BondLady & Admins Chat 05/13/2015 50,000 Dinar Notes
[Shredd] I was thinking about this 50k news and had this thought:
The CBI plans to move gradually from the dollar to the dinar. While this happens in the beginning, the dollar will still need to be used but the CBI wants to continue to reduce the large notes. This can be done with the 50k. The rate will be low enough at the beginning to support this note being in circulation.
If this is the case, the beginning of the change to the dinar may be close. The gradual (managed imo) change will begin as the reduction of the note count continues but is more agressive since the most used denoms will be coming in.
This is the only scenario I can see that would make sense regarding the release of the 50k note. The articles, while not yet from the horse's mouth, are supporting this; no increase in notes and no change in monetary policy.
[BondLady] in a sense I feel like if they bring out the 50 k note it will give them time to drag in a lot more 250, 500, 1000, 5 and 10k notes, letting them use the 25k and 50k abundantly, all the while pulling in massive amounts of the smaller than the 25k notes.
Since they already released the new 25 k notes...which should cause the rate to increase over time as they take in all these other notes...as they withdraw the notes ...less in circulation ...rates increase imo.
Just like its done throughout the years all the while the tariffs and other fee's charged by the state and all the new contracts as well and pumping more oil now than Saddam ever did...to me this all increases the exchange rate.
All of these things contribute to raising to the rate on notes we hold. Like I said above a slow grow, this is like owning stock in a company and as the company grows so does the value of your stocks !
It is also my opinion that they are doing this to make them stop using the dollar. They would carry less notes with the 50k. One of the reasons they used dollars anyways and that also to me would cause the rate increase on the dinar... less dollars more dinar....and reason enough to do it.
It looks more and more to me like no straight up RV but steady growth like it's been but on a quicker scale than before because they pull in a huge amount of notes lower than the 25 and 50k.
[tlm724] here is an article with direct quotes from Saleh which to me is about as close to the CBI as we can get without an actaul statement from the CBI:
BAGHDAD - Iraq Press - 12 May / May: detect Prime Minister for Economic Affairs, the appearance of Mohammed Saleh, that the central bank provides to the draft printing large cash categories need to market to those groups adviser.
Said Mohammed Saleh in a press statement that "Project Print Central Bank of Iraq large cash categories, an important step on the road to monetary reform, which supports the country's economy," as described, pointing to "the market need to large groups, because cash payments exceed dealing instruments, cards, e-payment ".
Saleh continued that "printed large cash categories of project is not about monetary policy but the payments system management, and that the plan would be reduced cash amounts especially since large groups constitute 90 per cent of the money supply,"
noting that "put these large groups is to ask how much Monthly itself of the money supply in the market but different categories, and not increase the original amount. "
He ruled out the possibility for inflation by the implementation of the new project, but in the case of lending to the government and the issuance of large cash categories can get inflation in prices, The country suffered a contraction in liquidity both in dinars or in dollars with total money supply in Iraq size less than 40 trillion dinars (about 31 billion dollars). "
Tlm724: These quotes I find interesting : that "Project Print Central Bank of Iraq large cash categories, an important step on the road to monetary reform and "printed large cash categories of project is not about monetary policy but the payments system management
what is interesting is Saleh is saying this is a "step" only in the reform but is NOT policy. I see it as a temeporary stopgap if you will to the furtherence of the currency reform, an action needed to buy time perhaps.
Tlm724: I argree Shredd that it will reduce the note count throughout the country and as BondLady said " all the while pulling in massive amounts of the smaller than the 25k notes" but a question still remains in my mind and that is to what purpose ?
: even though this 50,000 note will reduce the number of "notes" in circulation the value amount will not change, in other words if there 40 trillion dinar out there, even with this new note there will still be 40 trillion "dinars" maybe not as many notes but still the same amount.
Saleh said "and not increase the original amount" Just wanted to point that out. BondLady is correct imo that while this stopgap measure is happening it will give them time to fully implement the tariffs etc...
Tlm724: I have to admit over the last few weeks since the news broke about the 50,000 note I was insistant that there was no way they would print it, that is had to the 50 dinar note instead BUT I was wrong !
After reading BondLady and Shredds comments now I see this as a "step" in the currency reform and not as a bad thing at all . Thank you both for your opinions and helping me understand it !
[BondLady] Thank you. No one knows the exact plan and we base our thoughts and opinions on the most current news. We will continue to watch, study and assess the news as it is presented to us !