10 thoughts on “ICW Podcast- Dinar Corp part 2”

1. Hi JRG,

   I thought you would respond to this podcast. I think we have had this discussion a few times related to other posts but not with this much detail. Unfortunately, this is a complicated subject with many variables. So in order to address your concerns my response will be rather lengthy. I apologize for such a long read up front.

   I want to say that it is okay to disagree with me. I respect your point of view and I am looking into your points. I only hope that you took the time to look at the document I mentioned (Key Financial Indicators). There are others we can use from Iraq’s central bank like Monetary Aggregates that basically has the same information. I think for our purpose the original document works just fine.

   I also want to say that I used to hold your point of view. In fact, when I came up with my current theory it worried me because I knew it sounded crazy and people would reject it right away. I believed your point of view in the past for all the reasons you listed. But I encountered new problems in Iraq’s economy that this position does not explain.

   So in the post called “Trials For Dinar Holders” I began to revise my estimates. While I believed Iraq had approximately 28 to 30 trillion outside the nation I used a conservative number of 25 trillion. Then I used a conservative number of 5 trillion to give an approximate estimate of currency within the country. That still left about 6 trillion unaccounted for which I considered to be a margin of error in my understanding.

   https://iraqcurrencywatch.com/2014/08/04/trials-for-dinar-holders/

   It is important to note that this was not presented as fact. This is my theory. I explained that in the comments and I said that in the post. While I am not sure about the actual numbers I now believe that a lot more currency resides outside the border of Iraq then we were initially led to believe. This solves many issues regarding the stability of their currency and it makes sense. This is why I used approximate numbers. I am just trying to understand current economic laws that make no sense while I look at their currency history. Yes, I could be wrong, but a lot of my points could be right too.

   If someone would explain why things concluded the way they did with a different theory then I would be open to that. I am very familiar with your arguments because at one point they were mine. So I just did not pull this whole thing out of thin air. This conclusion is based on interpretations found in Iraqi documents. Before I address the problems that led to my current conclusion I would just like to address a few things you wrote.

   “You claim that of the Iraq M0 (cash outside of banks), at around 35T only something like 5T or maybe even less is in Iraq. But that is simply not enough cash to run the economy, especially in a cash oriented (non-banking) economy.”
   
   The 35 trillion numbers came from Iraq’s key financial indicators document. That is not my number. The 5 trillion was a rough guess and not a concrete number. This is the number used in Trials for Dinar Holders. I am not sure of the actual amount. My guess would be between 5 and 9 trillion.
   I agree that would not be enough cash to run the economy. The U.S. dollar fills the gap and makes up the difference. This is one area where we disagree.

   Iraq’s number 1 export is oil. This is according to documentation from the CBI and Wikipedia. Those sources confirm that 95 percent of Iraq’s exports are oil. Oil is only sold in U.S. dollars per the petro dollar system. When Iraq calculates the budget for the upcoming years they use projected oil sales. I remember going over Iraq’s yearly budgets for 2010-2013. They were calculated in both dinar and dollars. See examples below,

   http://www.washingtonpost.com/wp-dyn/content/article/2011/02/06/AR2011020601766.html

   http://www.reuters.com/article/us-iraq-budget-idUSTRE71J1SP20110220

   I just want to make sure of what you are saying so forgive my misunderstanding of your points and how the Iraqi system works. I am using the 2011 budget as an example. Projected oil revenue that went to the budget of 2011 was 82.6 billion which then was exchanged for 96.6 trillion dinar. That was used to pay for Iraq’s budget.

   This is in spite of the fact that the key financial indicators document never reflected these numbers in their currency supply. Their M2 never went above 75 trillion for that year. In fact for December their M2 was 72 trillion 178 billion. I am not trying to dispute what you are saying. I am only trying to understand it. I know that this 96 trillion would be reflected over a 12 month period as they sold oil. Even if you divide the 96.6 trillion by 12 you don’t see that much fluctuation on the monthly totals. At least I did not see it back when I looked at the financial indicators on a monthly basis.

