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How can a lop help the Iraqi people

cooked

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in LOPster tank

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cooked Newbie

cooked

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What benefits will the citizens see from a lop? Even with a lop then rv to $3.00 you only see a minute improvement for the people. Countries are forgiving thier debts because they hold dinar and expect an rv and can see the bigger picture from an rv perspective. It just doesn't male sense to lop.

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dvforumuser Newbie

dvforumuser

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What benefits will the citizens see from a lop? Even with a lop then rv to $3.00 you only see a minute improvement for the people.

Just easier transactions. Its really a minor thing (as Shabibi has said). It changes nothing in the economic picture for Iraq. What will change the economic picture is an improving economy, rising GDP, more industry growing up besides oil, exports of something other than oil, fewer imports due to in-country industry. There is no magic bullet.

Countries are forgiving thier debts because they hold dinar and expect an rv and can see the bigger picture from an rv perspective. It just doesn't male sense to lop.

This is of course just your opinion as to their motives and your presumption that they hold dinar. Many public and private debt holders have recently forgiven a lot of Greek debt. Are they expecting riches in return? No, they are expecting that Greece is unable to pay, so instead of letting them default 100% and get nothing, why not forgive part and get 50%? I would expect that holders of Iraqi debt (and I'm not sure what has been forgiven) would see it in a similar fashion. It helps no one of Iraq fails. Better to get a lesser return and have a prospering trading partner. Nothing in that about getting rich quick.

More interestingly, if Iraq can not pay their debts (which of course are paid in foreign currency) how will they pay for a big RV were these same countries holding dinar in such an expectation? A big RV drains foreign currency out of Iraq wildly faster then slowly paying off debt. So if they can't do the latter, how can they do the former?

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dinarck Newbie

dinarck

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What benefits will the citizens see from a lop? Even with a lop then rv to $3.00 you only see a minute improvement for the people. Countries are forgiving thier debts because they hold dinar and expect an rv and can see the bigger picture from an rv perspective. It just doesn't male sense to lop.

How would a 100,000% RV help the Iraqi people. Most are poor and live day to day on the little dinar they have. A massive RV will not benefit them only currency speculators. Their wages wont go up. It wont create new jobs. It wont do anything but create massive hyperinflation. Ask yourself this. If massive overnight RVs are so good for a countries citizens then why havent they ever been done? The answers is because they are impossible and wealth isnt created that way. Infrastructure, industry, agriculture, economy. Those are things that create wealth not imaginary RVs. It is clear to see that many have been programmed to believe that a massive RV is what Iraq needs but I fail to see how. Anyone in Iraq with a substational amount of dinar would quickly cash out for USD and skip the country after a 100,000% RV occured. Death squads would be breaking down doors and killing whoever possesed a 25,000 note. Shops would not be able to do business due to security issues. It is a joke to think anything like this is even possible. Why doesnt the US come out tomorrow and say the the USD is now worth 1000 times the Euro or the Pound? It doesnt work that way.

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skitealwedrop Newbie

skitealwedrop

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What benefits will the citizens see from a lop? Even with a lop then rv to $3.00 you only see a minute improvement for the people. Countries are forgiving thier debts because they hold dinar and expect an rv and can see the bigger picture from an rv perspective. It just doesn't male sense to lop.

Good question. In my mind a LOP without an/a RV first would do nothing for the value of IQD. I have thought about the LOP theory many times. Think about it this way. Say the UST suddenly decides to LOP the USD. For instance a $100.00 bill would drop three zeros and becomes a $10.00 bill. Or a 25k IQD note is reduced to 25 IQD. That would be disastrous for both economies. Right?

RV first with a subsequent LOP is how I think that this investment will evolve. This is my analogy and belief regarding a LOP.

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dvforumuser Newbie

dvforumuser

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Good question. In my mind a LOP without an/a RV first would do nothing for the value of IQD.

RIght, it does NOT chnage the value of the IQD. Its value neutral as is often said. So how can it have the disastrous effects you describe?

I have thought about the LOP theory many times. Think about it this way. Say the UST suddenly decides to LOP the USD. For instance a $100.00 bill would drop three zeros and becomes a $10.00 bill. Or a 25k IQD note is reduced to 25 IQD. That would be disastrous for both economies. Right?

No, FIrst a $100 going to a 10 new-dollar note, would be a dropping of one zero, not three. Second the new bills MUST be in a new currency. That is how it can be value neutral. The new-dollar 10 would buy exactly what the current $100 dollar bill (or ten $10 current dollar bills) would buy.
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Kimberlye Newbie

Kimberlye

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Good question. In my mind a LOP without an/a RV first would do nothing for the value of IQD. I have thought about the LOP theory many times. Think about it this way. Say the UST suddenly decides to LOP the USD. For instance a $100.00 bill would drop three zeros and becomes a $10.00 bill. Or a 25k IQD note is reduced to 25 IQD. That would be disastrous for both economies. Right?

RV first with a subsequent LOP is how I think that this investment will evolve. This is my analogy and belief regarding a LOP.

The problem with your analogy is that $100.00 bill and a $10.00 bill in USD have different "values," so, yes, that would be traumatic and disastrous. In the case of the IQD, for example, a 25000 note is worth about $21 USD, the new IQD 25 note will also be worth about $21 USD, so there is no value lost as there would be with USD lopping. I think I said that right, but I'm sure someone will correct me if I said it incorrectly.

