Groovgal
06-18-2010, 09:52 PM
A few days ago I broke down parts 1 and 2 of the Center for Studies and Research / Consultant for the CBI. The appearance of Chairman Mohammed Saleh.
Parts 1 and 2 covered the Central Bank of Iraq’s financial system, partial history of its currency, the Strategic Framework Agreement, and the reintegration of the Iraqi Dinar into the flexible exchange rate system that is recognized internationally. Although these articles are translated into English, I’ve had some individuals contact me asking to further clarify these articles into simpler terms. I’ve taken it upon myself to add additional information or further explanation beyond what the articles entail for mere educational purposes.
While it is easy to sit and read any of these documents as most of you do and are doing now, it is sometimes difficult to truly understand what is being said if you do not know the background or further knowledge of the topics being discussed. If you are an individual who already has a firm grasp on economic financial systems or global politics then you might find this to be more than what you need, however I’m writing this for the newer investors who are unfamiliar with what they are reading.
It was brought to my attention that a few who had read parts 1 and 2 of this study had seen the articles as reflecting negatively upon our investment, however they are anything but negative! These are fantastic and further prove that we have made a very wise choice in deciding to invest in the Iraqi currency. While this has been a long road we are close to the end.
I’ll move on to explaining part 3 of the Center for Studies and Research / Consultant for the CBI. The appearance of Chairman Mohammed Saleh, which was published yesterday. After I go through explaining and making the article easier to comprehend I’ll add some additional thoughts.
Mohammed Saleh of The Central Bank of Iraq believes that the current monetary policy, being that of a fixed rate on the Iraqi Dinar, is a natural and beneficial way of maintaining the financial system, which is based on market competition. However, the CBI desires to expand the Iraqi Dinar into the international market by joining the flexible exchange rate system in effort to join in global financial community.
Yet, it is important that the CBI continues surveillance on the flow of monies in order to curb possible illegal activities such as money laundering, terrorism, or tax evasion by Iraqi citizens depositing their monies in banks abroad.
The CBI wishes to leave behind the era of Saddam Hussein and no longer wishes to restrict the flow of foreign currency exchange. They are anticipating the upcoming freedom for its citizens and brighter economic climate within Iraq. The era of Saddam Hussein was narrowed by suppression of the Iraqi people who had limited freedom to own and dispose of legitimate economic rights. Chairman Saleh described this era as dark economic times specifically in the area of foreign currency exchange and as a result it left Iraq isolated from their neighbors as well as the global community.
He expressed excitement at the new horizon that stood before the people of Iraq. The provisions of Article VIII of the International Monetary Fund Convention, allows member countries to adopt freedom of foreign currency exchange by joining the flexible exchange rate system and it further allows member countries to lift restrictions upon its citizens and provide freedom to move monies with the exception of illegal cash flows as mentioned above. Individuals who partake in money laundering or other illegal actives hinder the value of the currency and restrict its growth by creating a parallel markets similar to the current model of North Korea.
Within a restricted monetary system these types of activities are greatly reduced, however the CBI does not wish to restrict its citizens even though the cost of surveillance will be a burden. By not adopting Article VIII and joining the global financial community the country of Iraq would only generate a negative financial system that would weaken its capacity and ability to attract foreign investments nor capital (cash) flow from within or globally.
The GOI/CBI is anticipating the Investment Law No. 13 of 2006. However, they wish to take the proper steps as to not repeat the mistake of others such as the problems that occurred within South East Asia during the years of 1997 – 1999. South East Asia experienced an endemic that proved to be detrimental to its economy due to the flight of foreign capitals, investment portfolios, deposits and various debt issues of high liquidity (currency in circulation) while having weak foreign reserves available. South East Asia experienced an imbalance within their budget pertaining to the balance of payments and their deficit. The situation proved to be unprecedented and resulted in the collapse of the currency exchange rates.
However, in spite of this, Iraq has little concern of joining the flexible exchange system. The CBI is seeking a monetary policy and has been doubling up on their foreign reserves to date, in order to create a firm foundation to cope with issues that might arise concerning external balances (debt) of the national economy because of currency speculation and capital flight abroad. They wish to be greatly prepared for any strong shocks to its economic system due to external factors.
In light of what has already been mentioned above, the CBI does not see its current monetary policy as one that would provide freedom and instead it restricts movement of cash flows to and from the country even though the current policy had controls and regulations in place that restrict money laundering, crime and terrorism. He believes the current monetary system is conflicting with the CBI’s greater goal of economic freedom.
