7-7-2012

B says today's rate is a dirty float and Iraq needs to correct the rate. He says you can't go from 15 trillion to 30 trillion and not change the exchange rate. Actually you can, B, if your foreign currency reserves (which Iraq uses to back their currency) are also growing. For example, let's say Iraq's foreign currency reserves a few years ago were $25.8 billion and their M2 was 30 trillion. And let's say that they were backing their M2 with their reserves at 100%. Okay, let's divide $25.8 billion by 30 trillion. That comes to about $.00086. Now let's say that a couple of years later their reserves grow to about $43 billion and their M2 is at 50 trillion. Divide $43 by 50 trillion and again you arrive at about $.00086. Now lets say that the foreign reserves today are at about $60 billion and the M2 is at about 70 trillion. Guess what? That comes to about $.000857 which is today's IQD value. You see, Iraq has been printing more dinar and increasing their money supply as their foreign currency reserves grow, which enables them to stabilize the exchange rate. Why would they want a stable currency rate instead of one that is rapidly increasing? Because contrary to what the dinar gurus are telling us, nations don't like to see their currency value increase. It tends to slow down the economy. Iraq did it a few years ago because they had to in order to get inflation under control, but now that it's under 10% they don't want to. So they print more money in order to maintain equilibrium.


B goes on to say once again that Iraq is reducing the money supply. No they're not. The CBI financials clearly show that they're not. And if you believe that the IMF is looking the other way while Iraq shows the world a money supply figure that is off by more than 90% (which would be the case if Iraq wanted to RV to $.86) you're nuts.  It might be off by a few % but nothing drastic enough to RV to an amount that makes millionaires out of dinar investors.    


B then rants "if you don't believe they're reducing the money supply then you need to get out of this investment!".  On that much we agree. 


http://www.youtube.com/watch?v=uFvMRlKl6NY&feature=plcp

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

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