The economics of this scenario look like this, using the exchange of a 10,000 IQD Note with a two-tier 2% bank exchange spread as an example:
1. Mr. & Mrs. X get $9,800 credited to their non-interest bearing checking account.
2. Bank Y gets a $10,000 credit to its Federal Reserve account, and by adding the $200 profit to their capital account, allows them to increase their lending cap by $2,000 under the 10% fractional banking model.
3. The Treasury gets $3,500 in estimated taxes in the quarter after the exchange, because Mr. & Mrs. X 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).
4. The Feds designated agent, at some point, orders $10,000 worth of oil from Iraq. Payment will consist of a 10,000 transfer from the Feds foreign currency reserve IQD account to the IRAQ Oil payment account at the CBI.
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 dont want USD in their foreign currency reserves.
5. The $10,000 order is filled with 200 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 $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 – .35)
6. The transaction is completed with the Federal Reserve exchanging foreign reserve credits which are equal to 10,000 IQD (which had a net acquisition cost of $6,500 USD) for 200 barrels of oil (which has a net cost to produce of $130 USD.
Simply put, it cost Iraq $130 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 $10,000 worth of oil for a net cost of $6,500.
Thats 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.)
Now lets really stir the pot by:
a) Having the DFI ($280+ Billion USD) plus other frozen assets (estimated at $100 billion) turned back to Iraq and added to their foreign currency reserve, bringing it up to $430+ billion USD.
Then change the current fractional IQD reserve requirements of 100% to 15%. That just raised the total potential money supply value to $2.8 Trillion (430 billion/ 15), while at the same time the total physical IQD in circulation is being reduced by removing the large bills with the 3 zeros.
c) Also execute the plan Iraq 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.
d) To add a little more intrigue have the CBI continue to use its 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.
We leave it to your analytical ability to determine how high of an RV exchange rate IRAQ can really support.
Tlar: All of the above thoughts on the dinar are reasonably accurate as of about 2009/2010. Since then the reserves are through the roof and the dinar in circulation in the middle east has been reduced to not much left through dollarization.
When the CBI releases the new rate, Iraqi's will want to start using the dinar again and will take the US dollars they have been using in day to day transactions back to the bank to swap out for dinars.
Using the rate of 1 to 1 for the purposes of this discussion, the bank would receive 1 dollar for each new dinar they put back on the streets.
Their reserves would be flooded with USD as the dinar went back out and each dinar put would be covered 100% by the dollars coming in.. The dinar left in circulation at the time of this change would remain in circulation. The CBI would not have to buy their own currency.
In the US the currency you and I hold will be bought and paid for buy the Treasury. Each dollar the Treasury would spend to do this would net them a massive return.
The Treasury after all is said and done will buy a dollars worth of dinar for approx 54 cents netting and instant return of 46 cents. That is the taxes (36.9%) and the Obama health care tax (4%) plus they will charge the bank for that transaction and that will be passed onto you when you sell you dinars.
(2-4% best guessitmate). So the government will instandl be guarranteed to makey between 46 and 48% on each dinar they buy.
Last year the congress passed a law that states for the first time in the history of the US, the Treasury can use its foreign currency reserves to pay down debt.
I thought the law was strange at the time and thought it definitely tied back into the dinar. So this law opens the possibility for the US to trade dinars and receive back the Treasury bonds or cash from countries who feel they are financing our debt or swimming in US dollars. As debt is reduced the value of our own currency would be strengthened.
If you will think of it this way it makes more sense. The world economy is fragile and sinking in the weight of its own debt. You hear this everywhere now. You hear it from you car radio, billboards , television and news outlets all saying our country is being destroyed by the debt and that our way of life is unsustainable.
That is only partially true. If the cost of servicing the present debt now around 17 trillion dollars was gone, this country would once again be on a solid footing at least until our government spent us back into the whole.
Those would be the choices of future generations but we could get back into shape again.. Something must happen to turn this around. But the world is on the brink of no return.
Just servicing this worldwide debt puts everybody further and further behind and the debt itself is continuing to grow because the principle is not being reduced. There simply is no way out of this trap. We need to look no further than the US to see what's happening.