He states that it is the of the CBI to take on the responsibility of Iraq’s economic stability, encourage communication between government organizations and others in order to strengthen the control of illicit money and fight economic crime which is the responsibility of all.
Between the State and Monetary Stability
Monetary policies or dollarization is one of the most important challenges within any monetary policy of developing nations. Iraq in particularly used the United States dollar as a substitution of its national currency in transactions and contracts internally as well as externally in order to function.
In spite of Iraq using the United States dollar for its transactions the country also used mostly loans granted in foreign currency and extended the pay back of these loans over long periods of time. 70% of the loans derived from Latin American.
The CBI supports joining the IMF who has allowed them to partially dollarize within its borders. However, while following the IMF’s agreement to promote sovereignty of the Iraqi economy by partially dollarizing their country they’ve found that of the bank deposits reflect that only 30% is actual Iraq Dinar, while the remaining is still that of the United States dollar, which is showing proof of a parallel currency within its borders still today. The amount of USD that is in circulation at any one time can extend upwards of 80% outside of the banking sector. Yet, the 30% of Iraq Dinar that is in circulation within its borders is proving to settle transactions and payments on a domestic level.
Notwithstanding the current monetary policy set forth by the IMF and adopted by the CBI to achieve the goal of stability, the parallel currency challenges of the USD in circulation has decreased with the adoption of monetary policies to strengthen the external value of the Dinar, which has increased in value by more than 40% of the last five years.
The challenges of de-dollarizing the Iraqi economy proved to be a struggle with competing against the high exchange rate of the USD, however now they are seeing signs that the Iraqi people are beginning to show faith within their local currency and strengthening the Iraqi peoples view of the their financial systems.
The country of Iraq is experiencing the largest reformation of monetary policy seen by meeting specific targets set forth by the IMF to achieve stability with the value of the IQD and the growth required to accelerate the development of opportunities, advance the process of government operations, manage domestic interest rates in order to achieve the intermediate objectives of the monetary policy itself. In this regard, the purpose of dollarization is a measure of monetary effectiveness set forth in effort to make the Iraqi Dinar more attractive, which is shown by the monetary demand or stability.
Seignorageis one of the sources of revenue generating strong cash charges resulting from increased demand for the Iraqi Dinar. It has been a positive reflection on the income disclosed in the annual financial statements of central banks.
In spite of this transitional phase of de-dollarization, the CBI uses the method of auctions to control aggregate demand through levels of reserve liquidity (foreign reserve deposits) generated mainly by government spending and inflationary pressure resulting from within it. The auction achieves three objectives:
1) It serves as an intervening tool to achieve stability with the value of the Iraqi Dinar by defending the exchange rate equilibrium, which has kept inflation down, especially that of imported goods and strengthen the export base.
2) It has provided a means of applying an indirect tool of the monetary policy in the management of liquidity and controlled economic stability by providing a continuous basis for achieving a balance within the money market.
3) It has proved to be the main source of funding for the private sector of trade and goods as well as other services needed by the country.
The previous dictator supported a financial policy prior to the war that weakened the economy, and adopted monetary policies that were unable to fund the general budget, which has delayed economic growth for decades and as a result it plunged the country into a massive wave of hyperinflation and the continued instability upon the value of goods. It plunged the country into a prolonged recession that led to the deterioration in economic and social development, which is still seen today.
In consideration to the challenges the current government is facing due to what the former Hussein regime left behind, they have been able to combat the hyper-inflationary pressure that had set in by managing the value of the Dinar as well as interest rates. For the first time in decades, even though the value is nominal, the Dinar has seen stability. The current interest rate is keeping inflation low and as a combined result for the first time in three decades the CBI has greater ability to advance the financial system by continuing the policy of money markets and stability in face of exceptional circumstances.
Three years ago the rate of inflation was 34%. One year ago the rate of inflation was 20%, however today it has fallen to 5%.
The current interest rate is about 17% for most, however some interest rates are 20% - 25%. The CBI has been trying to persuade the banking sector to offer lower interest loans to encourage development and investment. The CBI may resort to adopting additional monetary tools that work as a legal way of enabling monetary policy to reduce points (cheaper loans). By giving a point deduction spread of no more than 3 percentage points it will combat the current status of 10 percentage points which is unproductive. The CBI is considering providing a national orientation to address the imbalance within the structure of interest rates to generate a stronger and healthier atmosphere in the area of financial intermediation. They believe that this step would encourage real investment opportunities within the private sector.
