THE $50,000 DOLLAR BAG OF GROCERIES......

[jmw]

Jmw, they get adjusted accordingly. That was tough. Leg, what question do you want answered. So then you can run back to your buddies and say how foolish we-i am. Sorry for typing on my phone

maybe since you posted on your phone you weren't able to answer it fully....at what point? what is the magic number...they keep moving the value up over time...all be it a little at a time...but nothing has been adjusted yet...so what level do you think they would adjust all loans, prices and payments...plus salaries...If someone makes 1,000,000 dinar a week would their pay get adjusted if it is only a 100% increase?...surely you can take it a little deeper than you did.

It doesn't matter how much dinar is in the hands of Iraqi's or whether they use cash or electronic...it has everything to do with the CBI...they can only put the rate at what they can cover...how much do you think they can cover?

[Legolas]

Jmw, they get adjusted accordingly. That was tough. Leg, what question do you want answered. So then you can run back to your buddies and say how foolish we-i am. Sorry for typing on my phone

Honestly, Sonny, I want ALL of them answered. If there is validity to an argument, it should be relatively easy to present a rational position supporting it. It's ALL of the questions and facts put "together" which make up a solid position statement. We can't just selectively pick the ones we think might be easy. Many people insist on calling our position an "opinion," but it's not opinion at all. Everything we've stated has been supported by audited numbers presented by the CBI, IMF, CIA Fact Sheets, WTO, etc., as well as literally "hundreds" of well-publicized articles and statements of both Shabibi and Saleh. Calling it opinion is very self-serving.

To be fair, trying to type an answer on a phone sux. I don't expect you to do that. I'm not going to think you're ignoring me, or anyone else if you wait until you can gather your thoughts and answer the questions one by one on a computer, rather than attempting to do it on a phone.

[sonny1]

Honestly, Sonny, I want ALL of them answered. If there is validity to an argument, it should be relatively easy to present a rational position supporting it. It's ALL of the questions and facts put "together" which make up a solid position statement. We can't just selectively pick the ones we think might be easy. Many people insist on calling our position an "opinion," but it's not opinion at all. Everything we've stated has been supported by audited numbers presented by the CBI, IMF, CIA Fact Sheets, WTO, etc., as well as literally "hundreds" of well-publicized articles and statements of both Shabibi and Saleh. Calling it opinion is very self-serving.

To be fair, trying to type an answer on a phone sux. I don't expect you to do that. I'm not going to think you're ignoring me, or anyone else if you wait until you can gather your thoughts and answer the questions one by one on a computer, rather than attempting to do it on a phone.

i know i have had some wrong predictions in the past, but all i do is present rational support for the rv. i am one of the only ones to debate you guys on these issues, and i fully think they will revalue. your guys facts arent really facts though, unless you believe the okie of the m.e (iraq as a whole), because we all know iraq is so truthful. lol

[Legolas]

a redenomination is definately a negative move as far as building international trust in any countries economy, it would be a huge mistake. It would be great monitarily for them in a selfish way, but would screw everyone else. The only legitimate purpose to redenominate is to combat high inflation and in turn it attempts to restore confidence in a countries economy by its own people.

I still don't know why folks here think a "redenomination" would be a good thing, it would not be good for speculators at all. It might be a good idea for some to get educated on the terminology instead of just buying into the misunderstanding and hype of others.

I am hoping for a straight RV, revaluation, even if it is only $0.10 US, that would be awesome.

Hi sportfisher. Again, how is a redenomination a "negative" move? What about it is negative? I addressed several of the "positives" above. As far as I can tell, it's only negative to we the speculators who were convinced by gurus and pumpers that they would magically increase the value of their currency by 1,000-12,000 times its current value.

We too are hoping for a straight RV - we just don't think it's possible based on readily available facts and financial evidence. A revaluation to .10 cents would be absolutely amazing. That would be an increase of 100 times its current value. Unfortunately, with the M2 at 60 Trillion, even 10 cents results in $6 TRILLION DOLLARS magically being created - and that's almost as much as exists in the entire world, let alone the tiny country of Iraq.

[ijdk]

Jmw. Like how the usa can cover all our existing debts? They can't. Why is iraq different?

[dinarck]

Here is another million dinar question. How will Iraqis make change for their 25,000 notes? They go to buy a pair of shoes that cost 25,000 dinar the day before and now they are going to use that 25,000 note and get 999 new 25 notes back? Even if they got new 100 notes it would take almost 250 of them. Really? Does anyone even want to try and comprehend the massive amount of bills this "theory" would require. Let me guess. Iraqis are all going to get bank accounts and check cards. Yeah right. They dont even have trust in the banks now and they are poor. So some become wealthy overnight and are going to trust the banks then? Whatever. It is silly to even debate such nonsense.

