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Post by spooncreature on Thu Sep 05, 2013 2:46 pm

Hello all, this is my first post here and I have to say that I like the encouragement of opinion variety here that is lacking in most other sites. As I'm not sure about buying dinars (and it does have some stigmas), there is one question I have to ask.

Say you purchase your 1 million dinar for approximately 1k USD and it RVs to the $3.44 USD per 1 IQD (the most commonly cited number, the $20 rate just sounds ridiculous) that leaves you with currency valued at approx. 3.4 million USD. Now, there are a few sites that say over 5 million people hold dinars and at a conservative estimate, say 1 million of those people hold at least 1 million dinars apiece, after the RV 1,000,000 people x $3,400,000= 3.4 trillion new dollars in the world economy just for a few investors. This doesn't even account for the 30 million Iraqi people who make on average of 7 million IQD a year income and the supposed holding of dinar in national treasuries that will purportedly be used to pay off huge deficits. How is it believed that this much money (I assume a significant number of trillions of dollars) can suddenly appear in the world economy? I don't know much about economics let alone currency values and how they fluctuate, but if someone could help me understand that'd be great.

Thanks folks.

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Post by Ponee on Thu Sep 05, 2013 3:21 pm

Spooncreature, I know that we have had similiar conversations here and there are several members who have a better understanding of this.  They are not on right now, but if you want, you can  click on the "watch this topic for replies" tab to the bottom right under the posts, you will be notified when replies are made to your question.

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Post by Kevind53 on Thu Sep 05, 2013 4:10 pm

Well, hard to give a short answer, but I'll try. First, with the average Iraqi earning the equivalent of about $4000 a year, we can safely assume that they are not holding scads of dinar. Especially when you consider how much trade actually occurs in USD.

The M2 money supply of Iraq is about 4 trillion dinar but it's hard to say how much dinar is actually in circulation there. The CBI has been buying up a crap load and taking it out of circulation. A percentage of that is in foreign countries and will likely be held by the respective central banks as a part of their reserves. What is sure, is that if you use the numbers tossed around by some gurus, we would be up to our necks in paper.

As far as the US goes, it is again hard to know how much dinar is out there. The US itself may be holding some, in fact I would almost bet on it. Could we absorb 3 trillion in USD? Shoot, that would cause a ripple, but not much more than that. To try and lend a little perspective, as a part of the QE the Fed has been buying back bonds at about $85B a month. That's $85B a month or a little over a trillion a year being pumped into the economy. So yes, I think we can absorb it without too much trouble.

Let me emphasize one thing. This is a speculative investment. That's a nice way of saying it's a bit of a crap shoot. Yes, we could make a pile of money, but we could also lose our investment, or most of it. That said, the fundamentals are good, the dinar is IMO artificially low in value right now. It was, and should still be in the $3.00 to 4.00 range. Yea, I am bullish on the dinar. However, we do not know when, or if, the RV might occur, so don't put one dime into it that you can not afford to lose.

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Post by Ponee on Thu Sep 05, 2013 4:16 pm

 MY HERO....  Thanks Kevin!!!  I knew you would weigh in...

Ok, anyone else have some input here for spooncreature?

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Post by spooncreature on Thu Sep 05, 2013 4:36 pm

Thanks Ponee and Kevin, I couldn't ask for more from such an excellent forum.

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Post by Purpleskyz on Thu Sep 05, 2013 4:36 pm

I would just like to say that I truly LOVE the name spooncreature!

That is all

:shock:

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Post by spooncreature on Thu Sep 05, 2013 4:39 pm

@Purpleskyz wrote:I would just like to say that I truly LOVE the name spooncreature!

That is all

:shock:
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Post by Meme on Thu Sep 05, 2013 6:21 pm

couch  "There is no spoon"    but okay, a spooncreature is okay  Wink

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Post by Horizon on Thu Sep 05, 2013 10:27 pm

Glad you are here with us Spooncreature.....I would love to know how you came up with your name???? But, that's ok, maybe I should not ask???lol
Hope you will join in and enjoy being here with us....


