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Ell, to clarify my answer to your question: my math was exactly right. Some people would like to believe that the CBI will only remove large notes from circulation, but there are no news articles that back this up. So the hope that there will be no redenomination (lop) is a popular theory here, but no one knows for sure what is going to happen. Since you asked about your math on what would happen in the event of a lop, that is how I answered your question. "To lop or not to lop", that is the question. But you should be very skeptical about this fantastical theory that only a couple of bills are being removed. I think it is a bogus theory that people believe because they want to be very rich off of a very minimal investment, and don't want to acknowledge other possibilities. I won't go so far as to say that it is impossible, though. I'll just say that you shouldn't get your hopes up because it isn't very likely. Do yourself a favor if you really want to dig for the truth rather than just opinions. There are a couple of threads that contain some good discussion on the subject and give insightful opinions and can help you make up your own mind. Try: Common questions Hard data from the CBI Website... not just opinions FP

Hi Ell... thanks for your question. Your math is off a bit. Here is what it should be. If you have 40 notes worth 25,000 each, that is 40 x 25,000=1,000,000 dinar total. After a lop, 1,000,000 drops three zeros making it 1,000. If the new rate is set at 3.2:1, then the 1,000 dinar are worth 3,200 USD. Subtract what you paid for your dinar and you'll have your profit. Your math mistake was 1,000 x 3.2. That doesn't work out to 320,000. You had two zeros too many. FP

DinarVets is great! / Puffs 'membered my Haiku bent / She made me feel good. I know I took a liberty with the 'membered, but I wanted to work that one in. Thanks for 'membering, PP. See ya soon! FP

Well, I haven't left yet, so this one doesn't count. But you're probably right. I'm going to be holding over in a travel staging area for almost a week. I'll probably find a way to get back online and take another hit of DV crack! I am addicted! See ya soon, Jack! FP

Hey everyone, As much as I enjoy your company and discussion, I'm going on vacation tomorrow and, how do I say this nicely? I don't enjoy your company and discussion THAT MUCH... I'll be seeing my family, so although I may poke around from time to time, I don't think you'll see too much of me for a few weeks... (please, no cheering until I'm on the plane and out of earshot ) I'll catch up with you all in April... FP

You'll have to see a tax professional on this one, I think. But there are ways to shelter your $$ in non-profits. The concept is 'control with no ownership'. It's no longer your money, but you still get to decide what is done with it. Usually someone would set up a tax shelter that benefits whatever cause interests them. FP

Well said, UR. No matter what faith background you have (even if it happens to be agnostic/atheistic) there are always worthwhile organizations who are doing good things and really need the generous spirit that many Americans have. Even if we don't see an RV with millions, we can still give a percentage of whatever profit we receive. FP

Armond: Thanks for the respect and the question. I think you hit it right on the head as far as an important part of Iraq's money. As you stated, Iraq has somewhere around 43-46 trillion dinar. You also stated correctly that an RV would not increase that to 129 trillion. The reason is simple... instead of thinking about the money supply in terms of trillions, think about it in terms of how much you own. We'll say for example that you have 40x 25,000 notes. That's 1 million dinar. If it RV'ed to 3:1, you wouldn't all of the sudden have 3,000,000 IQD in your pocket, it would just be worth more. The money supply stays the same... just the value of the money increases. Good observations. Taking it one step further: Joe Iraqi takes his 25,000 IQD note to the bank and turns it in to the teller for deposit into his account. Does anyone think that that piece of paper goes into a drawer in the back of the bank labeled, "Iraqi, J.", and that he can come back to the bank and get that exact same piece of paper back? Of course not. It is handed out to another customer who withdraws 25,000 IQD, put into the vault, or sent back to the CBI. But if the note is sent back to CBI, does Joe Iraqi's account balance drop by 25,000? No way! He still has the value of the money in his account, no matter where that note ends up. This deposited money is part of M2, so no matter where the piece of paper ends up, the value of that money remains in the money supply. If he pays a merchant for gasoline and then uses the tank of gas up, the commodity (gas) is used, but the money is still in the merchant's pocket. In our case (foreign investors holding hard currency... which doesn't include me), dinar are deposited at the bank and exchanged for US dollars. They either end up at the Federal Reserve, or being traded internationally between banks for other currency. But the point is that their value doesn't cease to exist simply because they get deposited somewhere. This makes it seem like the money supply never changes. This also is not true. The money supply can be expanded or contracted, but it is far more complicated than the CBI reclaiming 25,000 notes. It happens more slowly over time through the increase and decrease of prime rates (interest rates set by the central bank). When interest rates go up, people borrow less money so less gets injected into the economy. When interest rates are low, people borrow more money from the bank so more gets added to the money supply. FP

