Kent

In Adam's writing about Warka, he discusses a senario where they do an in-country-only currency exchange and describes that as a main reason for an in-country account. That sounds like a different kind of deal than a "lop". I believe if it were a true "lop" - in order to follow the logic of a value neutral exchange, they would delete zero's in an account as well. That also means in a true lop all currency would change out - even lower denominations. Frankly, though I don't know for sure on your account question.

Been on chat quite a bit, but stay fairly quiet. I'm not real quick with a keyboard and not sure I'd do very well "under fire". I would also hate to mess up the atmosphere of the room. People really enjoy the relationships there. I don't want to be a Pied Piper of Pessamism. I am just looking for assistance in researching the investment.

SBX, thanks for weighing in and letting me play the Devil's advocate. This opinion is not popular and I would love to be convinced otherwise. As to what they have to gain, isn't the main motive for Iraq to have a more credible currency for foreign trade and one that is more on par with other gulf nations? If they were really wanting to give a huge windfall to the people in Iraq, they could just pass a budget that is 2000 times greater than the current one and give the money to their own people. No one really believes that would happen, but the obligation Iraq incurs from a $1 RV is just about the same thing - only they are paying us 1,000 times return for the money you and I have under our mattress as well... Muhammad, I admire all your research on North Korea, but isn't it a substantially different thing if the government put a cap on the amount of currency their people could exchange? That is a communist "no one can have any more than anyone else" move that beat down the few who saved - very anti-capitalist. Normally a "lop" is a totally value neutral exchange (read that history from the University of North Carolina in the earlier link). The next day you simply pay 3 Dinar for a loaf of bread rather than 3,000 and use a bill with a new face on it. That doesn't encourage terrorists or anger the US. If it paved the way to put the Dinar on the international market and improved commerce we would be giving them "high fives". We want them to be dependent on trade with the rest of the world because it makes them less of a terrorist nation. Sonny1, do you really believe Iraq can bury 40 trillion in obligations? Could I encourage you to research the M2 of Saudi Arabia or Kuwait (I am not on my normal computer and have another commitment this morning or I would work on it for this post, but I thought I had seen a figure near a GDP for them of about 300 billion dollars). Saudi is obviously on the mature and declining value of their oil reserves. Governments have been pining after them for their oil decades. How much money supply can they sustain? If we said Iraq has their economy today, there would still be no way to hide or squirm out of a 4 trillion dollar obligation (much less 40). Again, a period of stable inflation after hyper-inflation (or drastic increase in money supply) is an optimal time for a re-denomination according to that UNC, Chapel Hill paper (which is a study of like 18 lops). Again, guys thanks for weighing in on the discussion. I don't want to be a turd in the punchbowl. I would love to think differently. Any documentation that says a lop can't happen? I really, really want to see it. I hate being trapped in logic and I miss the dreaming. Someone get me out with some facts.

By the way Phonics, I tried to download a spell checker but couldn't get it to work. You were an inspiration....

Phonics, thanks for the opinion. Sherlock got a little "in people's face", but offered great documentation and logic. I would sure appreciate yours on this subject. I am sincere in looking for someone to tell me that his (and my) thinking is wrong. Really. Could you offer anything on the subject? No disrespect intended at all.

Torey, It would take some looking, but on the IMF site I believe I recall that they are currently controlling the rate that is being offered. It is not really a free market auction, really only a fixed market sale. For a while they indicated that they intended to increase about 6% per year. They did a big evaluation and report (see prior link) in December '07 and December '08. There was no similar report in December '09. Frankly, I find that interesting and wondered if that means that some substantial action was pending (my take, lop and rv?). It is strange to me that they didn't publish a new report in December '09. Inquiring minds would like to know...

Me too, and I'm still looking for someone to offer something to change my mind. Got bills to pay...

rt, I obviously agree in concept, but will mention that a lot of different numbers are thrown around for money supply for different reasons. The article could have been referring to M0 which is money/cash in circulation not including reserves, etc. For a quick description of the relative differences look at http://dollardaze.org/blog/?post_id=00565 . If you look at the chart in the link, the CBI August '08 figure when the article was written was 31 trillion dinar M2. They don't give a figure for M0. Also, it makes sense that the money supply would have increased with the growth in GDP and core inflation was pretty good (a by-product of increasing the money supply). To me that is a testimony of the success of the controlls of the IMF and all the other stabilizing influences. There is a lot in that chart I don't know the significance of, but some really good news there too.