   Major portions of Iraq’s budget for those years went to rebuilding Iraq’s infrastructure. Global corporations like Haliburton were used for rebuilding a lot of infrastructure. Since the dinar is only supposed to be used in Iraq for exchange, (currency law section 32) I find it hard to understand why Iraq would pay them in dinar and then require Haliburton to exchange it to dollars. Why not just pay them directly in US dollars when the money for oil sales come in?

   If you have any links that support the position that Haliburton was paid in dinar for contracts they fulfilled in Iraq then I would very much like to see them. While projects were calculated in dinar I was under the impression that Iraq paid them in dollars. I could be wrong. I have some unanswered questions in this area. Multiple links will send your comment to moderation. As you know we don’t censor anyone here and I will quickly approve your comment the minute I see it.

   “Looked at a few other ways: Dinar Banker is charged with selling $600M USD worth of IQD over ten or so years. They marked it up 20% so that’s $500M USD worth of dinar or around 550B IQD. To account for 30T IQD in sales there would have to be 59 other dealers as large as Dinar Baker.”

   I have looked at it this way and this was the main argument as to why I used to hold your point of view. Dinar trade was a bigger dealer than Dinar Banker and there were several other dealers in the U.S. I projected approximately 3 to 4 billion in dinar sales in 2012 based on this.”

   The problem with this stems from the fact that we are only using America for a basis of global dinar sales. The dinar is sold globally to private investors set up by dealers all over the world. Dinar Trade was even set up in Europe. But you could buy dinar locally from all over the world. American dealers were not the only ones pedaling this thing. That throws these calculations way off. There are many countries and many dealers around the world that sell dinar. This could be another point on which we disagree. Many countries have their own set of gurus too. I know this because they used to take stuff from my blog back when I was pro-dinar. It was translated to suit their needs.

   “At least a key driver if not the dominant driver of changes to the CBIs foreign reserves and the money supply is exports and imports (which you neglected to even mention).”
   
   While it is true I did not mention the way oil exports contribute to the reserves I did not say that Iraq exclusively got their reserves from dinar sales around the world. I said that these sales contributed to their reserves without going into a detailed analysis of the entire reserve system. I did not think that was needed and I was not trying to omit anything. I thought that most people would know how Iraq got the bulk of their reserves.

   “Are you claiming that the country runs almost entirely on USD? This is a common guru claim but I have never seen any evidence that such is the case, have you?”

   We all know that the revalue was misrepresented. Iraq wanted to do a redenomination. That was back when Shabibi was governor of the CBI. Even in spite of my limited economic understanding at the time I got into this thing, I recall reading several articles as to the reason Iraq wanted to do this. One of the main reasons was they wanted to strengthen the dinar.

   Many articles said that the dinar is mainly used for smaller purchases while the dollar is used for larger purchases. This is where some of the gurus got their information. But they claimed that Iraq wanted to revalue and not redenominate.

   I remember back when I discovered this was a redenomination and not a revalue. I went over many of the same articles. According to the press in Iraq the dollar is used for a major transaction because they don’t need to bring as much physical cash. It was easier to facilitate these transactions. The dinar was competing with the dollar and one of the objectives of a redenomination was to lessen the dollar amount in Iraq. That much was true but the gurus misrepresented the information.

   This does not mean that Iraq will redenominate today. That was a policy that Shabibi was pushing. They wanted to lessen their dependence on the dollar in their local economy. At least this was according to Iraqi articles I personally read. If this scenario were true then this would also mean that less dinar would be needed to sustain their economy at that time and the dollar filled the gap.

   “Addendum: I was incorrect about inflation from 2010-2014 (where the express it as at the consumer price index relative to 2007 not as a percentage). According to that, they have it at ~20% in 2009 (the last year they state it as a percentage in the sheet I had, which is a little out of date), but drops to 3% in 2010, then 6, 3, 3, 2 for 2011-2014. So an impressive drop. Still I don’t think that changes my overall argument.”
   
   While this may not reflect your points, it is one of the things that reflect the points I made in the Podcast. It is one reason why I switched my position. That makes it relevant to the overall discussion. So now let me tell you a few reasons why I arrived at my current point of view.

   I was reading through the history of the dinar on the CBI’s website today. It really has not changed since I was involved with it. Here is a small section that got me started.

