You can argue the definitions until the cows come home, it simply will not change the bottom line. Iraq is buying back at the rate of $1.5 Billion USD/Month Dinars on the Open Market (current rate .000856/1168/USD). The M2 Money supply either in hard currency or loans is max around 36T.
As I explained before, the Money Supply (M2) is value based (see line 1) value consistently is going up and this ABSOLUTELY could not happen by increasing the M0 for circulation as it would cause instant realized inflation (unlike Promissory) against the USD.
Further, your redeemed old/damaged currency (NON-ASSET) is a definition that has been there since Moses was born...which is another way of saying replaced. The Buy-back is NOT replaced.
This M2 Money Supply Chart is nothing more than In House Valuation Chart to keep track of inflation prior to GNP/GDP acclimation. Think of it also as circulatory....some have more currency going into banks as going out of banks
It has nothing to do with linear growth of newly printed currency being distributed into the market place --- aka (diluting) the economy such as the USA or Kuwait. If this were true then we would always have the total amount of printed currency from Britain within this financial spreadsheet. You must STOP thinking the Dinar is tied to the GNP/GDP, it is not.
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Lets consider your POV for the moment. Line 65 (18T) on this M2 was not Line 65 on your old argument M2 OK. Line 65 on your past M2 from Months ago was (36T). If this was the case, then I would agree that indeed the amount of Dinar from 7/2008 dropped 18T by 12/2008 and thus would prove the itemization of the massive $1.5 Billion USD buy-back /month (1.7T) of the Dinar and treating it as a liability against the GDP. They may well be treating the buy back within their assets per oil revenue windfall ... it is not tied to the GNP. I need to explain that the NEW YORK TIMES Headline, "The Iraqi central bank is buying back its currency at a feverish pace, forcing the value of the Iraqi dinar higher" is actually correct, but misleading to most people. Most people would ASSUME that the Dinar is tied to the GNP/GDP and would instantaneously have a dramatic value increase.....it would not. The Buy-back is being used as the LEVER to control Consumer Spending/Inflation and by DISCRETION the CBI will allow slow gradual value increase as shown in Line 1 of your new M2. We all know that the Dinar is way undervalued and it will stay that way so as not to over heat the economy like East Germany did after WWII. Under these circumstances I feel very positive about my position with the Dinar being under valued and waiting for the day when it is released to represent the GNP/GDP. March will be a very interesting month.
BUT THIS IS NOT THE CASE! :O)
As you can see as well as anyone else, line 65 here of currency outside Bank increases from 2002 to 2008 thus proving or should prove to you, that it corresponds to Line 1 (the increase in valuation of the Dinar) within recirculation. This is not to say that the CBI never increased circulating currency in the early years they may well have until it hit the 'Tight Monetary Policy'. Think of the Tight Monetary Policy as an equilibrium point _> the good balance between infrastructure/goods and consumer prices/inflation. The balance is there and it is based upon valuation and NOT linear increases in physical currency being pilfered out.
Line 71 on this graph is what was 65 on your previous graph of 36T. In fact on this M2 outlay, you are beating your own argument to death. Line 71 on this new M2 shows 33.5T and that is a 3T reduction from your old previous Line 65 argument of 36.5T.
That said, again make sure you take note of Line 1 on your new M2. See how the value has gone up from 2214 (2002) to 1170 which actually as of today is 1168 (2009).
This is called Valuation!!! IOWs, it took 2,214 Dinars to equal 1 USD back in 2002 and today, it only takes 1168 Dinars to equal 1 USD.? This means the Dinar increased in Value against the USD. These numbers are being used against the functions of the Dinar and where it is being utilized. It is not a chart simply showing the increase and/or decrease in physical Dinars. This economy is in discretionary osmosis not in GNP/GDP.
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