Post From Peoples Dinar By Stevel Part 2 of 2
News Article With Comments From Stevel & Member
3. dollar smuggling from Iraq:
The cheap dollar compared to what it is in neighboring countries and the world leads to the prevalence of smuggling cases in search of a price shift Supreme like looking for a cheap commodity demand top price of saturation.
This forms Mtota from the fact that the central bank Magali in raising the Iraqi dinar exchange rate against the dollar under the pretext of supporting economic stability, which is the other did not materialize, because the instability Mtota of factors other real related to production and employment, investment, income generation and cost
and added values rather is derived from monetary factors task, it is not able to variable exchange rate that addresses the structural imbalance, so it was bet on the stability in the exchange rate alone does not lead to the development will not lead to development,
it was a decade of lost unfortunately development, because development is to break the monotony and stability and create a strong payments in the side of the process real, to be the cause of creating a sustainable stability in the future,
and it was the central bank that is the power of the real economy is set for the value of its currency floating, not improve the image of the economy through freehand value coin administrative Bekazat flimsy may swallow up foreign exchange reserves without being able to create stability, and smuggling.
This has led to increased demand for the Iraqi dollar from neighboring countries, and will not be able to every police methods of control over it, but this is possible through prudent monetary policy,
and the dollars that do not run away for speculation and selling price up, they run away in search of better opportunities for investment because the structural imbalance and poor business environment and corruption, reflected in the growing costs makes less profit opportunities.
4. strengthening the economy of the phenomenon of rent-seeking:
The lifting of the dinar exchange rate works as opposed to protectionist measures required to protect the local product to compete with goods of similar imported services,
which means that the exchange rate inordinate provides a margin of protection for foreign product to compete with local product,
if any, which we are working upside down counter to the interests of our economy, and so will prices of imported goods cheap dollar looks pricey Iraqi consumers and competition, while prices of exported goods look expensive for foreign consumers and competition,
thereby enhancing the imbalance in the structure of exports where oil remains only dominant, as well as enhance the disruption of the structure of imports only consumer favor,
after a reluctant local product production to its inability to compete with foreign final product will not be need to import capital goods (capital) economy is occurring among the largest financier about Bria oil consumption.
Also, content import to the size of the total demand in the Iraqi economy is high mainly, which increases the leakage in the income cycle because the income generates mostly from oil, where accounts for almost 80% of GDP is spent mostly abroad for the purposes of import as supplemented by income cycle abroad,
This is too late more with the lifting of the dinar exchange rate procedures, some might say, where the product of the Iraqi order to encourage him to export ?,
or say let's import cheap goods and consume as long as we do not have the production, this argument for some people, unfortunately, is the case for retaining the comfortable pillow of the proceeds of oil and hibernate Long Iraqi economy (Sleeping economy),
but see enough sleep in a large hospital named Iraq eat the food and water the medicine versus crude oil pipeline extending to the outside, and why? Iraq only has to sleep and lag all other oil countries girl productivity rules replace oil depleted?
5. deepening of the phenomenon of dollarization:
When floating the Iraqi dinar with all currencies, except the dollar as associated with equations calculation by evaluating the revenue in the budget, and associated with him again at the central bank auction without the rest of the currencies, this companionship continuing with the dollar,
both toward the rise or fall of the price of the dinar exchange They indicate the presence of (inherent) between the two currencies and not (floating relationship) which enshrines the phenomenon of dollarization, no one claims to be raising the price of the dinar is facing excessive dollarization, because dollarization achieved by sticking both directions as it sounds.
Third, it raised associated with the decline in the dinar exchange rate:
1. High inflation:
Will get a rise in inflation rates with the significant decline in the dinar exchange rate, especially in the short term due to declining purchasing power of the dinar, this effect side will have an impact on the social side slipped people's living standards especially from people with limited income (craftsmen)
and those with fixed incomes (staff state), and after the passage of the economic adjustments desired associated period for this procedure reform and the absence of some or all of the adverse exchange rate overvalued the effects mentioned above,
start positive to emerge effects, length or palace of this period it depends on the availability of complementary factors other and the flexibility of the production system in the country ,
we mean effects positive is an improvement in the competitiveness of the domestic product after the demise of margin protection for foreign product that was provided by the exchange rate overvalued it,
and the increasing government's ability to spend on infrastructure that reduce production costs, which will be followed by increased production and operation and increase access of distributed elements production form in which it is facing the negative effects of inflation,
where regain real incomes recover and may improve more than the previous, and when these adaptations work be inflation (inflation development) is especially bad consequences in a country that seeks development.
Praised effects of development of inflation will re-balance for people with limited income in the private sector, they will sell their products competitively and higher prices, however,
aggrieved at the micro level remains are the owners of fixed inflexible entry (state officials), but at the macro level, the economy will correct itself, where become over time a government job repellent and the private sector an attractive, a reformist demand does not differ by two,
and when that happens we put laws and regulations protect workers in the private sector, by contrast, put the rate of increase in staff salaries is directly proportional to the rate of inflation,
after that tend privileges of the other state employees which tarnished the labor market and in particular the exclusive right to receive a piece of land and the exclusive right to obtain a guaranteed salary and other loans.