Can we please have a discussion on what effects a 1000 times increase overnight would have on their economy. Someone please explain how that would not cause instant hyperinflation. I am tired of pointing this out with no one even attempting a conversation about it. Maybe I am wrong and everything would be peachy. Someone please tell me how. This point alone proves that a RV of this caliber could never occur no matter how much is in circulation inside or outside of Iraq.

[ijdk]

How did a 1000 overnight decrease affect them?

[dinarck]

How did a 1000 overnight decrease affect them?

It caused massive hyperinflation the same as an overnight increase by 1000 times would.

[cslewis]

The question of what happens to all those Iraqis who happen to have a 25,000 dinar note when/if it RV's at around a buck US has always bothered me - My question is ... Does anyone know how quickly the old currency lost it's value? Did the Iraqi who had 25,000 dinar in 1993, or whenever it began to devalue, wake up one morning and suddenly find it was no longer worth 25,000? If they did, is it impossible to happen in reverse?

[dinarck]

The question of what happens to all those Iraqis who happen to have a 25,000 dinar note when/if it RV's at around a buck US has always bothered me - My question is ... Does anyone know how quickly the old currency lost it's value? Did the Iraqi who had 25,000 dinar in 1993, or whenever it began to devalue, wake up one morning and suddenly find it was no longer worth 25,000? If they did, is it impossible to happen in reverse?

Yes it is impossible for it to happen in reverse.

[ijdk]

Dinarck, since you have it figured out why are you still here? I ask that in all seriousness?

[cslewis]

Yes it is impossible for it to happen in reverse.

Okay thanks.

[dinarck]

Dinarck, since you have it figured out why are you still here? I ask that in all seriousness?

Well seriously I have answered that question many times and the reason I am still here has nothing to do with the discussion at hand. If you would like to add something of value to the discussion we are trying to have then by all means please do. If you feel you are unable to add to the whole point of the forum which is to discuss the dinar then I think that says alot about your whole position on the subject.

Edited March 20, 2012 by dinarck

[ijdk]

Don't be dbag. Just asked a serious question.

Sorry I have not seen your response to that question.

[dinarck]

Don't be dbag. Just asked a serious question.

Sorry I have not seen your response to that question.

OK. I am waiting to see if they will RD or not. If they do then I am out at a loss. If they dont then I will hold my dinar for as long as it takes for the value to rise to a point that would make cashing out profitable. It could take 30 even 40 years but that would make for a sweet retirement. That is if they dont decide to RD somewhere in between. This isnt an overnight get rich sceme no matter what the pumpers have had you believe and the reason it isnt is what is being discussed in this very thread. I truely hope you will keep an open mind about what you are reading here.

[Legolas]

Here is another million dinar question. How will Iraqis make change for their 25,000 notes? They go to buy a pair of shoes that cost 25,000 dinar the day before and now they are going to use that 25,000 note and get 999 new 25 notes back? Even if they got new 100 notes it would take almost 250 of them. Really? Does anyone even want to try and comprehend the massive amount of bills this "theory" would require. Let me guess. Iraqis are all going to get bank accounts and check cards. Yeah right. They dont even have trust in the banks now and they are poor. So some become wealthy overnight and are going to trust the banks then? Whatever. It is silly to even debate such nonsense.

Can we please have a discussion on what effects a 1000 times increase overnight would have on their economy. Someone please explain how that would not cause instant hyperinflation. I am tired of pointing this out with no one even attempting a conversation about it. Maybe I am wrong and everything would be peachy. Someone please tell me how. This point alone proves that a RV of this caliber could never occur no matter how much is in circulation inside or outside of Iraq.

The "change issue" is one I've addressed previously, dinarck, and it's a great point, but for some reason people don't understand that one either. Amazingly, the only answer I got, (and the responder shall remain nameless) was that they would use "U.S. Dollars" to make change until such time as there were sufficient small denominations available.......as if there are trillions of U.S. Dollars laying around in Iraq to provide this "change" for 25k and 10k notes. People just can't comprehend how much money this is, no matter how you try to explain it. Most know better that to use the "electronic banking" explanation, because it doesn't really exist there. It's a cash-based society. If a 25k note suddenly became $25,000 DOLLARS, obviously there would have to be boatloads of cash laying around to make change for hundreds of thousands of transactions daily. And again, the robbery, murder and mayhem issue comes into play, let alone the logistics of transporting and securing that amount of currency. Just add all of THOSE questions to the long list that never gets answered.

