Kent

But let me get this straight. That was only a +2.1% RV ? I don't exactly see the similarity to what people hope for here.

You know the drill. Pro RV people say all the press is "smoke and mirrors" (means outright lies) to dissuade dinar investors just before an RV. It's just a misinformation campaign. Interestingly, it doesn't seem to occur to them that pro-RV rumors could be a disinformation campaign to prop up the sale of that nearly worthless pretty red paper at the CBI auctions (which has been a brilliant tool to increase CBI reserves in dollars). I have a tendency to believe most of the pro-RV people and even most of the guru's aren't "pumpers" working for the dealers. They just believe what they hear and sometimes the things they hear come from people in-country. We'll have to wait and see. Some are wrong and some are right. Much about what is said by RVers about re-denomination is blatantly inaccurate. Personally, I am with you and lean toward the "black and white" view as the most likely. In the long run, the currency will strengthen if the country continues to develop. That is unfortunately different from an RV. Personally, I may not stay invested much longer. Kent

Reknow, just to clarify, I am not implying anything about Bush's character or ethics by mentioning him. The rumor was a few months ago and only related to a conference call in which he told some other businessmen to get ready because there was going to be a big change really soon. Actually, I live in DFW. His house is far more modest than you would expect and I've heard of more than a few stories about people running across Bush riding his bike on some off road bike trailsin a state park south of Dallas, friendly, gracious and unassuming.

THAT is a good description. I've heard rumors from people I totally trust who totally trusted the source. One was even a telephone conference where there were a handfull of people in the room on a telephone conference with George W Bush. Others, and that story in particular were cases where it was impossible for me to believe they were lying. The bottom line is that the forecasts from those stories never panned out. I honestly can't reconcile why, but I still totally respect the source of the information.

Sonny1, a little help please. I know you get loaded with requests for info. I find a reference to an RV when Estonia changed from the Kroon to the Euro for less than .0001% increase in 2004 (not exactly what dreams are made of). Likewise, I've not seen information on Kuwait where it was drastically changed by government fiat overnight. It seems all the examples people quote are really gradual market change or change by pegging to another country. Do you have any link for any example in any country where a drastic currency value change happened due to a declaration of value by that country or central bank? Honest question... I've asked others before, I've looked - just haven't found an example. The "woods are full" of redenomination examples and there certainly have been market driven success stories over time. I'd love to see an example of a pretty big overnight RV (anything over 25% increase). The closest I have come was Germany after WW II when they merged a few currencies and it wasn't that high (as I recall only about 15%) . I am sure all of us would be encouraged by seeing an example, particularly with the news like this string. Kent

The following 2 point conclusion of the report seems to exactly describe Iraq to me: "Based on the analysis above, the re-denomination of national currency must be done only when the following circumstances are being met: The decrease trend of inflation is consolidated. A low inflation rate, joined by zero-dropping operation will improve credibility of the national currency; Other significant positive results are obtained, proving the success of economic reforms and restructuring (e.g. the real terms increase of the GDP). It has been proved in the majority of the countries that put in place a re-denomination process that this operation is an indicator of the success in lowering inflation and determination to keep inflation under controlled margins. Iraq has ended and stabilized a period of high inflation and effected other positive reforms to keep it from happening again.

Drox, That was a good thread and good to see you and Chas32 looking at a market driven approach to revalue.

