESARA announcement would occur in the very near future, although in later years she was more reserved in these predictions. The Omega Trust still lives on in the Internet as a supposed global poverty relief program and in part as a Global Currency Reset.
http://en.wikipedia.org/wiki/Omega_Trust
 
 
Not everyone who believes in the GCR believes in the garbage that NESARA teaches. It is important to note that this does not represent every dinar speculator. There is only an outré fringe of people who believe this. People choose and pick from different aspects of this GCR conspiracy and there are different definitions. I felt it was proper to cover the origins of the catch phrase Global Currency Reset and Global Settlements.
 
The dollar crash definition basically says that there is a coming crash to the U.S. dollar. This is due to in part to the United States debt and in part to the overprinting of the U.S. dollar. People have been predicting this demise of the dollar for years
The basic belief here is that the dollar will lose reserve status around the world and it will become unstable. When this happens countries around the world will replace their reserves and the dinar will revalue as a result. Sometimes the idea here is that the dinar will use it’s resources to revalue it’s currency rather than the U.S. dollar
 
Gold and silver sellers have been predicting the end of the dollar for some time now and the GCR is used to hype gold and silver sales. Dinar Gurus have taken this a step further and said that the collapse of the dollar and the GCR event will be the thing that brings about a revalue in the Iraqi dinar. So it does not matter about the history of revalues because something is getting ready to happen that has never happened before in history. Then the claim is made that people can’t understand this new system and they can’t escape fiat currency terms.
 
A rabbit trail of this belief says that countries will give values to their currency based on the resources that particular nation has. And the commodities that are in that nation such as oil will determine the currency value. The IMF will force all nations to place a different value on their currency based on national resources
 
Another belief is that the International Monetary Fund (IMF) will force all nations to simply revalue their currency. The dollar will go down because it is over printed and the dinar will go up. Gold and silver will go up as well. This belief is slightly different as it has nothing to do with a nation’s resources. This is popular among gold and silver sellers like Lyndsey Williams. He is one of many precious metal gurus that is currently spreading this hype
See dinar update 3. According to Williams, the IMF is going to make this announcement for a GCR around March of 2014
 
Another belief is that reserves around the world will be replaced with a group of currencies or a basket of currencies thus replacing the dollar. While this is the only plausible aspect of the GCR theory and it has some merit, it will not happen overnight and it will not result in a total removal of the dollar or a revalue that will make every dinar holder wealthy.
Then there is another aspect of the GCR belief which claims it is a part of biblical prophecy. People subscribe to it because they believe it is a fulfillment of bible prophecy. To these people money mechanics don’t matter because they take their faith in scripture and misapply it to the GCR event.
 
http://www.prophecyclubresources.com/GLOBAL-CURRENCY-RESET-LINDSEY-WILLIAMS/productinfo/LW-GCR01/
 
These are just some of the different definitions of GCR. As crazy as all this sounds “GCR” proponents can’t explain what they’re trying to convey beyond throwing around a few buzzwords like “fiat currency” and “fractional reserve banking” Then these same pumpers only attributing these things to America. Most of these guys don’t have a clue as to how the money mechanics associated with these terms really work. So let’s explore it
 
 
I think the best way to explain some of this is to use some terms and facts that Jack has shared over at Baghdad Invest. He has spent a great deal of time debunking common misunderstandings with the economics of this alleged GCR event. So let me paraphrase and share his data as it provides some great insight.
As for revaluing a currency based on a nations gold supplies this is what Jack thinks.
 
“Do you even comprehend how BRICS possess more gold than all other countries combined” being another perfect example of an outrageously false claim. BRICS have certainly been importing more gold but over half of what they import gets consumed in industrial use and demand for jewelry.
 
“In 2013, the country of China produced 342 tons of gold and consumed 840 tons thus importing 498 tons.” That isn’t even remotely the same as the lie “China has been secretly adding 498 tons to their currency reserves every year” that you seem to be pumping… The same is true of India. They use nearly all of what they import on jewelry. That’s why the Indian government slapped on a 10% duty on gold bullion but a 15% import duty for gold jewelry. Most gold in Asia is going to private citizens not banks. Combined Euro zone gold reserves alone are more than the combined BRICS reserves, so that’s another lie you have told.
 