In my opinion, putting aside the logistics of being able to do it, it just seems it would cause distrust in the banks and the currency. I guess if they RV after they redenominate, that "might" help with the trust, but I don't know. The Iraqis already don't trust the banks and if they need a year or so just to get "educated" for a redenomination, I'm thinking this is not going to make them feel like opening a bank account. Just sayin.............

Kimberlye B)

Edited by Kimberlye
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dvforumuser Newbie

dvforumuser

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The problem with your analogy is that $100.00 bill and a $10.00 bill in USD have different "values," so, yes, that would be traumatic and disastrous. In the case of the IQD, for example, a 25000 note is worth about $21 USD, the new IQD 25 note will also be worth about $21 USD, so there is no value lost as there would be with USD lopping. I think I said that right, but I'm sure someone will correct me if I said it incorrectly.

Kimberlye B)

Exactamundo!
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dinarck Newbie

dinarck

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Good question. In my mind a LOP without an/a RV first would do nothing for the value of IQD. I have thought about the LOP theory many times. Think about it this way. Say the UST suddenly decides to LOP the USD. For instance a $100.00 bill would drop three zeros and becomes a $10.00 bill. Or a 25k IQD note is reduced to 25 IQD. That would be disastrous for both economies. Right?

RV first with a subsequent LOP is how I think that this investment will evolve. This is my analogy and belief regarding a LOP.

Say what? If the US dropped one zero from the 100 dollar bill making it a 10 dollar bill then that would be fine as long as the new 10 dollar bill could buy the same thing the 100 dollar bill could the day before. Sorry that I fail to follow here. You are saying that Iraq is decreasing the dinar by 1000 times by removing three zeros unless they RV first? OK. It seems once again that we have complete misunderstanding of redenominations and how they work here. First of all there is no such thing as a RV. Not by 100,000% overnight.That has been made up and pumped into the heads of every wannabe "investor" to sell large amounts of rediculously marked up dinar. Second of all the RD itself is a RV. They will bring in a whole new currency to replace the currency that we hold. The new currency will have an exchange rate 1000 times higher than the current currency. There is your RV. Problem is they will exchange 1000 to 1 so that it is a neutral event. This is nothing new. It has been done all over the world many times. It would in fact do something for the value of the dinar. It would bring it from .00085 to .85 overnight. That is a big something. Just because we all didnt make millions doesnt mean that a RD does nothing for the value of the dinar.

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dinarck Newbie

dinarck

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The new currency will have an exchange rate 1000 times higher than the current currency.

Read more:

Dinarck,

I thought the new currency would be equal in value to the current currency? Am I missing something here?

Thanks,

Kimberlye B)

No Kimberlye you are not. I know that it is confusing. It all comes down to exchange rates which is nothing more than what one currency can be exchanged for another. Lets make it simple and say that they have a RV tomorrow and bring the IQD (which we all hold) to .001 instead of .00085 which it is at now. That would mean 1000 IQD would equal 1 US dollar. I feel they will do this either prior to the RD or during. OK now we have the IQD with an exchange rate of .001. What Iraq is going to do is print a new currency and just for the sake of the discussion we will call the new currency the NIQD. Its exchange rate will be 1. So 1 NIQD is worth 1 US dollar and it is worth 1000 IQD (which we currently hold). See that? The new currency will be worth 1000 times the old and that is how it will be exchanged. Really nothing will happen with the currency we hold other than it being replace with a new currency worth 1000 times more. So to answer your question the new currency will in fact not be equal value to the old, it will be 1000 times more valuable based on its exchange rate. That is why we will get 1 new note for 1000 old. :(

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dinarck Newbie

dinarck

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Thanks, Dinarck. Now I understand it. I also now understand why there needs to be some education in Iraq before this takes place. Yes, it is friggin confusing. Jeeeez

No problem. Its always a joy to speak with you about whats going on. True it is confusing but I think that Iraqis will catch on pretty quick. When they see the new currency they will quickly understand that it is worth the same as the American dollar and can buy the same items for 1 of the new that 1000 old will buy. I do think it is inevitable that the RV to .001 will come before the RD if in fact the RD is what they decide to do. Hope not but again its not looking very good at this point.

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pocono Newbie

pocono

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A little off topic but a good read for anyone thinking if Iraq was going to lop they would have done it already...www.delarue.com...."the story of Fiji's new banknotes"

Delarue printed the currency we hold...Fiji simply redesigned their currency..no RD..no Rv..just a design change..the process is time consuming and labor intensive..it took 4 yrs. from the design stage to the "educating the public" stage....it might help all of us to understand how the process works and why it might be taking so long..

Edited by pocono
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sonny1 Newbie

sonny1

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What benefits will the citizens see from a lop? Even with a lop then rv to $3.00 you only see a minute improvement for the people. Countries are forgiving thier debts because they hold dinar and expect an rv and can see the bigger picture from an rv perspective. It just doesn't male sense to lop.

their is no benefit, since a lop is a neutral event, and neutral means even...i would say the broke stay broke

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dvforumuser Newbie

dvforumuser

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their is no benefit, since a lop is a neutral event, and neutral means even...i would say the broke stay broke

That is correct. An RD resets the currency back to its pre-hyperinflation state so as to lay a good foundation for future growth. It is growth in the economy that will create jobs, raise wages, expand exports etc. There is no magic bullet.
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