I think the old article is still relevant because I've never seen an article that clearly stated an intent to revalue rather than lop. I have seen things that say they want the value to increase, but not a declared revalue. ...but if anyone has one please post it.

Mariejose, discussion of an ERM type arrangement simply indicates that the currency needs to change before it would be on par to be combined with the other gulf nations (and the rate mechanism is a method to control the relative value of different currencies before combining). I agree the Iraq Dinar must change before it could be a part of such an arrangement. I don't think it necessarily means that the method of change has to be an RV. I think that whole subject speaks to how likely something is to occur. Most are simply speculating that what necessarily will occur is an RV rather than a redenomination. Again, I hope someone can clarify my thinking and tell why.

All who are convinced of a RV, however also believe that printing of lower denomination currency would have to occur before an RV... Why do we think the preparation for a redenomination (lop) would be much different? All of the discussion and rumors about banks setting up for an exchange, preparing for a common gulf currency, etc - if you think about it... it all applies whether the method of change in currency is from a lop or from an RV. I keep looking for someone to tell me why it is going to be an RV contrary to financial logic. Help if you can.

muydinar, you and Canadian, Please read this as a sincere (perhaps long) question. My understanding is when a lop or redenomination occurs, there is no change in value, just a change in the currency used. How can that be a disaster? It is the same as changing from green to blue. It is like a reverse stock split that happens all the time with penny stocks. The face of the certificate changes hoping that a more credible price will make the company more marketable. Likewise, a tradable currency. It also makes trading within the country easier because people can carry less cash. True Lops are common after a period of high inflation. Many will dismiss the concept for Iraq stating (accurately) that Iraq's inflation is very controlled. Well, best I can tell, a lop often occurs after a period of high inflation when the currency has little value and most optimally after a period of stabilization. See Page 8 "hypothosis 2" of this paper on the UNC, Chapel Hill web site for a study of redenominations http://www.unc.edu/~lmosley/APSA%202005.pdf . Iraq fits that senario perfectly. The most compelling logic for a redenomination is that there is no way Iraq can afford a true $1 RV (much less $3). If you look at the money supply of countries, it usually ranges between .5 to 1.5 GDP (usually closer to 1). The M2 for Iraq on the CBI web site is shy of 43 trillion dinar ( http://www.cbi.iq/xl&wr/key%20financial.xls ). IMF says that the forcast for GDP this year in Iraq is about $95 Billion US ( page 19 of http://www.imf.org/external/pubs/ft/...08/cr08383.pdf ). Converting Dinar on a $1 RV means Iraq would be converting their money supply to 43 trillion dollars! The M3 (a larger figure) of the entire world is only 60 trillion. Is it really plausable to think that governments are going to advance Iraq enough money to float that value? If you woke up tomorrow and declared that your dime was worth $100 would anyone buy it from you? That is exactly what would happen if they woke up tomorrow and declared a $1 RV. People say the Iraq GDP will increase drastically with oil production (and it will). They will say the oil reserves mean Iraq has great value (and it does). So, go ahead and double or tripple their GDP from IMF forecasts and double that again for how much money other governments will advance to get a piece of their oil. All that might get you to 1 trillion money supply (and there is no joking way...) not 43 trillion. Another thing investors will say is look at the $1.50-3.90 value of the other gulf region currencies. My response is yes, do look at them! ...with their M2 relative to their respective GDP's. You can't ignore money supply and value can't be declared out of thin air and be supported by the world community. They all fall within some relm of their GDP and no one exceeds 200%. Frankly, a lop makes sense to me and no one ever really addresses it head on. I bought Adam's book after sending the suggestion that he address that question, but he really skirts the subject and only nips at the corners. I would love to see someone answer this question in a convincing way on this string. Like you, the investor in me wants to believe in a big RV. I am afraid the facts don't support it. IMO the facts support a 2 or 3 zero lop and then a float or revalue to increase the value. Personally, if I tripple my money spent on Dinar and it happens relatively soon it was a good return on investment. If it does more it is a windfall. Please, please someone show me different!!!! I would really like to be convinced otherwise. (by the way, credit for lots of this info should go to Sherlock who no longer appears to be a member and whose posts and strings seem to have been removed - one string was a really good discussion on this. I wish he was still on the site.)

