Tlar & Members Reason & Rate Guesstimates Part 3
Tlar & Members Reason & Rate Guesstimates Part 2 link at end of post
TLAR: The CBI has only to cover "CIRCULATING CURRENCY" period. I have done an extensive study on what this means.
Depending on when his post was written and the true number of dinars "out of the CBI" which in no way is the number circulating, is one factor in determining value.
The problem here is he has no understanding as to what the difference between "CIRCULATING AND NON CIRCULATING DINAR IS". Mike came closest to figuring it out.
The currency you hold and I hold and people like us around the world is "NON CIRCULATING CURRENCY". Why? Because it is not accepted anywhere and you don't live in Iraq.
The dinar sitting in vaults around the world in central banks is "NOT CIRCULATING" either.
According to the IMF it too is not considered in this equation. What is considered by th IMF is "CIRCULATING CURRENCY" and that is the currency being used in Iraq whether in a bank account or otherwise as defined in Mikes post.
So out of the 35 to 40 trillion dinars let out by the CBI, how much is CIRCULATING still? The CBI won't publish that number but in Jan of 2012 Saleh let a little of the cat out of the bag.
He stated early in 2012 that there were only 4 trillion "circulating" which indicates that the rest is "NOT CIRCULATING". That was in the first part of 2012 and we know from the auction numbers that since then CIRCULATING DINARS have been reduced.
A good clue is they only minted 5 trillion in big notes in 2014 (250-25000), the intention of which was to replace all big notes in circulation left in Iraq.
We know they printed more than they would have needed to cover all notes that were circulating because banks always do this when replacing a currency or notes so as not to end up short.
5 trillion is a telling number. It says to me that in early 2012 when Saleh stated there were only 4 trillion left "CIRCULATING" he was right on or at the very least he had a close estimate.
So what can we gather from this?
We might assume that today we have less than 5 trillion dinar "CIRCULATING" and that the rest lie in investor hands such as you and I, and with central banks around the world and that this currency is not "CIRCULATING" and is not to be considered in what Iraq's reserves must cover.
This would affect what Iraq's currency is valued at exponentially IMO and it mutes arguments by Enorrste and the folks who truly don"t understand what constitutes the rules of currency reserves. Prove me wrong. tlar PS great thread. tlar again
Mally: But wouldn't the dinar we hold be accepted at any bank the minute they say so thus making it circulating? I'm under the impression all dinar is circulating once it leaves the cbi?
Someone's got to cover ours don't they, even if it isn't Iraq? This is where the conspiracy of all the out of country dinar being converted to oil credits by the country holding them always made some sense to me.
Even if the dinars become oil credits and no longer count against Iraqis money supply they're still converted to 40 trillion dollars worth of currency spread around the world, hard to wrap my head around that. Appreciate everyone's thoughts
Tlar: Another clue was given to us in the article stating they were only going to print 5 trillion dinar and that was very telling. They stated they were going to replace 2.7 billion in "CIRCULATION".
That was not actual USD as what fool would replace USD. So we assume by this statement they meant 2.7 worth of USD value of dinars that they figured were still circulating which is approximately 3 trillion , one hundred forty eight billion , two hundred million dinars.
Again this number represents a drop of almost 1 trillion dinars further supporting Saleh's statement made in early 2012 of approx. 4 trillion left in circulation.
They printed this 5 trillion dinars in somewhere about August or September of 2013, only revealing it in articles to us right after the first of the year in 2014.
They have slowly been replacing the currency ever since then on a planned obsolescence program. The purpose of this was to further secure the currency which was vulnerable to Iranian counterfeiting.
They were and still are introducing a currency that is secure and non counterfeit able but in no way were they increasing "CIRCULATING CURRENCY" as each new dinar put out, retired an old one.
So over the last year the CBI has been making sure that once the rate changes occurs , that no one, Iran in particular will be able to take advantage of this change. The currency has been secured. More later.
Tlar: Mally, quick answer - no. "CIRCULTING DINAR" isc slf dscriptive. It means dinar that is circulating. The minute it is international you wilol run to the bank and sell it who in turn will sell it to the Treasury Department to be held by them.
You won't buy anything with dinar in the US except under extraordinary circumstance. Therefore what you own is and will be non-circulating currency.
