(Thank you George for emailing this to Dinar Recaps.)
UU1066 – “What lays ahead” by Mnt Goat
This is a continuation of the ongoing saga of the revaluation of the Iraqi dinar. Please read past news letter dated 2/9 (LINK) to better understand this news today.
Today is Thursday Feb 12th and still no RV. President Fuad Masum approved (ratified) the federal budget bill on Tuesday 2/10 by 119 trillion dinars after a reduction of about 7 trillion dinars of the total amount, and a deficit real hit 25 trillion dinars. It has not yet been posted in the gazette.
Unbelievable but true I have heard three different dates for the ratification of the budget beginning as soon as Sunday. Just another example of the idiotic hype that is being presented on this budget saga. Why do people have to hype this up so much and just can’t tell the truth?
I have to tell you we must go by the official date announced to us by the government of Iraq and not some date leaked out of Iraq, or secretly given by some “contact” on Sunday or Monday or whatever…..lol….. This is where many of these so called “intel gurus” go wrong and mislead people. These same guru’s are now telling us the approved budget was also placed in the gazette on Tuesday but we won’t be able to see it for a couple days? Who does this make sense to? How ridiculous! Complete nonsense! This simply is not true. We must wait for Iraq to tell us the official posting date and then simply we will be able to out to the site and read it for yourself.
So if we were to go by these earlier dates we would be scratching our heads about now and asking – so where is the RV? We would be right to ask this question too since you are the one believing this so called “intel gurus” -so go ask them!
But I am telling you the budget was not “officially announced” for ratification until Tuesday 2/10 and this is the date we must go by. Iraq now has up to 48 hours to post it in to the gazette (their law library) which brings us to the end of today Thursday. Then they have 24 hours to fund the budget once it is officially posted which brings us to Friday 2/13. Don’t believe me? Go read the Iraqi constitution for yourself. I have sent you the link for it in my recent past news letters.
WHAT COMES NEXT?
You all know what comes next. They must fund this budget of 119 trillion dinars. I have to tell you there is not enough dinars in circulation today to cover this budget amount and they know this. So where will they get this much needed dinar with a rate of 1166? They have huge stockpiles of the lower denominations but currently they too are valued at the 1166 rate..
From past news letters I have explained to you that they are going to complete the project to delete the zeros. In doing so they are going to pop out the newer denomination bills. These bills or notes include $5. 10, 20, 50, 100 and metal coins to coincide. The banks already have a limited amount of these newer denominations and the CBI has stockpiles of them waiting to distribute on demand.
FACT: the citizen of Iraq is using the US Dollar since the CBI has already collected nearly 90% of the three zero notes from circulation. They did this by exchanging the three zero notes for USD over the last coupe years. Now they must find a way to once again de-dollarize and convert back to dinar. Why?
They must now do this to “normalize” their currency away from the provisional currency (3 zero notes) held now since 2003. In other words replace the 3 zero notes with a set of lower denominations.
Since you simply can’t just give away FREE money (the lower denominations) to the banks or citizens as a means of distributing them, the banks must now collect the USD (US dollars) from the citizens as they enforce their new currency law - meaning prohibiting the use of the USD in the market place. Now you can see the practicality and timing for enforcement of this law.
The banks then in an exchange for the USD will give them the lower denomination notes. The banks must pay the CBI for these lower denominations notes with exchange for USD. This how they are going to distribute them. This is how the CBI will collect the USD and get it out of circulation. This is called de-dollarization.
But there must be an incentive for the people to go to the banks and turn in their USD. Since they cling so heavily to this money how will they do this?
Iraq simply must now (like very soon) increase the value to these newer lower denomination notes with more purchasing power than the USD they now currently hold. They must get this exchange process underway. The planning is done but not implemented.
So you see there is NO WAY IN HELL Iraq is going to come out with a .10, .20, .30 or even a .40 cent rate. Why would citizens then dump the USD for the dinar since the USD would have more purchasing power?
Basic economic rules of supply and demand (and a little common sense) tells you they must come out with a higher rate than the USD currently has. Since the USD is now at a decade high value this is especially true.