As for “revaluing national currencies based on Gold in a Global Reset”, here is the Gold’s share of national reserves by country:
84% Portugal
76% Greece
70% USA
66% Germany
65% France
65% Italy
52% Netherlands
48% Austria
33% Belgium
23% Spain
12% UK
10% South Africa
7% India
2% Iraq
2% Saudi Arabia
1% China
1% Brazil
 
http://en.wikipedia.org/wiki/Gold_reserves#Officially_reported_gold_holdings
http://www.imf.org/external/np/sta/ir/IRProcessWeb/colist.aspx
 
Ninety nine percent Of China and Brazil’s wealth is holding other countries paper money. Trillions of paper USD’s. Ninety eight percent of Iraq’s wealth is USD paper. Ninety three percent of India’s wealth is again paper money. It really is time to drop the total mental delusion that
 
A. We’re going back on a 100% full reserve gold standard. There simply isn’t enough gold in the world which is why we came off it in the first place! The entire combined GLOBAL reserves are around 32,000 tons or around $1.2 Trillion worth. Compare that to the $80 trillion global economy, and
B. That doing so will cause Iraq to soar and the USA to plummet because Iraq holds a tiny 30 tons of gold which is less than Nepal’s or Slovakia’s.
 
As far as backing all currency on a nation’s resources this is what Jack had to convey
 
Iraq only has $1.2 billion worth of gold. If you tried to back 85 trillion dinar solely with that you would end up with an equivalent dollar rate of 70833:1 or 60x LESS! Even if it doubled overnight Jim-Willie-style it would still only be worth $3 billion.
Basing a currency’s value on vague unspecified resources simply lying in the ground as Jan claims is total nonsense. As for backing the dinar with oil goes, Iraq may have 140 billion barrels of oil. Giving a $100 per barrel oil price is only equivalent to $14 trillion in assets. BUT that $14 trillion worth of oil is going to be spread over the next 127 years in the form of 3.0 million barrels per day actual production. If Iraq increases exports to 4 million barrels, then that $14 trillion worth of oil will still be spread over the next 96 years. Some highly deluded people genuinely think all that 140 billion barrels will all be magically teleported out of the ground in 2014 and donated to the CBI. It will be stuck in some giant warehouse for backing the dinar tomorrow without a single drop being sold or used ever again!
 
No country is going to squeeze in every single year of economy from 2014-2141AD all into a 2014 currency’s valuation. This is the absurd GCR in a nutshell. You could make the same argument with the USA and claim the US Dollar is going to skyrocket if you count 127 years’ worth of future US exports which equals $194 trillion or 13.8 times Iraq’s worth in oil reserves. Iraq has 85 trillion dinar (M2) and 140 billion barrels of oil or basically, enough to back 607 Dinar with 1 barrel worth $100. Except they won’t because Iraq will consume around 1/5 to 1/4 of it themselves and export virtually all of the rest to non-Iraqi’s and in both cases all that oil is no longer available to back the Dinar!
 
Same thing applies with minerals. If you have 1 million tons of aluminum resources and you dig it up and use 300 thousand tons to build stuff and then you sell 700 thousand tons to other countries, how much do you have left for the purpose of currency backing that is just sitting there in a pile and doing nothing? None!!!! People dig up oil and metals to use or export, and once it gets used or exported it’s not available for backing anything. This is why simply quoting a nation’s oil reserves and assigning an arbitrary GCR exchange rate to the currency based on that is absurd.
 
It’s also comically inconsistent. Apparently Canada is going to fall and Iraq is going to rise due to Iraq’s oil. This is hilarious given that Canada has 175 billion barrels of oil or 25% more oil than Iraq’s 140 billion barrels. Canada has a lot of other natural resources. China will also LOSE out due to being a net IMPORTER of virtually every raw resource going from oil & LNG to iron, copper & aluminum, titanium, uranium, coal, timber, rubber, etc. Why do people think they’re running around Africa & South America buttering up the locals?
 
Because they don’t have enough resources to sustain even what they consume let alone surplus leftover to back 110 trillion Yuan at some wonder high rate! Yet more proof that the people shoveling this GCR conspiracy haven’t even bothered to research any of the countries they’re pumping.
 
Using non-recyclable resources like oil as currency backing and as an inflation hedge is also totally backwards and contradictory. As each year goes by, oil gets burnt up or sold to someone else to burn up. It becomes no longer available. Iraq can’t keep it in a vault for all eternity. They have to constantly sell it to fund central government in place of taxes or burn it internally for things like transportation, oil power stations, and construction, just out of necessity. Every time Iraq burns or exports a barrel of oil that oil will no longer be inside Iraq backing the dinar. This action will be making whatever GCR resource peg more and more OVER-valued as each year goes by.
 
