In my last post I introduce a reverse guru of sorts who goes by the name of Zahlid. He claims that he is a consultant for the Central Bank of Iraq. He claims that they are working with the Turkish MOF, and that he is advising them on how to go about a redenomination. He also said that the exchange would only happen in Iraq and you would need to go there to cash in.

When I posted what Zahid said a lot of people got angry. I gave a disclaimer and said that I did not know if Zahlid is really a part of the CBI. More than likely he was not, but that did not seem to matter. People were still mad that I posted the things Zahlid claimed.

Zahlid was posting his comments at a site called baghdadinvest.com. The article he was responding to was written by a man named Jack. This man has earned my respect as he basically talked facts and told the truth about the so-called investment. That is why I posted the link to his article in my last post. He used facts and figures to show the fallacy of the revalue. He was sharing information that I have been talking about for the last two years. So hats off to you Jack for doing your part in exposing all the guru lies!

Zahlid made a comment that the reserves at the central bank were growing as dinar was being exported. I had figured this out already through the research I had done just a few years ago. The thing that surprised me was he is the first person ever to acknowledge this. However this raises some very serious questions. If Iraq knows that their reserves are rising in part due to the export of their currency are they looking the other way as the currency leaves the country through certain channels? Is Iraq itself in on this Iraqi dinar scam?

I have always thought that this was a big possibility in the back of my mind. I never vocalized it in a direct accusation because I simply did not have the evidence. I only suspected it. Well Zahlid left another comment and he said this.

“@Marcus Curtis

my friend your analogy of this myth is all true, this situation was created by outside influence to attain our reserves prior to people being duped , im in know doubt things are already coming to light with regards to this, I have already maybe spoke to much on here due to my own honour for my country being blackned,even if we wanted to return to sadaams pre war rate it would be impossible even with the reserves of oil,gold,and gas resources and too e blunt ,we have know

interest in making outside investors profits from this currency reform as said before they will

be scattered like sand in the wind when the change happens, Syria found that out with us before

when there holdings were dissolved.There is over 60 tlion iqd which will be evaporated when the change happens,yes our currency will be manageable and in time will be the highest in the mddl east ,I do know main countries have been appeased but there will be a lot of disappointed people

come march when they see they have been fooled by this so called fools gold.

shukran

zahlid”

Well I began to think about what Zahlid was trying to tell me. Although some of it I can’t figure out. I thought to myself “when did Syria have their holdings with Iraq dissolved? What outside influences set this up so the CBI can build their reserves? As I began to dig I discovered that Iraq was involved in a currency scam under Saddam. Apparently Iraq has fooled other nations before. The recent dinar hoax is not the first time Iraq did this. Let me explain.

After the first gulf war George bush pulled out of Iraq leaving Saddam’s regime in power. A wide range of UN Sanctions were put in place. Because of embargoes imposed on Iraq, the CBI could no longer source paper currency from De La Rue. This was Iraq’s UK-based supplier. Saddam began to print dinars locally. He also started to outsource the printing of more bills from a Chinese based printer.

For some reason the new notes didn’t circulate at the same value with the pre-war Iraq notes but traded at a discount. Somewhere around April or May of 1992, the older dinar notes were worth around 3 US cents whereas the newer dinar notes traded at 1 cent. Before the war the dinar was equal to around three U.S. dollars. This was only two years back.

The poor quality of the new post-war notes meant that they were easily counterfeited. The new notes had no security features and they lacked a watermark. The paper for the new notes was thinner and easily torn. The ink ran on some of the new notes. The pre-war notes were printed by De La Rue with modern technology. Traders most likely discounted the newer notes because they may have thought that they would be accepting counterfeits.

There is a news article written in 1993 called “Fortunes in Iraqi Bills Gone Overnight” Here are a few highlights.

To many outside the Arab world a pile of banknotes, each with an engraving of Saddam Hussein in a military uniform, might not seem like a sound investment. But many Jordanians, sure that the United Nations embargo against Iraq would one day be lifted, believed that the hard currency of their neighbor would regain its old value once Baghdad resumes oil sales.