So what I can’t figure out is how some of these so called “gurus” are thinking. What idiot rational do they apply to their thinking? I am not hear to bash anyone but I am so tired of hearing all this nonsense about these very low revaluation rates. Even I can substantiate in many ways why the value on a revaluation or reinstatement would come out at least to the pre-war value and nothing less. I have not even studied this information as much as some of these “guru” pretend to have done. They just seem to miss the boat on so many issues.
Then to conclude this process of completing the project to delete the zeros, they must collect these old three zero notes from foreign countries that hold them. So what too is our incentive to turn them in (exchange) them for our country of origin currency? Bingo! You guessed it ! The value must be significant in the exchange process. So when will they increase the value of these lower denomination notes?
I never like to give an exact date or rate but I can tell you the CBI has announced in the past this project to delete the zeros would be completed by January 2015. This date has already passed. This announcement came out in 2012 and was predicated on a 2013 revaluation leaving a two year window for the collection process of the 3 zero notes. We also now know (articles told us) that the CBI did in fact plan to RV in 2013 but the Maliki GOI disapproved it and held it up “indefinitely”.
So here we are in February 2015, a new budget is passed, ratified and ready to post in the official gazette. We know Al-Abadi fully supports a revaluation and international investments. In fact he has been on a road trip going to financial and economic conferences during these final days to “prime” the pump for what comes next. So when the budget is posted in the gazette it will become fully implemented and the funding must then be made available. If not Iraq will we seen as insolvent in the eyes of the global banking community since lack of liquidity in meeting their obligations. Do they want to portray this image in the midst of everything else going on in their country? The entire world knows about their deficit and the large expenditures incurred for fighting ISIS and DAASH.
Why would anyone now want to go into Iraq and invest at time like this? This is a question they do not want investors to ask themselves. Instead they have repealed the curfew, set up the economic and investment conferences in order to tell the world they are ready for international business. They are on the brink of becoming a member of the world trade organization (WTO). All the need is a tradable currency to comply with a this final requirement.
But wait a second? How can they do this without an international currency? Are they planning to defy all the standard protocols of international banking and financial practices and hold on to almost worthless currency?
If you have been paying attention to what I have been saying in my past news letters and especially today’s news you know that they are about to revalue the Iraqi dinar IQD and it MUST happen in the coming days ahead (not weeks).
Some say they will wait for March 1st to pull the trigger on the revaluation. Personally I do not see them waiting this long since we all know the legalities and the final process for funding the 2015 budget. They simply can not wait this long. They are corned now with this budget issue.
We see the Federation Council hard at work now reviewing these needed laws I talked about in my last news letter dated 2/9. We still wait for this current session that began on Feb 10th, just two days ago, to pass this ‘basket” of laws. I believe this is coming on Saturday Feb 14th, in the next couple days.
We also hear news about a technical difficulty in paying the KRG staff salaries. This article is very significant to use and it tells us much.
Here is the article: http://8th-day.com/?p=95614
There is a statement made that I need to clarify. Many have overlooked the significance of this statement.
“The Finance Ministry said on Wednesday, that the late KRG staff salaries for 2015 will be launched soon after the completion of OVERCOMING TECHNICAL OBSTACLES BETWEEN THE CENTER AND THE REGION”.
“The Prophet, "there is no problem in the rest to pay its employees salaries that the financial behavior REGARDLESS OF THE FEDERAL BUDGET BASED ON 1/12 OF THE PREVIOUS BUDGET EXCHANGE RATE."
So you see Al-Abadi along with the CBI have to make a decision soon on when to RV this currency. I believe this decision has already been made weeks ago and we are now in the final countdown window now that the budget is truly ratified and ready to be posted in the gazette. It is a process that must play out. We should hear news of this next event (gazette posting) today or tomorrow. Then Iraq must fully fund the budget within 24 hours (partly by a revaluation). Can Iraq be fully positioned with all these events in time to open and begin spending this 2015 budget?
Peace and Luv To Ya All,