The inflation issue is even MORE complex for most to understand and decipher. Nobody wants to think about ANYTHING which disproves the overnight millionaire dream. It's like the little kid who puts his hands over his ears and yells "la la la la la" when someone tells him something he doesn't want to hear. If you don't hear it, then it's not true.

[keepmwlknfny]

Higher purchasing power? It would be neutral. Actually

Well the monetary illusion of it having more purchasing power is there.....all prices in the market would be adjusted accordingly but the end result is being able to buy goods with less dinar then before. So technically it does have a higher purchasing power....because what used to cost 10k dinar, can now be bought with only 10 dinar.

[dinarck]

The "change issue" is one I've addressed previously, dinarck, and it's a great point, but for some reason people don't understand that one either. Amazingly, the only answer I got, (and the responder shall remain nameless) was that they would use "U.S. Dollars" to make change until such time as there were sufficient small denominations available.......as if there are trillions of U.S. Dollars laying around in Iraq to provide this "change" for 25k and 10k notes. People just can't comprehend how much money this is, no matter how you try to explain it. Most know better that to use the "electronic banking" explanation, because it doesn't really exist there. It's a cash-based society. If a 25k note suddenly became $25,000 DOLLARS, obviously there would have to be boatloads of cash laying around to make change for hundreds of thousands of transactions daily. And again, the robbery, murder and mayhem issue comes into play, let alone the logistics of transporting and securing that amount of currency. Just add all of THOSE questions to the long list that never gets answered.

The inflation issue is even MORE complex for most to understand and decipher. Nobody wants to think about ANYTHING which disproves the overnight millionaire dream. It's like the little kid who puts his hands over his ears and yells "la la la la la" when someone tells him something he doesn't want to hear. If you don't hear it, then it's not true.

Correct. I mean the definition of inflation tells the whole story. Here it is.

http://education.yahoo.com/reference/dictionary/entry/inflation

The act of inflating or the state of being inflated.

A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.

So by the very defintion, a RV of this magnitude who destroy Iraq and would be a pointless act because they would end up even worse off than they are now. I keep repeating it over and over but this "RV" everyone is so hyped about is actually economically impossible. That doesnt seem to deter the hype though. I guess many just dont understand these simple concepts or dont want to understand them. That is to be expected though. They have been told daily that they are going to be multimillionares any time now. The psychological effect this has on people shouldnt be underestimated.

[sonny1]

Well the monetary illusion of it having more purchasing power is there.....all prices in the market would be adjusted accordingly but the end result is being able to buy goods with less dinar then before. So technically it does have a higher purchasing power....because what used to cost 10k dinar, can now be bought with only 10 dinar.

so your saying neutral then. lol

[caughtinthecrossfire]

Although you did not remark on my previous post to your topic, Legolas...I have continued to follow this link. So, I'll drop my request for more information as to your comments on "riots and chaos and the percentage of poor in Iraq with no savings at all"...and how that plays into your initial post's list of "considerations".

In regards to this RD with a gradual RV, I will give these other thought to ponder.

I keep reading in this thread that an economy cannot handle sudden changes in it's currency value (an INCREASE) if very large changes take place. What takes place when oil prices suddenly sky rocket for a country that exports oil? Prior to the destruction of Iraq's infrastructure it was held below $30/per barrel, correct? Will the price more likely remain triple that going forward a decade? And if it remains at the current rate...should that huge increase not drastically change a previously untradeable currency once it becomes a global currency?

My point that I'd like to offer to the debate...a currency is determined in value by both the holdings to back it...as well as the faith people place in using it (locally and globally). Iraq has huge players investing now and after the summit could possibly have other Arab countries invest. Shabs seems to think that there is already a much higher and true value to the dinar despite the infrastructure damage. The population of Iraq is not so large that it cannot not see at least a 1:1 potential. After all, it's three times large than Kuwait and that would make it one third the value due to GDP and (currently planned) infrastructure needed for jobs and exports, blah blah...(yes, I certainly do over simplify)

As far as imports effecting this? Agriculture/produce can and will be improved to levels the country held just over a decade ago. Northern Iraq (Kurd region has 5yr plan now in it's third year) has already been working to become self sufficient. The imports we have seen recently are due to the industrialization of produce through the occupation...namely...U.S. exports to Iraq in excess of 1billion are an expense that will likely reduce in a matter of a few years.

