tracytferrall Post: DV 2/11/10

February 11, 2010 · Posted in CHATS / POSTS
Here is the article in its entirety:

Plan to increase the value of the dinar against the dollar and the deletion of three zeroes

”Finance Ministry has prepared a plan to increase the value of the dinar against the dollar and then delete the three zeroes from the dinar’s value to contribute to the advancement of the Iraqi economy during the coming period with the Iraqi central bank denied the rumors making the dollar worth 1000 dinars and said in a statement issued by the Ministry of Finance:, the Minister Baqir Jabr said During his recent visit to the Jordanian capital Amman, said the CBI chagrin financially estimated $22 billion and three tons of gold intended to support the Iraqi dinar. He said that successful fiscal policy pursued in Iraq have contributed to increasing the value of the Iraqi dinar against the dollar, noting that the dollar exchange rate dropped significantly during the current year, stressing that all efforts will be channeled to the deletion of three zeros from the value of the dinar.

“On the other hand denied the authoritative source in the Iraqi Central Bank rumors making the dollar worth 1000 dinars, or a change denominations or raise zeros from the current currency.”

“He said in a press statement that the bank has been following with great interest the phenomenon of low demand for the dollar in the local exchange markets, stressing that such information or rumors surrounding the aim of achieving commercial gain emergency for some users at the expense of the public.”

[Analysis]

It has been claimed that the above article is an old article. Some thought it came from 2008. Others said it was first posted on 12/13/2009. The date at the top of the article changes everytime the page is refreshed, so that is not proof of its age.

However, within the article itself we can see that it is a recent article. The last paragraph states that there is “low demand for the dollar in the local exchange markets.” This phenomenon has only occurred since the dollar was banned for local use. That ban was originally to have been in October of 2009 but was since pushed back to January of 2010. Therefore the article has to be from at least January, and probably February, since the “phenomenon of low demand for the dollar” is quite recent.

Here is a link from January 30, 2010, in which this topic is discussed directly:

http://www.blackanthem.com/News/Mili…omy21736.shtml

Therefore the “phenomenon” talked about in the article under discussion could only have occurred in the very recent past, leading me to suspect that the article is actually current and not dated at all.

Let’s look at the portions of the article in red above and see what they tell us. In the first caption you will notice that I have put in bold the two words “and then”. We can see that the increase in the value of the dinar is juxtaposed to the removal of 3 zeros from the dinar. In addition, however, we see that the phrase “and then” tells us that the first must precede the second. In other words we now know that the two will not occur simultaneously.

From the prior article we gleaned the same information, namely that the removal of the large denominated notes would occur over a period of time ending at the end of this year.

Therefore, once again, we can see that this is not a typical lopping procedure but is instead a removal of large notes that will become superfluous or “unnecessary” in the normal course of business.

Now in this same quote we finally see a clear statement from the Central Bank of Iraq itself that it intends to increase the value of the dinar. This is the first time we have seen a statement of intent put out so clearly by the CBI.

In the next red quote we see that the CBI is receiving 3 tons of gold and $22 billion “intended to support the Iraqi dinar”. We can gain a tremendous insight from this little statement by asking a simple question: If it is the intention of the CBI to only remove 3 zeros from the dinar why do they need all of this money to support the dinar? The answer, of course, is that they wouldn’t. But more to the point, we see that they are bringing in these funds for the very PURPOSE of supporting the dinar.

$22 billion and 3 tons of gold is a little over $23 billion today. In addition we read earlier here that Iraq also intended to raise its reserve funds to $42 billion to support the dinar. Therefore the total reserves of Iraq are now going to go to about $65 billion. At the current exchange rate that means that they have reserves of over 75 trillion dinars.

We also see from the previous article that the total outstanding amount of dinars is only 25 trillion dinars. Therefore Iraq will have “in reserve” the equivalent of 3 times the total amount of dinars currently in the market. Almost all other countries in the world, including the United States, use a “fractional” reserve system in which they have, at most, about 10% reserves in foreign currencies for the amount of national currencies outstanding. Iraq, then, is in a position with this large reserve pool of foreign currencies and gold to raise the value of the IQD substantially in the near future. As I pointed out in the last chapter, we see again that Iraq can certainly afford a significant revaluation of its currency with this large reserve.

In the next red section of the article above we see that ”all efforts will be channeled to the deletion of three zeros from the value of the dinar.” Once again I have emboldened the verb in this sentence to point out that it is in the future tense. Here we see that Iraq will be taking actions in the future, and not immediately, to remove these large denominated notes from the market. This is consistent with the first article above in this chapter in which it was stated that the process would proceed naturally until the end of this year.

Now we come to the last part of the article. I will post the relevant quote again here for ease of access:

“On the other hand denied the authoritative source in the Iraqi Central Bank rumors making the dollar worth 1000 dinars, or a change denominations or raise zeros from the current currency.”

When this article came out I was surprised at how many people missed the intent of this statement. Many were worried that the increase in value would be only to 1000 to 1 for the dinar from the current 1170 to 1 for the dinar.

However, on looking at the emboldened portion of the quote we can see that the CBI is actually DENYING the RUMORS that it would only revalue to 1000 to 1. What this means in simple English is that the CBI is denying that it is only lopping off zeros. We can verify that this is correct from the quote itself, in which it states “or a change denominations or raise zeros from the current currency.” In other words, the statement states that the denial applies to all three things in the quote: (1) rumors of making the dollar worth 1000 dinars, (2) or a change in denomination , (3) or raising zeros from the current currency. Can you see how the word “or” here links all three of these items to the denial. It is saying “not this, or that, or that.”

Now this is extremely important because what it is saying is that the CBI is specifically denying a lopping of the “current currency”!

We now have a definitive statement from the CBI of its intent to raise the value of the dinar, to support that raise in value with substantial reserves, and a denial that there will be a lopping of 3 zeros off the current currency.

What that leaves us with is this: the RV will be substantial and will occur shortly (the timing comes from the need to act to avoid speculators from flooding the market). There will be a period of natural removal of the current currency as the new currency replaces it after the RV. The current currency will not be usable in the normal course of business because of the size of the notes. By the end of the year the notes will have been drawn into the banks and eliminated from the market. Most of the “value” of those large notes will remain in deposits at the bank. This will enable the banks to lend and will improve the economy through this process (this comes directly from the first article above). The end result will be a dramatic increase in the wealth of all Iraqis and a resurgence in the economy of Iraq at the same time.

http://dinarvets.com/forums/showthread.php?10016-increase-the-value-and-then-Feb-11-2010-9-48-AM-by-jxjordan-Plans-t