Today:
So we see this rate fluctuate now to 1,200 but traded in to the CBI for less in exchange for US dollars. This takes place in the money auctions. Why is the dinar exchanged this way?
It gives the banks an incentive to bring in the 3 zero notes to the CBI in exchange for US dollars. Why is the demand for the US dollars so high?
There is now a higher demand for the US dollars but we must go back to the 2012-2013 timeframe to understand why. During this period the CBI , under the direction of the presiding governor Dr Shabibi had created a void in the currency in Iraq. Part of the plan from 2009 – 2013 was to collect nearly 75% of the 3 zero notes and get them out of circulation. The plan then was to fill this void by introducing the newer lower denominations with a value more than the US dollar, thus creating an incentive to hold dinar over US dollar.
So we see this rate fluctuate now to 1,200 but traded in to the CBI for less in exchange for US dollars. This takes place in the money auctions. Why is the dinar exchanged this way?
It gives the banks an incentive to bring in the 3 zero notes to the CBI in exchange for US dollars. Why is the demand for the US dollars so high?
There is now a higher demand for the US dollars but we must go back to the 2012-2013 timeframe to understand why. During this period the CBI , under the direction of the presiding governor Dr Shabibi had created a void in the currency in Iraq. Part of the plan from 2009 – 2013 was to collect nearly 75% of the 3 zero notes and get them out of circulation. The plan then was to fill this void by introducing the newer lower denominations with a value more than the US dollar, thus creating an incentive to hold dinar over US dollar.
Well we all know this plan did not get executed and there was no RV. So this messed up the process.
So the Iraq economy could not continue without a currency for long. They had to fill this currency gap but did not want to have to issue more 3 zero notes since they had collected them already and could not go back to this process. So what could they do?
The decision in 2013 was made to infuse US dollars to fill this gap. So this void is currency had been filled with US dollars not the lower dinars as was planned. Today this continues by these daily auctions where the banks (because of the demand for US dollars due to purchasing power being greater than the 3 zero notes) take in the 3 zero notes from the citizens and buys US dollars from the CBI. But remember there was only 25% of the 3 zero notes remaining in Iraq. So how much longer can they continue this process because soon there will be almost no remaining 3 zero notes to collect and use to buy the US dollars to meet this demand for them? How will they replenish the money supply?
Where does the CBI get all these dollars from? They get them from 1)the US in exchange for the 3 zero notes. The US is not about to just five the CBI FREE money. 2) They also get them from the CBI reserves from oil revenue. Remember oil is still sold from Iraq for US dollars. So this money makes it way to the CBI and form the CBI it is allocated to projects via the budget. So now the CBI is tapping into these reserves of US dollars just to keep currency on the streets, something they never intended to do. Can you see a problem here?
So in the article above the finance committee is telling us there is a dangerous cycle occurring since 2013 where nearly 80 million US dollars is leaving the CBI weekly due to these auctions. Every time the parliamentary finance committee make everyone aware of this, the CBI comes out with articles telling everyone it is okay since they have nearly 60 billion US dollars in the reserves and can last up to 6 months of paying Iraqi debts.
Really? Do you think this is dangerous even to think on running a country on these terms?
Remember there is not much oil revenues now replenishing these reserves since the price of oil keeps dropping. It is now $35 a barrel but takes almost $10 a barrel just to extract and process. So can you see the problem the CBI will soon be in (is in)? How long can they continue the practice of these auctions? The US announced too is now reluctant to fund anymore US dollars to Iraq and so this exacerbates the situation even more since the flow of US dollars is not solely from the oil revenues. Can you see why they desperately need to get off the US dollar and it is killing their economy?
Remember also the CBI reasons that these auctions are beneficial and are taking yet more of the 3 zero notes off the streets, also part of the overall currency reform plan. Remember I said the banks must buys US dollars from the CBI using the 3 zero notes.
There is also another issue to consider. The CBI must now stockpile the new lower denominations in their bank vaults in preparation for the conversion someday to the newer lower denominations. There is no FREE money from the CBI. So how do the banks get this currency?
The banks must pay for these lower denoms and a new law went into effect in 2013 (remember?) that forces the banks to hold so much of the lower denoms. So how do they pay for them?
The banks pay for these new lower denoms from the CBI using US dollars.
