Economist Explains How The Plan To Have The IQD RV at 1 IQD = $1 USD Should Work!

Economist Explains How The Plan To Have The IQD RV at 1 IQD = $1 USD Should Work!


In
our 40+ year career as a Retirement Consultant we have been blessed to
meet some very talented professionals. One of them is a retired State
Dept. economist who introduced us to the IQD investment in 2005. He had
worked on the original plan to install a new monetary system for Iraq
after the 2003 invasion.

He had originally indicated that the
plan was for the IQD to achieve financial parity with the USD over a
7-10 year period from the introduction of the new system. At that time
the USD’s use would be completely discontinued and it would be replaced
by the IQD for in-country use and international exchange. The variable
factor in the timetable would be the political environment.

I visited with him recently and got an update on several issues:

(1)
He indicated the original time table was proceeding on a fast track due
to the financial management skills exhibited by the CBI and the Finance
Ministry in (1) controlling the rate of inflation, (2) controlling the
value of the IQD in a declining economic environment and (3)
implementing a digital banking system both internally and externally,
but the variable was still the political environment.

Like most
economist he doesn’t talk in absolutes (i.e. rate/date) but in
probabilities. His knowledge base is pretty current since he is still
part of a subsection of the original group that Iraq, State Department
and IMF financial people bounce things off of.

(2) We raised the
issue of the large number of IQD reported as being in circulation
(current estimates are at 25 Trillion). He indicated this was mostly
made up of (1) in country physical currency, (2) the foreign currency
reserves of the central banks around the world which are electronic, (3)
currency that had been printed but not released (i.e. small
denomination bills) and (4) privately held physical currency sold to
increase the foreign currency reserves.

The export oil revenues
are still under the control of the UN supervised DFI, and Iraq only gets
roughly 30% of the fair market value of the oil they are selling, which
is to be used only for budgetary expenditures. Since Shabbi, the head
of the CBI, knew he couldn’t get anymore cash flow out of the controlled
revenue system the IMF/UN had him under, he opened a currency sales
window at the daily auctions to tap into the wallets of the worlds
speculators. Worked pretty good, since he’s built his foreign currency
reserves to over $50 billion USD.

(3) We then moved to the
removal of big bills (the ones with the 3 zeros on them) and he said
that this activity was always built into the plan. The activity was to
begin as soon as Iraq had implemented a modern digital financial system
(i.e. bank branches, credit/debit cards, ATM’s, direct wire transfers
etc.). The removal of the large bills in-country would be the reverse of
the process that was used to remove the pre-2003 currency with Saddams
picture on it. The example was a 25,000 IQD=$25USD/pre-rv note would be
brought into the bank and exchanged for a 25 IQD note=$25 USD post/rv.
The 25,000 IQD note would then be destroyed removing it from the
currency in circulation account. I told him a lot of people would call
that a LOP and he laughed, saying they are partially right, because
25,000 IQD was being lopped from the currency in circulation account,
but the only reason for this process was to improve money handling
ability at all organization levels, and reduce the actual physical
currency in use in all areas of the Iraq economy.

Interestingly
enough, he said this activity could happen in-country without an
approved RV rate being released to the International financial system. I
asked how much physical IQD did he estimated was in circulation
in-country, and he said probably less than had been originally
introduced in 2003 which was about $4.5 billion USD worth at an exchange
rate of 2000 IQD = $1 USD, because there has been a continuous process
of not replacing the larger bills as they wore out. In fact this has
resulted in currency shortages in some areas.

(4) The next
obvious question was how would the removal of the large bills with the
three zeros work outside of Iraq, because of the number of world
speculators holding IQD. He indicated, the amount of IQD held by
speculators was relatively minor (less than 10%) compared to the IQD
held as foreign currency reserve by the central banks of a number of
major countries (US, China, England & France were the largest) with
major financial interest in Iraq. He didn’t have an exact estimate of
speculator holdings but ventured an educated guess of 750,000
individuals worldwide with the majority in the US. Estimated value of
their holdings $1.5 Trillion – $1.7 trillion IQD.

The remainder of the discussion will be posted in Part 2.


__________________
IRS
Circular 230 requires that those enrolled to practice before the IRS
should state when general information is given, that it “SHOULD NOT BE
CONSIDERED PROFESSIONAL ADVICE”. We strongly encourage all investors to
consult with their own professional financial team.

Economist RV Explantion – Part II

--------------------------------------------------------------------------------

(5)
Before discussing the planned process of how currency exchange would
take plan after the IQD was released as an international tradeable
currency, he asked if I remembered my economics 101 and what the real
purpose of currency is? Yes teacher I replied, it’s a medium of exchange
that facilitates the orderly distribution of goods and services among
individuals, companies, country’s etc. The often used example, is the
use of currency allows an automobile dealer to exchange a new mustang GT
(composed of many diverse parts each with its own individual market
value) for the cash down payment + bank financing check of a proud new
owner, and each has received equal market value at the moment of
exchange.

