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LET'S BREAK IT DOWN...........


Legolas
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LET’S BREAK IT DOWN TO MAKE IT EASIER TO UNDERSTAND

First, I want to thank Sonny1 for his apology, and for removing the “mod review” which made it impossible to post anything, even here in the dreaded “lop section.” Everyone has an opinion on those banishments and blockings, but it’s good that Sonny recognizes the importance of the issue.

The RV/RD issue has been made incredibly complex, most likely for very specific reasons. I had a discussion a while back with my CPA, who previously taught finance and economics at a local university. I asked her why so many people had so much difficulty understanding something which to so many others seemed so simple and clear. She pointed out that there were several obvious reasons, but the most apparent was that there is way too much “debris” blocking the view of the most important issue. Remove the debris, (translation issues, opinions not supported by evidence, misdirection, etc.) and it then becomes easier to see the reality of the situation.

A prime determinant of a currency’s value, regardless of what country we’re talking about, is the “NUMBER OF UNITS OF THAT CURRENCY IN CIRCULATION.” The very simple truth is that there are easily determined, readily available figures available via Google which accurately demonstrate how much currency each country has in circulation, and the value of that currency against the U.S. Dollar, as well as approximately how many “Dollars” are in circulation worldwide. You just have to research those numbers and lay them out in front of you. I’ve done it here in previous posts, as have others, so there’s no need to do it again.

Almost ANYONE should be able to understand the basic economic principle which indicates that the MORE units of currency printed, the LOWER the value of each unit is going to be. This is why we always see people complaining that the U.S. Dollar is being “devalued” by virtue of the fact that our treasury is continually solving financial problems by simply printing more currency – essentially “kicking the can down the road” as politicians love to say. With me so far?

Using the easiest example to grasp, without creating a chart (YOU should be doing that) let’s use the biggest, most powerful country in the world as an example – the United States. Of 196 countries, we have the highest GDP in the world, at just under $15 TRILLION. We have LESS than $1 Trillion units of currency (the U.S. Dollar) in circulation – generally believed to be just over $800 billion.

Iraq has a GDP of approximately $81 BILLION, and ranks at #62 in the world. So the GDP of the U.S. is roughly 180 times larger than that of Iraq. By contrast, Iraq has approximately 28 TRILLION units of currency (the Iraqi Dinar) in circulation. These numbers are audited by several agencies, but it is agreed by the CBI, the IMF and the WTO that they are accurate. Even if you are prone to believe that those numbers are “off,” it is highly unlikely that they’d be off by more than a few percentage points, and they’d have to be off by thousands of points to make any real difference.

So in “units of currency,” the most important determinant factor for value, Iraq has more than 28 times the number in circulation as the United States, and we are hoping that each of these units, currently valued at less than 1/10 of a “PENNY” each, are suddenly going to increase in value by 1000 times (or 12,000 if you believe OKIE) to attain parity with the U.S. Dollar. Keep in mind that this would instantly create $28 TRILLION DOLLARS (just in circulation – let alone their entire M2 of 60 Trillion) WAY more currency value than exists in the other 196 countries of the world COMBINED.

Keep in mind too, that a revaluation to even .10 CENTS would instantly create $2.8 TRILLION Dollars worth of Dinars in circulation – also impossible given current world money supply.

NOW, look at what a re-denomination accomplishes. By removing the three zeros, something they’ve been talking about for nearly 2 years straight, their currency in circulation is immediately reduced from 28 TRILLION Dinars to 28 BILLION, therefore becoming a much more manageable, and “believable” number. Plug that figure into your chart of the other countries of the world and it immediately makes sense when those Dinars ultimately become Dollars. AFTER this redenomination, they could THEN increase the value of the individual Dinar to par with the U.S. Dollar, or perhaps even above, depending on economic conditions like current oil production, etc.

It can’t be broken down in much simpler terms gang. Virtually anyone should be able to understand the logic presented here. You can disregard ALL of the other hype, lies, misinformation, translation issues, etc. It’s all in the numbers, and no matter what you think the numbers are, the results are the same. Even if you are sufficiently naïve to believe the guru BS stating that 80% of the Large notes have been removed from circulation (which is absolutely impossible) the RV we’re hoping for STILL could never happen. It just doesn’t work! The truth is that the numbers of Dinars in circulation have INCREASED every year - not decreased, but this really isn't important.