If the dinar is given a reasonable revalue (and after excess is removed from circulation) chaos nor hyperinflation are inevitable. What economics are you (others besides Legolas) using to imply this? Help the layman understand your reasoning...unless this is a link only for the economic professors who have no need to banter common place understandings.

Standing contracts in terms of money value do not have to volley up and down in regards to the extent implied earlier, do they?? The dollar value remains constant (for now) over the dinar. The debts are also held to a USD value, are they not? I AM ASKING, not telling. I want to be engaged in your understanding to better my own.

I fail to see the reasons a contractual amount or interest rates would fluctuate if the contracts revolve around a USD target price. Interest rates are also gauged by a USD price, are they not??

If the dinar revalues to say a 1:1, I feel certain that over time, contract prices will vary by increases, but as is...the amount the contract sets it's price on or interest sets it's rate on is the amount in direct relation to the dollar not the dinar and the understood value of the service or loan. PLEASE CORRECT ME IF I AM WRONG but I have followed this forum for several years and this (bottom line in USD value) always seems implied if not outright stated.

Therefore...post RV contracts might be haggled over and interest rates of out of country investors might slightly...SLIGHTLY...increase, but nothing changes about the amount the services are considered to be valued at overall. Those who would try to HIKE up prices, I feel certain, will face opposition in a global sense and CERTAINLY within the economic domain of Shabs. An RV simply means that Iraq is going to get more bang for it's buck. It certainly deserves something comparable to the USD if for no other reason than to increase Iraqi citizens desire to use it. This is not just my personal feeling...it is reflected in the news we see from CBI and the general populace of Iraq.

Again...I really would love to see someone with legitimate economical wisdom and authority explain this to me if the issue of money markets ect are debated. I am NO expert. I want to understand what you are suggesting. Can you say a sudden revaluation harms an economy with certainty to such a chaotic degree? Will this cause super-hyperinflation? Will an RD first really prevent more than and RV first in terms of the above stated economic damage? Or are there really no founded fears that suggest a redenomination must preceed a revaluation of a currency?

If education has hit the streets of Iraq about new denoms...many will look to exchange at a bank. Over a very short time and even initially, smaller notes will be distributed for the rural populace. If the poor, as has been suggested at the opening of this thread, have just a few 25k notes to their names...I think that smaller exchanges can easily be absorbed by CBI from the rural areas with regards to counterfeit risks. Any rural family that has a surplus of notes on hand instead of a bank...can CERTAINLY afford a trip to the city to exchange. Those who continue to hide their money at home in large stashes...they have been warned of the dangers as we have seen in news feeds about theft. If you can argue that RD money can be distributed effectively then you should be able to understand that rural exchanges of dinar will be easy at an RV rate. The education is KEY in either case...RD or RV first (or simultaneously).

Again...I feel that an RD as a stand alone solution...is no solution at all or they would have replaced the unused and hindering dinar long ago. The larger cities could have been circulating the currency for nearly two years now. The cost would have been just as absorbable then as it is now if it was considered the first solution. So, unless I'm completly ignorant of a reason that prevented any RD prior to now, an unusually large RV seems more likely a part of their plan.

I have not posted in the LOP forum in many many months. I am by no means ADEPT at economics but I'm certainly not scared of trying to follow them. Thanks for the topic, Legolas.

so your saying neutral then. lol

and 10 dinar for a loaf of bread sure sounds like ALOT if they RD with even smaller denoms set to something so akin to the USD structure. Heck...even their fils will be 250 to one dinar if I followed the article correctly the other day. Perhaps this rumored denom breakdown could give us insight to the rate of one dinar...if it's like pennies with 250 fill to the dinar, HA!! love it.

And sorry, but that article rumoring the denoms got me GOOOO ing! Why create so many low denoms and then coins if it still takes 10 dinar to buy a loaf of bread X 3?? Heck, unless you plan on only purchasing individual bubble gum balls...there's no reason to use the 5 denom or less, is there? I mean, don't most purhcases range (in USD value) around the 10+ dollar mark? And one part of the rumor article even stated them having a note with the denom of 2!

Sorry, I just see a RV all over that break down...provided the denom rumor is correct and NOT at all a rumor. Hugest piece of info I've seen in two years.

[dinarck]

Well caughtinthecrossfire I will give your post a shot.

I already posted the definition of inflation and it is totally relevant to the aftermath of a RV that you describe. A mass amount of money chasing few goods and services would quickly cause the "RVed" currency to inflate to rediculous levels. By the way each one of the points I am making here is why a 100,000% RV never has and never will be done.

