Ariel:   How Will Iraq Finance The Revaluation: The Pay Off

Ariel:   How Will Iraq Finance The Revaluation: The Pay Off

An example.

First off, I’ll use the exchange of a 50,000 IQD (Iraqi Dinar) note as my example. To help explain the economics of this cash-in example, I will use a 1:1 cash-in ratio between the USD (US Dollar) and IQD (Iraqi Dinar), considering the current global economic environment, Iraq’s gold reserves, numerous trade deals, and its financial independence from the fiat USD.

What You Will Receive:

If you were to cash in your 50,000 IQD note with a bank that charges you a 2% spread, you would personally receive a net take-home of $49,000 credited to your bank account.

Keep in mind you will more than likely be able to wave many bank fees. So do not worry about that.

What Your Bank Will Receive:

Your bank will receive a $50,000 credit to its account with the US Treasury. They will also be able to add the $1,000 profit to their “capital account.”

Ultimately, the bank wins because they are able to gain $10,000 in lending power under the 10% “Fractional Banking” model.

What the US Treasury Will Receive:

First off, the US Treasury will receive $17,500 in estimated taxes in the quarter after the exchange, because you are now in the “rich” category and get to enjoy the 35% tax bracket. This lowers the “net cost” of the IQD exchange to the US financial system to $32,500 USD (i.e., $50,000 out – $17,500 in).

Again this is only an example using what people assume about taxes based on the current system they are familiar with. We know bills have been passed that makes precious metals non-taxable. I want you all to read this with that in mind.

Furthermore, the US Treasury’s rate is higher than the banking rate (we will use in this example 1.25), thereby further reducing their “net cost” from $32,500 to $20,000.

Gold Reserves and Economic Stability:

Iraq’s substantial gold reserves, estimated at around 96 tons, provide significant economic stability and backing for their currency. This gold reserve bolsters confidence in the dinar and supports the revaluation process.

Trade Deals and Debt Status:

Iraq has established numerous trade agreements with countries such as China, India, and members of the European Union, boosting their economic resilience. Additionally, having paid off their international debts, Iraq’s financial position is more robust, making the revaluation more feasible.

In 2022, Iraq and China finalized multiple oil agreements, including a significant 25-year deal for the Mansuriya field. These deals enhance Iraq’s oil export capacity and strengthen economic ties between the two countries.

India also remains a major trade partner, with substantial imports of Iraqi crude oil. In 2022, Iraq exported $38.8 billion worth of crude oil to India, reinforcing the strategic energy partnership between the two countries.

Iraq has maintained strong trade relations with Turkey, with significant exports of hydrocarbons. The ongoing collaboration includes investments in infrastructure and trade facilitation.

Iraq has bolstered its trade relationship with the UAE, focusing on imports of refined petroleum, broadcasting equipment, and cars. In 2022, the UAE was one of Iraq’s largest import partners, contributing $21.2 billion to Iraq’s trade volume.

Iraq has sought to enhance trade relations with Jordan and Egypt. One notable initiative is the planned highway between Baghdad and Cairo via Amman, aimed at boosting regional trade and cooperation.

Moving Away from Fiat USD:

By reducing its reliance on the fiat USD and engaging in bilateral trade agreements using local currencies and gold-backed transactions, Iraq enhances its economic sovereignty. This shift supports the stability and strength of the IQD in the international market.

Oil Now Enters the Picture:

At some point, a Treasury-appointed agent orders $62,500 worth of oil from Iraq. Payment will consist of a $62,500 transfer from the Treasury’s foreign currency reserve IQD account to the Iraq oil payment account at the CBI (Central Bank of Iraq) in a form otherwise known as PetroDollars/PetroDinar. Even though the world spot price of oil is defined in terms of USD, the actual transaction may take place in any internationally recognized currency agreed to by the parties.

How The CBI Recaptures The Money:

The $62,500 order is filled with 1,250 barrels of oil based on the spot price on the date of the sale (for this example, we used a $50 USD spot price). What does it cost Iraq to produce the oil to fill this order? They have negotiated production agreements for approximately $2 USD/barrel. From that price, $.50 USD goes to the national Iraqi oil company who is the partner in the field the oil came from. Out of the remaining $1.50, the other oil field partners have to pay the Iraq government a profit tax of $.53 USD (35%). The net cost to Iraq to produce a barrel of oil used in this scenario is $.97 USD. (i.e., $2 – .50 – .53)

What does all that mean? It costs Iraq $1,212.50 to bring back a 50,000 IQD note! Can they afford that? I think so! So, instead of paying out $62,500 for a 50,000 IQD note, they only pay $1,212.50! That doesn’t add to the money supply much at all, does it? They receive their IQD back and place it in the CBI, or destroy it.

Summary of Economic Impact:

The transaction is completed with the US Treasury exchanging foreign reserve credits which are equal to $62,500 USD (which had a net acquisition cost of $20,000 USD for the US) for 1,250 barrels of oil (which has a TOTAL COST to produce of $1,212.50 USD for Iraq).

More completely explained, and simply put, it costs Iraq $1,212.50 USD from their foreign currency reserve accounts to redeem the value of 50,000 IQD, which goes into their operating accounts. At the same time, the US got $62,500 worth of oil for a net cost of $20,000. This is how the plan for Iraq to RV at 1 IQD = 1 USD is made possible, with the variable being the political element.

Other Factors that Strengthen Iraq’s Position and Ability to RV:

1. **Gold Reserves**: With approximately 96 tons of gold reserves, Iraq has a strong foundation to support its currency revaluation.

2. **Debt-Free Status**: Iraq has paid off its international debts, providing financial stability and credibility.

3. **Increased Oil Production**: Iraq plans to increase oil production from 2+ million barrels/day to 10 million barrels/day, significantly boosting revenues.

4. **Diversified Trade Deals**: Iraq’s numerous trade agreements with various countries enhance its economic resilience and reduce dependency on any single market.

5. **Reduced Reliance on Fiat USD**: By moving away from the fiat USD, Iraq enhances its economic sovereignty and stability.

Conclusion:

This comprehensive plan showcases how Iraq can afford to revalue its currency, benefiting all parties involved. The robust economic strategies, supported by significant gold reserves, trade agreements, and a shift away from fiat USD, make the revaluation not only feasible but also beneficial for the global economy.

In this scenario, EVERYONE WINS, and the IQD is gradually taken back into the CBI, eventually destroyed, leaving a manageable money supply behind. This process creates substantial wealth, supporting global economic regeneration and stability.

https://dinarchronicles.com/2024/05/31/ariel-prolotario1-how-will-iraq-finance-the-revaluation-and-the-pay-off/

 

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