This is an important concept because the value of a
particular currency may be defined by the value of what the currency can
be exchanged for, instead of the usual underlying economic indicators.

The
complete discussion was rather lengthy so here’s the executive summary
of how the exchange should work with IQD owned by a US speculator:

(1) IQD is released internationally with an exchange rate of $1 USD = 1 IQD
(2)
IQD is exchanged by Mr. & Mrs. X at Bank Y. Their exchange value is
credited to their designated financial account, Bank Y forwards the IQD
currency to the Federal Reserve and Bank Y’s account is credited at the
bank private exchange rate. Yes, the banks will have a private rate and
then they will add their profit spread to come up with their public
rate. By law this bank spread could be as high as 8%, but it will be a
competitive marketplace and the banks know investors will shop around.
There is a possibility that there might even be a three rate structure
(i.e. Treasury Rate – Bank Private Rate – Bank Public Rate) imposed, but
he had no input on that subject.
(3) The Federal Reserve adds the
value of the exchanged IQD to their foreign currency reserve accounts
and destroys the actual physical currency under agreement with the CBI,
which serves to reduce the total IQD physical currency in circulation.
This build up of the foreign currency reserve accounts serves to
strengthen the USD in the marketplace, because heretofore the US has
never held significant foreign currency reserves, because there wasn’t
any country whose currency was perceived as being equal to or stronger
than the USD. The IQD with it’s commodity (oil+others) base, potential
for agriculture growth and aggressive private development growth, has
the capability to become the most valuable currency in the world in the
10 years after it’s revaluation and approval as an internationally
recognized currency. Other countries have lots of oil, but they can’t
feed themselves, they operate under a monarchy or religious tribunal and
they have no private development system in place.
(4) Mr. & Mrs.
X tithe to their church, local charity etc. which stimulates activity
in that sector. They pay off their debts, making currency available for
re-lending by their creditors. They buy a new house and car which
stimulates their local economy and set up a conservative investment
portfolio which adds capital to the investment markets. They also pay
their estimated taxes which increases the cash flow to the US Treasury.
(5)
The Federal Reserve under a controlled redemption plan supervised by
the IMF, will use it’s foreign currency reserve IQD account to buy oil
for the national strategic reserve, DOD reserves, other country reserves
as part of international support agreements or resell it to private oil
companies etc.

This gives the Federal Reserve a powerful market
force capability to control the supply/price of imported oil which has
far-reaching economic and national security implications.

The
economics of this scenario look like this, using the exchange of a
10,000 IQD Note with a two-tier 2% bank exchange spread as an example:

(1) Mr. & Mrs. X get $9,800 credited to their non-interest bearing checking account.
(2)
Bank Y gets a $10,000 credit to its Federal Reserve account, and by
adding the $200 profit to their capital account, allows them to increase
their lending cap by $2,000 under the 10% fractional banking model.
(3)
The Treasury gets $3,500 in estimated taxes in the quarter after the
exchange, because Mr. & Mrs. X are now in the “rich” category and
get to enjoy the 35% tax bracket. This lowers the net cost of the IQD
exchange to the US financial system to $6,500 USD (i.e. $10,000 out –
$3,500 in).
(4) The Fed’s designated agent, at some point, orders
$10,000 worth of oil from Iraq. Payment will consist of a 10,000
transfer from the Fed’s foreign currency reserve IQD account to the IRAQ
Oil payment account at the CBI. Even though the world spot price of oil
is defined in terms of USD, the actual transaction may take place in
any internationally recognized currency agreed to by the parties. For
example, Iran only accepts Yen from Japan for their oil orders, because
they don’t want USD in their foreign currency reserves.
(5) The
$10,000 order is filled with 200 barrels of oil based on the spot price
on the date of the sale (for this example we used a $50 USD spot price).
What does it cost Iraq to produce the oil to fill this order? Well they
have negotiated productions agreements for $1.50 USD/barrel. From that
price $.50 USD goes to the national Iraqi oil company who is the partner
in the field the oil came from. Out of the remaining $1.00 the other
oil field partners have to pay the Iraq government a profit tax of $.35
USD (35%). The net cost to Iraq to produce a barrel of oil used in this
scenario is $.65 USD. (i.e. $1.50 – .50 – .35)
(6) The transaction is
completed with the Federal Reserve exchanging foreign reserve credits
which are equal to 10,000 IQD (which had a net acquisition cost of
$6,500 USD) for 200 barrels of oil (which has a net cost to produce of
$130 USD.

Simply put, it cost Iraq $130 USD from their foreign
currency reserve accounts to redeem the value of 10,000 IQD, which goes
into their operating accounts. At the same time the US got $10,000 worth
of oil for a net cost of $6,500. That’s how it was originally planned
for Iraq to RV at 1 IQD = 1 USD, with the variable being the political
element (i.e. UN Sanctions, GOI actions, IMF actions, World Bank actions
etc.)

