24 replies to this topic

[M.Duke]

[I would like to know how and what the effect of the droping of the zero's that I keep hearing about

[skinz]

"Drop the Zero, and get with a hero." - Vanilla Ice

[keepmwlknfny]

[I would like to know how and what the effect of the droping of the zero's that I keep hearing about

It means we would be lucky to break even.....

Your current dinar would not see a higher value....and if you wanted to exchange your dinar for the new currency, you would exchange at a ratio of 1000 to 1....meaning it would take 1000 old dinar, to equal 1 new dinar at a higher value.....

If they do follow through with it, it wont be good for us....but there is still time for the plan to be shot down cause as they said, its still just a plan on paper...

[valentine]

Or...... we still don,t know if it is off the actual currency, or off the nominal value of .00086 in which case it would be $.85 to one dinar

[utvolfan]

It will be both. The "000's" will be lifted from the face value currency and the exchange rate will increase to .85 - $1.00 (USD). That is why the CBI has said it will be a "neutral event". No gain, no loss.

[keepmwlknfny]

Or...... we still don,t know if it is off the actual currency, or off the nominal value of .00086 in which case it would be $.85 to one dinar

The nominal value is also referred to as the face value......

So when they say taking the zeros off the nominal value, it would be its face value....like 25,000 dinar note....thats its face value...three zeros off that but in a sense it would be coming off the exchange rate too (.00086) but that value would be on the new bills, not the ones we hold....

Its basically a bit of both of what your saying....

[rockfl9]

Take your current 1,000 dinar note worth $0.86. They will knock off (lift, raise, drop) the last 3 zeros and consider it a NEW 1 dinar note, still worth $0.86. If you had 1M dinar when they do the RD technically you only have 1,000 NEW dinar but still have $860 total.

[bamjack75]

[I would like to know how and what the effect of the droping of the zero's that I keep hearing about

No one can tell you, without a doubt, how this is all going to all play out. I think most DV'ers will agree dropping the zero's leads to a redenomination, as Iraq, has stated. Iraq redenominated in late 03' / early 04 with a 1 to 1 exchange, unless you had a swiss dinar and it was 150 NID to 1 (SD). The debate here will always be; what will the exchange rate be for the notes that we hold now (NID). Some will say that removing the zero's means taking zero's of the face value of the notes, such as Turkey and Brazil, did. I have to agree that most articles coming from Iraq have stated that. But, I do not believe that is what they are going to do. Back in 03'/04' when they RD to the NID, the rate was around 3000+ (NID) to 1 USD. Now, since then, supposedly the money supply has been growing but yet the rate has been getting better. It should be the reverse. Simply put,they are sustaining an artificial rate. They are doing what they want to with the rate. They are not following any guidelines, regarding the rate. IMO, the majority of the currency M1,M2 represented, is in electronic form. No new notes have had an issue date later than 2010, that I know about. Iraq is the apple compared to all of the other oranges, out there. All of this rhetoric and articles that are coming from Iraq, on this subject, resembles something other than an education for the citizens. If their aim was to simply (lop), why so much tip-toeing. Just RD, like they did before. Give the exchange rate and be done with it. Too random if you ask me. Hey, I 'll say this. I rather have some dinars and take a chance that it simply (lops) rather than not have any and then the NID have a nice appreciation in value. I see this as more to gain than less to lose. If this was a all or nothing proposition, then you would not find so many fence riders, such as myself. HA!!

[eastcreek]

The nominal value is also referred to as the face value......

So when they say taking the zeros off the nominal value, it would be its face value....like 25,000 dinar note....thats its face value...three zeros off that but in a sense it would be coming off the exchange rate too (.00086) but that value would be on the new bills, not the ones we hold....

Its basically a bit of both of what your saying....

Pardon me Keep, but I believe nominal value and face value are two different things...............
IF someone had a one dinar note today, it's face value would be one dinar. It's nominal value with respect to the USD would be .00086 USD.
IF , in one year the RV has happened and the zeros have been dropped, then the face value of that dinar note would still be one dinar, but the nominal value would be .86 USD.

[powerpager]

Shoe Polish!!!

[keepmwlknfny]

Pardon me Keep, but I believe nominal value and face value are two different things...............
IF someone had a one dinar note today, it's face value would be one dinar. It's nominal value with respect to the USD would be .00086 USD.
IF , in one year the RV has happened and the zeros have been dropped, then the face value of that dinar note would still be one dinar, but the nominal value would be .86 USD.

<br class="Apple-interchange-newline">Definition of 'Nominal Value'
The stated value of an issued security. Nominal value in economics also refers to a value expressed in monetary terms for a specific year or years, without adjusting for inflation. When used in reference to securities, nominal value is also known face value or par value.

Read more: http://www.investope...p#ixzz21hPcUjSV

nominal value
 

nounbook or par value, as of securities; face value.

Noun1.nominal value - the value of a security that is set by the company issuing it; unrelated to market valueface value, par value

NOMINAL VALUE
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The value of a security set by the entity that issues it. It is unrelated to market value. Also known as face valueor par value.