I am sure some will way in shortly disputing this so hang in there. This will get to be z very interesting thread because what I say next will depend on the outcome of the argument, is CIRCULATING CURRENCY WHAT IS TO BE COVERED BY THE RESERVES OR IS IT ALL CURRENCY EVER LET OUT OF THE CENTRAL BANK WHAT THEY HAVE TO COVER. Tlar
KJWayne: Tlar ,that makes perfect sence to me , Thank You! My government will take my dinar and exchange it for oil at some time in the future. The dinar that they took from me will be destroyed HERE in the USA!
Mally: Thanks for the reply. When I run to the bank to deposit my dinar and get dollars that's a lot of dollars being put into circulation out of thin air from the treasury then right?
It's trillions of usds worth of currency being entered into world markets over night one way or another. On my phone on way out for the night so I'll have te read and respond more later.
I've always believed that's what this unique plan was about, a big shot of money into the arm of the ailing banking system. Still tens of trillions is hard to reconcile. I look forward to reading this later
Tlar: Mally, Under your scenario the dinar you hold doesn't circulate. You have not spent it on anything nor will you ever actually spend dinars.
The likely \hood of you spending a dinar is almost nil since you don't live in Iraq.
It will actually go to the Treasury to be held as reserves covering our own currency or traded to a country like China to re-patriot USD..
You will end up with an electronic bank deposit and a small amount of cash in USD and the bank itself will be infused with both your deposit and with any fees they charged you as a profit.
The dinar remains non circulating as it rests first with you, then with the bank, then with the US government. In the short term it still is not circulating as it has yet to hit the street.
It has no velocity as it has bought nothing and probably will not be used to buy anything like a car or groceries etc. Circulating currency is generally considered circulating in the country of origin and its surrounding neighbors who use it in day to day transactions.
A currency is not considered circulating if it is not being used in day today transactions such as the dinar you and I hold, or the currencies "at rest" and non-circulating in a central bank..
The IMF makes a clear distinction between "currency circulating and currency not circulating" and what a reserve is intended to cover. Again I expect this to be challenged so hang in. Understanding the difference plays a major part in the determination of value. tlar
Diane: I just have a simple-minded reason for my guesstimate.... the dinar must be worth more than a dollar to get Iraqi's to switch from using the USD to the IQD.
That can only happen if the dinar is worth more than the dollar. So anywhere from $1.01+ is my guess... no specific number in mind at all. Then it can float up from there.
I suppose Iraq could insist their people use IQD only.... if that's the case, I have no guess at all.
DreamWeaver: Since early 2013, I've believed Iraq will delete the zeros, but exact rate varies between $.86 - $1.17 because CBI could accomplish this a few different ways.
Up until June of 2014, I adamantly believed it would be a rate of $.86. Why? Mainly because 2013 budget came out in dinars and dollars, and--for the first time--included a rate of 1.16 ($.86).
This didn't necessarily solidify my belief, as what nailed it down for me--as far as $.86 RV--was something included in 2014 budget.
2014 Budget was also in dinar and dollars, with a rate of 1.16 ($.86). But, the 2014 budget also included a disclaimer from the committee stating, basically, they weren't responsible for the accuracy of the budget figures being based on a 1.16 rate.
When I read this disclaimer, being former court reporter and always looking for meaning of anything included--or excluded--in verbiage, I thought: "Why would they have a disclaimer in 2014 budget about accuracy of budget figures, based on 1.16--and not have had that same disclaimer in the 2013 budget?"
My thoughts drifted to our belief that CBI intended to RV in 2013 when Turki promised the Iraqis a "surprise." Our conjecture was that RV was the intended "gift" government would bestow on Iraqi people at their feast, as part of their religious holiday tradition.
So, back in Fall 2013, it appears that CBI intends to RV--not only through Turki's statement, but there were several articles stating delete the zeros would occur in 2013, with October being specified in one particular article. 2013 Budget includes 1.16 exchange rate. No disclaimer about accuracy of figure.
Then, 2014 budget is prepared with same 1.16 rate, with disclaimer added. Why was this disclaimer added? IMO, the answer is that the committee is confident--because CBI told them--that the rate will be 1.16 in 2013; but, they have no idea if that rate will still be applicable in 2014.
