Brietling and his post about IMF loans

[TAV]

To explain the Time Value Of Money (TVOM) is too complex, therefore I'm going to answer his question this way. If people purchase a T-BILL or Bond inwhich we already know to be debt for 100 dollars and later the treasury department lops the two zeros off the 100 dollar bill making it only worth one dollar, the 100 dollars worth of debt that was purchased would only be worth one dollar of debt. The other 99 dollars of debt wouldn't simply disappear,NOPE THIS ISN'T HAPPENING, this would be a full market collapes!!!

[jackster]

To explain the Time Value Of Money (TVOM) is too complex, therefore I'm going to answer his question this way. If people purchase a T-BILL or Bond inwhich we already know to be debt for 100 dollars and later the treasury department lops the two zeros off the 100 dollar bill making it only worth one dollar, the 100 dollars worth of debt that was purchased would only be worth one dollar of debt. The other 99 dollars of debt wouldn't simply disappear,NOPE THIS ISN'T HAPPENING, this would be a full market collapes!!!

Definition of 'Time Value of Money - TVM'

The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

Also referred to as "present discounted value".

Investopedia explains 'Time Value of Money - TVM'

Everyone knows that money deposited in a savings account will earn interest. Because of this universal fact, we would prefer to receive money today rather than the same amount in the future.

For example, assuming a 5% interest rate, $100 invested today will be worth $105 in one year ($100 multiplied by 1.05). Conversely, $100 received one year from now is only worth $95.24 today ($100 divided by 1.05), assuming a 5% interest rate.

The problem with your explanation is that the $1 has the same purchasing power of the $100. Prices for goods and services would also lose 2 zeros. Nothing changes, except there are 2 fewer zeros to deal with.

[TAV]

Definition of 'Time Value of Money - TVM'

The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

Also referred to as "present discounted value".

Investopedia explains 'Time Value of Money - TVM'

Everyone knows that money deposited in a savings account will earn interest. Because of this universal fact, we would prefer to receive money today rather than the same amount in the future.

For example, assuming a 5% interest rate, $100 invested today will be worth $105 in one year ($100 multiplied by 1.05). Conversely, $100 received one year from now is only worth $95.24 today ($100 divided by 1.05), assuming a 5% interest rate.

The problem with your explanation is that the $1 has the same purchasing power of the $100. Prices for goods and services would also lose 2 zeros. Nothing changes, except there are 2 fewer zeros to deal with.

NO, there is no problem, this is the point that I'm conveying. IRAQ CANNOT LOP THEIR DEBTS/T-BILLS!!! I'm sure if everyone can lop their credit card bills they would.

So that others understand, "T-BILLS and BONDS is another name for Debt"!!! If a government is trying to make a little money, such as during WWII when they asked people to invest into war bonds, they are asking you to give them a loan in return for a promissary note that after a few years they will pay you the maturity plus a liitle more for lending them the money.

Iraq borrowed money in the form of selling T-BILLS, If any of you provided me a promissary note that If I lend you 100 dollars, you would pay me back with 115 dollars, then you decide to lop two zeros in your country thus paying me 15 dollars back..... instead of the promised 115 dollars, ......we now have a problem,,,,,,,.because who cares that the value of everything drops two zeros.......especially if I'm not from your country"!!!

Government usually purchase T-BILL of other governments. Most people don't have the resources to purchase a Government's T-BILL.

[jackster]

NO, there is no problem, this is the point that I'm conveying. IRAQ CANNOT LOP THEIR DEBTS/T-BILLS!!! I'm sure if everyone can lop their credit card bills they would.

So that others understand, "T-BILLS and BONDS is another name for Debt"!!! If a government is trying to make a little money, such as during WWII when they asked people to invest into war bonds, they are asking you to give them a loan in return for a promissary note that after a few years they will pay you the maturity plus a liitle more for lending them the money.

