Post From Currency Chatter
Tlar replied to a lopster a few days ago...
This person who wrote above has little understanding of the facts. He/she believes like so many dinarians that there is 37 trillion dinars in circulation in Iraq and has based his/her assumption above on this misconception. The CBI website says that the CBI has "released" 37 trillion dinars which it has.
That is the truth according to the CBI but "Released dinars" and "circulating dinars" are two different things. 37 trillion dinars are out of the CBI. The number of dinars "released" since 2003 has nothing to do with the actual number of dinars in "circulation" at any time in Iraq.
Dinars in "circulation" is the only number that is important to our investment. A circulating dinar means a dinar being used in commerce day to day in Iraq. Most people including journalists in Iraq just report that 37 trillion dinars are out and make the mistake as describing these as "in circulation in Iraq" when in fact we know this is not true. They make no distinction between "released" and "circulating" dinars.
There is good reason for that. The CBI does not want anyone to know how many dinars are actually circulating in Iraq at any time and their website only reports the aggregate number of "released dinars".
"Circulating dinars" has been a closely held secret by the CBI ever since Iraq started dollarizing their society. They do not report this number on their website because if they did and we knew the real number of "circulating dinars", we could fairly well figure the true value of the dinar.
So how do we determine the number of dinars that might still be circulating in Iraq and where are the rest of the dinars that have been released from the CBI since 2003? We do have a few good clues to work with.
In January 2012 Saleh either had a slip of the tongue or he just screwed up while giving an interview.
He told us there were only about 4 trillion dinars still "circulating" in Iraq, while at the same time the CBI website was reporting that 30 trillion dinars had been "released" meaning there was about 26 trillion "dinars released" that were not "circulating".
Then in about August of 2014 the CBI made a decision to replace all the currency in Iraq with higher security features to protect the currency from being counterfeited.
They announced December of 2014 their plan to begin replacing the currency in Jan 2015 stating they had printed "5 trillion dinars" in all denominations. We can safely assume that they would have printed more than would have needed to make sure to not run out.
By the middle of 2014 the CBI had determined that 5 trillion dinars was more than adequate to replace the national currency which re-affirmed Saleh's statement to the press made in January 2012.
I think we can safely assume that this number 5 trillion was some percentage more than what was actually circulating because until a dinar is released from the CBI and begins to circulate it is not counted as a dinar that needs to be covered.
Also it is always prudent for the CBI to have and inventory of dinars not yet released to account for some possible future growth of M1. So although we can never be accurate as to the actual number of dinars circulating we can make some pretty safe assumptions.
In 2012 there were approximately 4 trillion dinars still considered circulating. The auctions suck in dinars daily. The dinars recirculate back out through government payroll and budgets.
This is the ebb and flow of circulating dinars. The auctions were taking in as much as 350 billion dinars a day while selling 300 million dollars average per day in 2014 and 2015 as Iraq continued to dollarize.
At their height, the auctions were bringing in over a trillion dinars a week as they replaced their circulating dinars with USD and paid for remittances, imported goods and services.
So we know that by the middle of 2014 that the number of dinars circulating must have reduced some number below the 4 trillion, by some percentage. That's where it gets tricky because it anybody's guess by how much and the CBI has given us no more clues.
What about the dinars that have been released that are not considered circulating? Where are they? You need look no further then you own safe of safety deposit box to answer part of that question.
Are your dinars circulating in Iraq. The answer is no. So all dinars held by speculators are NOT CIRCULATING DINARS. Neither is any dinar held in a bank outside of Iraq. Bank of America, Merrill Lynch, Chase all have dinars in their vaults as does many of the major banks world wide.
In addition countries around the world have dinars just like the United States. Companies that have done business with Iraq like International Harvest or the oil equipment supply companies also count themselves as betting in the dinar.
Remember in 2012 there were 30 trillion dinars released but only 4 trillion circulating leaving 26 trillion held by folks other than Iraq.
Why are these dinars out all around the world? Iraq after the gulf was decimated and in great need of hard currency to jump start their rebirth. The US had done a currency swap to help get the economy going.
We printed their currency at our expense which the on total printing cost our Treasury 80 million dollars. Although the US treasury will never report how many dinars it has or even admit to having any, we know that for every USD that was initially given to Iraq, our Treasury Dept received 3000 dinars, the then going exchange rate in 2003. We swapped billions of USD for dinars in 2003.
But much more hard currency was needed to fund an entire country like Iraq. So early on our government decided that even though Iraq was under heavy sanctions and on the OFAC list, that through executive order 13303 that the currency of Iraq would be legal for banks in the US and Europe to sell to their citizens. Very remarkable at the time considering Iraq was still on the OFAC list; In fact unheard of.
So in the early days of the resurrection of Iraq before they had oil to export, before they had any products to sell to raise money, they were allowed to sell their currency to raised hard currency. That is why there is now probably close to 33-34 trillion dinars released but not circulating.
Was this part of the plan from the beginning? Quite simply it was the plan. A way to refinance the start up from scratch a new democratic Iraq. Did it go to far? We have some indications that it did exceed the original numbers they had planned to let Iraq sell.
In late 2011 if my memory serves me, Shabibi appeared to have tried to stop or at least greatly reduce the amount of dinars being sold to speculators. He had introduced into parliament laws to stop large amounts of currency coming or going from Iraq.
He also ordered banks in Iraq to stop selling the dinar in large amounts to speculators, in particular the TBI. The TBI continued to sell discreetly to currency companies violating Shabibi's order for a few years, as there existed a cottage industry sell dinars to satisfy world wide demand.
So this again is a number of how much became too much that we don't have the answer to. But what effect will this have? I don't feel it will have much effect on the pricing of the dinar because non circulating dinars although important, are not as important as circulating dinars when determining value. I hope this is helpful to all. ~ tlar