   “1990 – 2003 After the Gulf War in 1991, and due to the economic blockade, the previously used Swiss printing technology was no longer available. A new, inferior quality notes issue was produced. The previous issue became known as the Swiss dinar and continued to circulate in the Kurdish region of Iraq. Due to excessive government printing of the new notes issue, the dinar devalued quickly, and in late 1995, US$1 was valued at 3,000 dinars.” -CBI Website

   http://www.cbi.iq/index.php?pid=History

   That got me thinking about Iraq’s currency supply during the 1990s. I began to look at more recent inflation rates in regards to currency supplies. I discovered that inflation was a major issue up until 2007. Then things began to change. Looking at these totals I discovered something.

   2009 Currency outside of banks= 21 trillion 776 billion
   2010 Currency outside of banks= 24 trillion 342 billion
   2011 Currency outside of banks= 28 trillion 287 billion
   2012 Currency Outside of banks= 30 trillion 594 billion
   2013 Currency Outside of Banks= 34 trillion 994 billion
   2014 Currency Outside of banks= 36 trillion 72 billion

   These numbers are from the key financial indicators document. Inflation reached a record low of -6.37 percent in October of 2009. In 2010 it was 3 percent, Then 6 percent in 2011, 3 percent in 2012, 3 percent in 2013, and 2 percent for 2014.

   This is in spite of the fact that Iraq’s money supply grew by 15 trillion in the same period of time. This was during the height of the dinar scam. While a good economy may absorb some of the expansion, I will propose that it won’t cover an expansion this great. These inflation rates should be much higher than what they are.

   Whenever you dump currency into a local economy the end result is hyperinflation, yet we see that this is not the case. I would guess that even during the 1990’s when Iraq’s inflation was out of control their national currency supply was lower than it is right now. They invalidated all dinar outside their borders in 1993. This was a total of 25 billion dinar. Today, while their overall currency supply has gone down their money outside of banks has gone up. Today we are looking at over 39 trillion outside of banks. Yet they still maintain relatively low inflation rates.

   So the question is obvious. How come Iraq’s inflation rates are so low? It does not make sense unless they are lying about their inflation rate or they are exporting their currency.

   This is how I got started trying to figure out how much currency is outside Iraq. Then by the time I was done I calculated roughly 28 trillion. At the time I thought I was the only one who believed this. After I reached these conclusions I discovered that Professor Cory Bunting, director of the Capital Markets Center at Virginia Commonwealth University in Richmond, Virginia believes that Iraq exported a great deal of currency. His numbers were higher than mine.

   In addition Sam I Am ran these numbers and this scenario by John Jagerson. John thought that Iraq was lowballing their inflation rates. When he heard the scenario of Iraq exporting their currency it made sense to him. In fact this scenario made sense to other economists I talked with. Although the actual numbers may vary from person to person we agree on two things. Iraq may very well have engaged in exporting their currency, and it is a far greater number then 5 trillion. This is the best explanation for low inflation rates that I can think of.

   While I am not sure of the exact numbers I believe that a lot more currency is outside of the border than what is in the border. But this is only my theory.

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2. and… (too bad the blog does not support post-posting editing), a better indication of how much money the GOI is putting into the money supply would be just their budget. Exports (what I used) is a big part of it, but they are always running a deficit so that of course increased the money supply as well.

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3. Addendum: I was incorrect about inflation from 2010-2014 (where the express it as at the consumer price index relative to 2007 not as a percentage). According to that, they have it at ~20% in 2009 (the last year they state it as a percentage in the sheet I had, which is a little out of date), but drops to 3% in 2010, then 6, 3, 3, 2 for 2011-2014. So an impressive drop. Still I don’t think that changes my overall argument.

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4. Hey guys. Quite the saga in part 1, pretty amazing. But I think you are way off base in your financial analysis in part 2 by not considering the impact of Iraq’s export surplus. I know you’ll say, and have said, that everything in the podcasts are just your opinion, but it would be nice to HEAR you say that rather than it being in the fine print.