I hope that you were able to fully understand what the above article is trying to convey. This is all very positive for us as investors of the Iraqi Dinar. While digesting the above information try to reflect upon parts 1 and 2 of this study, and you’ll find that the CBI is saying that they are eager to join international ranks!
There was a window of opportunity that had opened in October of 2009 and closed in December of 2009. Sadly, many things obstructed our investment from becoming valuable. The government of Iraq stalled on advancing their economic stance until the elections took precedence and terrorism within its border took hold. Was this done on purpose or was this simply the governmental heads too inexperienced to move in a timely manner, it is hard to say. However, since January 2010 we have seen an influx of articles pertaining to their economic stability. We’ve seen actual words written within these articles such as Dinar, revaluation and re-denomination. For those of us who have been in this for such a long time we know just how wonderful it is to actually see these issues being addressed, whereas these words had not been mentioned before. That alone shows just how close we are to the end of this trial.
During the month of October 2009 we had the G-8 meeting on financial realignment. The global leaders (United States, European Union, United Kingdom, Russia, Japan, Italy, Germany, France and Canada) met to discuss trade barriers as well as global currencies. It was during this time that it had became painfully aware that China was manipulating their currency, VND was undervalued, Venezuela’s was undervalued, as well as several others. Many of you will remember me being the first to tell you more than a year ago that approximately 13 to 14 currencies would revalue and we’ve seen at least half of them already do so.
The global leaders met and had agreed that Iraq was in a wonderful position to revalue its currency, however Iraq stalled. Towards the end of October China began to cause problems with the United States and claimed that our currency was a risk and as a result they threatened to sell off their T-Bills. This was nothing more than a political maneuver by China in hopes that they might look as if they were more powerful than that of the United States. Yes, the value of the USD has fallen somewhat but not near to the degree that China was trying to insinuate.
Everyone must understand that China has been doing this for years only many of you are just now paying attention because of your interest in this investment. These advances by China are nothing new. China is consistent in causing havoc and they enjoy doing so. China is kept a bay for a reason and the G8 will continue to keep China at bay and continue to make sure that China hasn’t too much power. Why do you think the US is forcing China to revalue its currency?
Sure the United States wants trade relations to stabilize but this isn’t the only reason. China is growing far too fast and the G8 is looking for the fastest and safest way to slow their growth down. The only way for a communist country to economically survive is to feed off of the actual producing nations. China does so via their trade imbalances. The United States has stated that in order for the trade imbalance to correct itself they want China to increase the value of the Yuan by 8% in gradual increments, although it is undervalued approximately 10-40% against other currencies. The Chinese economy faces several hurdles that have been created by its communist theories. The country runs on government run banking sectors unlike the United States and these banking sectors are completely unorganized and overran by corruption. The Chinese government has dropped their interest rates for so many consecutive years that the economy is on the verge of imploding in some respects. The Chinese government is growing at a rate faster than what they have planned for due to the housing and automotive sales. Unfortunately, the Chinese government did not consider oil consumption while watching their housing and automotive markets sore, because they are now in a mad scramble for oil, in order to supply fuel for vehicles and heating.
Timothy Geithner has said that the U.S. is considering imposing trade sanctions and they just might do it. The global community is already taking measures to limit their funding to China, such as the United Kingdom's move to stop funding aid to the bloated country. The United Kingdom sent 40m pounds to China from 2008-09 alone. But trade sanctions are only a minor issue in comparison with the new carbon laws that the UN is making grounds on. The UN has been working on climate change laws that would restrict the CO2. emissions. China is one of the leading threats to our environment in the eyes of the individuals who believe this propaganda of climate change. If the UN succeeds with the new carbon laws China will be forced to pay out millions to retool their factories in order to meet the demands. China is trying everything in its power to offset this process.
If you noticed, China is not part of the top G8 who are the actual figureheads of the world. There is a reason for this. If you look at the list of the G8 they all have good relations with one another and hardly see upsets either on a political or economic level. The only exception could be that of Russia in concerning the arms issues but that is small in consideration with the other 192 member nations of the UN.
Many of you are unaware that the United States was actually the one to create the United Nations in 1945 under Franklin D. Roosevelt’s administration. Ever since the first meeting, consisting of 50 nations on April 25, 1945, the United States has held the most voting power and we will continue to do so.