Many like to use OIL as the reason that the impossible could occur, but the truth is, when you do the research again, Iraq currently produces ONE TENTH the amount of oil produced by the United States, and we are nowhere near the TOP oil producer. It is estimated that it will be at least TEN YEARS before Iraq reaches even OUR OWN production capacity. Yet here we are hoping that OIL is going to justify the overnight increase in value of the IQD to create many times more money than exists in the entire world.

Even the most desperate and delusional should be able to understand what was presented here in relatively simple terms. But DO YOUR OWN RESEARCH! Create your own charts of GDP, currency in circulation, per capita income, oil production, etc. Look at all of the OTHER re-denominations which have occurred. Don't believe the hype - look at them yourself.

There have been MANY additional logical arguments presented in the archives of this site presenting other applicable issues, but the circulation issue is the MOST relevant to the RV. The rest is essentially unimportant, but should be examined as well. For example:

1) Numbers of Dinars which has been sold, and are STILL being sold in the U.S. alone – Billions each month for years – and why Iraq would allow that if they intended to increase the value by 1000 times – or more.

2) The chaos which would ensue when 1/10 of a penny suddenly becomes $1.00 or more overnight – mass confusion, robbery, theft, murder, and incredible inflation, to say the least.

3) Distribution and security issues.

4) Merchant issues. A note that was worth less than $25 one day and is suddenly $25,000 the next. Think about it. How would anyone even make change for those insane number?. Certainly not with U.S. Dollars – there aren’t enough in the entire world to do that.

5) The anger and frustration issue. What is going to happen when the Iraqi who spent a 25 Dinar note yesterday to buy groceries finds out that today he could have bought a HOUSE with that same note?

6) Does it make ANY SENSE to ANYONE that Iraq would be talking about “revaluing” their currency on a daily basis, for even ONE MINUTE, let alone two YEARS? Would they tell us that in 6 months they are going to increase the value of their currency to be equal to the U.S. Dollar? What “idiot” wouldn’t immediately rush out and buy up every single Dinar in existence if that event were even remotely possible? It would take about 5 minutes before every note in existence would disappear – and YET we can still by them by the millions every single day!

7) Doesn’t it make a LOT MORE SENSE that they are going to do EXACTLY what they’ve been saying they’re going to do in nearly EVERY ARTICLE, EVERY DAY? Redenominating instantly reduces the money supply from 28 Trillion to 28 Billion, bringing it nearly on par with the U.S. Dollar immediately – a value neutral event. They could then increase the value (RV) to equal to or greater than the Dollar.

Take the time to THINK about the most important issue presented above and then all of the OTHER hundreds of related issues, and then ask yourselves again if you REALLY believe any of this is possible, or if desperation and a little bit of greed allowed you to be deceived by con artists.

Think about it…..remove desperation, greed, misdirection and blatant LIES from the equation and replace them with very simple research and logic. My bet is that like many of us, you’ll see this in an entirely different light. If not, then we’ve given it our best shot. Thanks for listening.

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Welcome back Legolas. I've always appreciated your thoughts and explanations on this investment because they make sense to me. My hope still remains that they will allow those outside their borders to exchange old dinar for new, and that they will revalue the new notes sufficiently enough to see some type of gain.

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Thanks guys. It's not what people want to hear, and many are going to bash it without attempting to dispute it. It's much easier, and WAY more satisfying to believe that "tomorrow" we'll be millionaires. Unfortunately that tomorrow has been coming for many years now, and yet people still believe it's coming. The Iraqi people, who for the most part hate us, are going to makes US incredibly wealthy while their own people are starving, with no water or electricity.

But the devil is in the details, and you can't argue with proven facts and figures. There simply is no way around them. Reality bites. If the glove don't fit......... B)

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Happy to see you posting again Legolas....at any point appropriate your friend Umbertino was pleading for your re-instatement, he's a great guy........I do not agree with what you say is gonna happen but I'm glad you are free to say it now.......Go RV, make me an overnight millionaire!!!!!

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Happy to see you posting again Legolas....at any point appropriate your friend Umbertino was pleading for your re-instatement, he's a great guy........I do not agree with what you say is gonna happen but I'm glad you are free to say it now.......Go RV, make me an overnight millionaire!!!!!

