7-28-2012

A listener emails B and asks about the CIA's figure of 68 trillion dinar in Iraq's M2.  B says he doesn't believe it.  (I'm SHOCKED!  LOL!)  He says that every statement from the CBI says 30 trillion, so how can it be 70 trillion?  Well obviously those statements are talking about the M1 (cash), which is approximately 30 trillion.  But Iraq's foreign currency reserves are backing everything in the M2 (cash, electronic currency, financial instruments ... etc.) which is approximately 70 trillion.  B says he talks to economists and they can't figure out why the articles say 30 trillion and the financial statements say 70 trillion.  I have a hard time believing that any journeyman economist can't see a distinction between M1 and M2.  It would be like a mechanic not recognizing the difference between a transmission and a powertrain.  Just who are these economists he's talking to?


B calls the view that Iraq is maintaining a stable exchange rate by printing more money as their foreign currency reserves increase a "cockamamie idea".  Actually it's not a theory at all.  It's a documented fact that their foreign currency reserves figure is growing, their M2 figure is increasing, and their exchange rate is stable.  If you want to say those figures are wrong then your argument isn't with me or any other investor.  Your argument is with the CBI.  When Shabibi was in DC last year he talked about maintaining stability with the exchange rate, and it would appear that this is how they're doing that. 


B calls me a bubblehead again for taking exception to his statement that he doesn't see anything negatively affecting our investment.  He acknowledges that there are things that can slow down progress but they're still moving forward.  On that we agree, they're making progress at a snail's pace which is why nobody should expect to get rich off of owning dinar.  At best this is a long term highly speculative investment.  Maybe there's hope for B after all. 

http://www.youtube.com/watch?v=nZU9AeXTzaE&feature=plcp


http://dinardouchebags.blogspot.com/2012/02/breitling-catalog.html

http://dinardouchebags.blogspot.com/2011/10/breitling-busted.html