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Post by spooncreature on Mon Sep 09, 2013 11:50 pm

Now, an addition to the newb question: has there been mention of a gold-backed IQD in the forum? I could find nothing other than a video posted which was concluded to be the stuff of conspiracy-theorists. However, this article from 13/06/10 surfaced in a forum thread about gold:

"In a bid to prevent the fluctuation of the Iraqi dinar and adjust its value against world currencies, the Iraqi government on Monday (June 10th) announced that a joint committee comprised of members from the planning and finance ministries and the Iraqi Central Bank has been formed.

Iraqi government economic advisor Salam al-Quraishi said the committee will establish several controls that aim to stabilise the dinar rate of exchange level and prevent its value from dropping.
This will be done by supporting the value of the dinar with gold and preventing traders and banks from manipulating the dollar and euro rates of exchange, he said."

http://al-shorfa.com/en_GB/articles/meii/newsbriefs/2013/06/10/newsbrief-09

but then there were rumors of a gold-backed Libyan dinar that would have "devastated the dollar" back in 2011.
http://rt.com/news/economy-oil-gold-libya/

...and of course the old chestnut about repricing oil in euros by Saddam around 2000
http://content.time.com/time/magazine/article/0,9171,998512,00.html
which is a rumored reason for why the invasion of Iraq occurred in the first place.

I'm avoiding all notions of conspiracy theories, but a return to an asset backed currency would be huge and was wondering if these things fit together in any way (I'm not sure how reliable "al-shorfa" is in terms of being a legitimate news outlet). I just know that a lot of the problems with the greenback started with it being transformed into a fiat by Nixon. Any opinions?

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Post by Kevind53 on Tue Sep 10, 2013 8:29 am

There was talk of a gold backed African currency some years back, It was pushed by Lybia, but nothing ever came of it. As to the dollar, A lot of gurus have been pushing that as part and parcel with the global currency reset. They state that the Federal Reserve Note will be replaced with a UST note that is gold backed.

But an asset based currency has it's own set of problems. Among them is the question of volatility. Any asset you care to name, gold, silver, petroleum, or anything else, is a commodity in today's markets. It's value can swing wildly from day to day, even within minutes. So then calculating exchange rates not to mention your salary,  becomes almost impossible.

I suppose you could lock the price down, but that brings it's own set of problems. One of the reasons the US moved of the gold/silver standard was that the currency was worth more in melt weight than as currency. Related to that, the price of the USD against non gold backed currencies was such that we could not compete against other countries in the growing international market. BTW we were one of the last countries to move off the gold standard.

Here is food for thought. If the US returns to a gold based currency as the proponents suggest, what happens to all the gold people have bought. Does it all get confiscated by the government at some artificial price like it did before? Will it become illegal to own? Will it become price controlled? After all we need to secure the physical backing of our currency right? Keep in mind that according to the government statistics, the gold held in reserve here in the US would have to be valued at somewhere around 10K/oz to cover the USD in circulation new.

Next, there is the question of the new UST notes they will trot out, they do not exist. No the new 100 dollar bill is not a UST note, nor is it a transitory note. It is just the latest note to undergo the process of redesign to include security features. BTW, you do know the Federal Reserve Notes were also gold backed then don't you? Go ahead and check there are lots of images and articles to back that up. 

Lastly, there is a good reason for the Fed to exist. Prior to it's establishment, our economy was subject to frequent, deep recessions and runs on the banks. The Great Depression was just one of them. Taking the USD dollar of the gold standard may not have altered the frequency of them, (there have been fewer, but not enough to be statistically significant IMO,) but it has shortened their duration, on average 11 months vs. 26 months, and lessened the severity of them when they have occurred. Remember, an asset based currency by it's nature is rigid. You can only have so much, and it's value is not easily adjusted to meet market conditions. 

No, though there are proponents of a return to a gold based currency, we are not likely to see it, soon, or ever.

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