Thanks bamagirl. Your dissenting opinion is appreciated. And I agree, Umbertino is a great guy - ever the diplomat, and his command of the English language puts many native speakers to shame. Being multi-lingual is awesome, and I'm jealous. B)

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Your logic is sound. But, what if you are wrong? What if your numbers are wrong? The Iraqi People are complaining the currency they hold in their hand, the Iraqi Dinar, isn't worth anything. Whether its 25 Trillion or 25 Billion in circulation, the currency isn't worth anything to the average Iraqi. You take their 25000 IQD which is worth $25 USD, and you exchange it for a new 25 NIQD which is still worth $25 USD. The only thing this does is make the IQD more easily tradable. You haven't added any value to it from their perspective, you just changed the number of bills they have to carry around.

Back to my first two questions: What if you are wrong and what if your numbers are wrong? What if Iraqi RV's like most everyone here hopes it will? What are you going to say to those people you convinced not to buy the Dinar and those you convinced to sell what they had, because this is all a pipe dream/get rich quick scheme? "Oh, my bad?"

The Iraqi people, who for the most part hate us, are going to makes US incredibly wealthy while their own people are starving, with no water or electricity.

Read more: http://dinarvets.com/forums/index.php?/topic/110175-lets-break-it-down/#ixzz1pOS3wYOY

The reason they are going to make "US" incredibly weatlhy is because it will benefit them more than us, and they're going to be incredibly wealthy too. Money has that effect on people. :twothumbs:

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It's hard to for me argue your position. It's also hard to see them changing the currency as you state( your points are strong ). What scares me is the number of debts being written off. This makes it easier for them to pay off any remaining debts without hurting themselves. I just hope something happens to our benefit. recent articles have me worried at this time. You represented your case well.

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LET’S BREAK IT DOWN TO MAKE IT EASIER TO UNDERSTAND

<snip>

It can’t be broken down in much simpler terms gang. Virtually anyone should be able to understand the logic presented here. You can disregard ALL of the other hype, lies, misinformation, translation issues, etc. It’s all in the numbers, and no matter what you think the numbers are, the results are the same. Even if you are sufficiently naïve to believe the guru BS stating that 80% of the Large notes have been removed from circulation (which is absolutely impossible) the RV we’re hoping for STILL could never happen. It just doesn’t work! The truth is that the numbers of Dinars in circulation have INCREASED every year - not decreased, but this really isn't important.

<snip>

BRAVO!! Well done!! :twothumbs::tiphat:

Edited by BlueOrchid919
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Very sound logic. I just don't know about the numbers. This not directed at you, just an old saying "liars figure and figures lie". Just saying I HOPE you are wrong, but again, some very strong points. Thanks for the reality check

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Now thats what I call a come back! It is really good to read your logical posts again Legolas. I have been attempting to explain these simple facts while you have been away but never could I portray them as eliquently as you. Your posts have been missed and I too tip my hat to sonny for seeing the importance of them continuing.

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Your logic is sound. But, what if you are wrong? What if your numbers are wrong? The Iraqi People are complaining the currency they hold in their hand, the Iraqi Dinar, isn't worth anything. Whether its 25 Trillion or 25 Billion in circulation, the currency isn't worth anything to the average Iraqi. You take their 25000 IQD which is worth $25 USD, and you exchange it for a new 25 NIQD which is still worth $25 USD. The only thing this does is make the IQD more easily tradable. You haven't added any value to it from their perspective, you just changed the number of bills they have to carry around.

Back to my first two questions: What if you are wrong and what if your numbers are wrong? What if Iraqi RV's like most everyone here hopes it will? What are you going to say to those people you convinced not to buy the Dinar and those you convinced to sell what they had, because this is all a pipe dream/get rich quick scheme? "Oh, my bad?"

The reason they are going to make "US" incredibly weatlhy is because it will benefit them more than us, and they're going to be incredibly wealthy too. Money has that effect on people. th_smiley_two_thumbs_up.gif

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I guess the point is that it doesn't MATTER if the numbers are wrong. They could be wrong by 90% (which is incomprehensible given the overwhelming evidence) and it STILL couldn't work. As long as the numbers in circulation are in the trillions, let alone 60 trillion, there can not be a revaluation. They have to FIRST reduce the money supply from trillions to billions, and the ONLY way to do that is by redenomination. It is likely that U.S. investors alone now hold more than a trillion - simple math makes that clear after many years of multiple dealers selling billions every month.