They added this disclaimer to protect themselves because they are LEGALLY responsible for providing an ACCURATE budget. The committee isn't certain that 1.16 figure will be accurate for 2014--as committee is only going by what is intended in 2013.
They probably anticipated that 1.16 figure would be different in 2014 because of free or managed float.
I'm never one that reads anything into articles, etc--but, I've found that oftentimes the truth is right there in front of your eyes, if you are able to read between the lines and discern the meaning.
So, this is how I've read between the lines as far as rate--though it's still a range from $.86 - $1.17.
I'll be thrilled if my interpretation--using logic, analysis and intuition--doesn't prove out. $3.+ is just fine by me, y'all. :D This thread is darn interesting. Much appreciated. Best thoughts everyone. ~ DW
Jb: DW, what I don't understand at all is the fact that there are 40 trillion dinar out there and how in heck can they just say one day, ok, our money is now worth x amount. How can any country pay off all the dinar holders with 3 dollars. that is more money than there is money. isn't it?
totally confused about how that is going to play out. Even at 50 cents, that is still a lot of money to come up with. Maybe I'm just stupid because I'm sure there is a logical reason. Am I right about 40 trillion or is it 4 trillion? HELP!
Mcduff82 D W ,great analysis ,
Mike: I've always understood circulating currency as all coins and bills printed that haven't been destroyed or has fallen apart, see below:
Money supplyM1-A: Currency plus demand deposits.
M1-B: M1-A plus other checkable deposits.
M2: M1-B plus overnight repos, money market funds, savings, and small (less than $100M) time deposits.
M3: M-2 plus large time deposits and term repos.
L: M-3 plus other liquid assets.
Money SupplyA measure of the total amount and value of money in an economy. There are various ways of calculating the money supply. The most conservative includes only currency in circulation and instruments that can be converted to currency on demand (e.g. the amount in a checking account).
Other calculations are much broader and include comparatively illiquid assets, such as money market funds. Central banks control the money supply in their own countries. See also: M0, M1, M2, M3, M4.
In monetary economics, circulation refers to the continuing use of individual units of a currency for transactions.
Thus currency in circulation refers to the total value of currency (coins and paper currency) that has ever been issued minus the amount that has been removed from the economy by the central bank.
More broadly, money in circulation refers to the total money supply of a country, which can be defined in various ways always including currency and also including some types of bank deposits.
Here's an example of the US dollar how much is in circulation inside and outside the country.
Total currency in circulationIn 1990, total currency in circulation in the world passed 1 trillion USD. After 12 years, in 2002 this figure was 2 trillion USD, and in 2008 it had increased to 4 trillion USD, broken down by country as follows:
European Union – 1035.2 billion USD, 24.30% of world total
USA – 850.7 billion USD, 19.97%
Japan – 762.4 billion USD, 17.90%
China – 492.3 billion USD, 11.56%
India – 140.3 billion USD, 3.29%
Russia – 110.8 billion USD, 2.60%
UK – 87.5 billion USD, 2.05%
Canada – 43.8 billion USD, 1.03%
Switzerland – 40.3 billion USD, 0.95%
Poland – 37.7 billion USD, 0.89%
Brazil – 37.3 billion USD, 0.88%
Mexico – 34.3 billion USD, 0.81%
Australia – 32.4 billion USD, 0.76%
Other countries – 554.9 billion USD, 13.03%
So, for me, Iraq has stated they have 40 trillion, in circulation, throughout Iraq and the world, and that's their financial liability. Can Iraq's current reserve cover this amount?
Sure, 40 trillion dollars is roughly $40 billion dollars, they've got that covered with their reserves. So the key is, how much has the CBI removed from that 40 trillion dinars?
ith a 1-1 rate increase Iraq would have to, in my opinion, bring the money supply/circulation down to 500 billion dinars. That's our money and anyone who holds physical dinar.
Iraq cannot assume that none of those dinars won't make it back to their country, how many would leak back in as dinar as investment?
I know I plan on investing in Kurdistan after the RV, and I'm not turning my dinar into dollars only to change it back to dinars again to buy stock.
I'm going to open a dinar denominated account and go from there. If someone else can find something that explains circulating currency, please bring it, everything I've read states that all physical currency counts as circulating, no matter what country it's held in.
Here's the links to the two above references.
" We are all born ignorant, but one must work hard to remain stupid " Benjamin Franklin