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Daniel Carlson Post: DinarProfits(Where Will the RV Come From?)
2011-02-10 16:31:36
Guest post by: Daniel Carlson of Dinar Profits

We’re all waiting for the RV and dream about how it will change our lives. But how is it possible to redeem such large amounts of cash? It’s not as if the Central Bank of Iraq has piles and piles of dollars to just hand out in exchange for dinars. So where do the dollars come from? In a nutshell, the market.

The market I’m talking about is the huge volume of trading between foreign countries. When an American company wants to buy oil from Iraq, it must pay for the oil in dinars. The American company has to convert their dollars into dinars first. This is where the dollars come from. The large commercial banks that broker the transactions will need dinars. This is the market that buys and sells dinars. The large investment banks will be at the root of the trade and other, smaller transactions will trickle down into local banks and dinar dealers for the larger banks to acquire dinars.

Keep in mind that dinars are not a commodity, it’s currency. It’s in circulation right now, it’s being used. It will continue to be used. An RV isn’t the end all be all for the dinar. In fact, post RV, the dinar will probably be more widely traded since it will be more stable and established.

A significant RV must be justified. The exchange rate of a currency reflects its value, which factors in many political and economic factors. If a country could just flip a switch to make their currency more valuable, every country would do it and there’d be chaos – currencies would become pointless. Iraq must progress as a country for the conditions to be right for an RV. Iraq has done a great job of establishing its oil trade and it is poised to reap in huge profits. In addition, foreign investors are flocking in to rebuild Iraq. It seems very likely that Iraq’s economic potential will increase the value of the dinar.

Iraq’s economic power will put Iraqi politics in the spotlight. Iraq has a chance to regain confidence from the international community by executing its foreign trade very well. This is the key component. We’ll see how this plays out. Iraq is moving forward, albeit not very fast, but it is moving in the right direction. Remember, you can’t get from step one to step ten without going from steps two through nine. Be patient, stay focused on facts.