Today pundits talk about the debt growth as if it is the weather. "The national debt growth has slowed a little in June verses May, but it is expected to accelerate once again as we go into August."
No matter how you spin it the debt continues tio increase to the point we have all become numb to it thinking this is just the way of life. You can only sustain deficit spending for so long before its effects will rare up and get you.
Historically no country has lasted long printing money with little to no backing to sustain their way of life. The clock continues to tick away. That clock needs to be reset or something will eventually break and the whole system will come down crashing down.
The world needs a new class of asset to fix this. Something that is justifiably worth the value while at the same time pretty much spread throughout the civilized countries. Think about it.
If you think about it there is nothing else but the dinar. If the US is truly in possession of 5-7 trillion dinar, we will be able to buy the debt back which will juice the world economic system.
Cynthia Legaurde, head of the IMF gave a very interesting speech in January basically saying 2014 will see the world start 7 good economic years after having just been though 7 bad years.
If you look at the world today, that is impossible task unless there is some kind of a major change coming.
I believe just as I did back in 2008. The dinar has the potential to be the catalyst to turn it all around and that's exactly what I believe Bush told the G-8 when he met with them in 2008 to give them the bad news that all the paper they had bought backed by US real estate market was bad and non-performing.
The notes were no good and the real estate market was poised for a major crash. That was the tunnel down that we have all lived through for the last 6.5 years. I see the dinar as the light at the end of that tunnel. tlar
Tlar: Taxes are 39.6% not 36.9 (typo). What I wrote above is admittedly just a short synopsis of how I think the dinar plays a big part in the next phase in world economics.
It would take a book to answer this at the factual level. It is and has been my specualtion as to how the G7 is going to set the world economies back on track. IMO this is just a first step to a more secure world economy, not the last step.
This must take place and soon otherwise the second step makes no sense as I am speculating also the second stepo is planned for Jan, 2015. Currencies everywhere have to be solidly backed and IMO it has to start with the dollar because the dollar is the currency reserve of the world.
We are a debtor country as is Europe and our debts are though of worldwide by almost every smart economist as out of control. Likened much to a frieght train heading to a brick wall.
China is the main creditor and China has become fearful of the dollar as has India as has Russia. That fear will spread. Some of it is geopolitics but it all starts with the sound economics.
The dollar is not sound. The plan to fix the dollar starts with the dinar. The plan to fix the world economy starts with the dollar. If we don't at some point fix the dollar and the dollar caves in value, every country out there will be affected.
That's what the IMF has been trying to fix in conjunction with every major institution and if you understand and believe this, then it is not too difficult to fill in the blanks on why this experiment in Iraq has to work and has to be successful.
If I am right and I believe I am, it also has to be done soon or the growth of our debt most likely will outgrow the plans ability to fix it. tlar (sorry Blue - you have the best color)
Tlar: For your interest. Barney frank caused this mess the world economy is in. He has never been called on it so I will do it here. He was a powerful life time leading Democrat in the house over Finacial Services. He took what was intended to be a piece of legislation that Clinton passed just before he left office, and prostituted it for personal reasons.
This legislation was intended to help minorities and low income families get affordable housing. Barney Frank took this bill intended to loosen the regulations to assist families in buying homes and used it to muscle Freddy Mac and Fanney Mae to buy bad loans being made by the mortgage industry and the banking system.
He did this because his boy friend who work at either Fanny or Freddy was making tons on money in commissions. George Bush met with Barney his first year in office and told him to stop this madness. Barney accused Bush of not liking black people or poor people and told him to get out.
Bush needed the Democrats on board with his 2 wars against Iraq. So he chose not to fight the battle at that time and that time turned out to be many years..
George Bush is also at fault because he did little to stop Barney based on the politics of the day and his need for democrats to support the war. The net result was millions of loans made to people that should have never been made. We have all heard of the maid making 30 thousand dollars being qualified to buy a 300 thousand dollar home who later sued the company that made the loan blaming them.
She couldn't make the first payment yet her loan was bought and funded by Fanney or Freddie based on their instruction from Barney. That is admittedly the worst but symbolizes the mess the lending industry found their selves in.