Think about it. Their confirmed reserves are now estimated to be $60 Billion - some believe $80 Billion. That is much less than ONE TENTH of $1 Trillion. Their reserves would be wiped out in seconds with even a minimal RV. More importantly, where are these TRILLIONS of Dollars going to come from? Again, look at the money supply of the ENTIRE WORLD? That amount of money simply doesn't exist, and it can't be created out of thin air. The world economy would crash like a boulder falling on Wiley Coyote.

It's inaccurate to say that the currency isn't worth anything to the average Iraqi. It very definitely IS. A 25k note is worth app. $22, and a re-denominated 25 Dinar note would STILL be worth $22......MORE if they RV at the same time. Their currency buys about the same amount of product as our own, give or take. It's not worthless by ANY stretch of the imagination. Iran's currency is worth TEN TIMES LESS than Iraq's as compared to a Dollar. Is THEIR currency worthless too? It's all relative. It's simply untrue that making US millionaires will benefit THEM more than us. It's not even remotely close. How many Iraqi's do you think have a million Dinars - or even 100,000 on any given day. The answer is damn few, and prices would have to be adjusted accordingly in any case, or inflation would skyrocket.

The average Iraqi is VERY poor. They are the 5th poorest in the world. The truth is that they have very little money, and probably virtually NONE saved. As I said before, if they spend a 25k note today to buy $22 worth of groceries, and it RV's tomorrow to be worth $25 Thousand DOLLARS, what is THAT going to do to the average Iraqi? It simply makes no sense for anything like that to happen. a revaluation would makes US millionaires, and do virtually nothing for the average Iraqi. You have to think about all of the eventualities involved.

I've never told ANYONE to buy OR sell Dinars. Using inverse logic to your "what if" scenario, what if it RD's tomorrow instead of RV's? What if a member has invested $10 thousand dollars (or whatever amount) and can't afford to lose that money. We already know that IF it RD's, at least 40-60% of the investment will be lost - probably more depending on how greedy the dealers are, and we could potentially lose ALL if we are ultimately unable to exchange old Dinars for new here in the U.S. So where is the difference in the what if scenarios? Many people here have invested WAY more than they care to admit, and many have already been hurt badly by the fact that the promised RV hasn't occurred over the past 8 years.

Now thats what I call a come back! It is really good to read your logical posts again Legolas. I have been attempting to explain these simple facts while you have been away but never could I portray them as eliquently as you. Your posts have been missed and I too tip my hat to sonny for seeing the importance of them continuing.

Don't kid yourself dinarck. You've done an amazing job in replacing the frequent rational posts of JMW, Dalite, Keepm, and many others who used to post on a regular basis and tired of the bashing. Keep up the great work! wink.gif

Edited by Markinsa
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Happy to see you posting again Legolas....at any point appropriate your friend Umbertino was pleading for your re-instatement, he's a great guy........I do not agree with what you say is gonna happen but I'm glad you are free to say it now.......Go RV, make me an overnight millionaire!!!!!

Thanks bamagirl. Your dissenting opinion is appreciated. And I agree, Umbertino is a great guy - ever the diplomat, and his command of the English language puts many native speakers to shame. Being multi-lingual is awesome, and I'm jealous. B)

THANK YOU ......

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It's so beyond my understanding to argue either side of this argument, but my question has always been, where does the statement of "increasing the purchasing power" fall in all of this? I've read that a lop is a neutral event. Can they lop and also increase the purchasing power?

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It's so beyond my understanding to argue either side of this argument, but my question has always been, where does the statement of "increasing the purchasing power" fall in all of this? I've read that a lop is a neutral event. Can they lop and also increase the purchasing power?

Many articles have stated straight up that the RD will not increase purchasing power and they are correct. However in my opinion the effects of a RD would increase purchasing power rather than the RD itself if that makes any sense. Right now the Dinar is competing with the dollar in the market place in Iraq. So if there is a shortage of dollars the actual value of the Dinar decreases because the demand for the dollar increases. This is a function of the auctions to keep the dinar value stable by selling USD. In my opinion they would bring the exchange rate to .001 either prior or during the RD so this means the new currency will have an exchange rate of 1 with the dollar. Since the new currency and the dollar will be exact in value then it is also my opinion that the demand for the dollar would fall significantly in the market place effectively raising the actual value as well as the purchasing power of the new Dinar.