Charles45, when a lop or redenomination occurs, there is no change in value, just a change in the currency used. It is the same as changing from green to blue. It is like a reverse stock split that happens all the time with penny stocks. The face of the certificate changes hoping that a more credible price will make the company more marketable. I don't know much about Muhammad's comments about North Korea, but it appears they limited the amount of currency anyone could exchange - not a true lop and of course that would have huge negative reprocussions because it is like nationalizing any funds above a very small dollar amount per person. True Lops are common after a period of high inflation. Many will dismiss the concept for Iraq stating (accurately) that Iraq's inflation is very controlled. Well, best I can tell, a lop often occurs after a period of high inflation when the currency has little value and most optimally after a period of stabilization. See Page 8 "hypothosis 2" of this paper on the UNC, Chapel Hill web site for a study of redenominations http://www.unc.edu/~lmosley/APSA%202005.pdf . Iraq fits that senario perfectly. The most compelling logic for a redenomination is that there is no way Iraq can afford a true $1 RV (much less $3). If you look at the money supply of countries, it usually ranges between .5 to 1.5 GDP (usually closer to 1). The M2 for Iraq on the CBI web site is shy of 43 trillion dinar ( http://www.cbi.iq/xl&wr/key%20financial.xls ). IMF says that the forcast for GDP this year in Iraq is about $95 Billion US ( page 19 of http://www.imf.org/external/pubs/ft/scr/2008/cr08383.pdf ). Converting Dinar on a $1 RV means Iraq would be converting their money supply to 43 trillion dollars! The M3 (a larger figure) of the entire world is only 60 trillion. Is it really plausable to think that governments are going to advance Iraq enough money to float that value? If you woke up tomorrow and declared that your dime was worth $100 would anyone buy it from you? That is exactly what would happen if they woke up tomorrow and declared a $1 RV. People say the Iraq GDP will increase drastically with oil production (and it will). They will say the oil reserves mean Iraq has great value (and it does). So, go ahead and double or tripple their GDP from IMF forecasts and double that again for how much money other governments will advance to get a piece of their oil. All that might get you to 1 trillion money supply (and there is no joking way...) not 43 trillion. Another thing investors will say is look at the $1.50-3.90 value of the other gulf region currencies. My response is yes, do look at them! ...with their M2 relative to their respective GDP's. You can't ignore money supply and value can't be declared out of thin air and be supported by the world community. They all fall within some relm of their GDP and no one exceeds 200%. Frankly, a lop makes sense to me and no one ever really addresses it head on. I bought Adam's book after sending the suggestion that he address that question, but he really skirts the subject and only nips at the corners. I would love to see someone answer your (and my) question in a convincing way on this string. Like you, the investor in me wants to believe in a big RV. I am afraid the facts don't support it. IMO the facts support a 2 or 3 zero lop and then a float or revalue to increase the value. Personally, if I tripple my money spent on Dinar and it happens relatively soon it was a good return on investment. If it does more it is a windfall. Please, please someone show me different!!!! I would really like to be convinced otherwise. (by the way, credit for lots of this info should go to Sherlock who no longer appears to be a member and whose posts and strings seem to have been removed - one string was a really good discussion on this. I wish he was still on the site.)

That means about 85% of their GDP is government spending... Wow. Then in another article posted today US is spending another $40 Mil US per month over there (about 480 Bln IQD per yr)?

I sent you a PM a few days ago and posted hoping that you would address Sherlock's view as a question in your book. I am anxious to see your position on Money Supply and what that logically means about a re-denomination versus a revaluation. I still have trouble understanding how Iraq can handle a true RV even to $1 if that creates a government obligation of tens of trillions of dollars, but really want to believe at least in some combination of a re-denomination and revaluation that will make the dinar a good investment. If that question isn't in the book, please consider adding it! ...and thanks for all your work. I may lean more toward Sherlock's view for now, but sincerely appreciate all you do.