Now let’s really stir the pot by:

(a) Having the
DFI ($280+ Billion USD) plus other frozen assets (estimated at $100
billion) turned back to Iraq and added to their foreign currency
reserve, bringing it up to $430+ billion USD.

(b) Then change the
current fractional IQD reserve requirements of 100% to 15%. That just
raised the total potential money supply value to $2.8 Trillion (430
billion/ 15), while at the same time the total physical IQD in
circulation is being reduced by removing the large bills with the 3
zeros.

(c) Also execute the plan Iraq announced to increase oil
production from 2+ million barrels/day to 10 million barrels/day with
the resulting revenues flowing directly to the Iraq treasury.

(d)
To add a little more intrigue have the CBI continue to use it’s sales
window to market oil futures and forex contracts. They have shown they
can generate significant cash flow in the private market, think of their
impact in public markets.

We leave it to your analytical ability
to determine how high of an RV exchange rate IRAQ can really support.
There is strong political pressure to set the initial rate at $3.22 USD =
1 IQD, so it can be proclaimed that IRAQ has moved back into the
International community of nations and has re-established it’s currency
at the internationally traded rate in effect before Saddam invaded
Kuwait in 1990.

The link: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=49331390

Thanks for that.

well there went the LOP theory right out the door. Good read. AJ

wow never thought of it that way! just added some more hope for this rv.......yyyyeeesssss!!!!

Everyone having any doubt about the RV should read this. I have read a very similar analysis that was done by Ennorste ( Steve Norris ) in the book that he wrote about a year and half ago. Instead of the oil costing the US $50.00, Enorrste said $32.50.

This certainly explains to all that have wondered how Iraq could possibly pay the speculated rate for all of the dinars that are out there in hands of all of the governments and individuals such as ourselves.

Hold steady. DO NOT sell your IQD. We are getting closer and closer.

Thanks for bringing the article.

Great article ... thanks.

AJAnderson wrote:well there went the LOP theory right out the door. Good read. AJ

AJ THE FIRST PART SAID LOP.THE SECOND DIDNT SAY IT

geezer wrote:

AJAnderson wrote:well there went the LOP theory right out the door. Good read. AJ

AJ THE FIRST PART SAID LOP.THE SECOND DIDNT SAY IT

Exactly! He also never explained how the old dinar would be exchanged for the new dinar before cash-in...

CJ

TNman wrote:Everyone having any doubt about the RV should read this. I have read a very similar analysis that was done by Ennorste ( Steve Norris ) in the book that he wrote about a year and half ago. Instead of the oil costing the US $50.00, Enorrste said $32.50.

This certainly explains to all that have wondered how Iraq could possibly pay the speculated rate for all of the dinars that are out there in hands of all of the governments and individuals such as ourselves.

Hold steady. DO NOT sell your IQD. We are getting closer and closer.

Thanks for bringing the article.

Do not sell your dinar...good advice.

punisher wrote:Do not sell your dinar...good advice.

Exactly!!! There is no need to sell your dinar...

CJ

AJAnderson wrote:well there went the LOP theory right out the door. Good read. AJ

The article was written April 22, 2010 and the info supposedly comes from an unnamed "retired State Dept economist". I sure hope an RV is what happens but the almost 2 year old post looks to be one man's theory/opinion or possibly even a "pumper" post. I'm not an economist so I can't comment on the validity of the economics of the post but the Iraqi's intentions to delete 3 zeros are pretty
plain in the articles I have read. I don't think anyone has shown that a LOP can be discounted at this point. If you or anyone has anything that shows that a LOP will not happen there are a lot of us that would like to see it.

I don't know if you read the comments that go with the post but one person posted>>> "Without a source, how do we know if this article is a complete fabrication-- despite the fact that it sounds pretty legit?" I had those same thoughts since "pumper" posts are common

And another commented>>> "If this guy was a real economist, heck, even if he was a decent fake economist
he would know that electronic currency is not part of currency in circulation... and claiming printed but not released currency is
included in the number is laughable. This is a total joke perpetrated by a dinar dealer."

zonepirate wrote: And another commented>>> "If this
guy was a real economist, heck, even if he was a decent fake economist
he would know that electronic currency is not part of currency in
circulation... and claiming printed but not released currency is
included in the number is laughable.
This is a total joke perpetrated by a dinar dealer."

I caught that too and loosly comented on it in another therad when asked my opinion...

CJ

This is a statement froms acouple of years back..I printed this 2 years ago when I first saw it (easier to read)..Mathmatiics wise its a keeper and I did like it... but,,, you can see as this guy talks of the release of the DFI funds..Already happened that I know of.......REINSTATE!!!!!!!

go rv!!!

Thank you very much for this post. Great read!