Sunday, April 24, 2011

Iraqi Dinar Back-Ground

The Iraqi Central Bank is planning to re-denominate the national currency in an effort to ease transactions and allow people to carry less paper money…

so The End goal in to have more value in the Dinar and less paper

 Historically relevant for us is the fact that the Dinar use to be allot higher then it is now $3
And they had about 30 billion Dinar notes printed that represented its value when it was at this rate

now mind you this is before the dif types of currency in Iraq started to get printed and you will understand this in a min when I quote the retired Brigadier General who was tasked on exchanging the Dinar for the NID the notes we hold now

People in the past have argued over the rate and inflation and all that garbage here is a quote from the Brigadier general who actually exchanged the currency out talking about the Rates and why  

“I lead the currency exchange program in Iraq. I was stationed in
Iraq from September 2003 to January 2004. The currency exchange program ran from October 15 2003 to January 15 2004.

Currency exchange was necessary for five reasons;

(1) Two currencies were in circulation, the old Swiss Dinar in the north and the Saddam Dinar in the Rest of the country;

 (2) Inadequate numbers of denominations existed, the Swiss
Dinar came in 3 denominations
 and the Saddam came in only two denominations;

(3) The currency was poorly made and easily counterfeited;

 (4) The Saddam Dinar had been devalued and the public had little trust in it;

(5) The presence of Saddam On the currency was inappropriate.
But, in the great majority of the country, they had the Saddam Dinar with Saddam's face on it.

There were basically only two denominations of that: there was a 10,000-dinar
Note, which was worth about $5, and there was a 250-dinar note, which was worth about 12.5 cents, 12 cents.

The reason its value had dropped so low was because of Saddam’s Inflationary monetary policy. In comparison, back in the '80s, before the Saddam Dinar came about, the rate of exchange was about $3 to one Dinar.

But because of Saddam
There was now a total upside-down situation where one dollar was worth about 2,300 Dinar. ”

Here is another quote 

" Now, with the new dinar, we have six denominations for the people. I understand that they're going to reestablish some coinage and perhaps two additional denominations, giving them a total of eight denominations plus coinage to continue progressing the currency situation.
But, of course, my team and I, we dealt in the six new denominations.

The cost to produce the currency was approximately six cents per note,

End up being a 200 million dollar operation

All of the currency was produced outside of Iraq, in Kenya, Sri Lanka, Malta, Germany, Great Britain, and Spain. These various printers produced the currency under De La Rue. They were provided plates and a mission to perform a certain portion of the currency. All of the currency was then taken into England and flown into Baghdad from Manston" .

So now we have back ground wise, the Brigadier General in charge

*Stating why they changed the currency
*How much the rates were in what time frames
*And how much the operations cost.
*Where the currency was printed. 

Reason I post this, you need to understand how they are using policy to get the numbers down
on the M2

Remember the over all policy, less Notes more value