But now most of the banks have their vaults already filled with these new lower denominations. So this process too is completed. Oh- but remember these lower denoms are worthless and the banks can’t do a damned thing with them until they have some real value. Can you see the dilemma ?
If you know anything about banking the banks want to make a profit and that is why they are in existence. So holding all this worthless currency and tying up so much of the US dollars is not very advantageous and caused a serious liquidity problem since they don’t have the US dollars to loan out and use for banking business.
Do you remember we kept hearing about this liquidity problem? This the major reason why. Money has to circulate through an economy to make it robust. Remember too they are now running the economy mostly on US dollars but the banks just tied up much of their liquidity in these new lower denominations.
So another dilemma- the banks are forced to exchange the 3 zero notes to the CBI for yet more US dollars to fill this liquidity gap as I mentioned above. This is how the auctions are run. Thus the reason why it is so hard to get off the money auctions. They need the US dollars to keep the economy rolling. Businesses need capital, citizens want to buy homes, etc..They get this money from the banks. They need money to loan out.
It was told to me that some banks did begin loaning out some of the new lower denominations in the northern regions of Kurdistan but this was abruptly put to a halt by the CBI. This does not mean much other than to tell us the amount of pressure the banks are under pressure to realize some monetary gain (profit) out of this new money (the new lower denoms) they are holding in their vaults. I know there was wide rumors they are distributing the lower denoms. Really? So let’s put this rumor to rest. Can we? Seems just more rumors that are not verified and investigated buy some of these ignorant intel “gurus”.
So another dilemma – the banks are buying the US dollars at more than the IMF program rate since the demand for US dollars is do high they are willing to pay more for them. This inflates the value of the US dollars to the Iraq dinars. Can you see the problem?
So what do they do?
At some point they MUST STOP THE AUCTIONS since 1) there will not be enough of the 3 zero notes in circulation to pay for the US dollars, so how will they buy them? 2). At some point the cycle must end since the banks will not want to keep all this capital tied up in the lower denominations for forever.
So these problems are recognized and there is a plan.
The CBI has told us they will begin scaling down the amount of US dollars sold in the auctions and then eventually stop the auctions altogether. They told us this event is planned for by the end of December 2015.
If you have been watching the auctions you can see the amounts are have been much less as the scaling process had begun months ago.
How does the launching of the 50k notes in early November fit into all this?
Remember the 50k notes launched already did draw in some of the 3 zero notes and I believe this was intentionally done to quicken the pace of the elimination of the remaining 3 zero notes in anticipation for the December deadline. I believe the plan was to continue to push out the 50k notes but due to administrative and public opinion reasons they discontinued them for now. We have not been given any other reason. I do not know if this really effects their overall plan very much.
So the situation at the end of December will look like this –
-The CBI can not afford to sell off any more of its reserves consisting of US dollars, regardless with what the CBI is telling us.
-The local banks vaults are stuffed with the new lower denominations already.
-There is only a couple more steps to take in the process. One of which is they must launch the new lower denominations but first they must create a demand for them. How do they do this?
-They will create the demand for the new lower denominations by coming to par value 1:1 with the US dollar (actually probably just over 1+ dinar to 1 US dollar). Then the banks will begin taking is the US dollars as they are exchanged for the new lower denominations by the public.
-As the demand increases for the dinar over the US dollars the banks will take the US dollars and requisition yet more of the newer lower denominations from the CBI to meet the demand. Note-this is not to be confused with more money auctions. The auctions will end! Instead this process is to be much like the Federal Reserve and Central banks in USA, Europe and Canada where banks can order money and pay a slight interest on the money to the CBI in order to borrow it. Then they can loan it out at a higher interest rate (to be determined by the Central Bank). Iraq needs to get to this point in their banking system and can only do it by stopping these auctions. It will be modeled off the western banking system.
When this final process begins the demand for the dinar will increase quickly as they will begin to enforce the 2013 law to use dinar over the US dollar. As the rate increases they predict it will take between 7 days to a week to get to the point where the IMF will let them revalue this new currency to it asset backed value.
Note: I DID NOT SAY THEY HAD TO WAIT FOR THE RATE TO RISE TO THE $4.00+ RATE we expect on any kind of a float. Do not mix apples and oranges here. The currency at this point is NOT on the global exchanges. It is not yet in a currency regime such as any kind of an IMF sanctioned / defined float.