2. Escape phenomenon of enlightened father:
The phenomenon of escape from the currency existed in the period of the economic blockade and got with the Iraqi dinar when the dinar fall day against the dollar and loses part of its purchasing power because of hyperinflation,
and people were fleeing from the dinar towards fixed assets, gold or foreign currencies stable (fixed) as dollar, the beneficiary Escape from the phenomenon of the dinar was working abroad who receive wages and revenue in dollars while purchases are in Iraq Dinars and were able to purchase real estate assets as a result of the high dollar exchange rate against the dinar.
He got the contrary after 2003, when the dollar falls against the dinar is not an expression of the real side growth in the economy, but upped (Baekaz) by monetary policy,
and became the beneficiary of this phenomenon are working in Iraq and obtaining their wages and their returns in dinars, but that their families resident abroad and economic activities List abroad are buying assets, real estate and to accumulate dollar balances abroad taking advantage of the exchange raised forcibly dinar rate (rather than floated),
where they get more dollars Bdnanar less, and most of the beneficiaries of this phenomenon engaged in service and commercial fast work of yield and are reluctant for access to productive areas Slow-yield and high-risk and thus be in their interest to promote the development rentier economy and the development of consumer behavior without the development of productive behavior in Iraq.
If we abandon extremism in the dinar exchange rate and made floating big up and over the two bounds of relative stability within the limits of the exchange rate of the lowest of the dinar,
may go back to the phenomenon of escape from the dinar, meaning that the dinar loses part of his job as a store of value, but it may reclaim after investigation relative stability,
even after a period of up to a minimum, despite the fact that the International Monetary Fund could be convinced to float the dinar,
while maintaining a certain level of stability in the value of the currency orbit, but the Central Bank of Iraq was more royalist than the King in the previous policy.
Finally, if we compare the negative exchange rate overvalued in, and the effects of the forecast as relics if we retreat with him, we will find it total,
the effects of reform desirable rebalance of the Iraqi economy and save him from the clutches of the imbalance, even if some medicine bitter and some a troublesome side effects,
but it treatment leads to healing, then what is the alternative for non-death treatment, we will stay clinging to an error at the price of high-dinar exchange are fake laugh it on ourselves,
in order to maintain the level we have to pumping more more dollars at the auction, in the equation dip our revenue dollar, we'll be witnesses on the foreign exchange reserves at the central bank swallows by the black hole (the exchange rate) to become without the required level of cover and we can not develop other wrap indicators then we are facing a real crisis,
and we have to then start the same reform measures, so why do not we are embarking upon We reserve Manfezon, before the problem is compounded, and impossible solutions.
(*) Counselor for Economic Affairs-prime minister
Well my friends, there you have it. This is why I am in this investment and getting more excited every day. Great things ahead. Awesome news. Blessings, Steve
brichards513, on 16 Jul 2015 - 10:39 PM, said: SteveI - I have to admit that I am reading this article a little differently then it seems everyone else is at this point.
From my understanding (and to be honest - this was a difficult read for me and this article had way too much Arabish for me to fully understand) the author is telling everyone that the Iraqis are lazy (Only work 19 minutes each day and get paid for 8 hours) and most everyone wants to work for the government and not take a risk and work in the private sector.
Their dependence on Oil revenues has made everyone lazy. He then compared the Iraqi dinar to the Jordanian currency and how the Jordanian currency has been stable because they have a thriving private sector.
This private production was what is supporting the value of their currency. So he is saying that Iraq needs to do the same thing - to have private industry and production within the country to help "bring value" to the currency (Iraqi dinar).
In fact - it almost seemed like the author was arguing that the dinar exchange rate should have been maintained at 1500 dinar to 1 dollar instead of the current 1166 to 1.
He indicated that this "improved" exchange rate in the years 2003 - 2013 actually cost the country of Iraq $138 billion in lost revenue.
He said that this lost revenue would have been more then enough to keep the country from running a deficit as they did in 2015 and expect to do in 2016. If I am reading this incorrectly - please correct me.
I absolutely want the dinar exchange rate to go back to what it was prior to the imposed program exchange rate that they have now.
However, my interpretation of what this author is saying seems like he is not advocating the improvement of the exchange rate in our direction.
Please understand - I might be reading this all backwards. The author is speaking from the perspective of an Iraqi citizen - where I am looking at this from the vantage point as a speculative investor in the currency.
That difference of perspective may have me reading and interpreting everything that is being said totally 180 degrees backwards. I am hoping that is the case.
Maybe our resident FOREX expert - GPCarter or our attorney friend Maynard can weigh in on their take on this lengthy article. Hopefully their reading of this is totally different from mine.
Thanks for allowing me to state my perspective - but please convince me it is in error.....
God Bless! B-rich
Steve: I read this and I had many others read this and we all find it positive. It is what it is, so let it play out. Have a nice weekend. Steve