Jordanian businessmen accepted Iraqi currency for payment, often in deals with the Iraqi Government, and squirreled it away. Shepherds sold their flocks, people traded in their gold jewelry and families mortgaged their homes, or withdrew their savings, to buy the Iraqi bills.

Remember this was going on in 1992-1993 The article continues,

Government officials estimate the value of hoarded Iraqi currency in Jordan at $100 million.

And Jordanians were not alone. Investors from Saudi Arabia, the United Arab Emirates and even Kuwait bought up millions of the banknotes, sometimes shipping them out of Jordan by the truckload. Iraq Complains of Hoarding

Iraqi officials say the Governments of Kuwait and the United Arab Emirates alone are hoarding 10 billion prewar Iraqi dinars as part of an effort to hasten the country’s economic collapse and force it to print money with no monetary backing.

Gulf Arab speculators would call up and place orders for a million dinars or more, Bashir Mostapha Nobani, a currency trader, said. “They always wanted the prewar 25-dinar notes because they are easier to ship in bulk than smaller denominations and because they did not have faith in the new Iraqi currency.”

In an effort to fight inflation within their country Iraq decided to invalidate the pre-war 25 dinar notes. This is what the article says

As the old 25-dinar notes began to disappear from the market, inflation soared, and Iraqi monetary officials, in what Western diplomats describe as a desperate effort to stifle it, invalidated the old notes. The move abruptly removed an estimated 25 billion dinars from circulation.

“This decision, in the short term, helps Iraq,” one Western diplomat said. “But in the long term it could prove devastating. Few people outside Iraq will now trust the currency, making imports harder to get and bleeding the hard currency reserves. Eventually this could fuel hyperinflation, as there will be lots of money and little left to buy.”

And that is exactly what happened! But the article continues

Baghdad permitted Iraqis to exchange the 25-dinar notes for the new currency, but they closed the borders for six days to keep speculators outside the country. The border was reopened Tuesday, after the Monday deadline to turn in the old notes passed. Baghdad Imposes Exit Tax

In an effort to cut down on smuggling, Baghdad also imposed a stiff exit tax of 15,000 dinars, the equivalent of $250 on the black market and $48,000 at the official exchange rate. The tax has slowed cross-border traffic from Iraq to a trickle.

Iraqi officials say they have no intention of compensating anyone else, even the Jordanian businessmen they traded with.

“It was their mistake to speculate in Iraqi currency,” Shawki Kubaisi, the chairman of the Iraqi Trade Bank, said in Amman. “This is a matter of our national sovereignty, taken to improve our economy.”

But Jordanian businessmen, who have lost tens of millions of dollars, say the move was akin to theft.

Here is a link to the article

http://www.nytimes.com/1993/05/16/world/fortunes-in-iraqi-bills-gone-overnight.html?src=pm

So here we see an Iraqi government that did business with its neighbors and paid them with pre-war dinars. Then it invalidated those dinars and provided a 6 day trade in period. To make matters worse they closed the borders so no one could trade in their currency during the trade in period. When they opened their borders anyone caught with dinar had to pay a high tax to cross the border thus Iraq was able to confiscate the currency. With this deceitful practice they removed 25 billion dinar from circulation. Remember that some of this currency the government themselves used to trade with other nations.

The Kurds in northern Iraq were not able to exchange their pre-war notes. The exchange period was closed to them. The 25-dinar notes continued to circulate and became known as the “Swiss dinars,” because they were printed with plates made in Switzerland. In the fall of 2002 it became more and more likely that the United States would invade. Because of this the Swiss dinar became more and more valuable. By this time the other nations that held the pre-war dinar already disposed of it. 25 billion dinar was gone and in the end speculators from other countries first invested because they thought the value of the dinar would return to pre-war levels. (Does any of this sound familiar?) But Iraq would not allow these nations to exchange it. They could not get through the border. Here are more links to further your study.

http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2004-01-15.html

http://www.bostonfed.org/economic/ppdp/2004/ppdp0401.pdf

Now fast forward to today’s date. Do you honestly think that Iraq won’t pull the same thing again? Some people say that Iraq has no choice and they got to honor their currency because of federal laws and the MSB license that dealers are required to have. FinCEN will force Iraq to honor their currency and the dealers will be able to trade it in.