Everything that was written up as a mortgage was purchased by Freddy and Fanny whether it was a good loan or not on the instructions of the man who's job was to implement it, Barney Frank.
For years this was allowed to go on and for that I blame Bush. Barney retired in 2012 and for the rest of his life this lifetime politician will receive his good retirement for a job well done.
Barney caused this mess and almost caused a world economic catastrophe all because he wanted to help his gay boyfriend become rich which he did. Some of you will take offence to what I have just said but so be it. I was mad then and I remain mad now. IMO this lifetime politician should be doing time for what he did, not retired in luxury at the tax payers expense. tlar
Member of the U.S. House of Representatives
from Massachusetts's 4th district
January 3, 1981 – January 3, 2013
Preceded by Robert Drinan
Succeeded by Joseph P. Kennedy III
Chair of the House Financial Services Committee
January 4, 2007 – January 3, 2011
Preceded by Mike Oxley
Succeeded by Spencer Bachus
Member of the Massachusetts House of Representatives
from the 8th Suffolk district
January 3, 1979 – January 3, 1981
Preceded by Francis Dailey
Succeeded by Thomas Vallely
Member of the Massachusetts House of Representatives
from the 5th Suffolk district
January 3, 1973 – January 3, 1979
Preceded by Eliot Wadsworth
Succeeded by Daniel Pokaski
Born Barnett Frank
March 31, 1940 (age 74)
Bayonne, New Jersey, U.S.
Political party Democratic
Spouse(s) Jim Ready
Alma mater Harvard University
Religion Jewish atheism
Barnett "Barney" Frank (born March 31, 1940) is an American politician who served as a member of the U.S. House of Representatives from Massachusetts from 1981 to 2013. A member of the Democratic Party, he served as chairman of the House Financial Services Committee (2007–2011) and was a leading co-sponsor of the 2010 Dodd–Frank Act, a sweeping reform of the U.S. financial industry.
Frank, a resident of Newton, Massachusetts, is considered the most prominent gay politician in the United States.
Born and raised in Bayonne, New Jersey, Frank graduated from Harvard College and Harvard Law School. He worked as a political aide before winning election to the Massachusetts House of Representatives in 1972. He was elected to the U.S. House of Representatives in 1980 with 52 percent of the vote.
He was re-elected every term thereafter by wide margins. In 1987, he came out as gay, becoming the first member of Congress to do so voluntarily.
From 2003 until his retirement, Frank was the leading Democrat on the House Financial Services Committee, and he served as committee chairman when his party held a House majority from 2007 to 2011.
In July 2012, he married his long-time partner, James Ready, becoming the first member of Congress to marry someone of the same sex while in office.
 Frank did not seek re-election in 2012, and retired from Congress at the end of his term in January 2013
 However, Frank had expressed interest in serving temporarily in the United States Senate after John Kerry had been confirmed as Secretary of State but was ultimately passed over for Mo Cowan
Rainbowrow: What about the personal responsibility of the persons taking out those loans? It's just easier to blame a politician than to admit poor judgement?
Was it really necessary to play the "gay" card? I'm sure Laura Bush benefited financially because of her husband's role in politics-don't see that mentioned. Just my take.
Scooby Read the http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
and explain how this was not the cause of the meltdown. A lot of players are to blame including both parties.
Tlar: Rainbow, they are at fault also. George Bush is at fault as well as the mortgage industry but the one who supplied the incentive to all is Barney Frank.
The system that has been in force for decades broke down based on this mans protityuting Clintons well intended legislation.. Mortgage companies qualified unqualified people because Fanny and Freddy would buy the loans no matter what they turned in and they could make money.
It was a free for all in those days. All someone had to do was have a desire to get a house loan and apply. I did not mean to use a gay card as you have suggested but that is an instrumental part of the reason Frank did what he did. He did it because his boy friend was making money hands over fist. ‘
I have friends that are gay. Please don't consider this is a gay bashing or a slur against democrats or republicans because that is not its intention. Frank's reasons for doing this insanity was because his boyfriend was getting rich period.
