Kent

Could you post it here?? I'd love to read it.

ditto that

Desimo, for a study on lops look at http://www.unc.edu/~lmosley/APSA%202005.pdf or look at the summary in the other link I gave above.

kap, I... don't think you wind up with the same return on investment either way. Not by a long margin. If there is a lop, we won't make as much money and Iraq doesn't incur as much debt.

Check out the report at http://dinarvets.com/forums/showthread.php?7545-Debunking-the-myths-of-the-infamous-bunny-ear-(lop) for an academic response to that.

I think it might have been http://dinarvets.com/forums/showthread.php?6697-Iraq-central-bank-takes-steps-to-rebase-dinar-article-from-august-2008

OOPS wrong link. Try http://dinarvets.com/forums/showthread.php?7545-Debunking-the-myths-of-the-infamous-bunny-ear-(lop)

Sonny, I appreciate the post, but actually a lop is statistically more likely when there is IMF involvement. See the post at http://dinarvets.com/forums/showthread.php?t=7506&goto=newpost That report also indicates foreign relations and credibility of the currency are motivating factors FOR a lop. PS, I'm still keeping mine.

The study says a 1 zero lop is the most common, but it is different based on what they are trying to accomplish each time. Answering your question, a 3 zero lop would turn your 50,000 dinar into 50 dinar, but since all currency is redominated, a 3,000 dinar loaf of bread starts selling tomorrow for 3 so the change is value neutral. That also means that your current rate of 1,170 dinar to the dollar would become 1.17 to the dollar.

There seem to be a lot of short phrase/sound bite myths that are mentioned about a lop. I am an investor and have just as much interest in an RV as anyone. In light of k98nights post, ( http://dinarvets.com/forums/showthread.php?7506-CBI-The-foreign-exchange-abroad-(draft)-and-seek-to-erase-the-zeros-from-the-dinar ) this should be informative. This post is long, but I

We may lose opportunity, but you do not lose money in a lop. It is value neutral. I think the value will go up after a lop, not down (just not enough to make dreams come true).

K98nights, thanks again for posting, in spite of the fact you got hammered. I am amazed how smart someone is if they offer good news, but how stupid they are if it's bad. It's not as if all the good rumors have panned out yet. Thanks for giving us the good with the bad.

OK, this is the third time I am trying to write this up. I keep looking for a link and leaving the page and then my post disappears. Very frustrating, but I digress. Pep, First, I agree that we are in debt, but even on your own link you are looking at the wrong figure when speaking about the credibility of our currency. Look in the top left. US National debt. Foreign governments care less about my personal mortgage and credit cards than they do our government debt. Your figure is far more relevant to the health of our economy than the strength of our currency. Our situation is a little unique being the biggest importers in the world and being the reserve currency of the globe, but still, as mentioned before, even we can run out of credit and I am afraid we will get there if we don't change our ways as a government and a people (savings rates of our people have improved drastically in the last year by the way). Second, I never said that other governments won't buy the Dinar effectively advancing them money. They can get credit. What I said was that there is a limit to everyone's credit. I don't know about your banker, but mine won't lend 1,200 times my earnings capacity. That is what Iraq would be asking with a $3 RV. "Come on, advance me just $120Trillion. You know I am good for it." I do have a link for the $60Trillion and have posted it in another string, but it is on my office computer and I am at home. It is a real number on (I think it was) 183 countries where data was available. Only a handful of small countries were not included in the data. I didn't pull that out of my backside. It's real. Now this statement: "Iraq will be the richest nation in the world". If you mean percapita income, someday you might be right if they do what Saudi Arabia does and give oil revenue to their people (but even that won't be so if they borrow themselves into oblivion). If you mean they will have the largest economy in the world (which better relates to foreign debt)... not any time soon. Google is a wonderful thing. Lets check the figures. US GDP is $14Trillion ( http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_mktp_cd&idim=country:USA&dl=en&hl=en&q=gdp+of+US ) Kuwait GDP is $137Billion ( http://en.wikipedia.org/wiki/Kuwait ) Saudi Arabia GDP is $468Billion ( http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_mktp_cd&idim=country:SAU&dl=en&hl=en&q=GDP+of+Saudi+Arabia ) Check that out in a Graph ( http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_mktp_cd&idim=country:SAU&dl=en&hl=en&q=GDP+of+Saudi+Arabia#met=ny_gdp_mktp_cd&idim=country:SAU:IRQ:ARE:KWT:USA ) Do you really believe Iraq will grow 140 times their present size very soon? Saudi is 3.4 times Kuwait and Saudi would have to triple in size to have the largest economy. Blind optimism about a thriving oil economy doesn't get us the kind of borrowing power it would take for a big RV. I am sorry, it just doesn't. "You say that next year they will only 150 billion to spend" No, they will actually only have 95 Billion according to the IMF. I was just inflating it by 50% to be obscenely generous to make the point. ( page 19 of http://www.imf.org/external/pubs/ft/...08/cr08383.pdf ) If you are going to have faith in an outcome, wouldn't you like it to be based on more than rumor? I simply believe that Iraq will act in their own interest based on priorities that best suit them. If they want to be generous to their own people and rebuild their economy there are far more direct and efficient ways to apply resources than to do an RV which becomes a government give-away to all the other nations and investors that are holding their currency. I don't think they wish us ill, but I don't think they want to do for us what they need to do for their own country - and even if they did, there is a limit to how much money they could borrow to do it. For them to have a money supply 4 times their current GDP would be a huge loan from other nations. Do some research and look at the money supply of other countries relative to their GDP. Even if we stipulated that they could go ten times GDP to a money supply of 1 Trillion Dollars that would still be what, a 2.33 cent RV conversion to us? I hate this, but all of it is true.

