STATUS OF THE RV
There is WOW! news today. I got to tell you that when I read this article I almost fell off my chair. This is exactly what my CBI contact just told me on my call to Iraq yesterday. My contact told me the CBI is about to move to yet another step in the process, choo! choo!!!
So once again we see the news media talk about good news from the financial advisor to the Prime Minister, Dr. Mazhar Muhammad Salih. He is really talking a lot these days, isn’t he? Why wouldn’t he. There is so much good news and the citizens of Iraq need to be kept informed.
But what good news?
What news did he bring us in today’s Newsletter? Let’s slow down, relax and I will try to explain why this simple article is so telling of what is happening in Iraq. You can find the complete article in the Articles Section of today’s Newsletter.
As you might sense, I like analogies, as they capture the essence of the situation and help us to understand it even better. You do want to understand?
So, the Iraqi choo-choo train is driving down the track, speed is picking up with every new reform completed. Each reform feeds or allows the next to move ahead. This train is the Dr Shabibi and IMF reinstatement plan. As the train travels down the track, it passes by certain stops along the way. We have witnessed these events and so I will not go into detail again today. These stops are the events that will get us to where we need the train to go. It may have traveled slow at times but now I think it is going to plow forward faster and maybe into the early summer but not much longer. The final destination is the reinstatement but not there yet.
What did Salih just tell us that got me so excited?
First of all, he said that the fiscal and monetary policies succeed in undermining the parallel dollar. If you recall, this would be the third article telling us they succeeded and are now controlling the parallel market and the dinar is stabilizing. I quote from the article – “The exchange rates of the dollar in the parallel market witnessed a noticeable decline, reaching yesterday, Monday, around 146 thousand dinars per 100 dollars, a number that specialists believe may decline further in the coming periods as a result of the success of the financial and monetary policies, stressing that the superiority of the official market” But is this just tempory for now and later we see spikes again? Remember that the CBI is mostly concerned about bringing the rate downward and then leveling it off, they watching for the reduction in inflation and the dinar will be worth more. But what did all this past rhetoric mean anyhow?
So, what was the last reform implemented from the financial and monetary policies that finally seemed to break the camels back? I will quote from the article – “while specialists attributed the reasons for this decline to the introduction of the customs automation program (ASYCUDA).” Then “noting “the importance of using the customs policy, which was represented by (reducing customs tariffs and diversifying imports without quantitative limits for basic and necessary goods) as part of the performance of the financial policy in providing stability.”
Yes, STABILITY, STABILITY, STABILITY!
Oh… but the news gets even better…..
Then Salih went on to say and I quote – “Al-Alaq indicated during the hosting that there were ongoing meetings with the US Treasury, and it was agreed to reconsider the sanctions imposed on Iraqi banks ,”
These sanctions of Iraqi banks needed to be lifted but remember these sanctions were put on the banks by the CBI with recommendations from the US Treasury. These sanctions were just sanctions on the selling of the dollar. So, remember a couple things then:
1. The CBI does not want to restrict the selling of the dollar to merchants who need it as long as it is in line with the CBI official rates and can compete with the dinar, controlled and not suffocated;
2. In the recent past, by limiting the dollar through the sanctions only created a shortage of dollars and through shortages drove up the price, simple microeconomic principles. It seemed self-defeating in helping to bring down the parallel market rate. But this is now all changing.
However, with implementation of ASYCUDA it was able to control the illegal smuggling and selling of dollars in Iraq, thus eliminate the paper handling too in these transactions. This limits corruption since it is now all electronic and tracked. Remember over the years I kept telling you that this will be “HUGE” impact on Iraq if they can control the customs and tariffs and the impact it would have all around favorable consequences on the economy. Now we are beginning to see tangible effects and the interconnectivity of some of these reforms on the overall big picture and allowing the CBI to go forward to yet the NEXT STEP in the reinstatement plan.
So, what is the next step?
If you care to remember I told you in my last Newsletter that it is very significant to collect these dollars stashed in the homes of the citizens. This is the next step. But they told us the CBI would not take this next big step, to collect all this cash, unless they first got the parallel market under control. Now they are telling us it is under control. So, what do you think they are going to do next? Gee Whiz….let me think…lol.. lol.. lol..