‘To do what Frank he did was pure insanity. This is the reason he did this and I implore you to understand that. I am not anti-gay I am not anti Democrat. I am not anti Republican. I am anti individuals who are responsible for this mess that almost wrecked the system, who have never been held accountable for their role it it only. tlar
Tlar: Rainbow lets take the gay out of the story. Lets assume congressman Frank is straight for a minute. Substitute the word girlfriend everywhere you see boyfriend. Re-read the story I've told.
The story still stands and what he did was an abomination to the nation and to the citizens of this country. He should have been called on it but instead he was assigned to the committee responsible to investigate what happened. That's why we now have the Dodd- Frank bill. tlar
Preacher Man: I dont want to get started on, the Dodd-Frank Bill, But....I have been a home builder, going on 34 years, to see what a home buyer has to go through to get a loan theses days, is un-believeable, maybe thats why this year, I am sitting on about 3 million dollars worth of properties,
I knew 2 years ago, I should of went into, low income housing, Tlar, you are correct, all one has to do is look at the ones that profited,, I can only see 2 things to pull me out of this mess, as Forest Gump said, About all I have to say about that subject.
Rissas dad: Take it easy everybody. We are at a point in this that hasnt existed before. This new government looks to be on track and hopefully we will get what we all hope for soon or in the near future. There is no point bickering over who did what and why as far the mess the US is in, or the reasons why those persons did what they did. Yes the world economy needs fixing and the dinar is part of that, but can we look forward and not back?
DreamWeaver: Not bickering; Discussing actions that brought us to this threshold. Big student of history and I see no reason another debacle will not occur.
Also,I will be living in that future .. not blindfolded but as someone that will try to prepare a bright future. The past is the future if nothing changes. And I do not consider getting saved from the mess created as learning from it unless they change their mindset and I see no evidence of that.
I personally will be shocked if reserves are used mostly to pay down debt. Shocked. Having a law on the books doesn't mean you will use it. If you don't act like debt is an issue, why would a windfall change your mind?
Seen lots of people get saved from credit card debt by a windfall or a loan, only to be right back in the same situation a few yrs. later. Not get saved and go bankrupt. Jmo anyway. Not worth this darn smartphone I am trying to post on. Lol. Help Mr. WIZARD....
Rissas Dad: DW, I follow history too but as far as the dinar and today moving forward is all that concerns me. Neither you nor I or anyone else on this board is responsible for legislation that will change things for the better more than voting for someone we feel will try.
As far as learning from my own mistakes once wealth comes is up to me and no one else. If I blow it its my fault, not some bank who allowed me to do something I shouldnt have.
As far as reserves paying down debt, we have no control over what they do. None.
You dont need me to tell you as its apparent that you are bright enough to invest your money well in addition to holding on to as much as possible in the event of a economic meltdown.
I am considering relocation out of the country to tell you the truth. No doomsday prepper here, just would like to try somewhere else for a while. All economies are connected, I know but somewhere more lightly populated would be better IMO. But thats beside the point.
There are always bad times and good times in economics. It ebbs and flows, cyclical. All you need is to be smart, aware, and protective. Ride it out.
Anyway, wasnt implying you were bickering. Didnt read your post that you deleted. Was more remarking on Tlars strong statement which was taken the wrong way IMO. I dont want him to stop posting current dinar-related news, especially at this crucial time, over some words which have no bearing on the state of the dinar today.
Mainelorax: would respectfully disagree that we should look forward not back. Lack of accountability or consequences is what got us in this mess to start with. Those that screwed up should be called on it, rather than given the special treatment and protection that comes with being an elite. If it's against the law for me and you, it should be against the law for everyone including the president.
As for the gay portion of this thread, Blue and Tlar, I understand where both of your hearts are in this and I think Tlar's response was spot on in explaining why it wasn't really part of the issue.
I can, however, see where the comments could become a focal point in such an emotionaly charged discourse. I have to admit, I put too much emphasis on it on the first reading until I thought about how big a part being gay has played in Frank's political career.
If he's going to make such a big deal of it, then it's a big deal and can be mentioned in context. Sounds like the big, red hot button got pushed by accident (and I don't mean the Staples easy button).