Then after it is determined that Iraq can hold the increase in value and have worked out the inflation issue then comes our RV, the currency is reintroduced to the global exchanges and will be placed on a float with a fixed cap. This is really what we have been waiting for so long.
Can you see how there is no Reinstatement? Did I mention reinstatement? Please don’t put words into my mouth. If you are going to talk about this process I just described and can’t remember it then print this news letter out and read it. You can read? So please let us put this idea of a reinstatement vs revaluation to rest. It’s really a moot point. It is getting very boring arguing over this point.
Can you also see how we can be in the mid to late January for this process to unfold fully to the point of the RV?
I hope these details clarify this process yet more for everyone. It is not my theory but a summation told to me by the CBI. They also told me they are guiding the citizens through the entire process and so we should be looking and watching for more news on this topic of CURRENCY REFORM. This is where our attention should be right now. Remember these articles out of Iraq are not written so much for us than for the Iraqi citizen. We are just indirect beneficiaries of this information. If you weren’t an investor you would not even care or be paying any attention to these articles.
Update: Needed Laws
So Monday 12/14 came and went and no budget being passed in parliament. Then later on Monday Iraq told us there were still some necessary changes and so they postponed it until Wednesday 12/16. Let’s watch and see if they actually do it this today.
Article Begins
Parliamentary Finance: We will put the finishing touches on the 2016 budget and approval next Wednesday
2015/12/14
{Baghdad: Euphrates News} confirmed a member of the parliamentary finance committee pros Hamadoun that the Commission will end today the final touches on the budget in 2016, in preparation for approval in parliament.
She said Hamadoun in a statement received by the agency {Euphrates News}, that "the Finance Committee held a meeting to put the finishing touches on the paragraphs of the federal budget for 2016", likely approval in the House of Representatives session next Wednesday.
He said a member of the Finance Committee that the meeting will put legal materials and additional to the draft budget order to be approved, and voted on at a meeting Wednesday.
The Congress has revealed that the budget will be approved and passed by the end of this month, and stressed the seriousness of it back to the government, what would cause a delay longer, and thus a direct negative impact on the lives of people in the country.
Article Ends
Update: Fighting ISIS
Coalition forces are moving through regions of Ramadi and clearing them of ISIS. They predict this could be completed by the end of next week.
One more item today:
Let’s not forget to keep praying for the success of THESE IRAQI AND COALITION SOLDIERS. I believe their success is in part some of the acceleration of the process we are now witnessing.
“Lord, protect Abadi and all who stand with him in righteousness, the Iraq and Coalition Soldiers who are fighting the good fight against terrorism, that they would be shielded from the enemy and would be Victorious against them! We ask that the Victory comes swiftly and healing of the Iraqi peoples and all whom have been effected by these evil doers can begin! Amen!
Till next time…. Auf Wiedersehen!
Peace and Luv To Ya All,
Mnt Goat
So the Iraq economy could not continue without a currency for long. They had to fill this currency gap but did not want to have to issue more 3 zero notes since they had collected them already and could not go back to this process. So what could they do?
The decision in 2013 was made to infuse US dollars to fill this gap. So this void is currency had been filled with US dollars not the lower dinars as was planned. Today this continues by these daily auctions where the banks (because of the demand for US dollars due to purchasing power being greater than the 3 zero notes) take in the 3 zero notes from the citizens and buys US dollars from the CBI. But remember there was only 25% of the 3 zero notes remaining in Iraq. So how much longer can they continue this process because soon there will be almost no remaining 3 zero notes to collect and use to buy the US dollars to meet this demand for them? How will they replenish the money supply?
Where does the CBI get all these dollars from? They get them from 1)the US in exchange for the 3 zero notes. The US is not about to just five the CBI FREE money. 2) They also get them from the CBI reserves from oil revenue. Remember oil is still sold from Iraq for US dollars. So this money makes it way to the CBI and form the CBI it is allocated to projects via the budget. So now the CBI is tapping into these reserves of US dollars just to keep currency on the streets, something they never intended to do. Can you see a problem here?
So in the article above the finance committee is telling us there is a dangerous cycle occurring since 2013 where nearly 80 million US dollars is leaving the CBI weekly due to these auctions. Every time the parliamentary finance committee make everyone aware of this, the CBI comes out with articles telling everyone it is okay since they have nearly 60 billion US dollars in the reserves and can last up to 6 months of paying Iraqi debts.
