Post Written By Phillip - Emailed to Dinar Recaps
My Two Cents from a Perspective of: Opinion vs Published Intention on the IQD
It looks like the more popular version of a predictable future for the value of the IQD has come down to simply “Opinion” ~ but without much regard to very public statements made by very well-known Iraqi Banking and GOI representatives since at least 2009, all of whom have reputations and credibility at stake in Iraq.
Having had a Vanuatu Credit Union account in USD, a Japanese Yen account in both USD & Yen, a Hong Kong based Hang Seng Hong Kong Dollar Checking account, a Hang Seng savings account capable of holding funds in six different currencies and now a Warka account with at least two different currency accounts available, I figure I’ve paid some dues and learned a few things about international banking along the way.
The Vanuatu account supposedly got hacked, but I’m certain it was by the very same person who started the Ponzi scheme in the first place ~ before (successfully) bailing out. Fool me once………..
The Japanese yen accounts were just regular checking and savings accounts while in-country and got closed when I moved ~ currencies in both Yen and the USD. Could have had a savings account in Euros, but didn’t.
The Hong Kong based Hang Seng accounts supported a Hong Kong based International Corporation (Hong Kong has a reasonable cap on corporate taxation) and I closed them when the corporation became too expensive to maintain while waiting on a windfall of enormous wealth.
Costs for Hong Kong Resident Agents, Nominated Directors and the annual bookkeeping and filing for the Hong Kong Internal Revenue eventually grew (over a 5 year period) from under $1000 per year to over $2000 per year ~ just so that I could maintain an international façade that was ready to absorb an overnight windfall of wealth.
It became a real pain to keep up with all the official requirements especially since my Resident Agents/Bookkeepers/Nominal Directors moved location almost every year.
Not sure why.
By the time I finally closed the bank accounts, de-registered the corporation and had the remaining funds sent to me, the extra fees had come out of the woodwork to the tune of at least $1500 more than the usual annual fee; even though I timed the closing well in advance to try to avoid extra fees.
I still have the names and contact information (phone, email, address) of at least two agents in Belize whose business it is to help foreigners who wish to take advantage of Belize law by introducing them to Belize bank managers, to Belize resident agents, and to Belize lawyers who can help them set up Trusts, International Holding Companies, obtain Passports, etc.
Haven’t yet had the need to contact the Belize dudes ~ still not wealthy enough to consider it.
Along the way of this international financial education I learned a few things about off-shore corporations, offshore bank accounts, unbreakable trusts, reliable venues for American LLC’s, and quite a myriad number of ways to represent yourself internationally in this age of corporations and internet identities.
I also learned about currencies and how they operate internationally.
For example, I was in Japan when the King of Siam (Thailand) decided to float the Thai Baht on the international currency exchange platforms free of any pegs (like to the Japanese Yen or China’s Yuan Renmembi) and consequently caused most Asian currencies taking advantage of the low cost “Made in Thailand” label to take a dive against the USD.
The King could do that because technically speaking, being the King, the entire Thai Money Supply belonged to him ~ like a personal bank account.
I had no choice but to deal with the reality of the Yen taking a dive from 85 Yen per USD 1, down to 145 Yen per USD 1. Ouch!!
That Japanese bubble was due to pop anyway, but still!!
It ended up costing me about $35K to $40K over a 5 year period.
Anyway, here is my collection of Opinions and Perspectives on the IQD that I’ve seen expressed (and not just here on DV) and of course my Two Cents Worth will probably creep into the language of interpreting those Opinions and the Perspectives into the following narratives:
Opinion: Those very public announcements stating the CBI/GOI intentions regarding the future of the IQD should be ignored; because they are mostly all smoke and mirrors and those Iraqi spokesman announcing those intentions (regardless of their reputations) aren’t really telling the truth, anyway.
“They” want to keep foreign speculators and Iraqi citizens in the dark regarding the CBI’s true intentions for the IQD so that the CBI and Iraq itself can realize the most profit from this up-coming redenomination/revaluation.
Perspective: The CBI (still under IMF supervision) has always publicly emphasized through different spokesman that one of its most important financial goals is to reduce Iraq’s Total Money Supply ~ close to 90 Trillion Dinar ~ from trillions down to 90 Billion Dinar. Three zeros less.