Oldwazhisname: Tlar, one of the main points of your synopsis is that we can use foriegn currency pay back our debt (and not USD as a defined currency of settlement of such). I'd like to see some solid links to that tidbit so we can make sure that Dinarland hasn't twisted one thing into another for convenience sake to justify our belifs.
Tlar: old, its not an article, its a law. I will let you do the research and prove me wrong. Start with the library of congress. The law was passed last year.
It is a law that for the first time since our country was formed in 1776, allows the US Treasury to use foreign currency reserves to pay down debt. Quite honestly I don't have time right now to do the research for you. Tlar
Laura: Politics....control the outcome of the dinar.....politics...controls the world......For now...everyone breathing is...a part of the world....not speaking in the Biblical sense here.
How I hate politics, but have learned...must learn about them...because what I DON"T KNOW...can harm myself, and the future of those I love. Rock on super brains!
JTDinar: Yes thanks guys and gals, good stuff. Still don't see any response to the $3.71 rate and the irony of it popping up previously with a couple of numnut gurus that stated it pre-Tlar.....other wise we would all know it was ripped off.... --Jtdinar still here...still waiting
Rissas dad: Jt, I'll take Tlars explanation at face value. He explained how he got that in detail, we'll see. But always hope for the best and expect the worst. Im in it for the long haul no matter what, the usual dinar pep talk stuff, blah blah.
BlueyesinLevis: Street asked me to post this.. as his friend.. I will.
-Blue, this is well written and as for as B Frank and his roll of bringing down the real estate market and causing the crash is accurate. I would like to add a few things though.
-1st the mortgages were call no documentation mortgages or (no docs) for short, this meant that you could aply for a mortgage without having proof of income, no credit check, no down payment, all you had to do was pay the outrageous closing cost and even that was built into the mortgage and lastly if the average interest rate was 5% than a no doc rate would be about 6.5 or 7%..
-Frank uses Acorn to pressure Bush not to sell of Frannie & Freddie as Bush knew that something was amiss with the mortgage industry and Frank testified just 6 mths before the mortgage crash that Frannie & Freddie were solid with cash and had no problems..
Frank & the CEO thief from Country Wide were involved in setting up a bank called Sun Trust that bough failed mortgages from F & F at pennies on the dollar and here is how and why they did that…
All of those mortgages that the banks made were backed by F&F (our government) as a guaranty to the banks by 80%.. Suntrust would buy up the defaulted mortgages at 30 to 40 cents on the dollar from F&F own the property and then get paid 80 cents on the dollar from the gov because of the guarantee and then sell the properties.. this was a huge fleecing of our government..
-They scammed billions not millions from this plan.. B frank and his cronies from Country Wide and Acorn should been jailed on racketeering and mortgage market manipulation…
BlueyesinLevis: I understand it is partly politics.. but it also the crooked banking industry... and it ruined lots of lives...particularly my parents retirement.
-It's PERSONAL for me. It ruined the economy... and many of us landed in the gutter. When I read what JT is going through.. I always wonder where he might be if the housing market bubble had not been manipulated.. causing this HUGE recession that we are STILL not recovered from....
-Sorry it is economics.. more than politics.
MD'Shea: Without crooked politicians the feak-o-nomics would not have happened. By no means is the study of economics an exact science, but the manipulation of the mortgage industry by politicians became an art of deception in fleecing the American tax payer
Tlar: TUCH'E. Well said street. You are a premo historian. Let me add this. Fanny and Freddie packaged millions of these bad loans comprised of billions and billions of dollars of real-estate, and commissioned folks to sell these packages around the world.
That is how the disease was spread worldwide. Everybody did this with their eyes wide open from the mortgage companies to the guys who sold these bad packages backed by property in the US to overseas markets.
By the time they were determined to be non-performing loans within the packages the damage had been done.
None of this would have happened had Barney Frank not been in charge of the House Finance Committee, the group charged with implementing this legislation, and had he been responsible and not done this to impress his "spouse", the world economy would look a lot brighter today.
No bank or Mortgage company would have dared pass these loans in the first place because there would have been no place to sell them.
But immediately realizing Fanny and Freddie had to buy these loans on orders from the "House Finance Committee", the bankers and mortgage companies became greedy.