Really? Do you think this is dangerous even to think on running a country on these terms?
Remember there is not much oil revenues now replenishing these reserves since the price of oil keeps dropping. It is now $35 a barrel but takes almost $10 a barrel just to extract and process. So can you see the problem the CBI will soon be in (is in)? How long can they continue the practice of these auctions? The US announced too is now reluctant to fund anymore US dollars to Iraq and so this exacerbates the situation even more since the flow of US dollars is not solely from the oil revenues. Can you see why they desperately need to get off the US dollar and it is killing their economy?
Remember also the CBI reasons that these auctions are beneficial and are taking yet more of the 3 zero notes off the streets, also part of the overall currency reform plan. Remember I said the banks must buys US dollars from the CBI using the 3 zero notes.
There is also another issue to consider. The CBI must now stockpile the new lower denominations in their bank vaults in preparation for the conversion someday to the newer lower denominations. There is no FREE money from the CBI. So how do the banks get this currency?
The banks must pay for these lower denoms and a new law went into effect in 2013 (remember?) that forces the banks to hold so much of the lower denoms. So how do they pay for them?
The banks pay for these new lower denoms from the CBI using US dollars.
But now most of the banks have their vaults already filled with these new lower denominations. So this process too is completed. Oh- but remember these lower denoms are worthless and the banks can’t do a damned thing with them until they have some real value. Can you see the dilemma ?
If you know anything about banking the banks want to make a profit and that is why they are in existence. So holding all this worthless currency and tying up so much of the US dollars is not very advantageous and caused a serious liquidity problem since they don’t have the US dollars to loan out and use for banking business.
Do you remember we kept hearing about this liquidity problem? This the major reason why. Money has to circulate through an economy to make it robust. Remember too they are now running the economy mostly on US dollars but the banks just tied up much of their liquidity in these new lower denominations.
So another dilemma- the banks are forced to exchange the 3 zero notes to the CBI for yet more US dollars to fill this liquidity gap as I mentioned above. This is how the auctions are run. Thus the reason why it is so hard to get off the money auctions. They need the US dollars to keep the economy rolling. Businesses need capital, citizens want to buy homes, etc..They get this money from the banks. They need money to loan out.
It was told to me that some banks did begin loaning out some of the new lower denominations in the northern regions of Kurdistan but this was abruptly put to a halt by the CBI. This does not mean much other than to tell us the amount of pressure the banks are under pressure to realize some monetary gain (profit) out of this new money (the new lower denoms) they are holding in their vaults. I know there was wide rumors they are distributing the lower denoms. Really? So let’s put this rumor to rest. Can we? Seems just more rumors that are not verified and investigated buy some of these ignorant intel “gurus”.
So another dilemma – the banks are buying the US dollars at more than the IMF program rate since the demand for US dollars is do high they are willing to pay more for them. This inflates the value of the US dollars to the Iraq dinars. Can you see the problem?
So what do they do?
At some point they MUST STOP THE AUCTIONS since 1) there will not be enough of the 3 zero notes in circulation to pay for the US dollars, so how will they buy them? 2). At some point the cycle must end since the banks will not want to keep all this capital tied up in the lower denominations for forever.
So these problems are recognized and there is a plan.
The CBI has told us they will begin scaling down the amount of US dollars sold in the auctions and then eventually stop the auctions altogether. They told us this event is planned for by the end of December 2015.
If you have been watching the auctions you can see the amounts are have been much less as the scaling process had begun months ago.
How does the launching of the 50k notes in early November fit into all this?
Remember the 50k notes launched already did draw in some of the 3 zero notes and I believe this was intentionally done to quicken the pace of the elimination of the remaining 3 zero notes in anticipation for the December deadline. I believe the plan was to continue to push out the 50k notes but due to administrative and public opinion reasons they discontinued them for now. We have not been given any other reason. I do not know if this really effects their overall plan very much.
So the situation at the end of December will look like this –
-The CBI can not afford to sell off any more of its reserves consisting of US dollars, regardless with what the CBI is telling us.
-The local banks vaults are stuffed with the new lower denominations already.
