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

Originally Posted by Elfwizard

They have been doing these Auctions since I bought my dinars 3 years ago. What makes you guys think they are pulling the dinar from circulation? If they have been doing that all along they would have run out of dinar. If you look back at the auction history itn not that exciting, these Auctions

What's different now?

For starters they are taking Dinar in and not giving more to the other local banks. Second, the rate is lowering even when they are pulling Dinar out of circulation. Both of these are unlike auctions i witnessed in the past.

So then if you look historically at this, the CBI has always been selling DOLLARS? From the above statements, it seems they RARELY bought dollars then..... and the PDF history does not show both scenarios....

This is Wm Knowles post from Nov. 9th



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There seems to be a disagreement over what the auction results mean. As I see it there are two options.

#1 They are buying dinars and placing USDs in the local banks. This reduces the amount of dinar in the economy and if I read the numbers right, they have bought close to 340B USD of dinar in the last four auctions. A very large amount.

#2 They are buying dollars and placing an additional large amount of dinar into the economy.

Option #1 is my choice. This is consistent with reducing inflation and since they have large currency reserves and oil income, they are reducing the quanity of money in the economy that is consistent with inflation being too much money chasing too few goods. Quantity money theory has been around since the 1970s and was advocated by Milton Friedman the economist as a result of the double digit inflationary period in the US in the 1970s. If they were following option #2, then they would be flooding the economy with dinar, and to keep this policy up they would reduce the value of the money and eventually it would be worthless (even more than now). Placing USDs in the local banks is consistent with an eventual RV. It anticipates local demand for USDs if the currency RVs, reduces the quantity of money in the economy and maybe is the first step towards removing the large denominations from the economy. "Printing money" is a sure sign of an impending economic disaster. I think when the IMF stated that monetary controls needed to be in place was talking about this very issue. Reducing the amount of money in circulation is just like a company using its profits and buying its stock back to decrease the amount of stock in circulation resulting in a higher value for the stock in circulation. Buying dinars is also consistent with a slowly rising exchange rate. If they were flooding the economy with dinars, you would expect the exchange rate to move the other direction. So I am optimistic.

Originally Posted by Hardwood

So then if you look historically at this, the CBI has always been selling DOLLARS? From the above statements, it seems they RARELY bought dollars then..... and the PDF history does not show both scenarios....

Exactly what I am saying, this is nothing new.

Originally Posted by Elfwizard

Exactly what I am saying, this is nothing new.

OK then you go find 12 auctions in a row in the last 3yr history of the CBI that is the same as what is happening now and post it.

Originally Posted by Hardwood

So then if you look historically at this, the CBI has always been selling DOLLARS? From the above statements, it seems they RARELY bought dollars then..... and the PDF history does not show both scenarios....

When I look at the PDF, I don't see how any conclusion is possible. The file lists the date, the "Market price", and then something confusing--it's not really at the top of any one collumn (sorry I can't cut and paste the view--maybe someone can take a screen shot) It says "Settlement Volumn (000 price USD)" I think this could be interpretted many ways...at the very least it's clear to me that this PDF does not give values of dinar or dollar sold--IE on 2/23/06 the CBI bought x amount dinars, or sold x amount dinars....

Originally Posted by Mike5200

OK then you go find 12 auctions in a row in the last 3yr history of the CBI that is the same as what is happening now and post it.

If you talking abou the rate getting better, I think that is great Im not saying that that has been normal. My point was about them PULLING DINAR from circulation, Theres no proof of that.

Wheres the Proof? They have been buying dinar for 3 years!!

Glad to see that the "brain trust" is posting today.

Greatly appreicate the information, perspective and logical reasoning.

Keep passing it on.

Wishing us all success,

harrisomi

Originally Posted by Mike5200

OK then you go find 12 auctions in a row in the last 3yr history of the CBI that is the same as what is happening now and post it.

The only thing that is new is the rate going down. That in its self is good news. One thing that has never happened is the 11/7 - 11/13 selling of dinar by the CBI.They have sold dinar before but never 4 out of 5 days. If everyone that says that this has never happened before, except for the better price, tell me what else is new please.

Originally Posted by Adster

Exactly Wm, and at some point in the near future thay have to bring the dinar into parity with neighbouring countries. Sooner than later as the Kurds are now ready to go.

What will be interesting to keep an eye on is the countries that have forgiven 80% in the Paris Club and outside will forgive the other 20% that's been requested........

GK hit the nail on the head when he said we'd soon have to see the lower denoms if the rate continues to fall, very true. We have to be on the verge of these being released. And that is paramount to an imminent r/v. Not forgetting the 10k handouts. Are they waiting to release them after a r/v? Certainly looks that way.

I've said this before, but could it be a possibility that they hand out this 10,000 and when folks come to 'cash' it the banks use the lower denoms - essentially getting the lower denominations in to the hands of the people at the same time as they give them all a little shot in the arm with the hand out. Pure speculation, I know.