If Iraq has 140 billion barrels of oil and sells oil at 1.1 billion barrels per year and consumes more internally on top of that. Then as each year goes by, its resources backing its currency increasingly dwindle and they’ll need to LOWER the value of their currency peg vs oil. They will do this with an endless stream of annual DOWNWARD RV’s because if they lose currency-backing-resources each year, then their resource-backed-currency will lose value each year too! And all the while their population is growing they still have to print more money for liquidity purposes amplifying this effect. What “Genius” came up with that? Avoiding inflation by using a constantly dwindling resource that is naturally permanently inflationary? If you want a hedge against inflation, you don’t peg your currency to an asset which shrinks each year like oil as that is exactly the same long-term effect as printing too much fiat money and not having the resources to back it!
 
There is just as many GCR gurus spewing out junk economics as there are RV gurus. Many people cling to this because they’re deathly afraid of admitting Iraq is going to redenominate and they are left trying to find some alternative “magic millionaire elixir” to allow Iraq to keep 85 trillion Dinar and somehow magically make it more valuable to avoid admitting the blatantly obvious “elephant in the room”! The Iraqi Dinar is 3,000 times weaker than the Kuwaiti Dinar simply because Iraq has printed 3,000 times more paper money than Kuwait. A vastly disproportionate people hanging round GCR conspiracy stuff are either Doomsday gold bugs predicting imminent $5,000 gold prices every month since 1999 or they are Dinar holders who have realized the absurdity of a 100,000% RV for Iraq, yet strangely they see nothing wrong in extending the same contorted logic to the whole planet to try to keep the dream going!
 
People keep talking about the oil that Iraq has as a means to base a new value on their currency. Countries don’t base currency values on oil reserves and then once again on oil exports years later when the oil actually gets dug up and sold. This is because you would be double counting everything and essentially trying to price in that same barrel of oil twice!
 
On the USA losing it’s reserve status these are some of Jack’s thoughts.
The USA’s “reserve status” is not going to collapse to zero as if the USD got replaced by say the SDR (IMF Special Drawing Rights) which gets expanded to include the BRICS countries as some are claiming or similar new supra-national reserve basket of currencies. The USD is still going to make up a large chunk of that simply out of economic necessity for trade. The USA still exports over $1.5 trillion in goods per year. This is 3/4 of China’s $2 trillion and still the 2nd place exporter out of some +190 countries. Some people are wildly over-reacting to a trend for more multi-national reserves somehow meaning total collapse of the USA’s economy. This is not true. Even in these dark times, exporting 3/4 of what China does with only 1/5th of the population, (300 million people vs 1.5 billion people) is hardly something to be embarrassed about.
 
What will happen if countries stop selling oil in dollars is that their future inflationary risk will be spread over a larger number of currencies. Basically they won’t continue to devalue at the same rate with a peg to multiple currencies rather than pure dollars. BUT – that won’t undo existing massive devaluation of inflated currencies like the Dinar, Dong, Rupiah, Rial, and others. they will remain weak until they redenominate simply because they’ve printed even more money in their own currencies than even the USA has. It’ll simply hedge against further future devaluation. It won’t undo the past. Just like a cut in a budget deficit will slow the rate of increase of more future debt – it won’t shrink the existing debt.
 
The USA has printed $11 trillion dollars for 300 million Americans which work out to $36 thousand per American. Even if real figures were double that still works out to $72 thousand per American. That is a worst case of 100% of all USD used only by Americans. Iraq however has printed 85 trillion Dinar for 30 million Iraqi people. That works out to over 2.8 million dinar per Iraqi citizen – the classical definition of past hyper-inflation. When everyone in your country is a multi-millionaire in local currency units and yet the average annual salary is barely $5 thousand in real international terms then that is exactly what hyper-inflation is. People who also believe reducing dollar holdings equal the dollar will tank and the Yuan will soar also need to get a grip of how much money China has printed.
Which of the big nations have printed the most currency units?
 
1. China – 110 trillion Yuan
2. Russia – 29 trillion Rubles
3. India – 20 trillion Rupee
4. USA – 10.9 trillion Dollars
5. Eurozone – 9.2 trillion Euro’s
Even if the USA’s money supply was double of the official figures, it would still only be 1/5th that of China’s.
 