Drox, thanks for the personal note and "welcome back" PM message. This is the response you requested. First, Thanks for putting in the time and thought. I always appreciate people who offer thoughtful opinion and analysis, even when we disagree. The people who offer respectful insight and even insightful questions make the site worthwhile. You are a great example of that. Candidly, I have a tendency to take things closer to face value than your analysis. When an articles say "delete 3 zeros" and make comparison to countries who did a redenomination I think that is what they mean. We used to have the discussions about "they didn't really mean delete the zeros from the notes, they mean delete the zeros from the rate"? ...bunk. Apart from translation difficulties (which I admit are confusing) the articles seem pretty clear. As to whether they are "smoke screen" efforts to scare away investors that they would have to pay on RV day? I don't think so. It makes more practical sense that they have told the truth about an RD, but not so aggressively that it kills the CBI auction activity. I think they WANTED to keep selling those little red slips of paper in exchange for dollars and that they have been doing that for years now to increase their REAL currency reserves to shore up the value and stability of a currency that was ravaged by war - and it has worked beautifully. I rather suspect some of the "intel" our well intended gurus are getting from CBI folks is intentional for that purpose - to sell more junk paper in return for greenbacks. (side note, I seldom agree with someone being called a "pumper" or a "dumper" because either are probably well intended based on what they think is valid information from sources they think credible). Remember, articles often spoke of inflation as a great fear and avoiding it as job #1 at the CBI. You rightfully comment that interest rates are not a tool to control inflation in a country where there is very little consumer borrowing. Often in the past I made a totally ignored, but no less valid point. Increasing the money supply is inflationary. Highly increasing the money supply is highly inflationary. Even if you assume all the rumors that all the guru say is true, even if you buy the premise that oil in the ground is the same thing as monetary reserves (and it isn't by the way) and even if you think those reserves are large enough to support a money supply larger than the US (and all you have to do on the surface is compare Saudi Arabia to know that isn't true) - still the question remains if increasing the money supply x3000 overnight is a good thing. My opinion is that would hyper inflate the economy of Iraq. The day after an RV you would have 3000 times more money offering to buy the same amount of "stuff". That is exactly what causes inflation - more money chasing the same amount of stuff (e.g. if you had 50 buyers for a piece of real estate rather than 2 and the 50 got rich overnight) Personally, I am more inclined to believe CBI will use the past occasional "3 zero" announcement as fall-back to claim they were telling everyone the truth all along and we just weren't listening. They are certainly on no mission to clear up our misunderstanding because we are buying those pretty red bills, but they have been releasing enough to say later "we told you all along". Think about it... All the reasons there MUST be an RV. They MUST have it to pay their bills (now Paris on the 11th). Really, no war ravaged country has ever had trouble paying their bills? They MUST do it for their poverty stricken people! Aren't there more efficient methods to distribute oil wealth to citizens? Look at other oil rich nations where they just give them a healthy income and benefits. They MUST recover prewar currency rates. Why? Pride? -Not a healthy economic policy basis and they could get there the way all other countries have done it - with a combination of market change and redenomination. Drox, I still haven't been able to get anyone to document a single incident where a country has done anything like what would be represented in even a ten cent RV. My research indicated that there are just a few examples like Germany where there was a very nominal government (as opposed to market change) revalue. After WW II Germany needed to consolidate different currencies and in the process there was (can't remember the exact figure) like a 15% revalue. The rest of the growth came in economic horsepower and market change. Likewise, even Kuwait. The huge increase in value given seems to be the contrast between what shopkeepers would pay in the market for worthless mid-war money to post war values. That wasn't by government fiat. If the government RV'd the currency for 10, 100, 3,000 times the worst value I'd like someone to show the link. I have challenged others to show a single example in history. I can find more than a hundred RDs and even read studies on the motivation (grossly misrepresented on this site by the way), but I've never seen anyone give an example close to what is forecast as an RV for Iraq. Ask yourself, really. If a government could get away with an overnight announcement that their currency was worth 1000 times more overnight, why hasn't anyone else done it to get out of THEIR debts. Answer? A). the world wouldn't "buy" it and . even if they would, it would wreck their economy with inflation. Do I think Iraq has tons of growth potential? yes. Do I think Iraq's value will substantially increase? yes (if they don't "****** victory from the jaws of defeat"). Would I like to believe your "plan B" theory and see an RV and become an overnight multi-millionaire? H_ _l yes. Honestly though, I don't see it square with economic reality. That leaves me in the uncomfortable position of disagreeing with some who see their view as spiritually motivated and all who see the dinar as a quick ticket to a much better life. It's no fun. Neither is giving you such a candid answer, but I could do no less for someone whose efforts and manner I respect. I have, however become very quiet in the last year. Over that time it seems the site has become even more harsh than it was before. I miss reading some of the old guys who no longer post. Blessings to you and yours. As always, hope I'm wrong. Kent