Iraq borrowed money in the form of selling T-BILLS, If any of you provided me a promissary note that If I lend you 100 dollars, you would pay me back with 115 dollars, then you decide to lop two zeros in your country thus paying me 15 dollars back..... instead of the promised 115 dollars, ......we now have a problem,,,,,,,.because who cares that the value of everything drops two zeros.......especially if I'm not from your country"!!!

Government usually purchase T-BILL of other governments. Most people don't have the resources to purchase a Government's T-BILL.

Right now 1,000 IQD will exchange for US$0.86. After removing 3 zeros 1 IQD will exchange for US$0.86, not US$0.00086.

The exchange will change when they remove 3 zeros.

If they did not change the exchange rate from US$0.00086 to US$0.86, then you are absolutely right.

Someone posted an article about how Saddam's Iraq made all dinar outside of Iraq worthless. If the government and bank of Iraq remove 3 zeros and do not change the rate to accomodate that change, every 1 million IQD that every holds that is currently worth $860 will be worth US$0.86.

[easyrider]

Right now 1,000 IQD will exchange for US$0.86. After removing 3 zeros 1 IQD will exchange for US$0.86, not US$0.00086.

The exchange will change when they remove 3 zeros.

If they did not change the exchange rate from US$0.00086 to US$0.86, then you are absolutely right.

Someone posted an article about how Saddam's Iraq made all dinar outside of Iraq worthless. If the government and bank of Iraq remove 3 zeros and do not change the rate to accomodate that change, every 1 million IQD that every holds that is currently worth $860 will be worth US$0.86.

thats the whole point jackster they are trying to get away from that saddam era thinking and to join the rest of the world and make the dinar go international. I would bet that many governments hold Iraq dinar in their reserves.

NO, there is no problem, this is the point that I'm conveying. IRAQ CANNOT LOP THEIR DEBTS/T-BILLS!!! I'm sure if everyone can lop their credit card bills they would.

So that others understand, "T-BILLS and BONDS is another name for Debt"!!! If a government is trying to make a little money, such as during WWII when they asked people to invest into war bonds, they are asking you to give them a loan in return for a promissary note that after a few years they will pay you the maturity plus a liitle more for lending them the money.

Iraq borrowed money in the form of selling T-BILLS, If any of you provided me a promissary note that If I lend you 100 dollars, you would pay me back with 115 dollars, then you decide to lop two zeros in your country thus paying me 15 dollars back..... instead of the promised 115 dollars, ......we now have a problem,,,,,,,.because who cares that the value of everything drops two zeros.......especially if I'm not from your country"!!!

Government usually purchase T-BILL of other governments. Most people don't have the resources to purchase a Government's T-BILL.

I completely agree with you and thanks for the bringing the whole T-bill scenario up, I believe Scooter posted something along these lines sometime last year it was a great read and made me feel confident in our investment.

Edited July 14, 2012 by easyrider

[unusual]

Nope.......I wish.....Iraqs debts are paid in USD.....which they get from oil revenues, so it wouldnt matter what the dinar does....

That depends keep on who they're paying, other debt repayments are made in SDRs

[jackster]

thats the whole point jackster they are trying to get away from that saddam era thinking and to join the rest of the world and make the dinar go international. I would bet that many governments hold Iraq dinar in their reserves.

I completely agree with you and thanks for the bringing the whole T-bill scenario up, I believe Scooter posted something along these lines sometime last year it was a great read and made me feel confident in our investment.

You just said "that's the whole point", but I missed what point you're talking about in my post.

We're talking about removing 3 zeros. TAV says they can not do it. I say they can.

My position is IF they go ahead with removing 3 zeros, the exchange rate will also change proportionally.

1000 IQD becomes 1 IQD. 1 IQD now equals US$0.00086, then will equal US$0.86.

If they do not alter the exchange rate by 3 decimal places at the same they change the currency by 3 decimal places, then the currency you now hold will become worthless and Iraq's government and banking system will lose all credibility. I think we all agree on the credibility issue.