 
A lot of people bash the Federal Reserve for printing too much money to bail out the banks (and rightly so), but strangely they seem to ignore the fact China has printed 10 times more Yuan than even the Federal Reserve has printed dollars! Inflation for many BRICS countries is just as high as the USA’s rate. Russia’s is 6.5%, India’s is 6.0-7.5%, Brazil’s is 6%, and South Africa’s rate is 5.5-6.5%. This is also assuming everyone else is honest and the USA is the only country which under-reports it! Food price inflation in China/India has been in double digits in many areas these past few years. Again it’s amazing how some people act like only the USA experiences inflation.
 
In short: Moving away from a pure dollar peg will slow down the rate of future devaluation based on Federal Reserve over-printing the money supply, but what it WON’T do is cause the dinar’s value to shoot up! This is because Iraq will continue to have 85 trillion dinar in circulation until they redenominate. It does not matter what the Fed does as Iraq’s problem is too many over-printed DINAR not too many over-printed dollars!
 
It’s a common guru fallacy that the dinar must be weak purely because of the dollar which will be corrected by a mythical GCR event. This is nonsense. The dinar is also weak vs the Euro (1590:1), GBP (1919:1), Gold (1.475m Dinar / oz), Silver (23,157 Dinar / oz), commodities (eg, Wheat ($272/mt) is 317,457 Dinar / mt (metric tonne), etc.
 
The Dinar is weak because Iraq has printed too many dinars. No matter what the dollar does the dinar will continue to be weak until they redenominate and reduce their 85 trillion money supply back down to the 85 billion it used to be pre-1990′s inflation. The USD could vanish off the face of the Earth overnight, and the dinar would still have a rate of 1590:1 vs the Euro!
 
Same is true of the Dong – it’s utterly mind-boggling how some people can sit there with a straight face and say a GCR will adjust the undervalued Dong, when the Dong’s 21600:1 rate vs the dollar is a direct result of the Vietnamese Central Bank printing an eye-watering 3.5 QUADRILLION Dong! For clarity’s sake that’s 3,519 trillion Dong vs the Fed’s $11 trillion-dollar.
 
There is some truth to the move to a multi-polar financial reserve world, but there’s also a whole lot of hysterical guru B.S. surrounding RVing the Dinar/Dong by +100,000% in either national “RV’s” or some mythical Global Currency Reset event which really isn’t about making any currency shoot up or down 1,000 times.
The move away from pure dollar to a mix of dollar, Euro’s, Yuan, etc, is more about ending a downward spiral of future unilateral Federal Reserve devaluations. Add to that the usual USA vs China power-bloc politics. Not some +100,000% return get-rich-quick scheme that involves convincing amateur speculators that all the 10 times most inflated currencies on Earth are unfairly undervalued and are not really inflated! This is about 99 percent of almost all Dinar/Dong RV pumping in a nutshell.
 
I would like to thank Jack for sharing this information. I have edited his comments in an effort to make his information easier to digest. I have not changed his information, his numbers, or his points..I just changed things like $ to dollar and tn to trillion. I changed some phrasing as well. All of Jack’s data is in tact and his points are made. Those were not changed
 
One thing I will say is Iraq has a little over 71 trillion dinar in their M1 alone. That entire dinar supply is only meant for a population of 30 million people. The dinar is only meant for circulation inside of Iraq. America has 11 Trillion U.S. dollars in their M2 for a population of over 300 million people. Two thirds of the U.S. dollar is exported and used around the world in currency reserves and by other nations as a means for exchange.
 
In part 2 we will examine more problems with the Global Currency Reset Doctrine and wrap things up.
 
http://iraqcurrencywatch.wordpress.com/author/marcuscurtis/

Interesting... thanks

On a very quick read, there is some good information here. I can personally confirm some of the info, for instance, the NESARA info. I have carefully researched this and arrived at the same conclusions, there is no NESARA law, there never has been and it was never even introduced as a bill. he also pretty much reflects my thinking as far the the GCR goes and the USD being replaced as a reserve currency. None of it makes sense from an economic point of view.

That said I do not completely agree with everything said. For instance Iraq's reserves are not limited to dollars although that is a substantial portion of them, they also have large holdings of gold and some other currency. On that subject, I also disagree with the conclusion that Iraq does not have sufficient reserves to support a significant increase, by my admittedly amateurish calculations Iraq's reserves should be able to support at least a par rate with the USD.

