Thread: Iraq/Dinar News. 09/05 to 01/14/07

Originally Posted by Kevmo

I am no economist but it has often been said that inflation is caused by too many dollars chasing too few goods. With the high amount of dinar in circulation and few consumer goods on the shelves it stands to reason that Iraq would have high inflation. Taking dinar out of circulation should bring inflation down if you follow the above simplified definition. That has always been my concern with a RV. Without taking dinar out of circulation, a RV would just compound the inflation problem.

Question for those in Iraq or have been in Iraq: is there an abundance of consumer goods in shops for the people to spend their money on???

So if I understand you correctly, this actually could be the "official" start of the rv process? Step 1 remove excess dinar from economy. Step 2 raise value of dinar?

But if this were the case, would that lend itself to the gradual increase in value theory? Just keep removing dinars until the value just starts to go up by itself? And if that were the case, then why have a major move up in the value of the dinar? Just keep bleeding the supply until it goes up on its own.

The problems I see with this are the length of time needed to accomplish this (it could take a lot longer than they have left as a country if something isn't done soon). And we are still dealing with a "program rate" which isn't the true rate to begin with (true rate should be higher, much higher than the "program rate"). If the reported 2 book theory is true, that being that they have 2 set of books they are running concerning the value of the dinar, (one being the program rate they are currently using, the other the old rate just prior to the ousting of Saddam), why don't they just rv it to the higher book now instead of waiting? (Even the old Saddam rate is probably lower than it's actual current value.) This would go a long way to relieving the suffering of the Iraqi people not mention the politicians that catch wind in advance could make out like the bandits they truly are by converting their bloated paychecks in usd to dinars before the rv. If they continue to wait, then it might become too late for all of them if you know what I mean.

worf

One of the Iraqi MPs yesterday, Monday, said that the cabinet reshuffle destruction, which called for Prime Minister Nouri Al-Maliki Sunday will be a few weeks and will include about ten ministries.
وقال عباس البياتي ( من لائحة الائتلاف الموحد بزعامة عبد العزيز الحكيم) ان التغيير الوزاري الشامل الذي دعا اليه المالكي قد يشمل عشر وزارات في الاقل في حكومته التي تتكون من 73 وزيرا.He said Abbas Bayati (of the Rules of the United Alliance led by Abdul Aziz al-Hakim) said that the cabinet reshuffle called for by the Comprehensive Maliki may include ten ministries in the least in the government which is composed of 73 ministers.
واكد ان التغيير سيكون على اساس التكنوقراط والكفاءة وسيتم خلال الاسابيع المقبلة.He emphasized that the change will be based on technocrats and efficiency will be in the coming weeks.
واضاف: ان التغيير سيتم بعد التقييم الموضوعي للوزير وبعيدا عن التسييس وبالتشاور مع القوائم المشاركة في الحكومة وسيقوم المالكي بابلاغ الكتل التي سيتم تغيير وزرائها على ان يطلب منها ثلاثة مرشحين جددا لكل حقيبة.He added : that will change after the objective evaluation of the Minister and away from politicization and consultation with the lists participating in the government and will inform Maliki blocs that will be changing ministers to ask them three new candidates for each bag.
وتابع البياتي انه في حال عدم كفاءة الثلاثة سيتم تغييرهم ايضا مشيرا الى ان ذلك يشمل تغييرا في توزيع الحقائب التي منحت للكتل، اي ان الحقائب قد تذهب من كتلة الى كتلة اخرى بغض النظر عن الشخص.He continued Bayati that in the absence of the efficiency of the three committee members also will be pointing out that this includes a change in the distribution of portfolios given to the masses, any bags that might go from block to block, regardless of the other person.

Translated version of http://www.newsabah.com/

What " portofolios"?

Originally Posted by aporl

Check your PM. You will get two free $1,000 NID notes.

can I have PM too?

The question is what is the relationship of the lower denominations to the exchange rate?

If lower denominations have been pre-positioned in the banks, then it is probably a simple "making change" type of process and would not have any relationship to the daily auction. However, as I have suggested before, the large removal of cash in the last 6 auctions might be the first step in retiring the larger denominations. Again, what is of interest to me is that this removal of large amounts of dinar is taking place in a short period of time. Imagine. The GOI announces that they are going to give every person in Iraq 10000 dinar. So far so good. Then someones realizes that this action would actually be a meaningless gesture and would result in demoralizing the people and insulting them. Such a grant would only make sense if the money was actually worth something. They then demand a RV and the CBI says, "We are not ready". Then the CBI begins a "knee-jerk" reaction to remove as much dinar from the economy as soon as possible. Which is really a processthat should have taken place over a longer period of time in a less dramatic way. Just an opinion.

Originally Posted by Kevmo

I am no economist but it has often been said that inflation is caused by too many dollars chasing too few goods. With the high amount of dinar in circulation and few consumer goods on the shelves it stands to reason that Iraq would have high inflation. Taking dinar out of circulation should bring inflation down if you follow the above simplified definition. That has always been my concern with a RV. Without taking dinar out of circulation, a RV would just compound the inflation problem.

Question for those in Iraq or have been in Iraq: is there an abundance of consumer goods in shops for the people to spend their money on???

Probaly not when you can sell them in the bordering country for a lot more.

Originally Posted by Wm.Knowles

The question is what is the relationship of the lower denominations to the exchange rate?