There are not very many nations who are truly seen as what I would coin as “troublemakers,” but the ones I would deem as troublemakers would be that of Iran, China, North Korea, Cuba, Pakistan, and Saudi Arabia. These nations have shown to cause political upset when the global leaders desiring advancement. If you are on top of your current events you’ll notice that each of the nations I just mentioned are in the news on a daily basis, it seems. Lol
There is so very much currently taking place across the globe that it would be endless for me to list here within this article. I will not bore you with all the political upsets that are taking place seeing as your only interest is pertaining to that of the Iraqi Dinar or the Vietnam Dong. However, you must understand that everything is interconnected. We cannot solely look at what is occurring within Iraq’s or Vietnam’s borders to truly understand what is taking place or grasp what steps are actually being taken to revalue these currencies.
We are currently experiencing a global recession with the exception of Switzerland who recently reported that they will hardly feel any affects due to the actions they had taken a few years ago. The global leaders have taken a step back and studied what needs to occur in order to stabilize the global economy, and in doing so they’ve came to the conclusion that there is trade imbalances that are currently in place. In laymen’s terms, the global leaders do not believe it is fair for certain countries to be benefiting from undervalued currencies and essentially creating a monopoly on industry by being an attractive location to build factories and have cheap labor thus prospering at a rate greater than the countries they are exporting to. One example of this would be the trade imbalance between China and the United States.
That is the reason why we are hearing of so many countries revaluing or devaluing their currencies. Now, will the United States devalue its currency? Absolutely not. One reason would be that we produce most of the common every day goods within our borders and our exporting is not great enough to be of concern. In fact, China was complaining because the value of the dollar had fallen and they wanted reassurance that it would rise again. Of course this issue was quickly dropped once the light was shown upon their currency manipulation. Lol
Many speak of a global currency created under a new world order. I don’t see this being an issue for many many many years. Too many steps would have to take place in order for that to occur without there being a global uprising. I can speak for pages on this topic alone as to why this is not an issue within our near future.
I hope that I’ve addressed some of the current hot topics that I’ve seen flying across the chat room’s screen throughout the day. If you have questions about any of the above-mentioned topics please feel free to ask and I’ll consider expanding upon them.
Parts 1 and 2 covered the Central Bank of Iraq’s financial system, partial history of its currency, the Strategic Framework Agreement, and the reintegration of the Iraqi Dinar into the flexible exchange rate system that is recognized internationally. Although these articles are translated into English, I’ve had some individuals contact me asking to further clarify these articles into simpler terms. I’ve taken it upon myself to add additional information or further explanation beyond what the articles entail for mere educational purposes.
While it is easy to sit and read any of these documents as most of you do and are doing now, it is sometimes difficult to truly understand what is being said if you do not know the background or further knowledge of the topics being discussed. If you are an individual who already has a firm grasp on economic financial systems or global politics then you might find this to be more than what you need, however I’m writing this for the newer investors who are unfamiliar with what they are reading.
It was brought to my attention that a few who had read parts 1 and 2 of this study had seen the articles as reflecting negatively upon our investment, however they are anything but negative! These are fantastic and further prove that we have made a very wise choice in deciding to invest in the Iraqi currency. While this has been a long road we are close to the end.
I’ll move on to explaining part 3 of the Center for Studies and Research / Consultant for the CBI. The appearance of Chairman Mohammed Saleh, which was published yesterday. After I go through explaining and making the article easier to comprehend I’ll add some additional thoughts.
Mohammed Saleh of The Central Bank of Iraq believes that the current monetary policy, being that of a fixed rate on the Iraqi Dinar, is a natural and beneficial way of maintaining the financial system, which is based on market competition. However, the CBI desires to expand the Iraqi Dinar into the international market by joining the flexible exchange rate system in effort to join in global financial community.
Yet, it is important that the CBI continues surveillance on the flow of monies in order to curb possible illegal activities such as money laundering, terrorism, or tax evasion by Iraqi citizens depositing their monies in banks abroad.
The CBI wishes to leave behind the era of Saddam Hussein and no longer wishes to restrict the flow of foreign currency exchange. They are anticipating the upcoming freedom for its citizens and brighter economic climate within Iraq. The era of Saddam Hussein was narrowed by suppression of the Iraqi people who had limited freedom to own and dispose of legitimate economic rights. Chairman Saleh described this era as dark economic times specifically in the area of foreign currency exchange and as a result it left Iraq isolated from their neighbors as well as the global community.
