RV and Float, Removing the Confusion
I realize that no matter how clearly I write this the confusion will continue. So, drop whatever is confusing you, read, and learn.
Nothing has changed. The plan of action has not changed. The plan of implementation of the Dinar has not changed. All this huge whirlwind of confusion that is taking place right now about a floating Dinar has not changed anything, period.
There are so many issues and there is so much absolute confusion out there in just the last couple of days that it is going to be difficult to sort this out so I will just start.
There has always been only one plan to introduce the new Dinar into the Iraqi economy. Only one, period. People, stop dreaming up other stuff! The plan was and is to de-dollarize the economy by replacing dollars with Dinars over a period of time and then let the Dinar seek its own value on the international market by the normal means, i.e., to let it value itself up on the foreign exchange markets. That's it. There isn't much more to it than that. I mean, give me a break here. You act like you have never heard of floating a currency before! You act like this is big news. It isn't.
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In order to make it feasible and attractive within the domestic Iraqi economy the Dinar needs to value domestically at about parity or just above parity with the currency of circulation now which is the dollar. Is that difficult to understand? Why? Because the local economy needs to remain as stable as possible and then as local confidence builds and the value of the Dinar goes up the people learn to trust the banking system and have confidence in their new economy.
Now to a new topic of complete confusion and consternation, the so-called, "facilitator". Yes, folks, somebody or some firm or some banking institution has to guide the introduction and rise of the new currency. What on earth do you think? Do you think that it is just thrown out into the wind and everything somehow turns out just fine? Come on, use your heads! This process must be guided and it has always been part of the same plan, the original plan, and the only plan to introduce and value up the new currency for the domestic economy of Iraq and its regional rise to significance, not to mention its rise in importance as a new reserve petro-currency. Yes, petro-currency! (I just coined a new phrase in case you didn't notice.) Because the new way of conducting petro-biz in the world is the allow several new petro-currencies to replace the old petro-dollar with a new and powerful group of petro-currencies that float against one another thus establishing their relative purchasing power.
It is going to get more complicated so just hang on. And, remember, stop inventing scenarios that never existed and do not exist now. Please!
The value of the domestic Dinar is NOT THE SAME as the value of our Dinars which we hold OUTSIDE of the domestic Iraqi economy. The entire idea that our value must be the same as the rate established by the facilitator at introduction, etc. is NONSENSE! Why? (I have explained this so many times that it makes my head spin to do it again.) Here is the very simple reason: the fate and destiny of our physically held petro-Dinars is that they will be bought up by our treasury for later redemption against delivery of oil at about $33 per barrel over a long period of time, period.
It's a treaty, a done deal, the spoils of war. That's all there is to it folks, end of story. Therefore, the banks and other purchasers of our petro-Dinar look at them as investments. They will buy them up and then re-sell them for a higher amount and they will eventually be held as already described. On the way up through the financial system they will re-hydrate the economy with liquidity that will be available for normal commercial purposes.
Therefore, you have the best of all worlds here: you have a domestic Iraqi RV as set by the facilitator about about $1, you have an upward float over a specified and controlled period of time so that the Dinar can value up on the international markets, and you have a completely independent market of physically held petro-Dinars held by petro-Dinarians who will sell their notes into the system at a higher value because they will be worth, in reality, $33 each at the governmental level for the purchase of oil at about $33 per barrel.
Now the complete confusion will be begin again. Why? Because so many of you have zero understanding of the most simple economic concepts in the world. You confuse definitions and imagine all kinds of scenarios that do not now and never will exist. For instance, somebody tried to compare the opening value of the Dinar at 10 cents which is the way it happened for Kuwait. That's when the confusion began! It was a COMPARISON, not a statement of fact. But you people can't seem to get it right. Examples are examples, not facts. Read more carefully.