BLOG

Billions for Baghdad

In February of 2007 a book was published called Global financial warriors, written by John B. Taylor, Undersecretary of the Treasury from 2001-2005.

It tells the story of the US plan to prevent the financial collapse of Iraq in the wake of the US invasion in 2003.

"In the first stage, the United States would pay Iraqi government employees and pensioners in American dollars. These were obtained from Saddam Hussein's accounts in American banks, which were frozen after he attacked Kuwait in 1990 and amounted to about $1.7 billion. . . The second stage of the plan was to print a new Iraqi currency for which Iraqis could exchange their old dinars. . . .

"In only a few months, 27 planeloads (in 747 jumbo jets) of new Iraqi currency were flown into Iraq from seven printing plants around the world. . . [This was 360 tons of currency.]

"Because the new Iraqi currency was so popular, the central bank bought billions of United States dollars to keep it from appreciating too much [in value]. As a result, billions of cash accumulated in the vaults of the central bank. Later, with American help, the Iraqi central bank deposited these billions at the New York Federal Reserve Bank, where they could earn interest."

[NOTE: Timothy Geithner was chairman of the NY Fed at the time. He is now Treasury Secretary.]

"Finally, when Iraq started earning dollars selling oil, the United States transferred the cash revenue to the Finance Ministry, where it was used to finance government operations, including salaries and reconstruction."

http://www.nytimes.com/2007/02/27/opinion/27taylor.html

COMMENT: This report shows that a great deal of US government thought and planning has gone into the financial planning for a post-war Iraq. They have known from the beginning that the Iraqi dinar would eventually be revalued at the appropriate time. Reports are that the Treasury owns a few trillion dinars with which to pay down the national debt in the years to come.

I have my doubts, personally. In my view, the Fed wants the US Treasury to remain indebted to the Fed as a control mechanism. I think it is more likely that the Fed is the real owner of these trillions of dinar, as this would be of personal benefit to those who want to run the Babylonian system.

Nonetheless, this book offers some insights into the careful planning that has gone into the dinar situation. It is inconceivable that all this would leave the dinar at its present low value as an "exotic currency." The plan is to revalue it at some point in order to allow Iraq to be removed from all UN sanctions, join the World Trade Organization, and re-take its place among the nations. Above all, when the reinstatement is complete, the dinars in the Treasury (or Fed) would end up paying for the entire cost of the war and reconstruction, both past bills and into the future.

Perhaps the only thing they did not count on was the long delay between the Iraqi election in March of 2010 and the formation of the complete government. During the interim, thousands of people outside of government circles have learned about the dinar's potential rise in value and have invested what they can in the dinar. This left the government scrambling to put financial measures in place to allow the government to obtain as much tax revenue as possible.