-There is only a couple more steps to take in the process. One of which is they must launch the new lower denominations but first they must create a demand for them. How do they do this?
-They will create the demand for the new lower denominations by coming to par value 1:1 with the US dollar (actually probably just over 1+ dinar to 1 US dollar). Then the banks will begin taking is the US dollars as they are exchanged for the new lower denominations by the public.
-As the demand increases for the dinar over the US dollars the banks will take the US dollars and requisition yet more of the newer lower denominations from the CBI to meet the demand. Note-this is not to be confused with more money auctions. The auctions will end! Instead this process is to be much like the Federal Reserve and Central banks in USA, Europe and Canada where banks can order money and pay a slight interest on the money to the CBI in order to borrow it. Then they can loan it out at a higher interest rate (to be determined by the Central Bank). Iraq needs to get to this point in their banking system and can only do it by stopping these auctions. It will be modeled off the western banking system.
When this final process begins the demand for the dinar will increase quickly as they will begin to enforce the 2013 law to use dinar over the US dollar. As the rate increases they predict it will take between 7 days to a week to get to the point where the IMF will let them revalue this new currency to it asset backed value.
Note: I DID NOT SAY THEY HAD TO WAIT FOR THE RATE TO RISE TO THE $4.00+ RATE we expect on any kind of a float. Do not mix apples and oranges here. The currency at this point is NOT on the global exchanges. It is not yet in a currency regime such as any kind of an IMF sanctioned / defined float.
Then after it is determined that Iraq can hold the increase in value and have worked out the inflation issue then comes our RV, the currency is reintroduced to the global exchanges and will be placed on a float with a fixed cap. This is really what we have been waiting for so long.
Can you see how there is no Reinstatement? Did I mention reinstatement? Please don’t put words into my mouth. If you are going to talk about this process I just described and can’t remember it then print this news letter out and read it. You can read? So please let us put this idea of a reinstatement vs revaluation to rest. It’s really a moot point. It is getting very boring arguing over this point.
Can you also see how we can be in the mid to late January for this process to unfold fully to the point of the RV?
I hope these details clarify this process yet more for everyone. It is not my theory but a summation told to me by the CBI. They also told me they are guiding the citizens through the entire process and so we should be looking and watching for more news on this topic of CURRENCY REFORM. This is where our attention should be right now. Remember these articles out of Iraq are not written so much for us than for the Iraqi citizen. We are just indirect beneficiaries of this information. If you weren’t an investor you would not even care or be paying any attention to these articles.
Update: Needed Laws
So Monday 12/14 came and went and no budget being passed in parliament. Then later on Monday Iraq told us there were still some necessary changes and so they postponed it until Wednesday 12/16. Let’s watch and see if they actually do it this today.
Article Begins
Parliamentary Finance: We will put the finishing touches on the 2016 budget and approval next Wednesday
2015/12/14
{Baghdad: Euphrates News} confirmed a member of the parliamentary finance committee pros Hamadoun that the Commission will end today the final touches on the budget in 2016, in preparation for approval in parliament.
She said Hamadoun in a statement received by the agency {Euphrates News}, that "the Finance Committee held a meeting to put the finishing touches on the paragraphs of the federal budget for 2016", likely approval in the House of Representatives session next Wednesday.
He said a member of the Finance Committee that the meeting will put legal materials and additional to the draft budget order to be approved, and voted on at a meeting Wednesday.
The Congress has revealed that the budget will be approved and passed by the end of this month, and stressed the seriousness of it back to the government, what would cause a delay longer, and thus a direct negative impact on the lives of people in the country.
Article Ends
Update: Fighting ISIS
Coalition forces are moving through regions of Ramadi and clearing them of ISIS. They predict this could be completed by the end of next week.
One more item today:
Let’s not forget to keep praying for the success of THESE IRAQI AND COALITION SOLDIERS. I believe their success is in part some of the acceleration of the process we are now witnessing.
“Lord, protect Abadi and all who stand with him in righteousness, the Iraq and Coalition Soldiers who are fighting the good fight against terrorism, that they would be shielded from the enemy and would be Victorious against them! We ask that the Victory comes swiftly and healing of the Iraqi peoples and all whom have been effected by these evil doers can begin! Amen!
Till next time…. Auf Wiedersehen!
Peace and Luv To Ya All,
Mnt Goat
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