Next you talk about the price of oil. A country that exports oil sells that oil on the open market and the GOVORNMENT profits. There is a huge difference than millions of citizens becoming millionares overnight. So inflation insnt an issue here. As a matter of fact sales of oil would prop up foreign reserves to fight off any inflation occuring in the economy.

Next you talk about people around the world investing in Iraq which is true. What does this have to do with their hyperinflated currency? If anything it is motivation to RD and erase the effects of past hyperinflation so that the new currency could benefit from the economic growth.

Next is something about imports but I kind of fail to follow you. I will say that Iraq would benefit from a higher exchange rate to make imports cheaper but only after a RD because a 1000 times overnight increase isnt possible.

Next you state that a significant RV would not cause chaos or hyperinflation but I think we have shown reasonably that it would. If you disagree here then please state why so we can discuss.

Next you talk about contracts and loans being adjusted or not but again these points are moot since a RV of this magnitude is fantasy. For the sake of discussion we will talk about hypotheticals. In my opinion any contracts, mortages loans ect would be adjsuted with a massive RV. You would only have to pay the value you originally owed but it doesnt really matter because it will never happen.

Next you attempt to address the change issue but that doesnt really hold much water. Daily business would not be possible. Period.

Then you say that if a RD is such a good solution then why havent they done it years ago. I would ask the same about the "RV".

If you truely want to hear all of these any many other points from an actual economist with epic credentials then I suggest searching back a little ways here in the LOP section for a post called interview with John Jagerson. Kind of hard to argue with what he has to say.

[keepmwlknfny]

so your saying neutral then. lol

Technically no.....I mean the purchasing power is greater then the old dinar.....if they run this plan to RD and they have both currencies in play for a couple years, then when seeing the two prices (old dinar/new dinar) the new definately has more purchasing power vs the old....

The Iraqis would see it that way as well.....they will see it as buying the same products for less dinar when using the new currency and thats why they do mention the purchasing power of the new currency being increased....

[sportfisher]

Higher purchasing power? It would be neutral. Actually

think of it as cooking down a soup or stew to make it thicker, more concentrated, but only a higher value per dinar than it once was with the currency that was replaced.

Technically no.....I mean the purchasing power is greater then the old dinar.....if they run this plan to RD and they have both currencies in play for a couple years, then when seeing the two prices (old dinar/new dinar) the new definately has more purchasing power vs the old....

The Iraqis would see it that way as well.....they will see it as buying the same products for less dinar when using the new currency and thats why they do mention the purchasing power of the new currency being increased....

and that is the illusion of an improvment, designed to try and increase their peoples confidence in their own currency & economy.

Although you cant have a electronic dinar account here in the states, if they were a possibility it would be affected just as if you had an account in Iraq....for every 1000 dinars you had, it turns into 1 dinar with a higher purchasing power....so you really didnt lose anything....it evens out

don't know why you got negged for explaining a "redenomination"..............I evened you out +1

Edited March 21, 2012 by sportfisher

[DinarSeeker]

First, and only question to any of you. Has anyone ever considered what is digital money when considering how much dinar is out. M1 and M2 figures do not state it and what comes into the auctions and goes out certainly could be digital to any one of the other banks. Just like how the US removes bills off our street. Last I checked, were still 15.2 trillion in the hole, but yet somehow the federal reserve manages to move trillions upon trillions of USD through the banks monthly.

So just because the CBI says they have 30 trillion out, does not mean it is in hard cash. Hard cash in the Iraqi economy, could be 1 billion today. This is information you and I will never get. And is exactly why this debate will never end. Not enough info, and if this proves correct, every lopter on this thread will be in gross error.

Legolas, I do respect your wisdom, but even you should realize we have never had enough information to complete this puzzle from the start. Could you guys be right, could it go down the way you theroize..... Yes, however, I could be right too. 5o one way and 50 the other. Since Bush jr stated that the war will pay for itself, I choose to believe we have a payday coming up. I also have a pdf copy of declassified dept of the states intention of a 1 to 1 with the hope that one day they could bring it back to the glory days. That report was written by our govt with your $. We all know about the inflation and so on. But I belive the real truth to how this will play out, lies right in the digital numbers. Theres much more, but Ive made my point here to all of you.

[Darin]

I've always thought the best solution was to appreciate the value, but the history in their value in recent years has shown that they do not intend to do that. We can hope for moments of substantial increases, but, until one happens, we can't even seen it happening that way either.