Ok let’s look consider that for a moment. MSB is an acronym for Money Service Business. This is a license that must be obtained by a private business in order to conduct certain money services. These services are things like wire transfers, currency exchanges, Money orders, check cashing, and traveler’s checks. These services are normally done in a bank, but this license allows a private business to provide the same service. This is why dinar dealers are required to have the MSB license.

Here is a fact sheet regarding MSB

http://www.fincen.gov/financial_institutions/msb/pdf/FinCENfactsheet.pdf

FinCEN stands for Financial Crimes Enforcement Network Here is a quote from their site.

“FinCEN is a bureau of the U.S. Department of the Treasury. The Director of FinCEN is appointed by the Secretary of the Treasury and reports to the Treasury Under Secretary for Terrorism and Financial Intelligence. FinCEN’s mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.”

These are the guys that issue the MSB licenses to the dinar dealers. It allows them to sell the dinar as a collectible item. Here is a link to their site.

http://www.fincen.gov/about_fincen/wwd/

here is a look at their international program

“FinCEN works to establish and strengthen mechanisms for the exchange of information globally, and to engage, encourage, and support international partners in taking necessary steps to construct regimes to combat money laundering, terrorist financing, and other financial crimes. FinCEN responds to requests from financial intelligence units (FIUs) that are members of the Egmont Group, and acts as a conduit for requests from domestic law enforcement to foreign FIUs. FinCEN also issues strategic products for law enforcement agencies and FIUs on topics of international interest.”

Here is the link.

http://www.fincen.gov/international/

Now that we have our background established how does all of this work on a legal basis? First and foremost it is against the law for a business with a MSB license to provide investment advice! You need a special license for that. Yet we see some dealers who have a MSB license marketing the dinar as an investment.

Second-any investment needs to have legal disclosure. The risks of any investment will need to be covered during the purchase of said investment. That is not being done.

http://legal-dictionary.thefreedictionary.com/full+disclosure

http://www.learningmarkets.com/the-iraqi-dinar-scam/

Third-there are some gurus who not only hype the scam, but they sell dinar or get kickbacks from dealers that sell dinar. Not only is this illegal, but the agents of any MSB must be listed with FinCEN! Some of these gurus on the payroll are being presented as an independent analysis and that is simply not the case. They are excepting money from dealers.

According to the department of homeland security importing the dinar is against Federal law. They got a prosecution based on this. It was even established in the Status Of Forces Agreement (SOFA) that U.S. solders could not bring back dinar after their tour of duty.

According to Iraqi law the dinar can only be used an honored within the borders of Iraq and it is illegal to export the currency. Check the official links below

Click to access 20081119_SOFA_FINAL_AGREED_TEXT.pdf

Click to access CBILAW-EN_f.pdf

http://www.ice.gov/news/releases/1305/130521rapidcity.htm

Dinar has been exported in the past to provide a means of exchange From US dollars for people traveling to Iraq. People cannot use it as a means of exchange outside the borders of Iraq or use it for investment purposes. Check the BH indictment!

When Iraq enters the redenomination process it will site these laws as a reason for exchanging the currency in country only. So you would need to go to Iraq to exchange your old dinar for the new dinar or you would need to know someone who is willing to go on your behalf. You can’t use the banks and the banks do not offer an exchange service for the dinar to begin with.

FinCEN will go after the law breakers. But those law breakers are the gurus and the people marketing the dinar as an investment. It’s jurisdiction is limited outside of the United States and in the end Iraq has national sovereignty! Iraq will more than likely cooperate with anything FinCEN wants to investigate but in the end FinCEN will go after the dealers and their agents/gurus who market the dinar as an investment. Those are the ones breaking the law. So now,

I would highly recommend that you be honest with yourself just this one time. Given the fact that Iraq will profit by only doing a redenomination within their borders and their reserves will remain stable. Considering the fact that Iraq has done this once before, What do you think Iraq is really going to do?