He expressed excitement at the new horizon that stood before the people of Iraq. The provisions of Article VIII of the International Monetary Fund Convention, allows member countries to adopt freedom of foreign currency exchange by joining the flexible exchange rate system and it further allows member countries to lift restrictions upon its citizens and provide freedom to move monies with the exception of illegal cash flows as mentioned above. Individuals who partake in money laundering or other illegal actives hinder the value of the currency and restrict its growth by creating a parallel markets similar to the current model of North Korea.
Within a restricted monetary system these types of activities are greatly reduced, however the CBI does not wish to restrict its citizens even though the cost of surveillance will be a burden. By not adopting Article VIII and joining the global financial community the country of Iraq would only generate a negative financial system that would weaken its capacity and ability to attract foreign investments nor capital (cash) flow from within or globally.
The GOI/CBI is anticipating the Investment Law No. 13 of 2006. However, they wish to take the proper steps as to not repeat the mistake of others such as the problems that occurred within South East Asia during the years of 1997 – 1999. South East Asia experienced an endemic that proved to be detrimental to its economy due to the flight of foreign capitals, investment portfolios, deposits and various debt issues of high liquidity (currency in circulation) while having weak foreign reserves available. South East Asia experienced an imbalance within their budget pertaining to the balance of payments and their deficit. The situation proved to be unprecedented and resulted in the collapse of the currency exchange rates.
However, in spite of this, Iraq has little concern of joining the flexible exchange system. The CBI is seeking a monetary policy and has been doubling up on their foreign reserves to date, in order to create a firm foundation to cope with issues that might arise concerning external balances (debt) of the national economy because of currency speculation and capital flight abroad. They wish to be greatly prepared for any strong shocks to its economic system due to external factors.
In light of what has already been mentioned above, the CBI does not see its current monetary policy as one that would provide freedom and instead it restricts movement of cash flows to and from the country even though the current policy had controls and regulations in place that restrict money laundering, crime and terrorism. He believes the current monetary system is conflicting with the CBI’s greater goal of economic freedom.
He states that it is the of the CBI to take on the responsibility of Iraq’s economic stability, encourage communication between government organizations and others in order to strengthen the control of illicit money and fight economic crime which is the responsibility of all.
Between the State and Monetary Stability
Monetary policies or dollarization is one of the most important challenges within any monetary policy of developing nations. Iraq in particularly used the United States dollar as a substitution of its national currency in transactions and contracts internally as well as externally in order to function.
In spite of Iraq using the United States dollar for its transactions the country also used mostly loans granted in foreign currency and extended the pay back of these loans over long periods of time. 70% of the loans derived from Latin American.
The CBI supports joining the IMF who has allowed them to partially dollarize within its borders. However, while following the IMF’s agreement to promote sovereignty of the Iraqi economy by partially dollarizing their country they’ve found that of the bank deposits reflect that only 30% is actual Iraq Dinar, while the remaining is still that of the United States dollar, which is showing proof of a parallel currency within its borders still today. The amount of USD that is in circulation at any one time can extend upwards of 80% outside of the banking sector. Yet, the 30% of Iraq Dinar that is in circulation within its borders is proving to settle transactions and payments on a domestic level.
Notwithstanding the current monetary policy set forth by the IMF and adopted by the CBI to achieve the goal of stability, the parallel currency challenges of the USD in circulation has decreased with the adoption of monetary policies to strengthen the external value of the Dinar, which has increased in value by more than 40% of the last five years.
The challenges of de-dollarizing the Iraqi economy proved to be a struggle with competing against the high exchange rate of the USD, however now they are seeing signs that the Iraqi people are beginning to show faith within their local currency and strengthening the Iraqi peoples view of the their financial systems.
The country of Iraq is experiencing the largest reformation of monetary policy seen by meeting specific targets set forth by the IMF to achieve stability with the value of the IQD and the growth required to accelerate the development of opportunities, advance the process of government operations, manage domestic interest rates in order to achieve the intermediate objectives of the monetary policy itself. In this regard, the purpose of dollarization is a measure of monetary effectiveness set forth in effort to make the Iraqi Dinar more attractive, which is shown by the monetary demand or stability.