Nominal value IS face value.............

[yota691]

'M.Duke'
I would like to know how and what the effect of the droping of the zero's that I keep hearing about

One day we will have a Link to your question with a Answer, until it happens, what you read is somebody else Theory that it, no more no less!!

Edited by yota691, 25 July 2012 - 10:44 PM.

[MovieMaker]

Thanks for all the opinions, that's what we're here for.

[jeepguy]

no onw has brought up the dinar will equal or be bigger than the dollar 1 too 1 ratio ,,, that has a lot of folks in a spin also ,,, if they drop zero`s off the .00086 too .86 ,, the dinar is worth 86 cents per 1 dinar ,,, but if the local countries have their currency stated as .27 .18 and so -on ,,, and they are above 1 dollar per 1 of their currencies ,,seems like .86 would be wayyyyy up there in price range exchange even the euro is above 1 u.s. dollar ,,, surely the dinar can be brought up too 1.50 per dinar ,,, also the zero`s they seem too say lately is re-fering too 5- 10-- 20---50--- 100--- with no { 000 `s } on the ends of note numbers both large notes and smaller notes will co-exsist side by side till all larger notes are off streets { 2 years too complete after relase of lower notes } --------------> if you come out with a 5 dinar note i would think it would really be close too what a 5 u.s. dollar note would be worth { 5 singles or 1 five dinar ,,, soo we are really waiting on the rate of exchange too see what the zero`s and worth are going too say !!! } just my take on this idea ,,,,,,, come on 2.00 rate per 1 dinar

[magawatt]

If the rate is .86 IQD=1 USD, then 1 IQD = 1.16 USD.

[Badrabbit]

+1 for the Jeepguy;) i like your thinking i am absolutely against the LOPsters way of thinking they have no hope they seem to be preaching doom and gloom, GW. said that this war will not cost this country any money, how?...THE RV...it has been a master plan, we now have an Allie in the Heart of the old Persian Empire, a demacratic Allie, one that will have the most valuable currency in the Middle east/World, i do think it will come out above 1 to 1, more important is that a new way of life is being introduced to a historically waring people! i agree the removing the 3 zeroes means .00086 to .86.

[SWFloridaGuy]

Source: http://economics.abo...nal_vs_real.htm

Generally a real variable, such as the real interest rate, is one where the effects of inflation have been factored in. A nominal variable is one where the effects of inflation have not been accounted for. A few examples illustrate the difference:

1. Nominal Interest Rates vs. Real Interest Rates

Suppose we buy a 1 year bond for face value that pays 6% at the end of the year. We pay $100 at the beginning of the year and get $106 at the end of the year. Thus the bond pays an interest rate of 6%. This 6% is the nominal interest rate, as we have not accounted for inflation. Whenever people speak of the interest rate they're talking about the nominal interest rate, unless they state otherwise.
Now suppose the inflation rate is 3% for that year. We can buy a basket of goods today and it will cost $100, or we can buy that basket next year and it will cost $103. If we buy the bond with a 6% nominal interest rate for $100, sell it after a year and get $106, buy a basket of goods for $103, we will have $3 left over. So after factoring in inflation, our $100 bond will earn us $3 in income; a real interest rate of 3%. The relationship between the nominal interest rate, inflation, and the real interest rate is described by the Fisher Equation: Real Interest Rate = Nominal Interest Rate - Inflation. If inflation is positive, which it generally is, then the real interest rate is lower than the nominal interest rate. If we have deflation and the inflation rate is negative, then the real interest rate will be larger.

2. Nominal GDP Growth vs. Real GDP Growth

GDP, or Gross Domestic Product is the value of all the goods and services produced in a country. The Nominal Gross Domestic Product measures the value of all the goods and services produced expressed in current prices. On the other hand, Real Gross Domestic Product measures the value of all the goods and services produced expressed in the prices of some base year. An example:
Suppose in the year 2000, the economy of a country produced $100 billion worth of goods and services based on year 2000 prices. Since we're using 2000 as a basis year, the nominal and real GDP are the same. In the year 2001, the economy produced $110B worth of goods and services based on year 2001 prices. Those same goods and services are instead valued at $105B if year 2000 prices are used. Then:

Year 2000 Nominal GDP = $100B, Real GDP = $100B
Year 2001 Nominal GDP = $110B, Real GDP = $105B
Nominal GDP Growth Rate = 10%
Real GDP Growth Rate = 5%

Once again, if inflation is positive, then the Nominal GDP and Nominal GDP Growth Rate will be less than their nominal counterparts. The difference between Nominal GDP and Real GDP is used to measure inflation in a statistic called The GDP Deflator.

3. Nominal Wages vs. Real Wages

These work in the same way as the nominal interest rate. So if your nominal wage is $50,000 in 2002 and $55,000 in 2003, but the price level has risen by 12%, then your $55,000 in 2003 buys what $49,107 would have in 2002, so your real wage has gone done. You can calculate a real wage in terms of some base year by the following:
Real Wage = Nominal Wage / 1 + % Increase in Prices Since Base Year
Where a 34% increase in prices since the base year is expressed as 0.34.

