So you have NOTES and you have DINAR? Two different thing and slightly confusing I know!
Guru Breitling and others have been touting the importance of note count for a very long time. Breitling reports that the last note count update from the CBI was in early 2014 and approaching 4 Billion notes with the CBI stated goal of getting to 1 Billion notes.
Why do they think note count is important? Here's a simple example of how it is explaned...
Let's say for example you have 100 in value with 4 equal notes representing this value. That means each note has the value of 25.
25+25+25+25= 100 (great, even I can do this math! :)
Now let's say we take away (retire) 2 notes which obviously leaves 2 notes remaining. Now it's important to understand the total value did not change. The total value is still 100. But we have 2 fewer notes.
So what does that mean? It means the 2 remaining notes represent a value of 100.
(50 + 50 = 100)!
So the idea is that as note count goes down value goes up.
What does this have to do with the dinar?
Some of the gurus feel....EVERYTHING!
If what several of the gurus believe to be true is true and the CBI has been dramatically reducing the note count then the notes that still exist (the notes we all hold) represent more value! Of course the CBI has not changed the value nor have they let the market decide what the value is so all this is still theory.
What Guru Enorrste's puts together below reinforces this whole theory and tries to determine exactly how many notes are left in the marketplace.
If you're serious about the dinar...this is a must read...read it several times to "get it". But remember Enorrste is trying to piece together a puzzle with limited information...just keep that in mind too ok?
Based upon the chart shown in this thread I have come up with the following:
The total money supply is about 41.5 trillion dinars. The chart is in terms of dinar VALUE.
61% of the value is in 25000 dinar notes
17% of the value is in 10000 dinar notes
17% of the value is in 5000 dinar notes
2% of the value is in 1000 dinar notes
1% of the value is in 500 dinar notes
1% of the value is in 250 dinar notes
1% of the value is in 59 dinar notes (or was)
The distribution in terms of paper, then, would be as follows, assuming that there are 4 billion pieces of paper in circulation:
2.44 billion 25000 dinar notes
680 million 10000 dinar notes
680 million 5000 dinar notes
80 million 1000 dinar notes
40 million 500 dinar notes
40 million 250 dinar notes
40 million 50 dinar notes
Total: 4 billion notes
However, when you go from the number of notes back to the value of the notes, the totals do not match up.
2.44 billion X 25000 = 61 trillion dinars
680 million X 10000 = 6.6 trillion dinars
680 million X 5000 = 3.3 trillion dinars
80 million X 1000 = 80 billion dinars
40 million X 500 dinars = 20 billion dinars
40 million X 250 dinars = 10 billion dinars
40 million X 50 dinars = 2 billion dinars
Total: 71.012 trillion dinars in VALUE (not equal to 41.5 trillion)
Something is therefore fishy with this chart.
However, if the relative percentages of notes is correct (they do add up to 41.5 trillion dinars on the chart, roughly the total money supply at this time), then we can obtain a rough number of NOTES relative to each other by going backwards.
We know from the CBI that the total money supply number is accurate. We must, then, assume that the total number of bills in circulation is not 4 billion, which would be worth 71 trillion dinars given the breakout above, but instead must be lower than that. To calculate THAT number we must go back to the actual money supply of 41.5 trillion dinars and recalculate the number of bills in circulation based on THAT number instead of on 71 trillion dinars. Doing that we have the following:
1.426 billion 25000 dinar notes worth 35.65 trillion dinars
397.5 million 10000 dinar notes worth 3.975 trillion dinars
397.5 million 5000 dinar notes worth 1.9875 trillion dinars
235,720 of the 1000 dinar notes worth 235,720,000 dinars
233,800 of the 500 dinar notes worth 116,900,000 dinars
233,800 of the 250 dinar notes worth 58,450,000 dinars
233,800 of the 50 dinar notes worth 11,690,000 dinars
Totals: 2.222 billion notes worth 41.6 trillion dinars (there is a minor rounding error).
If this is correct, then there aren’t as many notes in circulation as we thought. However, we can determine the relative percentages of notes from this easily:
64.2% is in 25000 notes
17.8% is in 10000 notes
17.8% is in 5000 notes
.2% is in all of the other notes combined
While this is all essentially just mental gymnastics I believe it shows that the solution that the CBI has come up with in replacing the 25000 notes with 50000 and 100000 dinar notes makes a lot of sense because it would reduce the paper considerably. Not all 25000 dinar notes would go away, obviously. Let’s suppose that ½ of them were converted and that of that portion the 50000 and 100000 notes were split evenly in terms of VALUE (or, in other words, half as many 100000 notes as there are 50000 notes). Then the paper in circulation would be something like this:
.089 billion 100000 notes worth 8.9 trillion dinars
.178 billion 50000 notes worth 8.9 trillion dinars
.713 billion 25000 notes worth 17.8 trillion dinars
397.5 million 10000 notes worth 3.8 trillion dinars
397.5 million 5000 notes worth 1.9 trillion dinars
About 900,000 of all smaller notes worth about 250 billion dinars
Total VALUE: 41.5 trillion dinars (the money supply)
Total Notes in Circulation: about 1.776 billion notes, or a reduction of about 20% of the overall currency. (This is consistent with the stated CBI goal of reducing the paper to 1.8 billion pieces, but starts at a much lower number of 2.2 billion pieces of paper).
If more 25000 dinar notes are converted to the larger notes then the percentage reduction would increase accordingly. I am being conservative because I know how important our $20 bill is in our own economy, so I doubt seriously if more than ½ of the 25000 dinar notes would be exchanged.
Given this analysis, it appears to me that the CBI is incorrect in the number of notes in circulation but that it will be easily able to meet its goal of 1.8 billion notes in circulation with the introduction of the larger 50k and 100k notes. Only 20% of all of the notes in circulation currently, all of them 25000 dinar notes (1/2 of them), would need to be exchanged to meet the goal.
At the end of the process, which could be accomplished in less than 90 days, in my view, the Iraqi currency would mirror the American currency closely in terms of note VALUES, but be off by a factor of 1000 in terms of actual note numbers. This would position Iraq well for moving to the float and the increase in the value of the dinar over the next period of time, whatever it takes. In other words, their 1000, 5000, 10000, 25000, 50000, and 10000 notes would mirror our $1, $5, $10, $20, $50, and $100 notes, although the VALUES would be a little less in each case initially.