Seignorageis one of the sources of revenue generating strong cash charges resulting from increased demand for the Iraqi Dinar. It has been a positive reflection on the income disclosed in the annual financial statements of central banks.
In spite of this transitional phase of de-dollarization, the CBI uses the method of auctions to control aggregate demand through levels of reserve liquidity (foreign reserve deposits) generated mainly by government spending and inflationary pressure resulting from within it. The auction achieves three objectives:
1) It serves as an intervening tool to achieve stability with the value of the Iraqi Dinar by defending the exchange rate equilibrium, which has kept inflation down, especially that of imported goods and strengthen the export base.
2) It has provided a means of applying an indirect tool of the monetary policy in the management of liquidity and controlled economic stability by providing a continuous basis for achieving a balance within the money market.
3) It has proved to be the main source of funding for the private sector of trade and goods as well as other services needed by the country.
The previous dictator supported a financial policy prior to the war that weakened the economy, and adopted monetary policies that were unable to fund the general budget, which has delayed economic growth for decades and as a result it plunged the country into a massive wave of hyperinflation and the continued instability upon the value of goods. It plunged the country into a prolonged recession that led to the deterioration in economic and social development, which is still seen today.
In consideration to the challenges the current government is facing due to what the former Hussein regime left behind, they have been able to combat the hyper-inflationary pressure that had set in by managing the value of the Dinar as well as interest rates. For the first time in decades, even though the value is nominal, the Dinar has seen stability. The current interest rate is keeping inflation low and as a combined result for the first time in three decades the CBI has greater ability to advance the financial system by continuing the policy of money markets and stability in face of exceptional circumstances.
Three years ago the rate of inflation was 34%. One year ago the rate of inflation was 20%, however today it has fallen to 5%.
The current interest rate is about 17% for most, however some interest rates are 20% - 25%. The CBI has been trying to persuade the banking sector to offer lower interest loans to encourage development and investment. The CBI may resort to adopting additional monetary tools that work as a legal way of enabling monetary policy to reduce points (cheaper loans). By giving a point deduction spread of no more than 3 percentage points it will combat the current status of 10 percentage points which is unproductive. The CBI is considering providing a national orientation to address the imbalance within the structure of interest rates to generate a stronger and healthier atmosphere in the area of financial intermediation. They believe that this step would encourage real investment opportunities within the private sector.
I hope that you were able to fully understand what the above article is trying to convey. This is all very positive for us as investors of the Iraqi Dinar. While digesting the above information try to reflect upon parts 1 and 2 of this study, and you’ll find that the CBI is saying that they are eager to join international ranks!
There was a window of opportunity that had opened in October of 2009 and closed in December of 2009. Sadly, many things obstructed our investment from becoming valuable. The government of Iraq stalled on advancing their economic stance until the elections took precedence and terrorism within its border took hold. Was this done on purpose or was this simply the governmental heads too inexperienced to move in a timely manner, it is hard to say. However, since January 2010 we have seen an influx of articles pertaining to their economic stability. We’ve seen actual words written within these articles such as Dinar, revaluation and re-denomination. For those of us who have been in this for such a long time we know just how wonderful it is to actually see these issues being addressed, whereas these words had not been mentioned before. That alone shows just how close we are to the end of this trial.
During the month of October 2009 we had the G-8 meeting on financial realignment. The global leaders (United States, European Union, United Kingdom, Russia, Japan, Italy, Germany, France and Canada) met to discuss trade barriers as well as global currencies. It was during this time that it had became painfully aware that China was manipulating their currency, VND was undervalued, Venezuela’s was undervalued, as well as several others. Many of you will remember me being the first to tell you more than a year ago that approximately 13 to 14 currencies would revalue and we’ve seen at least half of them already do so.
The global leaders met and had agreed that Iraq was in a wonderful position to revalue its currency, however Iraq stalled. Towards the end of October China began to cause problems with the United States and claimed that our currency was a risk and as a result they threatened to sell off their T-Bills. This was nothing more than a political maneuver by China in hopes that they might look as if they were more powerful than that of the United States. Yes, the value of the USD has fallen somewhat but not near to the degree that China was trying to insinuate.
Everyone must understand that China has been doing this for years only many of you are just now paying attention because of your interest in this investment. These advances by China are nothing new. China is consistent in causing havoc and they enjoy doing so. China is kept a bay for a reason and the G8 will continue to keep China at bay and continue to make sure that China hasn’t too much power. Why do you think the US is forcing China to revalue its currency?
