(Post by Red Lily)
How Fractional Banking Economics will allow a high RV EXPLAINED:
First off, I’ll use the exchange of a 10,000 IQD note as my example. To help
explain the economics of this cash-in example, I will use a 1:1 cash-in ratio
between the USD and IQD, that is given a two-tier payout, and a 2% bank spread.
What You Will Receive:
If you were to cash in your 10,000 IQD note with a bank that charges you a 2%
spread, you would personally receive a net take-home of $9,800 credited to your
What Your Bank Will Receive:
Your Bank will receive a $10,000 credit to its Federal Reserve Account. They
will also be able to add the $200 profit to their “capital account”.
If you don’t understand the “Fractional Banking“ concept that runs our country,
you may want to, as that is what this is based on, and is what is behind this
entire concept and plan. To learn more about this concept, I suggest you click
HERE, and go to a video post I brought to the forum previously, and posted in
my “Tidbits“ section.
Read More Link on Right
Ultimately, the bank wins because they are able to gain $2,000 in lending power
under the 10% “Fractional Banking“ model.
What the US Treasury Will Receive:
First off, the US Treasury will receive $3,500 in estimated taxes in the
quarter after the exchange, because you 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).
Furthermore, the US Treasury’s rate is higher than the banking rate (we will
use in this example 1.25), thereby further reducing their “net cost” from
$6,500 to $4,000.
Oil Now Enters the Picture:
At some point, a Fed-appointed agent orders $12,500 worth of oil from Iraq.
Payment will consist of a $12,500 transfer from the Fed’s foreign currency
reserve IQD account to the IRAQ Oil payment account at the CBI in a form
otherwise known as PetroDollars/PetroDinar. 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.
How the CBI “RECAPTURES” the Money:
The $12,500 order is filled with 250 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 approximately $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 –
What does all that mean? It cost Iraq $162.50 to bring back a 10,000 IQD note!
Can they afford that? I think so! So, instead of paying out $12,500 for a
10,000 IQD note, they only pay $162.50! That doesn’t add to the money supply
much at all does it! They receive their IQD back and place it in the CBI, or
The transaction is completed with the Federal Reserve exchanging foreign
reserve credits which are equal to $12,500 USD (which had a net acquisition
cost of $4,000 USD for the US) for 250 barrels of oil (which has a TOTAL COST
to produce of $162.50 USD for Iraq.
More completely explained, and simply put, it cost Iraq $162.50 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 $12,500 worth of oil
for a net cost of $4,000. 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.)
Other Factors that Strengthen Iraq’s Position and Ability to RV:
■DFI Funds Returned & Other Assets: $280+ Billion USD, plus other frozen
assets (estimated at $100 billion) will be returned back to Iraq and added to
their foreign currency reserve, bringing it up to $430+ billion USD.
■CBI IQD Reserve Requirement
Adjustment: The CBI will change the current
fractional IQD reserve requirements from 100% to 15% at the appropriate time.
As a result, the the total potential money supply will be raised in value to
$2.8 Trillion (430 billion/15), while at the same time, the total physical IQD
in circulation will be reduced by removing the large bills with the 3 zeros
over a period of 2 years, as they have indicated.
■Oil Production Increased: Iraq
will also execute the plan they 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.
■Oil Futures & Forex Contracts Added: To further stir the pot, the
CBI will 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.
There, my friends, is how this plan will be enacted and made possible. Taking
NOTHING, and turning it into SOMETHING, then bringing it back to a “manageable
and reasonable something” that is accepted and supported by seeming endless
supplies of oil. This is how the world’s ENTIRE NEW MONETARY SYSTEM will be
regenerated and supported and backed, given, in essence, a re-birth and renewed
for most governments and economic regions… even by “Black Gold”.
So, here’s the summary for all the “players” involved, giving ballpark numbers,
and not taking into account superfluous costs, fees, and other small details
that don’t really affect the larger picture:
■Investor’s Net Gain: $10,000 –
$200 = $9,800 x .65 = 6,370 for an investment
that cost $10
■Bank’s Net Gain: $200 added to
“capital account”, plus $2,000 they can use to loan out.
■US Treasury Net Gain: $2,500
from the .25 spread on top + $3,500 in quarterly taxes = $6,000
■CBI/GOI/Iraqi People Net Gain:
$12,500 – $162.50 = $12,337.50 + Profits from
■Overall Net Gain for All
Involved: $6,370+$200+$6,000+12,337.20 = $24,907.20
This is the wealth that was generated from a single 10,000 IQD note that was
given an original value of approximately $10! Is that amazing or what?! You
tell me… can Iraq afford NOT to RV?!!! Will the IMF allow them to NOT RV their
currency, but simply replace their large denoms for smaller ones?!!! LOL!!!
In this scenario, EVERYONE WINS… and the IQD is slowly (over 2 years) taken
back in to the CBI… eventually destroyed, leaving a manageable M2 behind,
having created HUGE WEALTH throughout the world to re-supply what was allowed
to be destroyed in the “great bleed” over a period of just a few weeks a couple
of years ago, even the greatest redistribution of wealth the world has ever
seen. Believe it or not, it has happened for this very purpose, and it IS
(Dinar Recaps Note: we believe this originally was posted at Dinar Daddy's site)