Don961: The introductions of the dollar’s collapse are beginning towards the new economy
Dr.. Ibrahim Al-Shammari *
The world is entering the penultimate stage of the great economic meltdown, which is a reversal called the new economy, in the light of which the centers of economic power in the world will change for reasons, most notably the accelerating technological development, the Corona pandemic, the economic recession that swept the world, and the rise of global debt to more than (350) trillion dollars After the global national product reached nearly (85) trillion dollars, as all the great countries became indebted to each other, and this heralds an inevitable economic crisis that will affect the great countries of the world.
To go into this field requires us to refer to the Bretton Woods agreement that was concluded in the United States of America in the year 1941 , in which the US dollar exchange rate was fixed against gold, where the price of an ounce was $ 35, then the currencies of the countries were fixed against the US dollar, And not allowing the currency exchange rate to fluctuate more than (2%) up and down from the fixed value against the dollar, and thus the system is similar to the gold standard and is sometimes described as the gold exchange standard and some countries imposed trade restrictions to protect reserves and exchange rates, so the currencies of most countries It was still essentially non-convertible until the late 1950’s, exchange restrictions were removed and gold became an important component of international financial settlements .
But the rule of gold exchange had a weak point represented in patterns of prosperity – distress, with the strengthening of the economy may import a lot before the stock of gold required to support the currency decreased, as a result of that the flow of money decreases and interest rates escalate and the economic activity of the recession point leads and these moves led to The instability of the Forex price, which was strengthened by (Burton Woods) and in (1971) the United States abandoned (Burton Woods) so that it is no longer possible to exchange the dollar for gold and the power of supply and demand dominated the currencies of the major industrial countries that are now freely traded.
The successive economic developments in the world made the United States the first economy globally, but today, many countries are trying to achieve economic power through controlling energy centers and keeping pace with the technological development that led the United States to take incorrect steps that lead the dollar to collapse sooner or later, most notably The price of gold has risen dramatically and continuously, the US dollar continues to decline, and the end result of the dollar’s increasing decline against the euro and gold will be the collapse of the dollar as a complete collapse, as many currencies before it have collapsed when conditions are prepared for it.
As the great decline of the dollar by (40%) in the last two decades, where the easiest way to bridge the deficit in the United States was to print more dollars and the greater the printing of the dollar, the lower its value (its purchasing power), and the huge deficit in the American trade balance because imports are more than exports. The deficit that exceeds (3) trillion dollars constitutes a great pressure on the dollar. The increase and increase of pumping money not covered by goods will inevitably destabilize the currency rates and the collapse of the currencies of the countries that won the “race to print currencies”, including the dollar and the euro.
In the past, the dollar was a safe currency because of its stability and its dependence on the gold base. Today, dollar owners are re-calculating them due to its steady decline and the cracking of the American economy.
Yes, there may be short recovery, but the end result is that the world is heading for the best and strongest according to the theory of natural selection, and this is what the compass directs towards the Chinese yuan, which is likely to be a well-studied jump due to the great strategic alliances that China is undertaking with India, Pakistan and other countries. Another to create a common market is in the currency (yuan).
* Dr. Ibrahim Shammari Lecturer in School Imam Kadhim”p”
Samson:: Kuwaiti Prime Minister: We have no cash to pay the salaries of next June
28th May, 2020
Kuwaiti Prime Minister Sabah Al-Khaled stressed that the country’s economic situation is good now in terms of classification and solvency, but the government has no cash to pay the salaries of next June
The Kuwaiti newspaper “Al-Jarida” stated in a news seen by “Al-Iqtisad News” that “during the extended governmental-parliamentary meeting, which was chaired by Speaker of the National Assembly Marzouk Al-Ghanem, and attended by 6 ministers and 32 deputies, this was an opportunity to pass this law.” That is the case in the Gulf states, and we do not even tend to liquidate assets. Do you accept that
Al-Sabah added, “The country’s economic situation is good now in terms of classification and solvency, but the government has no cash to pay the salaries of next June
Regarding the return to work in government institutions, the newspaper quoted Al-Khaled that the National Assembly was informed that the vortices will return starting next Sunday with a capacity of 30% LINK
Don961: After Allawi’s visit to his country … a former Kuwaiti deputy talks about “exempting Iraq” from debts of $ 3 billion
Policy 05/28 2020 09:27 1902 Editor: am
Baghdad today – follow up
The former Kuwaiti MP, Abdul Hamid Abbas Dashti, revealed, on Thursday (28 May 2020), that his country exempted Iraq from debts amounting to 3 billion dollars, and postponed other payments.