I was responding to Eagled1954 indicating that my previous string (link above) was gone and he said Sherlock's posts are gone (I hit the wrong button but was intending to include his quote). I am not sure how the system works, but I think my post count went down and I dropped from a Member to a Junior Member in this string so I was wondering if the other string was deleted and that is why my post count went down?? By the way, I put in my order for the book. Looking forward to it.

If his posts have been removed that is a Huge disappointment. You are right about the thread though. I don't know if it was the subject matter or it simply got too old, but it was a great string so I made PDF's of it. I sent you a PM with my email. Send me an email and I will send you the PDF's. It was a good exchange on money supply and RV versus re-denomination.

look at Line 72. http://www.cbi.iq/xl&wr/key%20financial.xls . The last figure for M3 was over 36, the M2 figure is almost 43. You also see 20 trillion numbers which relate to M0 which is just money in circulation not including debt and other stuff. For a big discussion on that subject look at http://dinarvets.com/forums/showthread.php?t=5225&goto=newpost

Thanks for your post Short6, the SDR and foreign govmts holding them issue is interesting and would certainly explain some (particularly explain a delay), but when they convert to SDR's, still their value would become huge overnight and by purchasing oil- that value is infused over time into the Iraq money supply. Torey0112's point that it happened in Kuait is a good one, but I still wish someone could explain the economic concepts about the size of the money supply and how the economy could handle it. I understand if there were no foreign transactions, it wouldn't matter if 1 Dinar bought a loaf of bread or if it took 3,000. Everything would scale (wages, cost, domestic debt), but when it comes to a foreign currency exchange, an increase in value seems to create a HUGE debt for Iraq to foreign Dinar investors on exchange by increasing their money supply. Example: I have heard rumors of a single investor that bought over $5Million US in Dinar. Rough math - that means he has north of 5Bil dinar. Overnight he would drag 15Bil out of the Iraq economy that was only worth 95Bil(US) in GDP! That is one private investor. Even if that rumor was totally false, look at the kind of figures that Ali at Dinar Trade has thrown around regarding his sales alone ( http://www.cnbc.com//id/15840232?video=1311362126&play=1 ) 100Mil US a year ( if my $1k US bought 1Mil Dinar that's 100 Trillion Dinar on the market in one year?)- his sales alone in one year to private investors would be several times Iraq's total annual GDP on conversion. Someone please check my math. I'd like to live in Wonderland, really. Someone save me from my logic. I know I am wrong here somewhere... and someone on this site is smart enough to set me straight. I don't know specifics, but know it happened in Kuait somehow (and without the much feared inflation) and I am completely convinced that Iraq must be able to trade internationally and the value will go up drastically. For me a ten cent reval would pay off the house and be a life changing event, but I just want to understand how the big rate rumors can possibly work. These numbers are so huge compared to their economy and I haven't seen data yet to show how large the economy was when Sadam was President and Mass Murderer in Chief. I understand they had a 3:1 ratio back then, but was Iraq GDP 3,000 times the present size?

OK guys, this isn't critical. I am trying to understand. Will someone with some knowledge in economics answer this question about the ultimate value on RV? I am sure there are some bright minds in this group that know a lot more about economics that I do and already have this figured out. If this is an old question that keeps getting tossed on the table I apologize in advance for bringing it up again. The International Monitary Fund estimates a 2010 GDP for Iraq of a little south of $95 Billion US. (see chart on page 19 of http://www.imf.org/external/pubs/ft/scr/2008/cr08383.pdf ) How can an economy that size support the instant trillions in value that would exist in a $3 RV - and that with (same chart) 46% of GDP in government debt? The amount of funds or supply of money in an economy is also influenced by the velocity or the turnover of money (like inventory turnover in a retail business) so I don't believe you usually have anywhere near as much as 1xGDP as money supply. Somewhere in college days I thought I remembered a formula that said the money supply = GDP + Debt / Velocity or something like that. Does anyone have information or comment that supports the very attractive $3+ RV? I am looking for economic theory to support rumor and thought the discussion would help others also.

Only been on for a week, been very casually following Dinar investment for 4 years. Invested a few weeks ago... like the site and appreciate the info and rumors and appreciate the difference. --thx and hello to you contributors! I will weigh in if there is something of genuine value, otherwise will be pretty quiet.