Lots of great info here! Always good to see facts and figures brought in to the discussion!

Kevind53 wrote:For instance Iraq's reserves are not limited to dollars although that is a substantial portion of them, they also have large holdings of gold and some other currency. On that subject, I also disagree with the conclusion that Iraq does not have sufficient reserves to support a significant increase, by my admittedly amateurish calculations Iraq's reserves should be able to support at least a par rate with the USD.

Their gold is reported to be a few billion USD at most, from what I've seen.

What calculations lead you to a par rate with the USD?  Their reserves are around 80 billion USD and their money supply is around 85 trillion dinar which would work out to around 1063 dinar per dollar.

I'm no expert, but I looked at what other countries hold in reserve compared to what they have in circulation and compared them to what Iraq holds for reserves. Crude perhaps, but it should be realistic.

I should mention that I just looked at other countries with solid economies/currency.

Yes Marcus points out some very good points. And Kudos to DD for printing it here.

RECAPS : Pay attention , this is the proper balance of types of news to share with readers. All sides are welcome.

Marcus needs to be a guest on TNT  CC's to straighten out a few nut jobs over there.

Kevind53 wrote:I'm no expert, but I looked at what other countries hold in reserve compared to what they have in circulation and compared them to what Iraq holds for reserves. Crude perhaps, but it should be realistic.

I should mention that I just looked at other countries with solid economies/currency.

From tradingeconomics.com:

Saudi Arabia
Money supply (M2, in USD): 363 billion
Foreign exchange reserves (USD): 735 billion

Kuwait
Money supply (M2, in USD):  118 billion
Foreign exchange reserves (USD):  29 billion

UAE
Money supply (M2, in USD): 283 billion
Foreign exchange reserves (USD): 43 billion

Turkey
Money supply (M2, in USD): 414 billion
Foreign exchange reserves (USD):  131 billion

Iran
Money supply (M2, in USD): 43 billion
Foreign exchange reserves (USD):  70 billion

Libya
Money supply (M2, in USD):  46 billion
Foreign exchange reserves (USD): 130 billion

Iraq
Money supply (M2, in USD): 73 billion
Foreign exchange reserves (USD):  80 billion

If your country isn't a messed up toilet, barring unique or extremely rare circumstances (such as the USD), you can get away with having a total currency value of 4-6 times your currency reserves.  Examples are UAE, Kuwait, and to a lesser extent, Turkey.

If your country IS a messed up toilet, you're frequently restricted to whatever you've got for reserves.  Examples are Iran, Libya and, like it or not, Iraq.

Another thing to look at is GDP vs. total currency value.  You'll find very similar results, a range of values for various countries with Iraq sitting in the middle of the range, right where one would expect them.

Your 1 to 1 RV would give Iraq around 1,000 times more currency than they have reserves, despite their neighbor Kuwait (a country that is FAR more together than Iraq) only having about 4 times as much.

Hey FS4 ;

Nice write up ;
Marcus can't make the guest slot for the TNT cc so you are up !!!!

And Kevin , you are the back up !

Get ready to have dozens & dozens of eggs thrown on you by wannabe millionaires .

Somewhere on here there is a long article in which I looked at it all, and explained my reasoning. I looked at money supply, reserves, GDP, GDP per capita, ... a lot of factors. To be honest I have neither the time, nor the energy to try and find it, or to re-do the research I did for it. BTW, I di not say it would RV at 1:1. I have said that there was a chance it might, but .10 is just as, if not more possible. Heck even at a penny we see a very nice profit.

Could it RV at 1:1? Well there are some arguments that we could see that, even some that point toward a higher rate. Is it probable? As much as I would like to say yes, I would have to consider it a very, very long shot at this point. Will we see some sort of RV? Yea, I think the chances are pretty good, how large, or how small is anybody's guess.

Kevind53 wrote:Somewhere on here there is a long article in which I looked at it all, and explained my reasoning. I looked at money supply, reserves, GDP, GDP per capita, ... a lot of factors.

Unless you're comparing Iraq to countries like the US, Canada, Australia, Germany, etc, I don't see how you could come up with anything other than something similar to the above.

Compare them to other ME oil producing countries and you're going to come up with numbers like the above every single time, no matter which metric you're using.

