Iraqi Dinar Discussion Board

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Again FX this quotes M1. I bet you don't even know what type of money system all currencies circulate under. As of 12/31/09 there was 888.3 billion us dollars in circulation as reported by the Fed. http://www.federalreserve.gov/paymentsystems/coin_currcircvalue.htm
Now 300 mil of that was in notes like the 500 to 10000 that can be used but are removed when they come in and are mostly held by collectors. So we can reduce that number to 888 bil. The 888 bil is all paper currency and coin but the majority of it is held by large institutions and foreign countries. In reality there is probably only less then half that in actual circulation, around 300 bil. The same can be said for any other currency in the world. Now here comes your lesson and you will want to pay attention.
The US as any other country operates on a Fiat money based system. What that means is that the paper money and coin that exchange hands is worthless itself. It is basically just a promise. Money is in fact nothing but debt. By creating the Federal Reserve Bank and creating amendments in the constitution the government in fact broke the laws of the constitution. The other form of money based system is intrinsic. This is something the US used to be until they removed all the silver from coins, creation the Fed and removal of the US dollar being pegged to gold and actually being able to exchange the bills for it's equal value in gold at any federal reserve branch located in the country. In reality the Fed is actually the biggest Ponzi scheme ever created by man. It makes Madof look like Mickey Mouse.
So now that you understand what type of money system we use we can go further. Being that the US dollar is backed by power and a promise if we wanted to we could use seashells as a national currency. A nations wealth is only measured by it's ability to pay the debt back. Hence I mentioned to you money is actually debt. So what is iraqs MO, which is the actual notes/coin money in circulation and notes/coin in bank vaults. Well we know from looking at the CBI website what Iraqs M1 is. This of coarse is the notes/coins in circulation outside the Fed and vaults of depository institutions, travelers checks of non bank issuers, demand deposits, and other checkable deposits (OCDs), which consist primarily of negotiable order of withdrawal (NOW) accounts at depository institutions and credit union share draft accounts. M1 does not include currency held in bank vaults, only M0 and MB do. Now if this to much for you take a break.
Ok so lets say you deposit 1000 dollars into your checking. The bank only keeps 100 dollars in reserve and loans the other 900 out. This again shows how money itself is nothing but debt. Now originally the US dollar was pegged as the world reserve currency. Now that we are a service based economy and really don't make anything anymore you can see why many nations are no longer or don't want to be pegged to the US dollar. Which leads us to Iraq. Since paper/coin is basically worthless we have to look at a countries ability to payback money/debt. Now I would wager that anyone would look at Iraq with their 300 bil plus barrels of oil and not even question their ability to pay anything. The one key factor that has kept them down is the unfair valuation of the Dinar after the war. It's no question that Iraq can pay back any PTP based on their natural resources. Which in reality in this day and age is more valuable then a service sector.
You can't look at currency like a stock which is what you have tried to do in the past. You can't say oh they have more currency so the value of there currency is less. Look at the US. We primarely just sell stuff and service stuff but our currency is valued much higher than many other. This has again be based on our power and ability to pay. Iraq has actual physical or intrinsic value. Which in the long run makes it more valuable then the US dollar. Look at it this way, say you are a bank and you have 2 companies coming to you for a loan. One is a services based/fiat company like insurance the other is an intrinsic/hard value company like a natural gas company. Now although the insurance company has less overhead and a higher profit margin the natural gas co is still ahead because it produces a physical product.
This is why many companies that are valued on the stocks are way over priced because they really have to intrinsic value. So to sum it all up as I said before, Iraq does not have 26 tril Dinars in M0 circulation. Even if they did they could back that with oil reserved as a form of currency. Remember in a fiat money based system anything can be used as currency, because it's only tied to power and the ability to pay the debt back. I hope you have learned something and if you want to sign up for my expert economics class it's only a 49.99 fee. Have a day!!!!