I decided to write another update to address something that people have been asking me. I have been getting questions regarding a world-wide global reset on all currencies. Basically some people think there will be a global reset of all currencies in the first quarter of 2014. According to this view a global reset is coming from the International Monetary Fund. (IMF) According to this belief the dollar is in big trouble. Supposedly there are 204 countries that have agreed with the IMF to revalue their currencies. The IMF will determine the new value of all currencies and every nation has agreed to keep these new values within a 5 percent deferential of each other. All currencies will revalue according to the assets that nations hold. This is supposed to happen by the end of March 2014. it is supposed to be announced as a global event. This rumor comes from people with different backgrounds and beliefs. I have even read about it in dinar forums. Here is what Lindsey Williams has to say about it.
(According to Lindsey Williams) A number of years ago Lindsey was given a job in Alaska. He was a chaplain for the oil company ARCO. His job was to provide consul to employees and improve company relations with employees. While he was there he got to meet the top people in the oil industry and he became close friends with them.
These guys are supposed to have an inside track on global events and they can predict and tell of events and plans before they occur. Lindsey became famous for a book he wrote called the Non-Energy Crisis. In this book he claims that there is enough oil in Alaska to last the United States for the next 200 years and there is no shortage of oil. In 2008 during the financial crisis oil shot up to $149.00 a barrel. During that Summer Lindsey said that his friends in the oil industry told him that oil was going to drop below 50 dollars a barrel. He was called a nut for saying this. In the fall of that same year oil fell to around 30 dollars a barrel.
However it should be noted that Lindsey Williams does not have the best track record. He has also been wrong on many of his currency predictions. In fact he has been more wrong than he has been right. He has predicted the end of the dollar in 2012. He said it would crash. Now he says this global reset will happen in March of 2014. He claims that he is acting on insider information. At least he is not saying God told him these things.
Will there be a global reset? Will this affect the value of the Iraqi dinar?
Mr. Williams said that all the currencies in the world will revalue within the first quarter of 2014. The dollar will be valued at 30 percent less. There will be no more currency wars. All then he makes the bold claim that all nations have signed on to this and it will happen by the end of March. This claim has served to increase speculation of a revalue in the Iraqi dinar. Is any of this true?
The first thing to understand about the Iraqi dinar is that it is a currency that requires a reserve. Something needs to back the dinar for the currency to be worth anything. Iraq’s oil does not back the Iraqi dinar. The U.S. dollar backs the Iraqi dinar. This means that Iraq must have enough U.S. currency on hand to match the value given to the dinar. Currently Iraq’s money supply outside of the bank is over 30 trillion. These numbers are available on the Central Bank of Iraq website.
Iraq’s M0 money is physical money. Iraq’s M1 is physical and electronic currency. Iraq’s M1 is over 70 Trillion. This is according to the Central Bank of Iraq. (CBI) So the dinar gets its value from the Dollar. This is why the exchange rate is about 1166 to 1. If Iraq had less currency in circulation the dinar would be worth more. One thing about a revalue is that they will need enough US currency to back any value they place on their currency. The amount of currency in circulation plus the reserve amount (US Dollars) determines the overall value of the dinar. This puts an overnight Revalue out of the question once and for all.
First if the dollar is worth 30 cents less than the dinar will also be worth less because it is pegged to the dollar. Remember the dollar backs the dinar. Lindsey does not say that the dollar will not be a reserve. He says that all the currencies globally will revalue putting an end to currency wars. He says that the crash of the dollar will come after that. When the dollar crashes it will be because it is no longer used as a reserve and oil will no longer be sold in dollars.
Second I find it hard to believe that all the nations signed on to this and there will be no more currency wars. Nations like to keep their currency low in an effort to increase their exports. China undervalues their currency by 30 to 40 cents. This is the same as having a 30 to 40 cent tariff on all goods coming into china from America and it allows china to export more goods which is the fuel to any nation’s economy. I find it hard to believe that all nations will give that up. Especially China!
The lower a currency value the better the chance that country will get industry because it will be cheap to manufacture goods and exports for that nation will be higher. This is the incentive for having a low value on your currency. The country with low currency rates can have a higher trade export and that fuels that country’s economy because it provides many jobs. Global currencies flow to that country as a result of their low currency rate. These countries are all of a sudden going to play nice because the IMF says so? I have my doubts. I highly doubt china is on board with this. Their actions over the last 10 years suggests otherwise. By the way this scenario further debunks the revalue of the Iraqi dinar because a higher currency will serve to restrict their economic growth from an industrial point of view.