If lower denominations have been pre-positioned in the banks, then it is probably a simple "making change" type of process and would not have any relationship to the daily auction. However, as I have suggested before, the large removal of cash in the last 6 auctions might be the first step in retiring the larger denominations. Again, what is of interest to me is that this removal of large amounts of dinar is taking place in a short period of time. Imagine. The GOI announces that they are going to give every person in Iraq 10000 dinar. So far so good. Then someones realizes that this action would actually be a meaningless gesture and would result in demoralizing the people and insulting them. Such a grant would only make sense if the money was actually worth something. They then demand a RV and the CBI says, "We are not ready". Then the CBI begins a "knee-jerk" reaction to remove as much dinar from the economy as soon as possible. Which is really a processthat should have taken place over a longer period of time in a less dramatic way. Just an opinion.

So if I understand you correctly, then this really could be the start of the rv process.... or not? Thanks for all of your imput. I know many of us have expressed our appreciation of your opinions and whether you prove to be right or wrong, we appreciate your input. Some of us (ok, me) can be at times "economically challenged" so if we say or ask anything that sounds really stupid, please forgive us we are all trying to understand this thing together!!!

worf

Originally Posted by Wm.Knowles

The question is what is the relationship of the lower denominations to the exchange rate?

If lower denominations have been pre-positioned in the banks, then it is probably a simple "making change" type of process and would not have any relationship to the daily auction. However, as I have suggested before, the large removal of cash in the last 6 auctions might be the first step in retiring the larger denominations. Again, what is of interest to me is that this removal of large amounts of dinar is taking place in a short period of time. Imagine. The GOI announces that they are going to give every person in Iraq 10000 dinar. So far so good. Then someones realizes that this action would actually be a meaningless gesture and would result in demoralizing the people and insulting them. Such a grant would only make sense if the money was actually worth something. They then demand a RV and the CBI says, "We are not ready". Then the CBI begins a "knee-jerk" reaction to remove as much dinar from the economy as soon as possible. Which is really a processthat should have taken place over a longer period of time in a less dramatic way. Just an opinion.

I think it could have been possible for the sake of secrecy and excessive speculation that the CBI would have held these lesser notes until the proper moment, which may be happening now. They would have to show the currency in the spreadsheeteven if they aren't mentioning the denominations, But i agree the recent auctions are either a knee jerk reaction perhaps based on the election or they may just be behind schedule and are attempting to catch up.

Originally Posted by worf

So if I understand you correctly, this actually could be the "official" start of the rv process? Step 1 remove excess dinar from economy. Step 2 raise value of dinar?

But if this were the case, would that lend itself to the gradual increase in value theory? Just keep removing dinars until the value just starts to go up by itself? And if that were the case, then why have a major move up in the value of the dinar? Just keep bleeding the supply until it goes up on its own.

The problems I see with this are the length of time needed to accomplish this (it could take a lot longer than they have left as a country if something isn't done soon). And we are still dealing with a "program rate" which isn't the true rate to begin with (true rate should be higher, much higher than the "program rate"). If the reported 2 book theory is true, that being that they have 2 set of books they are running concerning the value of the dinar, (one being the program rate they are currently using, the other the old rate just prior to the ousting of Saddam), why don't they just rv it to the higher book now instead of waiting? (Even the old Saddam rate is probably lower than it's actual current value.) This would go a long way to relieving the suffering of the Iraqi people not mention the politicians that catch wind in advance could make out like the bandits they truly are by converting their bloated paychecks in usd to dinars before the rv. If they continue to wait, then it might become too late for all of them if you know what I mean.

worf

IMO the RV will do nothing to relieve the suffering of the Iraqi people in the short term. What difference does it make to have a substantially increased purchasing power with nothing to purchase unless its a plane ticket out of Iraq? What it will significantly impact is the governments purchasing power in order to import the necessary materials for rebuilding the country without bankrupting the CBI. That in turn will help the average Iraqi in the long term.

Originally Posted by Wm.Knowles

The question is what is the relationship of the lower denominations to the exchange rate?

If lower denominations have been pre-positioned in the banks, then it is probably a simple "making change" type of process and would not have any relationship to the daily auction. However, as I have suggested before, the large removal of cash in the last 6 auctions might be the first step in retiring the larger denominations. Again, what is of interest to me is that this removal of large amounts of dinar is taking place in a short period of time. Imagine. The GOI announces that they are going to give every person in Iraq 10000 dinar. So far so good. Then someones realizes that this action would actually be a meaningless gesture and would result in demoralizing the people and insulting them. Such a grant would only make sense if the money was actually worth something. They then demand a RV and the CBI says, "We are not ready". Then the CBI begins a "knee-jerk" reaction to remove as much dinar from the economy as soon as possible. Which is really a processthat should have taken place over a longer period of time in a less dramatic way. Just an opinion.

Wm,

Is there a possibably the CBI is "catching up" in their auctions since they were closed for so many days at the end of their holiday?

My thanks for your input.

JK

Originally Posted by Kevmo

IMO the RV will do nothing to relieve the suffering of the Iraqi people in the short term. What difference does it make to have a substantially increased purchasing power with nothing to purchase unless its a plane ticket out of Iraq? What it will significantly impact is the governments purchasing power in order to import the necessary materials for rebuilding the country without bankrupting the CBI. That in turn will help the average Iraqi in the long term.

It should help the average Iraqi as it will put him to work !