Well for close comparables in the middle east, I would look at Kuwait, they probably have the most commonality with the situation in Iraq, people wise and resource wise. Turkey and the UAE in that order also have some commonality although less so IMO. In my view, Iran has more in common with Afghanistan than Iraq. I would not consider Saudi Arabia, or any of the smaller gulf countries comparable, there are just too many differences. Libya is not even on the same continent, and for that reason, along with everything else going on there, I never gave them much consideration. Most of the other neighboring countries have too much going against them to be comparable.

So let's look at them ... KWD = $3.54
                                 TRY = $0.46
                                 AED = $0.27

Given the similarities of the respective countries, then we might expect something in that range to be reasonable and supportable. Mathematically, they have a ratio of M2 to reserves of 3:1 to 4:1, so that would be around .03/USD.

Now I remember some info about assets that had been seized back after the first gulf war being released soon, and if memory serves me correctly that would about double their reserves, so, if accurate, that would significantly increase those numbers.

Has anyone considered the US money supply??? The only reasonable way I see this happening is for the US to devalue considering current monetary policy.... Cant keep exporting inflation and expect to keep a healthy economic system for long.... Any feedback???

Kevind53 wrote:Well for close comparables in the middle east, I would look at Kuwait, they probably have the most commonality with the situation in Iraq, people wise and resource wise. Turkey and the UAE in that order also have some commonality although less so IMO. In my view, Iran has more in common with Afghanistan than Iraq. I would not consider Saudi Arabia, or any of the smaller gulf countries comparable, there are just too many differences. Libya is not even on the same continent, and for that reason, along with everything else going on there, I never gave them much consideration. Most of the other neighboring countries have too much going against them to be comparable.

So let's look at them ... KWD = $3.54
                                 TRY = $0.46
                                 AED = $0.27

Given the similarities of the respective countries, then we might expect something in that range to be reasonable and supportable. Mathematically, they have a ratio of M2 to reserves of 3:1 to 4:1, so that would be around .03/USD.

Now I remember some info about assets that had been seized back after the first gulf war being released soon, and if memory serves me correctly that would about double their reserves, so, if accurate, that would significantly increase those numbers.

Those aren't the CBIs assets, they're the GOIs assets, and they're far more likely to be used on things like trying to keep the lights on and feed their people (or pad their own wallets, or buy military equipment) than go to foreign currency speculators.

And I wouldn't expect them to by able to support 3:1 or 4:1 as Kuwait does:
1. Kuwait has their **** together, Iraq doesn't.  Kuwait has infrastructure, massive shipping industries, Kuwait City is amazing, etc.
2. Kuwait has a nominal GDP per capita of over 56,000 USD (depending on who's numbers you go with, according to the CIA it's over $80,000, either way it's huge, Kuwait is one of the richest countries per capita on the planet), Iraq's is $4,557.  That's "comparable"?  Kuwait is ahead of the US in GDP per capita, Iraq is behind such lovely vacation destinations as Serbia and Botswana and Lebanon.

GDP vs money supply.  GDP per capita vs money supply.  Reserves vs money supply.  All point emphatically to the dinar being correctly valued, not enormously undervalued.  The IMF even states this.
http://www.iraq-businessnews.com/2011/03/30/imf-suggests-stable-iraqi-dinar/
The CBI [Central Bank of Iraq] will continue to aim at keeping inflation low, predominantly by maintaining a stable exchange rate. The low level and the relative stability of inflation do not suggest any significant over- or under-valuation of the Iraqi dinar.

Also, 3:1 or 4:1 for their reserve to money supply ratio isn't 0.03 USD, it's 0.0026 to 0.0034 USD.  About a third of a penny, at best.  0.03 would be about 35 times their reserves.

No that is not comparable. Nothing will ever be perfect, but culturally, and in resources etc. they are pretty close. Iraq's population is much larger and more diverse, so I.  would never expect their per capita income to match, but that is about as close as it gets. Kuwait was only one of the comparables I mentioned, and happens to be the richest. BTW, Kuwait and Iraq have agreements to  share and co-develop port facilities etc. which COULD, note I said COULD argue for a Dinar rate similar to the KWD. I would consider that an outside shot, but it should be considered.

The IQD is now at 1/.0086USD. Increase that by 4 and it is .03. There are numerous articles out from the CBI and GOI suggesting their short term goal is not to maintain a stable rate but to enhance, or increase the rate.

The dinar is not at 0.0086, it's at 0.00086.

I stand corrected, still, all in all a decent profit even at that, but, based on everything I have read and seen over the years, and not on guru speak, I do expect to see a better return than that.