Oil is sold in dollars. This is how Iraq pays for its international contracts that are given out to rebuild the country. There are not any companies that will accept dinar. This is mainly because it is a currency that is only used within Iraq itself. It is not a global currency. These companies don’t have any global use for the Iraqi currency.
To understand what the Petro-Dollar is you must first go back to the Nixon administration. In August of 1971 Nixon removed the dollar from being backed by gold. This was called The Nixon Shock. This ended the current financial system which was call Bretton Woods that was set up in 1945 after World War II. Shortly after that event agreements were set up with OPEC.
Basically OPEC agreed to sell oil only using U.S. dollars. In return the United States would protect any nation selling oil in dollars with our military. They also promised to make any nation that sold oil in dollars rich. As long as dollars are used to buy oil the currency will be in demand. Oil is the factor. The dollar will begin to hyper-inflate and collapse when it will no longer be used to buy and sell oil.
The United States started to make invasion plans shortly after Saddam started selling oil in Euros instead of Dollars.
Even Barak Obama protects the petro dollar. If he did not do this then it would lead to an entire collapse of the U.S. economy. This would also result in a global collapse. Remember when Obama said Gaddafi must go
For better or worse here is my opinion. I don’t put much stock in a global reset simply because it does not serve the interests of nations like China. It is doubtful that they will comply. The dollar will collapse only when our military might diminishes. Once the OPEC nations begin to rely on other nations for military protection and when or if our military weakens due to lack of funding, then the United States will no longer be able to force the current Petro-Dollar arrangement.
It is highly doubtful that Iraq will begin selling oil in dinar without a collapse of our military and our economy. No so-called global reset can change this. I believe the U.S dollar could collapse, but it won’t be overnight. I think it will be gradual over time. I believe that eventually the dollar will be replaced by a new international currency controlled by the IMF.
To research these things further I will recommend some articles that I wrote on my other blog that will point you in the right direction.
To understand Iraq’s oil industry read The Role That Oil Plays in Iraq.
To understand what is going on in China and how we got to where we are read The Real Battle part 7
To understand America’s currency and how we got to our current financial system read The Monetary History of America.
To understand the financial meltdown of 2008 and our current global financial system read The Rabbit Hole series.
Click on the links and resources in those articles to further your research.
3 thoughts on “Dinar Update 3”
Pingback: The Global Currency Reset Part 1 | Iraq Currency Watch
While I certainly agree that the “global reset” is a myth (typically pumped by sellers of precious metals and exotic currencies like the Iraqi Dinar) I’ll correct a couple of details.
“Currently Iraq’s money supply outside of the bank is over 30 trillion. These numbers are available on the Central Bank of Iraq website.
M1 money is physical money. M2 is physical and electronic currency. Iraq’s M2 is over 70 Trillion.”
M0 is physical currency in circulation (outside of the central bank system)
M1 is M0 + on demand deposits (which are electronic of course), including checking saving etc, also called narrow money but base money, narrow money and broad money can have different meanings in different countries.
M2 is M1 + non on-demand deposits (bonds and more complex instruments that have early withdrawal penalties and such), often called broad money. many refs for this on the net.
For Iraq (as of the end of 2012) M0 = 35T, M1 = 70T, and M2 = 83T IQD (which one can find in the CBI’s indicators spread sheet http://cbi.iq/documents/key%20financial.xls). With a bit over $80B in USD they of course can not change their exchange rate by more than about 15%, and very likely they want to keep that powder dry so to speak in case they need to use it for things like combating inflation down the road.
As for the “global currency reset”. Anyone who thinks the nations of the world (including all the developed world) have agreed to execute the most significant financial structural change in the history of civilization, where those currently holding the wealth are going to generously distribute it, and the only people that know about this are those running or posting on some conspiracy web sites, well please pass the tin foil! It doesn’t pass the smell test at the garbage dump.
I got a lot of email inquiries about this global reset thing. So I decided to address it. I have been away from the dinar for a while. I have been pursuing other interests. I did some quick searches and I could tell a lot of people have fallen for this bunk.
Thanks for pointing out the error in the M1 classification. I already knew points you corrected, but as I was typing I was thinking about American classifications of money. Because of a lack of proof reading on my part I did not catch that mistake. Thank you for setting the record straight.
usually it takes about 4 days to create an article on this site which includes links to back up what I am saying and proof reading. I did this one in just 3 hours. I appreciate the time you took to help make this correction. I will edit the post and make the proper corrections
Comments are closed.