   Of course the RV is a scam, and was a myth from the start. The value of a pegged currency can not significantly exceed the total of the central banks foreign reserves. So RVs outside of that range, let alone 10x or 100x or 1000x outside that range simply can not occur. There is no decision available to be made in Iraq that can change that. I also agree that people might well get stuck if Iraq redenominates. But, your claim of ~30T IQD being out of the country does not hold up as I see it (and of course I could be wrong, speaking of which let me get in a plug for Sean Carol’s book The Big Picture which I just listened too, he has a lot on keeping in mind that you could be wrong, great book though it might be a challenge for Theists (but hey give it a shot anyway!)).

   You claim that of the Iraq M0 (cash outside of banks), at around 35T only something like 5T or maybe even less is in Iraq. But that is simply not enough cash to run the economy, especially in a cash oriented (non-banking) economy. Iraq in 2013 had about a 200B USD or 220T IQD GDP. 2% of GDP in cash is not enough. Are you claiming that the country runs almost entirely on USD? This is a common guru claim but I have never seen any evidence that such is the case, have you?

   At least a key driver if not the dominant driver of changes to the CBIs foreign reserves and the money supply is exports and imports (which you neglected to even mention). USD oil revenue comes in to the MOF, they exchange it for IQD to fill out the GOIs budget which pays for things in the country. That increases the money supply and the CBIs foreign reserves. Then the auctions sell USD for IQD lowering the money supply and the CBIs foreign reserves. All of that is mostly electronic. The auctions are mostly for imports (if you add them up they used to be very close to total imports, though in recent years the CBI got a bit looser on who get gets USD this way). So if there is an export surplus year over year, the money supply goes up and the foreign reserves also go up. This was the situation for most of the 2009-2013 or 2014 period which is they main reason the money supply went up. Inflation during this time was also pretty high, in the teens at least. But the GDP was rising very fast, which is perhaps why they did not experience worse inflation, it could be absorbed by the economy given how bad it was in the early 2000s. Its also not the increase in M0 but the increase in M1 that matters here (it also went up but less so as a percentage since of course its about 2x bigger).

   Is there enough slop in all this to account for 2 or 3 trillion IQD bought by the RV crowd? Sure. To really account for everything you’d have to both understand fully how the CBI calculates what it publishes (which I do not) and get good data on exports and imports. But just doing this sort of back of the envelope calculation, its not 30T. That’s ten times too big.

   Looked at a few other ways: Dinar Banker is charged with selling $600M USD worth of IQD over ten or so years. They marked it up 20% so that’s $500M USD worth of dinar or around 550B IQD. To account for 30T IQD in sales there would have to be 59 other dealers as large as Dinar Baker. Where are they? If you figure people on average bought 2M IQD, then there would be around 15M purchasers? If 2/3 of that was from the US that would be 1 in 30 people bought IQD in the US. In my personal experience there is no way it was that common. Did the dealers in total make $6B USD in profits (20% of $30B in revenue)? No way, the numbers just do not add up, its not that big. 2-3T IQD is plenty huge enough!

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5. There is a special place in heaven for you guys! I bought IQD back in December 2011 and by April 2014 had sold most of it back to the online dealer. Had it not been for y’all, I’d probably not been able to convince my husband to abandon this “investment.” THANK YOU!!!!

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   • Hi BThatGirl. Long time no see. I’m glad to hear that your hubby finally came around. Sometimes it’s like pulling teeth to get people to give up on their RV dreams, but Marcus and I have been on both sides and we understand. Hopefully this latest conviction will wake a few more people up. Best wishes.

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     • Yo, Sam I Am, I was not sure you’d remember me…. Thank you for sticking your neck out to save some of us from the IQD racket. BTW, my husband was born in Tulsa. We live in North Texas. When I read where you guys are from, it was like kinfolk talking. LOL Keep up the good work!

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6. I wish you add text to it and I am hearing impaired.

   thanks

   Eric (million dinars holder)

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   • I am sorry that there is no caption feature. This is only audio and there is no video where closed caption can be inserted. My apologies for your inconvenience.

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   • You can use speech to text programs to follow what’s said, or you can wait for us to upload the video to YouTube where there will be closed captioning for hearing impaired. We should have that ready in a few weeks.

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