Originally Posted by
BlueyesinLevis
Enorste on the LOP
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Enorrste Response to Lopster
The article below is based entirely on a false premise. Once it is shown that the premise is false then the remainder of the content of the article fails as well.
The premise of the article is that the money supply, M2, which is now said to be 70 trillion dinars, will remain at that same level. I will not dispute the M2 number but will state clearly that the CBI is on record that the currency now in circulation (i.e., physical currency) is about 30 trillion dinars. This is a direct statement from the CBI. They have made this statement to indicate that it is way too high. Furthermore, in the same articles that have this statement there is another statement which is that the goal is to REDUCE the money supply in Iraq to about 25 billion dinars. It blows my mind that the writer of this article fails to take into account the very statements of the CBI that deal with this specific issue.
Furthermore, the CBI is on record on this matter and has been since 2007! When I wrote my book I included an article from 2007 in which Al Zubaidi, the head of the Ministry of Finance at that time, had recommended to Shabibi, head of the CBI, that the money supply be reduced from the then 25 trillion dinars to about 25 billion dinars "as it was before the Saddam Hussein regime." In that same article he recommended that the dinar RETURN to the value of $3.33 per dinar that it held prior to the Saddam Hussein regime. Again, as noted in my book, Shabibi accepted that recommendation and a 5 year plan was created to implement it.
Because of the election the timing has been delayed somewhat, but the plan is still being implemented. More recent articles explain clearly that the goal is now to bring the dinar initially to "about $1", after which it will rise gradually to the level of equilibrium, which will be over $3.00. Furthermore, the process will include REDUCING the current money supply to 25 billion dinars to affect this change. This is in CBI articles, not "guru-speak." All of this can be found on DinarAlert.webs.com.
The question then becomes as follows: how will they reduce the money supply? The answer is the "remove the three zeros" project! During the last year the large denominated notes have been gradually withdrawn from the market and are being stored at the CBI for eventual destruction. The reason for the "dollarization" that is evident in the country is because there are fewer and fewer dinars available to the general public. Even banks can no longer obtain new larger denominated notes in Iraq (there is an article stating this point, incidentally).
At the time of the $1 RV most of the large notes will have been pulled in. Shabibi is on record that as of last year already over 50% of them were removed, and at the beginning of this year it was over 75% removed. The CBI has stated that now "all preparations" for the implementation of the issuance of the small denoms is now complete. They are ready to raise the value of the IQD to about $1.
At the time that they do this they will issue the EXISTING small denominated IQD that was printed in 2003 and has been held in vaults since that time at the CBI. AT THE SAME TIME they will begin destroying the large denominated notes. Between the RV date and the end of this year most of the remaining large notes will be deposited in banks, since they will be worth $5,000 to $25,000 each (!) and they will also be sent to the CBI to be destroyed.
In January 2013 the NEW CURRENCY will be issued with 3 languages. The EXISTING CURRENCY (now almost all small notes entirely) and the NEW CURRENCY will COEXIST until the middle of 2014, after which all of the EXISTING CURRENCY will be withdrawn as it wears out, leaving only the NEW CURRENCY in Iraq. The plan is to print only 25 Billion NEW dinars!
The PROCESS of "removing the three zeros" will reduce the money supply to 25 billion dinars. This is NOT guru magic. It is a clear statement of the intent of the CBI.
Now, with $63 billion in reserves currently, and with a projected money supply post RV of 25 billion dinars at about $1 each, then the total money supply will equal about $25 billion. This means that Iraq will have almost 250% coverage of their money! This will make the dinar the strongest currency in the world, by far.
Finally, it must be asked what will happen to the 5 to 7 trillion dinars that are outside of Iraq. The CBI has clearly stated that this money will become a "world reserve currency" for "a long time", quoting Saleh himself (all of these articles are on the web site and have been discussed thoroughly by Kap, Russell, and myself on numerous conference calls). Therefore, they will NOT be included in the "effective" money supply in Iraq, any more than the Dollar is counted as it sits in reserves all around the world.
The writer of the article I am discussing is obviously well intentioned, but also ill informed. Had he done his due diligence and read all of the abundantly available information directly from the CBI he would have been educated on the "remove the three zeros" project enough to know that it is NOT A LOP and that it is clearly an RV at "about $1" just as the CBI has been saying for over a year now.
The EXISTING CURRENCY will remain legal tender, per the CBI, throughout this process. This means that we will be able to cash in at the $1 rate at least through the middle of 2014. Again, this is directly from the CBI.
While I appreciate that the "lopster" writer wants to educate, I believe that it is incumbent for him to educate himself before he tries to educate others. By spreading the drivel that he has, he not only shows himself to be ignorant of the facts but also does no service whatsoever to those who read his drivel. This comment is not a "put down" on the writer personally. It is only a total TRASHING of the content of his writing. I do not attack persons; I attack fallacious content. Ignorance is not a pejorative term: it simply means that he is not well informed.
Enorrste