tmc, + from me buddy. I find it hard to believe how thinking people can read all the news quotes, even from the CBI, over and over referencing to "deleting three zeros" and even making comparisons to other countries that have done a redenomination... yet still not even question whether they will see a 3,000x revaluation of their investment by government fiat. I used to try and respectfully post a lot about money supply, currency reserves, comparisons to other countries, etc. thinking that balance on the site would be a benefit to others. Many people believe what they want to believe. We all like to dream and I'd love to be wrong and shout it from the mountaintops. I am still holding my dinar, but with a pretty nominal expectation of return. The news seems pretty clear. I don't have a crystal ball, but RD and then float seems likely to me. JMHO - not trying to offend anyone.

also, some of us USED to be dinarified before the system converted - and never went to the trouble to re-dinarify

I find it interesting that the article is exactly the scenario (not large notes but the process to a redenomination) that A/C describes.

Hey Ron, while I've got your attention, ever had your Phd Economist wife post something on the feasibility/impact of a large RV? I'd sure like to read anything like that you've done. Kent

Ron, It's been a long time since I posted. Thanks for the story. I hope your banker's intel is gold. Blessings on ya. Kent

Darin, The best study on redenom. I have seen is http://www.unc.edu/~lmosley/APSA%202005.pdf and it discusses the why and the outcome and it is based on looking at (I can't recall the exact number) like 70 redenominaitons. Regarding your question about a revaluation, there are certainly examples of market change and Kuwait is an example. My understanding is that the government didn't revalue the currency, the market did - down during the war when locally in Kuwait, stores were reluctant to accept it, and then up again afterward. People made money in that change. Germany apparently consolidated more than a single currency in the shadow of WW II and that resulted in a modest (true) revalue. I am not aware of another example where a government (or government entities) redefined the value of their currency the way everyone hopes for an RV in this curcumstance. I've literally asked for years and no one gas given an example (please, someone chime in if you can cite one). In truth, "this time may be different". We all hope so. Some are not as convinced as others. In a frustrated response to many who, in my opinion give false reasons that this time MUST be different, I offered this post based largely on the Mosley study: http://dinarvets.com/forums/showthread.php?7545-Debunking-the-myths-of-the-infamous-bunny-ear-(lop)&highlight= Conviction regarding an RV must be based on economic optomism about Iraq and their economy (Oil growth, the fact that they can support a diverse economy including agriculture, etc.) In my opinion, that must be factored against the amout of currency they can afford to support without causing massive inflation in any change. (think about the current discussion in the US about QE2 or quantitative easing by the Fed and the fear that it would cause inflation of costs and devaluation of the dollar). In forming your opinion, you have to largely assume that a true RV is the same thing as printing the same percentage of new, additional money and putting it in curculation (some exceptions). What would happen to the US economy if we told everyone tomorrow that they can come to the bank and get $1,000 of blue dollars in exchange for $1 of current "green"? Process that question and then ask yourself why Iraq is different and by how much? Seriously, if anyone reads this and they have a good example of a true, substantial RV I'd love to hear it. Sorry to sound pessamistic. ...don't want to rain on anyone's party. I have dinar and want it to change like everyone else.

No criticism intended, but none of the Venezuela discussion is new. For a quicker read, look at the Venezuela brochure link in Bellypod's post a year ago. It was used to promote that redenomination. Often such opinions have not been popular in the past and people who hold them tire and leave or quit posting.