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It's so beyond my understanding to argue either side of this argument, but my question has always been, where does the statement of "increasing the purchasing power" fall in all of this? I've read that a lop is a neutral event. Can they lop and also increase the purchasing power?

Excellent point, cslewis, and that's the "good news" which has appeared in many of the articles. A redenomination is in fact a value-neutral event, UNLESS they RV at the same time, thus INCREASING the value of the new Dinar. Personally, I think it makes perfect sense to do that, and it's what we have to hope for. The RD would bring the Dinar CLOSE to the value of the USD, but they would have to increase it by about 17% to bring it EQUAL to the Dollar. That's a substantial increase, but it's logical, and I don't know of anything that says they couldn't go further if they wanted to. I'd be "surprised" to see it go higher than that, but it sure would be nice. I don't think there's any particular logic in it having to be the same value as a Dollar. That would increase their purchasing power substantially, provided that "prices" don't rise in unison.

Obviously, we need to hope for the BIGGER increase in order to make up for the spreads. As always, we wait. ;)

Many articles have stated straight up that the RD will not increase purchasing power and they are correct. However in my opinion the effects of a RD would increase purchasing power rather than the RD itself if that makes any sense. Right now the Dinar is competing with the dollar in the market place in Iraq. So if there is a shortage of dollars the actual value of the Dinar decreases because the demand for the dollar increases. This is a function of the auctions to keep the dinar value stable by selling USD. In my opinion they would bring the exchange rate to .001 either prior or during the RD so this means the new currency will have an exchange rate of 1 with the dollar. Since the new currency and the dollar will be exact in value then it is also my opinion that the demand for the dollar would fall significantly in the market place effectively raising the actual value as well as the purchasing power of the new Dinar.

LOL. We were typing at the same time, and I agree. INCREASING the value of the Dinar would have the same effect as equaling it. Demand for the Dollar should decrease, and the very fact that a new 1 Dinar note would be equal to or greater in value to the Dollar would undoubtedly increase confidence in their currency. :)

Edited by Legolas
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It's so beyond my understanding to argue either side of this argument, but my question has always been, where does the statement of "increasing the purchasing power" fall in all of this? I've read that a lop is a neutral event. Can they lop and also increase the purchasing power?

It depends on what purchasing power they are referring to. After an RD the new-dinar will have 1000x the purchasing power of the current IQD, but since you will have 1000x fewer of them the purchasing power of dinar holders remains the same. So I think usually they are referring to the dinar currency unit itself (e.g. 1 dinar). Edited by dvforumuser
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I asked this question in another thread but may have directed it to the wrong audience. If a country closes it's borders, is there any warning before hand? here's my question from the other thread:

I do have one question for anyone who would care to hazard a guess. If they do decide to close their borders, would that mean the mail would not get through either? I would rather donate my currency to a needy Iraqi family than get stuck with it. What do you suppose would happen if they tried to stiff us and a ground swell of pissed off investors dumped their dinar back into their economy via their own citizens? What would that do to their RD plan, if there is one? I would think the CBI has a pretty good idea of how many dinar they could get rid of just by closing their borders.

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I do have one question for anyone who would care to hazard a guess. If they do decide to close their borders, would that mean the mail would not get through either? I would rather donate my currency to a needy Iraqi family than get stuck with it. What do you suppose would happen if they tried to stiff us and a ground swell of pissed off investors dumped their dinar back into their economy via their own citizens? What would that do to their RD plan, if there is one? I would think the CBI has a pretty good idea of how many dinar they could get rid of just by closing their borders.

That would be the extra screw job for sure since then we'd just be stick with them. But that seems very very unlikely to me. They did this with the 2003/2004 exchange as counterfeiting was a huge problem for the old dinar (but its not for the current IQD) and the exchange was very short (just a couple of days I think). They have said the old and new currencies will coexist for a year, so no way can they close the border for a year.

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That would be the extra screw job for sure since then we'd just be stick with them. But that seems very very unlikely to me. They did this with the 2003/2004 exchange as counterfeiting was a huge problem for the old dinar (but its not for the current IQD) and the exchange was very short (just a couple of days I think). They have said the old and new currencies will coexist for a year, so no way can they close the border for a year.

There was an article a few weeks ago that, when questioned about out of country exchanges,Saleh seemed to infer that citizens could exchange 200k...{not a direct quote}...did anyone catch that and maybe interpreted it differently?

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