It seems that we do not agree on the part about the exchange rate changing with the removal of 3 zeros.

[keepmwlknfny]

That depends keep on who they're paying, other debt repayments are made in SDRs

Your right, countries do have that option....to take SDRs but if Im not mistaken that is still tied to a basket of currencies I believe, and thats how the SDR has its value....dont quote me lol....

Everytime they do mention Iraqs debts and who they are paying its all in USD, so I would assume thats probly the preferred method of payment because of its convertibility

Edited July 14, 2012 by keepmwlknfny

[20MillionDinar]

Your right, countries do have that option....to take SDRs but if Im not mistaken that is still tied to a basket of currencies I believe, and thats how the SDR has its value....dont quote me lol....

Everytime they do mention Iraqs debts and who they are paying its all in USD, so I would assume thats probly the preferred method of payment because of its convertibility

You're right Keep, here is the breakdown in "weight" of the SDR's basket of currencies:

http://www.imf.org/e...r/sdrbasket.htm

U.S. dollar 41.9 percent (compared with 44 percent at the 2005 review)

Euro 37.4 percent (compared with 34 percent at the 2005 review)

Pound sterling 11.3 percent (compared with 11 percent at the 2005 review)

Japanese yen 9.4 percent (compared with 11 percent at the 2005 review)

Edited July 14, 2012 by 20MillionDinar

[skitealwedrop]

To explain the Time Value Of Money (TVOM) is too complex, therefore I'm going to answer his question this way. If people purchase a T-BILL or Bond inwhich we already know to be debt for 100 dollars and later the treasury department lops the two zeros off the 100 dollar bill making it only worth one dollar, the 100 dollars worth of debt that was purchased would only be worth one dollar of debt. The other 99 dollars of debt wouldn't simply disappear,NOPE THIS ISN'T HAPPENING, this would be a full market collapes!!!

I like your analogy of what a LOP would look like if applied to USD. The CBI can't LOP it's currency without another mechanism in place to offset the deletion of zeros.

[doctor robbins]

I like your analogy of what a LOP would look like if applied to USD. The CBI can't LOP it's currency without another mechanism in place to offset the deletion of zeros.

As Jackster explained, the mechanism is called redenomination. It covers everything related to the exchange rate. Every country that ever lopped took all of these debts/t-bills/bonds into consideration and so will Iraq.

[skitealwedrop]

As Jackster explained, the mechanism is called redenomination. It covers everything related to the exchange rate. Every country that ever lopped took all of these debts/t-bills/bonds into consideration and so will Iraq.

Exactly. A RD is most plausible and makes sense to me from an economic stand point. Let's wait patiently. My gut tells me that the CBI has a plan to adjust the value of their currency.

[skitealwedrop]

I respectively read the articles, opinions and the thoughts of the members that post on this site. Did I answer your question?

[jackster]

Exactly. A RD is most plausible and makes sense to me from an economic stand point. Let's wait patiently. My gut tells me that the CBI has a plan to adjust the value of their currency.

The CBI will adjust the value of their currency. The IQD will revalue from US$0.00086 to US$0.86. This will be very close to the 1:1 that many are predicting. Another 16% increase in value would make it 1:1.

It will take years after that for the IQD to reach $3.00.

Are you from Dallas proper or a suburb?

Edited July 15, 2012 by jackster

[skitealwedrop]

The CBI will adjust the value of their currency. The IQD will revalue from US$0.00086 to US$0.86. This will be very close to the 1:1 that many are predicting. Another 16% increase in value would make it 1:1.

It will take years after that for the IQD to reach $3.00.

Are you from Dallas proper or a suburb?

Your prediction is similar to Laidback's. I can definitely roll with it.

I live in a suburb north of Dallas.

[jackster]

Your prediction is similar to Laidback's. I can definitely roll with it.

I live in a suburb north of Dallas.