War Eagle, I agree with you that they know exactly what's out there, but I am thinking they must have printed more. The CBI showed currency outside of banks to be 21,306,000,000 Nov '09 http://www.cbi.iq/xl&wr/key%20financial.xls If you think about it, the life expectancy of a paper bill is pretty short (wicki says one of our dollar bills only lasts 12-18 months before it has to be replaced and that matches with what my wife remembered from touring a local currency printing plant). They would have to have a lot more printed - just not put in circulation.

By the way, I'll put in another plug for John Maulden's free newsletter. I gave the link earlier. It is excellent!

The short answer was up above, but I will assume you's like a little more explanation. Really, the strength of the dollar presently isn't based as much on our fundamentals, after all, O is spending us into oblivion (and I thought Bush overspent - geese, this guy makes Bush a miser). The drastic encroachment of government spending as a % of GDP continues to erode our ability to work ourselves out of a problem and it sucks up borrowing capacity for free enterprise. The stimulus is making the future even worse, not better because, instead of stimulating the private economy where money turns multiple times, he is spending too much of the stimulus on government programs where you get a road or a park and it's gone. It wasn't the New Deal that got us out of the Great Depression (even if it did offer hope and fed people). You can't give your way out of an economic problem (which is also at the root of my conviction that Iraq can't overspend) and drastically increased government debt sucks up borrowing capacity and stifles the private sector. Capitalism doesn't thrive when government increasingly eats up more of the pie. So why are we doing pretty good on currency rates right now? China has already expressed their concerns about government debt in the US and they are holding tons of our Treasuries in their reserves. Why do they keep pumping us up? They need us to buy their stuff and we are the biggest spenders on the globe! If the Dollar goes down their imports become more expensive to us and we slow our buying (happened last year big time). So it pays them to be patient, even though they could make more on their reserves elsewhere. The other big thing is what I mentioned above. In looking around the world at the big guys, we are least unstable so still the safest bet (for now). Ireland and Spain make our bank problem look like a cake walk. The problem with the Euro is that different nations within the group have different reserve and banking problems but they can't independently ease or restrict money supply to solve individual problems. There is a present concern that at some point the music stops. Somewhere I read that our economy is likely to only be able to absorb 1/3 of the increased government debt that is required for this next year alone. That means as a government we go hunting for others to bail us out by buying about a trillion in treasuries (with no indication of it letting up in coming years so we will need that each year for several years)! At some point those other governments simply stop buying. Quite simply we run out of credit, period... So reflect for a minute about that. What would happen if Uncle Sugar couldn't borrow the trillion they need to cover the budget next year? OOPS In order for us to run a deficit someone has to lend it to us. For now that isn't happening, but if we don't get a grip on spending IT ABSOLUTELY WILL. Everyone and every government can run out of credit sometime. Smaller governments try and print their way out of the problem and get hyperinflation. IRAQ IS THE SAME. If they want to do a 1:1.5 honest to goodness RV someone has to loan them the $60 Trillion because next year they will only produce (add 50% for optomism) $150Billion. That is all the currency in the world. (and I thought Obama was a big spender). Just my opinion.