Did you notice that Siva alluded to the fact that he/she is from an another country... probably in or near Asia? I see the typos, but Siva's English is much better than many Americans on this site. FP

Good points all, and sounds very intellectually honest and level-headed. FP

8:31 PM [Adam Montana] quick note - for anyone to come in this room and take my hospitality and then go other places and talk trash about me is reprehensible I agree. No matter what your opinion, no one can argue that Adam has been a very gracious host to all of us with very little book and VIP pumping Very much worth the trade off, IMO. Thanks Adam. FP

Devaluation isn't a lop. A lop is neutral value. That means that there is no change in value. Devaluation means that a currency loses value. Do you see the difference? FP

Redenomination has a definition. Either you understand it or you don't. It isn't intolerant to tell someone that they are speaking in ignorance of what it means. FP

Are you serious? You of all people know that I've done plenty of reading on redenomination. I've said many times that lopping is a value neutral event. Notice how revalue and devalue both have the word, "value" in them? When I say that it is value "neutral" that means it doesn't go up or down in intrinsic value. Redenomination and your article have nothing to do with one another. And since you are the one who posted the article, perhaps you should be the one "looking it up" so that you don't say foolish things in your own thread. FP

Your article didn't say anything about redenomination, Armond. But that is what you wrote in the header. I don't understand what point you are trying to make. FP

If it is exchanged for smaller currency, there is no change to the money supply, unless you are receiving 20x 1,000 notes for your 25,000k note. In this case, I want to be your banker. If the money is spent on goods or services, the merchant who provided those goods or services now has your money. Even though you may exhaust the goods or services, the money is still part of the money supply because the person you paid still has it. Contracting the money supply is more complicated than this. FP

You are right that the currency in circulation would be reduced by this theory (by the way, great post, Steve), but the money supply would remain high. Collecting the notes does not reduce the overall money supply, only the paper in circulation. Central bank reserves, inflation, and other macroeconomic considerations will have to apply to all of the money, not just the paper in circulation. This major speed bump in the RV theory is too often overlooked and brushed aside with this misconception that collecting 25k notes will reduce the money supply by trillions. It is far more complicated than that to constrict the money supply by using higher interest rates (which is economically regressive) and other means. Steve does make some good points, though, and I think we have reason to be optimistic. (If you know me, you'll not be surprised that I'm not overly optimistic!) FP

Wow. That was unnecessarily insulting. Wolf: Anger management. FP

Dude, I'm not sure but I think he was kidding about you being a 'puffer'. But, if you don't know about it, you might use the "Reply with Quote" button so we can see the original comment you are replying to. I personally liked your post. Any reasonable person can differentiate between, "My buddy talked to a teller..." and "In a press statement, Al-Shabibi stated..." It doesn't make it bad info that it is based on your own personal experience. There are many intelligent people here who can give it the proper amount of weight and treat it accordingly. Don't listen to bashers, and keep on posting, sir! FP

I think he is saying that this is the first thread he has opened, therefore subjecting himself to a higher level of scrutiny. FP

Thanks for the update, Woody! FP

Somewhat true, I would say, lawog. We may not know exactly what will happen or when it will happen, but we can learn what Iraq intends to do by watching what they do and have done, and listening to what they say. It may not tell us word for word what exactly will happen, but we can have some idea of what to expect by analyzing the facts collaboratively. Just like a football game: if you are really into stats, know the injured list, the coach's history, background, and tendancies, you may have a good idea of who is going to win the game, but you don't know the exact score until it's over. FP

I do read a lot of what Steve says and because he is such a smart guy, his posts do tend get me thinking a lot. I suppose that is why others have had the 'him vs. me' idea. Not to mention the poll he created on who is right, FP or Steve? So it seems more like he propped me up to be his intellectual adversary, but it was never my intention to be anyone's counterpart in particular. I just wanted to read, learn, and give my own opinions from the day I arrived here. He just happens to have great insight that stimulates a lot of thought for me. And I just happen to disagree with a lot of his great thought But I do try to be fair minded and not disagreeable for the sake of disagreement. I'm sure you aren't the only one who feels this way outback, so I'm glad you brought it up and gave me a chance to explain how I feel about it. Thank you! FP

The recent news is what stated that the value of the IQD would grow to 1,000 IQD per USD in June. As we know, CBI denies that this is true. I've got a 'wait and see' attitude about it. June isn't too far. We'll know soon enough. FP

I agree... but people still ask about it and I was new once too, so I try to help people learn in the same way that others educated me when I asked questions. Try to remember how it was for you when you were new in, uh... March 2010? Apparently, the lop is about four days old for you, at the most. How does someone who just became a member in the last four days call the lop 'old'? Hmmm... FP