Sure the United States wants trade relations to stabilize but this isn’t the only reason. China is growing far too fast and the G8 is looking for the fastest and safest way to slow their growth down. The only way for a communist country to economically survive is to feed off of the actual producing nations. China does so via their trade imbalances. The United States has stated that in order for the trade imbalance to correct itself they want China to increase the value of the Yuan by 8% in gradual increments, although it is undervalued approximately 10-40% against other currencies. The Chinese economy faces several hurdles that have been created by its communist theories. The country runs on government run banking sectors unlike the United States and these banking sectors are completely unorganized and overran by corruption. The Chinese government has dropped their interest rates for so many consecutive years that the economy is on the verge of imploding in some respects. The Chinese government is growing at a rate faster than what they have planned for due to the housing and automotive sales. Unfortunately, the Chinese government did not consider oil consumption while watching their housing and automotive markets sore, because they are now in a mad scramble for oil, in order to supply fuel for vehicles and heating.
Timothy Geithner has said that the U.S. is considering imposing trade sanctions and they just might do it. The global community is already taking measures to limit their funding to China, such as the United Kingdom's move to stop funding aid to the bloated country. The United Kingdom sent 40m pounds to China from 2008-09 alone. But trade sanctions are only a minor issue in comparison with the new carbon laws that the UN is making grounds on. The UN has been working on climate change laws that would restrict the CO2. emissions. China is one of the leading threats to our environment in the eyes of the individuals who believe this propaganda of climate change. If the UN succeeds with the new carbon laws China will be forced to pay out millions to retool their factories in order to meet the demands. China is trying everything in its power to offset this process.
If you noticed, China is not part of the top G8 who are the actual figureheads of the world. There is a reason for this. If you look at the list of the G8 they all have good relations with one another and hardly see upsets either on a political or economic level. The only exception could be that of Russia in concerning the arms issues but that is small in consideration with the other 192 member nations of the UN.
Many of you are unaware that the United States was actually the one to create the United Nations in 1945 under Franklin D. Roosevelt’s administration. Ever since the first meeting, consisting of 50 nations on April 25, 1945, the United States has held the most voting power and we will continue to do so.
There are not very many nations who are truly seen as what I would coin as “troublemakers,” but the ones I would deem as troublemakers would be that of Iran, China, North Korea, Cuba, Pakistan, and Saudi Arabia. These nations have shown to cause political upset when the global leaders desiring advancement. If you are on top of your current events you’ll notice that each of the nations I just mentioned are in the news on a daily basis, it seems. Lol
There is so very much currently taking place across the globe that it would be endless for me to list here within this article. I will not bore you with all the political upsets that are taking place seeing as your only interest is pertaining to that of the Iraqi Dinar or the Vietnam Dong. However, you must understand that everything is interconnected. We cannot solely look at what is occurring within Iraq’s or Vietnam’s borders to truly understand what is taking place or grasp what steps are actually being taken to revalue these currencies.
We are currently experiencing a global recession with the exception of Switzerland who recently reported that they will hardly feel any affects due to the actions they had taken a few years ago. The global leaders have taken a step back and studied what needs to occur in order to stabilize the global economy, and in doing so they’ve came to the conclusion that there is trade imbalances that are currently in place. In laymen’s terms, the global leaders do not believe it is fair for certain countries to be benefiting from undervalued currencies and essentially creating a monopoly on industry by being an attractive location to build factories and have cheap labor thus prospering at a rate greater than the countries they are exporting to. One example of this would be the trade imbalance between China and the United States.
That is the reason why we are hearing of so many countries revaluing or devaluing their currencies. Now, will the United States devalue its currency? Absolutely not. One reason would be that we produce most of the common every day goods within our borders and our exporting is not great enough to be of concern. In fact, China was complaining because the value of the dollar had fallen and they wanted reassurance that it would rise again. Of course this issue was quickly dropped once the light was shown upon their currency manipulation. Lol
Many speak of a global currency created under a new world order. I don’t see this being an issue for many many many years. Too many steps would have to take place in order for that to occur without there being a global uprising. I can speak for pages on this topic alone as to why this is not an issue within our near future.
I hope that I’ve addressed some of the current hot topics that I’ve seen flying across the chat room’s screen throughout the day. If you have questions about any of the above-mentioned topics please feel free to ask and I’ll consider expanding upon them.