Thanks for the compliment. Honestly, I know a lot less about the dinar than a lot of folks on this site. I do, however have a different perspective on economics than most of them. I honestly hope they are right and I am wrong, but I also think there are some people who are dangerously optimistic, meaning they really need this to happen. I don't want to see folks get hurt but I am hanging on with them and hoping for the best. In the meantime I add my 2 cents now and again in spite of the fact it is a very unpopular view and keep asking someone to document the opposing view with examples or other references. It is amazing how so many of the news items and rumors could as easily point to the urgency of a lop as it could an RV. I really appreciate all the work everyone does on this forum.

Everyone is talking about the GCC deal. It makes sense to me that they need to bring the rate into range in order to play ball with the other guys. I am not as confident that they have to try and get into ERM now, but it just makes sense to me that a legitimate currency rate should be somewhere in the range of the Dollar, the Euro or the other guys in the Gulf ($1-3). It also makes sense to me that when they are able to internationally trade the Dinar that the rate will go up simply based on availability and the future prospects of the country. Smithgroup in another string gave an excellent description of a lop being like a reverse stock split and gave an example of how a lop in combination with an RV would look. Personally, I believe something like that makes sense. Most people disagree with me, but IMO, the money to pay for any RV has to come from somewhere and that somewhere is 1). growth in their economy and 2). loans via other countries buying lots of Dinar. I think the amount countries will advance is necessarily based on what they can get in return. Just google the GDP and money supply of Kuwait and of Saudi Arabia as a reference. The world is buying oil from them as well. What Iraq can afford to do must be in a range of feasibility by comparison. Any more is quite literally a pipe(line - oil that is) dream. It doesn't matter how bad we want it. There is simply a range of plausibility and this deal will fall in the range. Even a 10 cent RV won't work because of the debt Iraq would incur, both to us investors now and to foreign governments over time. Facts are facts. Excess money supply necessarily causes inflation and ruins an economy. If I remember correctly, there is an economic formula that says GDP times velocity of money (how often money turns in the economy) equals money supply. If you have more it causes inflation. I don't believe Iraq can fabricate value by government fiat and expect the world economy to just suck up the excess. Right now the US is having that same problem. The Fed has been increasing our money supply and the only reason we don't have inflation (yet) is because our velocity slowed drastically with the bank problems. I've read an economist say we are the worst currency in the world... except for all the others. The banking problems and demographic decline of other countries is often worse than the US. If everyone else wasn't struggling so much, foreign governments would be putting their money into other currencies and our dollar would tank quickly and that still could happen. When our economy heats back up the fed better have already retrenched on the easing of our money supply or we will get hit bad with inflation. Iraq has to live in those same kind of guidelines and that necessarily affects what they can pay you and me to cash out our Dinar.

If you don't mind, let me challenge your logic by comparing to the largest, most oil rich gulf region economy. Look at the Gross Domestic Product of Saudi Arabia http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_mktp_cd&idim=country:SAU&dl=en&hl=en&q=Saudi+Arabia+Gross+Domestic+Product $468 Billion US. - obviously a mature, oil rich nation with a very stable government. Their M3 Money Supply is less than 1Trillion http://www.encyclopedia.com/doc/1G1-197458666.html. Iraq has 43 Trillion Dinar in M2 money supply and a current $100Billion DOLLAR GDP. $1 RV converts Iraq's money supply to 43 TRILLION DOLLARS. IMO it is naive to simply say they have the largest energy reserves on the planet and it will pay for a big RV. Just food for thought.

You don't think there may be too much in circulation and that is a big reason for such a low rate??? I'd say there is something wrong that needs to be fixed. That is what we are all counting on. The question is how they correct it. Most say RV. Others (few) think they can only afford a lop and modest RV.

sure would like to see some of the links if you have any.

I believe Adam had something about that in the book confirming that owning the dinar IS legal and protected by US govt but I am not on the computer where I have the book. It was either there or in one of Adam's blog posts at the other site. I know it was there somewhere.

I believe exactly the same thing... only shift a zero or 2 depending on what their government can afford to incur in debt. Very, very well explained.

Stephen, I could see it happening quickly, just with a combination of either a lop and market change on international trade or a lop and an RV. What I don't think makes economic sense is a really large government declared RV to get straight to a gulf nations relative value. My argument is on method, not timing. A lot of the news seems to point to a pretty quick change. It seem unlikely to me that it would continue as it is for very much longer. They need to trade their currency internationally because they are becoming one of the largest exporters in the world and they would also really benefit from a more credible rate. I wish, but don't believe (yet) that I will make a 1000-3000x return. It looks to me like a 1-3x.

Charles45, aren't you in-country? What do you think?