I'm originally from Bedford. Attended L.D. Bell. Live near the mountains and ski almost every year.

[skitealwedrop]

I'm originally from Bedford. Attended L.D. Bell. Live near the mountains and ski almost every year.

Bedford is not far from where I live. Your lucky! I'm stuck in the concrete jungle for 3 more years. Me and my son are ski/board bums. We're out of here once he graduates from High School.

Sorry for the off topic post peeps.

[TAV]

I like your analogy of what a LOP would look like if applied to USD. The CBI can't LOP it's currency without another mechanism in place to offset the deletion of zeros.

This is exactly what I'm saying!!!! The only options I see:

1) Continue on the path inwhich they are on. The best thing they did, was to not completely form their government. No one can hold Iraq accountable because there is no completely formed government to hold to the fire. Yes Maliki is the PM but he doesn't completely form the government.

2) Because they have already sold T-BILLS, a LOP is off the table, as well as a Re-denomination!!! I challenge everyone to look up the definition of Re-denomination!!! It's not in any dictionary!!! Re-denomination is a term used by currency speculators, mostly IQD speculators.

Investopedia states: Definition of 'Re-denomination'

a.)The process whereby a country's currency is recalibrated due to significant inflation and currency devaluation. Certain currencies have been redenominated a number of times over the last century for various reasons.

b.)The process of changing the currency value on a financial security.

Read more: http://www.investopedia.com/terms/r/redenomination.asp#ixzz20jtViJsS

Wikipedia states: Redenomination is the process of changing the face value of banknotes or coins used in circulating currency.

When redenomination occurs, financial data that spans the change must be correctly accounted for. For example, the GDP reported by the Central Bank of Nicaragua is properly documented.

http://en.wikipedia.

org/wiki/Redenomination

Neither Wikipedia or Investopedia are reliable resources to be quoting from due to anyone can add or remove data from those sites.

3) So far what we have already hear was that they plan to introduce small notes to the market and slowly withdraw the larger notes. This isn't Re-denomination nor is it dropping of the three zeros!!! This is simply adding small notes to the market and slowly removing the larger notes. Again because their Finance/Treasury sold government T-Bills, they can't simply drop anything!!!!

I do believe that possibly, they maybe sitting around a table trying to come up with some ideals. I also believe that the RV isn't entirely in their hands. As long as they play on the ideal of not having a completely functioning government to handle their affairs, we will continue to read articles of the prolonged currency issues...unless..........

4) That region splits into 3 separate states inwhich it appears that is what the Kurds are aiming for, then baghdad to take all the time they need. The north has given contracts to exxonmobile to get started in the oil field and I believe they will, if they haven't already will start developing before the end of the year.

KEEP AN EYE ON EXXONMOBILE STOCKS!!!

[keepmwlknfny]

This is exactly what I'm saying!!!! The only options I see:

1) Continue on the path inwhich they are on. The best thing they did, was to not completely form their government. No one can hold Iraq accountable because there is no completely formed government to hold to the fire. Yes Maliki is the PM but he doesn't completely form the government.

2) Because they have already sold T-BILLS, a LOP is off the table, as well as a Re-denomination!!! I challenge everyone to look up the definition of Re-denomination!!! It's not in any dictionary!!! Re-denomination is a term used by currency speculators, mostly IQD speculators.

Investopedia states: Definition of 'Re-denomination'

a.)The process whereby a country's currency is recalibrated due to significant inflation and currency devaluation. Certain currencies have been redenominated a number of times over the last century for various reasons.

b.)The process of changing the currency value on a financial security.

Read more: http://www.investope...p#ixzz20jtViJsS

Wikipedia states: Redenomination is the process of changing the face value of banknotes or coins used in circulating currency.

When redenomination occurs, financial data that spans the change must be correctly accounted for. For example, the GDP reported by the Central Bank of Nicaragua is properly documented.

http://en.wikipedia.

org/wiki/Redenomination

Neither Wikipedia or Investopedia are reliable resources to be quoting from due to anyone can add or remove data from those sites.