Kevind53 wrote:No that is not comparable. Nothing will ever be perfect, but culturally, and in resources etc. they are pretty close. Iraq's population is much larger and more diverse, so I.  would never expect their per capita income to match, but that is about as close as it gets. Kuwait was only one of the comparables I mentioned, and happens to be the richest. BTW, Kuwait and Iraq have agreements to  share and co-develop port facilities etc. which COULD, note I said COULD argue for a Dinar rate similar to the KWD. I would consider that an outside shot, but it should be considered.

The IQD is now at 1/.0086USD. Increase that by 4 and it is .03. There are numerous articles out from the CBI and GOI suggesting their short term goal is not to maintain a stable rate but to enhance, or increase the rate.

You're speculating that sharing a port COULD result in Iraq's currency increasing over 300,000%, giving them more currency value than the rest of the planet combined?

No, read my words more closely. I made an news based observation stating that it was an outside possibility but should be considered. As I have said, I have studied this for years, and my opinion is based on the whole picture, not one isolated piece, but I consider everything that is factual and possibly pertinent. 

Just for clarity, at this point, I consider a rate around .10 or so to be the most likely IF it RV's. $1.00 give or take is possible, and the $3.50 range a very long shot. Anything beyond that is absolute fantasy land IMO. I'm no bookmaker so I don't do odds, but I remain cautiously optimistic.

Saudi Arabia
GDP (Nom.) (in USD): 711 billion
M2 (USD): 363 billion
Ratio (M2/GDP): 0.51

Kuwait
GDP (Nom.) (in USD): 183 billion
M2 (USD): 118 billion
Ratio: 0.64

UAE
GDP (Nom.) (in USD): 384 billion
M2 (USD): 283 billion
Ratio: 0.74

Turkey
GDP (Nom.) (in USD): 788 billion
M2 (USD): 414 billion
Ratio: 0.53

Libya
GDP (Nom.) (in USD): 96 billion
M2 (USD): 46 billion
Ratio: 0.48

Iraq now
GDP (Nom.) (in USD): 149 billion
M2 (USD): 73 billion
Ratio: 0.49

Iraq after 0.03 RV
GDP (Nom.) (in USD): 149 billion
M2 (USD): 2,555 billion
Ratio: 17.1

Iraq after 0.30 RV
GDP (Nom.) (in USD): 149 billion
M2 (USD): 25,500 billion
Ratio: 171

Iraq after 1.00 RV
GDP (Nom.) (in USD): 149 billion
M2 (USD): 84,884 billion
Ratio: 570

Iraq after 3.00 RV
GDP (Nom.) (in USD): 149 billion
M2 (USD): 255,000 billion
Ratio: 1,711

Which of these things are not like the others?

Kevind53 wrote:No, read my words more closely. I made an news based observation stating that it was an outside possibility but should be considered.

How is that any different than what I said?

You're speculating that sharing a port COULD result in Iraq's currency increasing over 300,000%, giving them more currency value than the rest of the planet combined?

I'm  not speculating anything based upon that, simply observing a fact and noting it's possible ramifications while making it clear that it is not likely at all. It's a basic principle of any research, you look at and consider all the possibilities.

I see no functional difference between "speculating that something could happen" and "noting that something is possible" but whatever, it's semantics and there's no point in arguing over it.

Feel free to replace my previous comment with:

"You think it's a possibility worth considering that sharing a port COULD result in Iraq's currency increasing over 300,000%, giving them more currency value than the rest of the planet combined?"

Whatever ... still trying to figure out why you are even here since you seem to have no interest in the dinar or currency speculation in general.

it seems that he's just keeping things real with open discussion and offering a more realistic expectation of where the iraqi dinar is headed.

Kevind53 wrote:Whatever ... still trying to figure out why you are even here since you seem to have no interest in the dinar or currency speculation in general.

I didn't acquire my knowledge regarding the dinar and currency speculation in general because I have no interest in them.

Kevind53 wrote:Whatever ... still trying to figure out why you are even here since you seem to have no interest in the dinar or currency speculation in general.

BECAUSE KEVIN ; HERE UNLIKE OTHER SITES INTELLIGENCE IS RECOGNIZED AND APPRECIATED !

I AGREE WITH OUR FRIEND , UNREALISTIC RETURNS ARE PIE IN THE SKY CRAP SWALLOWED UP BY SHEEPLE IN OTHER SITES>