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jg167_mkII

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  1. Yep they have a lot of oil. Their current goal is to pump 5Mbpd. Lets say they actually make $100 profit on each barrel, so that would be $180B dollars worth to their GDP (2+x its current level). How would that support a money supply with a value of $60T dollars, (or $24T if you like that number better), no way. So what makes the KWD supportable at $3+? Kuwait's GDP is only around $150B USD but their M2 is only 27B KWD. In contrast Iraq's GDP is maybe $85B USD and they have 60T dinars in their M2. Do the math as they say!
  2. Sure, but what sets the value is not what someone types into the central banks computer, but what other nations and the CBI will exchange (in other currencies or goods and services) for it. Each country is the only one that prints its monopoly money. So Iraq can not print (with a press or a computer) dollars, only dinars. Further the value of they money supply that is actually involved in GDP (whatever that is, m0 , m1, m?) has to stay roughly in sync. If the value goes way up, the economy overheats and prices go through the roof, then wages have to follow and its sort of like inflation but worse. If the value goes way down there isn't enough money to make GDP work and the economy grinds to a halt (as we say with the start of the financial melt down). So if the Iraq economy is at least sort of working now, then the value of the money supply can not be suddenly adjusted by (I'd guess) even 10x relative to GDP let alone 100x or 1000x . But again the IQD is backed by what the central bank will exchange for it, and that is backed by the Iraqi economy and its relationship to the world. Sure Iraq has lots of oil, maybe next year they will get to $100B of revenue from it and that will boost GDP and perhaps justify a higher exchange rate all else being equal (which it never is of course). But that will not support a 1:1 exchange rate with the dollar as long as there are so many dinars in the money supply. I understand the poker reference but what has this to do with Iraq's economy and monetary system?
  3. Actually I've been here for a couple of months as jg167, and think I understand it pretty well. If you can refute what I said then do so.Do you deny that the IQD was not devalued by Iraq while all else remained the same, but was devalued very much against the wishes of Saddam as a result of his printing of a 1000x as many dinars while the economy went into the toilet? That can not be undone over night by a few keystrokes at the CBI since the key cause (the massive amount of dinars) are still out there.
  4. I don't think anyone says this. What many (me included) say is that a HUGE RV can not occur. Any country that pegs its currency will likely move the exchange rate around from time to time. Countries that float their currencies do so as well but by buying and selling bonds, making loans etc. One more time :-) (ok likely N more times but here goes the next one..)* When the IQD was worth ~$3 there were only a few 10s of billions of them in Iraq's money supply. Saddam fixed that by printing 10s of trillions of dinars (which were replaced, 1:1 with the currency we have now). * The value dropped as it isn't just what you SAY its worth, but what it will really buy, what the country (if they peg) will exchange it for and with a GDP that was at best staying the same (and with war in fact dropping like a stone) the value of the dinar dropped as well. No one, including Iraq, would at this point give $3 per dinar, only (eventually) $0.00086 . * So it can't just be revalued back to $3, because it was not just devalued with no other changes, it was devalued as a result of a 1000x or 100,000% increase in the number of dinars. Indeed I think that is all we can hope for, and I hope for it! Ten cents would be great and more wildly so, but I think we will be very lucky to see a penny per dinar. And a lose due to the dealer spread is still possible if they only RV by say 20% to just bring the dinar to around $1 wiith a 1000:1 RD. Oh well. Where would this transfer be from? Iraq presumably. They are a pretty poor country and whatever they do have, why would they agree to a process that ended up with them giving up the largest chunk of wealth, ever transferred in history?
  5. The husband leans over and asks his wife, 'Do you remember the first time we had sex together over fifty years ago? We went behind the Irish village tavern where you leaned against the back fence and I made love to you.' Yes, she says, 'I remember it well.' OK,' he says, 'How about taking a stroll around there again and we can do it for old time's sake?' *Oh Jim, you old devil, that sounds like a crazy, but good idea!' A police officer sitting in the next booth heard their conversation and, having a chuckle to himself, he thinks to himself, I've got to see these two old-timers having sex against a fence. I'll just keep an eye on them so there's no trouble. So he follows them. The elderly couple walks haltingly along, leaning on each other for support aided by walking sticks. Finally, they get to the back of the tavern and make their way to the fence. The old lady lifts her skirt and the old man drops his trousers. As she leans against the fence, the old man moves in. Then suddenly they erupt into the most furious sex that the policeman has ever seen. This goes on for about ten minutes while both are making loud noises and moaning and screaming. Finally, they both collapse, panting on the ground. The policeman is amazed. He thinks he has learned something about life and old age that he didn't know. After about half an hour of lying on the ground recovering, the old couple struggle to their feet and put their clothes back on. The policeman, is still watching and thinks to himself, this is truly amazing, I've got to ask them what their secret is. So, as the couple passes, he says to them,' Excuse me, but that was something else. You must've had a fantastic sex life together. Is there some sort of secret to this?' Shaking, the old man is barely able to reply, '**Fifty years ago** **that fence was not electrified!!!**.'
  6. Don't quit your job until you actually have the money in the bank to allow that. NO ONE "saying so" is as good as having the cash.
  7. While no one knows just what will happen, I think we can say what won't happen. And alas a straight up RV at 1 IQD per $1 USD is something that can not happen. The value of a country's GDP and its money supply have to stay in some sort of sync. For most countries M2 is something like 80% of GDP. Exactly what are those limits? Who knows, but M2 getting to be 1000x GDP is clearly outside of them.
  8. Wow, talk about rationalization! Of course they will not disclose an RV (of any size, even tiny) beforehand, they will just do it. But if they were not planning on an RD, why would they talk about it at all? Any country that pegs its currency is likely to RV from time to time, and hopefully Iraq will do a pretty big one soon. They also seem very very likely to do an RD soon. The only question is the size of each of the components, RD and RV.
  9. A rate of 300 dinars per dollar is $0.0033 dollars per dinar or 1/3 of a cent, not 3 cents. A rate of $0.03 USD per dinar would be 33.33 dinar per dollar, not ~300 dinars per dollar as the article mentioned. A steady climb of the exchange rate seems unlikely to me since this would be a constant headache for the import/export business and would just invite speculators. My thinking is that Iraq will RV/RD to something around $1 and then grow the money supply to keep pace with their growing GDP and only make minor tweaks in the exchange rate.
  10. I don't understand it either. The CBI 2009 doc says 21T IQD was "issued" in 2008, so that doesn't quite match the 36B USD worth of dinar either, and in any case they do not show M2 increasing by 50% in 2008, so "issued" can not mean added to M2.
  11. I don't see where yall are getting the 3 cents rate from. ~300 dinars per dollar would be 1/3 of a cent per dinar.
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