Dashti wrote in a tweet on the Twitter site and followed it (Baghdad today): “Congratulations for Iraq, to exempt debts of $ 3 billion due to Kuwait, and to postpone a debt of $ 1.6 billion.”
He added, “They deserve (deserve) our people in Iraq, and we hope that the Kuwaiti people will enjoy the same treatment.”
Neither Kuwait nor Iraq has formally announced the existence of such an agreement between the two countries, as was previously the practice.
The Iraqi Minister of Finance, Ali Allawi, had said, after his visit to Kuwait, that he had proposed that “Kuwait postpone or cancel about 3 billion dollars due to Iraq on compensation for the 1990-1991 Gulf War.”
Allawi said: “This will help the flow of liquidity significantly, in addition to other measures that would help stabilize the situation . ”
Iraq had stopped making payments in 2014 during the war against ISIS, who controlled a third of the country but resumed in 2018, and now, 3% of oil export revenues go to Kuwait, which is also suffering from low oil prices .
And Iraqi Finance Minister Ali Allawi began a Gulf tour last Friday in an effort to secure sums to avoid the country from defaulting on the salaries of millions of employees in the wake of the collapse of crude oil prices. LINK
Don961: One of the proposals to face the crisis
What does it mean to reduce the Iraqi dinar price against the dollar? .. An economist answers
2020.05.28 – 16:16
Baghdad – people
On Thursday, economist and academic expert Nabil Al-Marsoumi expected a set of results if the proposal to reduce the price of the Iraqi dinar against the dollar was applied to counter the financial crisis.
“If the Iraqi dinar exchange rate is reduced substantially by 25%, for example, the economies of some of the countries neighboring Iraq that export to it more than 20 billion dollars will be severely damaged,” said Al-Marsoumi, an academic at the University of Basra. Annually, because the cost of its exports to Iraq will become high and its competitive capabilities in the Iraqi market will decrease, which is an important brake on taking this type of policy due to the strong influence that neighboring countries possess in Iraq.
He added, “Given the lack of flexibility of the production base and its limitations in Iraq, the prices of imported goods will rise in the short term, especially, but in the medium and long term this may constitute an incentive to activate the role of the private sector in establishing projects producing consumer goods, especially food, to cover the needs of the Iraqi market, which will lead to lower prices. Later”.
He continued, “The government revenues denominated in the Iraqi dinar will increase by the same percentage of the dinar price, which will increase its ability to cover public expenditures and maintain the cash reserves of the Iraqi Central Bank from erosion.”
He pointed to another point which is that “putting an end to the flight of capital in view of the low value of the dollar in the face of the dinar, as well as reducing Iraqi investments abroad, especially in real estate and reducing Iraqi deposits in foreign banks, as well as the relative reduction of money laundering operations in Iraq.”
In this regard, the decree expected that “reducing foreign labor in Iraq, as work becomes less feasible on the one hand, and foreign labor becomes more expensive compared to national employment.” LINK
MilitiaMan: Gotta love the education they are doing. The explanation of the choices both good and bad.
Keep in mind they have some very bright minds from very large entities, that are banking like us they make good choices. Imo
They will make the right choice and they have been telling us about it for in recent terms that last 60 days real close. The can expect results from the choices they make.
Firstly they suggest if they reduce the value of the IQD, that would cause inflation and cost more for imports and that Iraq will be less competitive.
Then on the other hand if they reduce the amount of IQDs to by the dollar that will create the environment needed for a new market economy to grow and prosper internally.
With that said, they amount of countries coming into Iraq now shows that the doors are about to fully open and they are gearing for to have the CBI share with the world and the Iraqi’s, as to what they can expect when the exchange rate changes.
I suspect those that have a need to know will have been all ears by now.. So I am surely liking what I have been told would come is coming.. Very good article Don961!! You and Samson are bright stars in my book! ~ MM