4. Other Real Variables
Almost all other real variables can be calculated in the manner as Real Wages. The Federal Reserve keeps statistics on items such as the Real Change in Private Inventories, Real Disposable Income, Real Government Expenditures, Real Private Residential Fixed Investment, etc. These are all statistics which account for inflation by using a base year for prices.

Edited by SWFloridaGuy, 26 July 2012 - 10:56 AM.

[steveinfla]

Source: http://economics.abo...nal_vs_real.htm

Generally a real variable, such as the real interest rate, is one where the effects of inflation have been factored in. A nominal variable is one where the effects of inflation have not been accounted for. A few examples illustrate the difference:

1. Nominal Interest Rates vs. Real Interest Rates

Suppose we buy a 1 year bond for face value that pays 6% at the end of the year. We pay $100 at the beginning of the year and get $106 at the end of the year. Thus the bond pays an interest rate of 6%. This 6% is the nominal interest rate, as we have not accounted for inflation. Whenever people speak of the interest rate they're talking about the nominal interest rate, unless they state otherwise.
Now suppose the inflation rate is 3% for that year. We can buy a basket of goods today and it will cost $100, or we can buy that basket next year and it will cost $103. If we buy the bond with a 6% nominal interest rate for $100, sell it after a year and get $106, buy a basket of goods for $103, we will have $3 left over. So after factoring in inflation, our $100 bond will earn us $3 in income; a real interest rate of 3%. The relationship between the nominal interest rate, inflation, and the real interest rate is described by the Fisher Equation: Real Interest Rate = Nominal Interest Rate - Inflation. If inflation is positive, which it generally is, then the real interest rate is lower than the nominal interest rate. If we have deflation and the inflation rate is negative, then the real interest rate will be larger.

2. Nominal GDP Growth vs. Real GDP Growth

GDP, or Gross Domestic Product is the value of all the goods and services produced in a country. The Nominal Gross Domestic Product measures the value of all the goods and services produced expressed in current prices. On the other hand, Real Gross Domestic Product measures the value of all the goods and services produced expressed in the prices of some base year. An example:
Suppose in the year 2000, the economy of a country produced $100 billion worth of goods and services based on year 2000 prices. Since we're using 2000 as a basis year, the nominal and real GDP are the same. In the year 2001, the economy produced $110B worth of goods and services based on year 2001 prices. Those same goods and services are instead valued at $105B if year 2000 prices are used. Then:

Year 2000 Nominal GDP = $100B, Real GDP = $100B
Year 2001 Nominal GDP = $110B, Real GDP = $105B
Nominal GDP Growth Rate = 10%
Real GDP Growth Rate = 5%

Once again, if inflation is positive, then the Nominal GDP and Nominal GDP Growth Rate will be less than their nominal counterparts. The difference between Nominal GDP and Real GDP is used to measure inflation in a statistic called The GDP Deflator.

3. Nominal Wages vs. Real Wages

These work in the same way as the nominal interest rate. So if your nominal wage is $50,000 in 2002 and $55,000 in 2003, but the price level has risen by 12%, then your $55,000 in 2003 buys what $49,107 would have in 2002, so your real wage has gone done. You can calculate a real wage in terms of some base year by the following:
Real Wage = Nominal Wage / 1 + % Increase in Prices Since Base Year
Where a 34% increase in prices since the base year is expressed as 0.34.

4. Other Real Variables
Almost all other real variables can be calculated in the manner as Real Wages. The Federal Reserve keeps statistics on items such as the Real Change in Private Inventories, Real Disposable Income, Real Government Expenditures, Real Private Residential Fixed Investment, etc. These are all statistics which account for inflation by using a base year for prices.

funny I was just thinking the exact same thing..

[Maggie123]

Wow SWFG! Great Article! Thank You!

I love story problems, my favorite part in math classes. Cheers!

[whatsthis]

I think what you are seeing is a misinterpretation of what will happen so let me go over a few here delete zeros or drop zeros remover zeros as we have seen in someone printing of what they thought was happening to the currency. Now let get back to what the CBI has said to correct that wrong wording they have said it is NOT deleting or removing or dropping the zeros it is lifting the zeros. When Shabibi has said deleting the zeros he meant that he would be taking them of the streets of Iraq to increase the value of the dinar. now we are some where around 4 trillion dinar or less in the streets of Iraq meaning he has taking as many of the 25k note as possible of the streets & a lot of the 10 k notes off the streets. which he believes will strengthen the value.
in in the last few days I saw an artical the said they would be coming out with the new currency & remove the old, when you remove it is not saying it will change anything. So I.M.O get off the lop we will not see a lop you can't lop just a few notes, & not others its not possible, now my opinion is we will get a straight up rate change with face value of what we have.

NO LOP

Edited by whatsthis, 26 July 2012 - 01:07 PM.