By doing so, the CBI board of directors can then decide to increase the value of the IQD against the USD using its current USD Reserve ~ close to 90 Billion USD ~ to help determine a new revalued exchange rate for the IQD vs the USD (possibly even a rate of one to one against the new currency).
This is the first time in decades of Iraqi history that the official currency has had this many zeros on it and nobody likes it; especially since it was Bremer and company that added the zeros after Saddam and sons absconded with all the USD and wreaked the Iraqi Central Bank’s USD Foreign Reserve balance.
Opinion: Most Iraqis would prefer the IQD currency to be closer in denomination to the available USD denominations now in circulation and at the same time they’d like to have the IQD have close to the purchasing power of the USD. This is a matter of national/ethnic pride more than anything else.
Opinion: Right now, with that ratio of IQD Money Supply (90 Trillion) to its USD Currency Reserve (90 Billion), the CBI could easily increase the official value of the IQD against the USD from 1166:1 up to 1000:1; but instead has chosen to (successfully) fight in-country inflation and promote de-dollarization instead.
Perspective: Perhaps there are some currency speculators who are holding physical IQD banknotes, but who don’t really understand that both the IQD and the USD are fiat currencies and that the Ratio of the amount of IQD in the Iraqi Money Supply verses the amount of USD being held in the Iraqi/CBI vaults in Reserve is actually what is used to help determine the exchange rate between the IQD and the USD.
The Ratio doesn’t necessarily “establish” the official rate of exchange, but it is certainly instrumental in determining what rate of exchange both countries and the rest of the world might find acceptable.
As evidence that this is exactly the way currency exchange rates work a person need look no further than Iraq itself at the time these De la Rue notes were first issued.
In 2003 Coalition Forces invaded Iraq and Saddam left town. On the way out of his Baghdad Compound (now part of the Green Zone) Saddam ordered his sons to rob the old Iraqi Central Bank on their own way out of town. Saddam also took his entire stash of USD cash with him when he left.
Because the Hussein boys successfully committed the largest bank heist in recorded human history, (US$920 Million), the old Iraqi Central Bank lost its counterbalance in USD foreign currency reserves ~ compared to the IQD currency it had in circulation ~ and went immediately bankrupt, insolvent and un-savable and the foreign exchange rate jumped from 1:1957 to 1:3500 / USD to IQD.
In 2004, Bremer and crew brought the exchange rate back up to around 1:1460 with literally plane loads of newly printed USD and IQD banknotes being put into circulation.
The CBI, chartered in 2004, took over the management of the IQD from there.
That same Ratio is what helps determine currency exchange rates between Central Banks for virtually all fiat currencies all over the world and currency traders use very small up or down changes between one currency exchange and another to make a profit.
The IQD to USD exchange rate has been pegged at 1166 to 1 for the last 4 years and before that since 2004, under the guidance of the newly charted CBI, has always steadily increased in value against the USD.
Opinion: These last 4 years represent an admirable control of inflation by a fairly new central bank ~ the CBI is only a decade old now.
Opinion: The actual Ratio of Iraqi IQD Money Supply versus the CBI held USD Currency Reserves no longer applies in Iraq because Iraq is special and has a different set of rules going on due to its hidden wealth in oil, gold and dates, etc.
Opinion: Because Iraq is now a truly sovereign country, and out from under UN Chapter 7 sanctions, the CBI can set the exchange rate between the IQD and the USD to whatever it wants it to be; without permission or approval of the IMF, the World Bank, the Fed, the Bank of International Settlements or the Bank of England. The fact that Iraq is one of the founding member countries of the IMF doesn’t matter; the CBI can still just do whatever it wants to with its own currency.
Opinion: Because Iraq is so special out of all the countries in the world, the CBI will not have to follow the very same international currency and finance laws that govern all the rest of the countries associated with the IMF; even though Iraq through the CBI (which is still under IMF supervision), has been doing just that ~ right up to current day.
Opinion: The CBI wants to get the high denomination notes out of circulation to reduce the total IQD money supply.
The CBI can delete the zero's from the existing currency banknotes by issuing new currency with fewer zero’s on them (for exchange purposes only and at no profit or loss for either party in the exchange) and at the same time raise the value of both sets of IQD Currency against the USD; and therefore, both foreign speculators and Iraqis can still profit from such a scenario.
Comments may be made at the end of Part 2 Thank You