Of course, the CBI is going to go after these stashes of cash. What else? Gee Whiz!! 😊 This is their words not mine. From the article Dadoush, the reported, also believes during his talk with Al-Sabih and I quote from the article – “” that this decline will positively affect the level of per capita income, and will also push people who hoard the dollar to give it up and sell it,”
Can you hear the train jugging down the track….choo..choo! Listen carefully now for the whistle…
Yes, this means turn the dollars into the bank and banks only have accounts for the average citizen in dinars. Yes, only now dinar, yet another CBI reform. Oh…but if the dinar is worth less than the dollar then why would they turn them in if they are losing money….? The answer is simple – they wouldn’t. Get it? So, how would they make the dinar more valuable than the dollar so they will turn them in, thus get all this capital finally into the banks?
In the past, the CBI told us this is a huge chuck of the monetary mass taken out of circulation by “uncertainly” and “lack of stability” in the markets. They told us this is “vital” and has to be done to move the economy forward. I quote from the article – “Salih, believes that “economic policy played a major role in imposing a climate of stabilityin the general level of dollar exchange rates,”
Opps, yes, STABILITY, STABILITY, STABILITY again!
Choo! Choo!
Then in past articles they told us the banks need this capital to generate products for revenues for their profit margins (since the auctions are being phased out come mid-year 2024). They will do this by providing loans to the citizens for cars and homes. Business also needs the money to invest in farming, manufacturing, services, etc.. This money is going to literally “kick start” the private sector.
But how will the CBI get all these hordes of cash out of the homes and into the banks?
Again, I quote from the part of today’s article which tells it all – “which could contribute to the continued decline in the exchange rate, (of the parallel dollar market) indicating at the same time that this decline in the currency Green prices will ultimately lead to a positive effect of controlling the prices of some goods necessary for the individual,” Yes, more purchasing power, inflation would drop. But how do you get more purchasing power? You must increase the rate of the dinar and I firmly believe this will be next step and this is coming soon, VERY soon!
But slow down cowboy, I did not yet say reinstatement, did I? The choo choo is still running.
What is the “official” CBI rate for the dinar? It is now at 1320 so if they delete the three zeros then it becomes 1.32 IQD – 1 USD. But as I explained a million times already this is going to be first an in-country revaluation. Also hold your RV horses and let’s not do one of those intel guru knee jerks either. We don’t actually know the next “program” rate revaluation from 1320, but we do know with certainly it must be over a dollar. How much over to give enough incentive to turn in the dollars, we don’t know. But anyhow we are really not concerned anyhow with this next rate but only to want it to happen and be over a dollar. We are not going to exchange at this rate anyhow. Later, after the reinstatement, If you live in the U.S. you will get the U.S. rate, if in Canada you will get the Canadian rate or if you live in the EU you will get the European rate. I told it will be significantly higher than the initial in-country rate by the time we see it and go to the bank.
Choo! Choo!
Why?
I just told you…. To make the dinar more valuable than the dollar. Is $1.32 more valuable than $1.00? Which one would you rather have. But the citizens are still not going to rush to the banks to exchange their stashes of cash so quickly, hold on to your horses…. So, unless the economic environment is “STABLE” and thus they can trust the banks and trust the system, their money will stay at home. So, Iraq needs two things to make this next step work:
1. the rate of the dinar to be over a dollar,
2.stability
Choo! Choo!
Do you see also now why over the past decades the CBI kept telling us that, in order to conduct the “project to delete the zero”, they will need STABILITY and SECURITY? Now do you fully understand, as things come full circle, why they kept saying this to citizens? I told everyone someday you will understand why the CBI kept telling us this about needing STABILITY and SECURITY?
So, folks this is the news for today as far at the dinar goes. Remember that for Iraq it is an uphill battle as they also fight the US trying to manipulate their economy and keep Iraq under their thumb. But, as I said in the past and will say again today, that Iraq will win enough of these battles and ultimately win the war on their economy with the US. These people are not dumb. They see the manipulation too and have to work around it.
I know it’s been a very long road for us investors but we will get to the end of this and we can now see the writing is on the wall. Again, I can’t over emphasize enough in that we must stop this nonsensical intel guru guessing and just follow the 2011 plan and it is going to lead us to the RV, whenever that occurs. We can see now their next step. When will the CBI decide to do this next step? This is the real question we must ask today as we can clearly see it is VERY, VERY close, according to the interview with Salih. Choo! Choo!
PS- please try to consider a gift to help pay for these calls to Iraq. I cannot do this without you.