3) So far what we have already hear was that they plan to introduce small notes to the market and slowly withdraw the larger notes. This isn't Re-denomination nor is it dropping of the three zeros!!! This is simply adding small notes to the market and slowly removing the larger notes. Again because their Finance/Treasury sold government T-Bills, they can't simply drop anything!!!!

I do believe that possibly, they maybe sitting around a table trying to come up with some ideals. I also believe that the RV isn't entirely in their hands. As long as they play on the ideal of not having a completely functioning government to handle their affairs, we will continue to read articles of the prolonged currency issues...unless..........

4) That region splits into 3 separate states inwhich it appears that is what the Kurds are aiming for, then baghdad to take all the time they need. The north has given contracts to exxonmobile to get started in the oil field and I believe they will, if they haven't already will start developing before the end of the year.

KEEP AN EYE ON EXXONMOBILE STOCKS!!!

Couple questions for you......

If redenominations dont exist, or it was made up by or just being used by IDQ speculators, then what did the other 50+ countries call it when they changed out their currency, for a new one, in order to reduce the money supply and end up with a stronger valued currency?

And can you break it down for me how if they sold any bonds/T-bills that they couldnt possibly lop if the value or worth is a neutral change?

[Texas1]

Thanks Tirebiter for your response on the other thread that suddenly was locked with no explanation. Appreciate your input.

[jackster]

Thanks Tirebiter for your response on the other thread that suddenly was locked with no explanation. Appreciate your input.

The comments were very cordial and polite. I guess the subject matter was a sensitive issue. Makes one begin to wonder.

[randalln]

Couple questions for you......

If redenominations dont exist, or it was made up by or just being used by IDQ speculators, then what did the other 50+ countries call it when they changed out their currency, for a new one, in order to reduce the money supply and end up with a stronger valued currency?

And can you break it down for me how if they sold any bonds/T-bills that they couldnt possibly lop if the value or worth is a neutral change?

Well the best answer is don't listen to people who have never traveled more than 1000 miles from their house ........cause even the big old USA RD'ed in the 50'-60's

and if they want to argue with that ..they need history lessons ......and there is nothing that you can say to them to help ..........

but you can't RD over a long period of time ......it has to take place all at once .......remove 1......and implement another at a new rate .........you can't run two at different rates at the same time ......Its all or nothing ........currency has to be exchanged at face value (thats its whole purpose )....its a promissory note

just because its paper dose not mean it devalues cause its old ....if you can read the SN*....and the amount on the face ......banks have to give you the market value ......currency dealers are a different story

and if the T bill has a face value of 100,000 .....the it will be cashed at 100,000 at maturity not 89,000

now that dose not mean the the value on the world market ...cant change and effect how much of some one else's currency you will receive ....but the original Bill ......will give you the original amount ....from the country of origin .........no matter what the value is on the world market

[jas428]

Well the best answer is don't listen to people who have never traveled more than 1000 miles from their house ........cause even the big old USA RD'ed in the 50'-60's

and if they want to argue with that ..they need history lessons ......and there is nothing that you can say to them to help ..........

but you can't RD over a long period of time ......it has to take place all at once .......remove 1......and implement another at a new rate .........you can't run two at different rates at the same time ......Its all or nothing ........currency has to be exchanged at face value (thats its whole purpose )....its a promissory note

just because its paper dose not mean it devalues cause its old ....if you can read the SN*....and the amount on the face ......banks have to give you the market value ......currency dealers are a different story

and if the T bill has a face value of 100,000 .....the it will be cashed at 100,000 at maturity not 89,000

now that dose not mean the the value on the world market ...cant change and effect how much of some one else's currency you will receive ....but the original Bill ......will give you the original amount ....from the country of origin .........no matter what the value is on the world market

Disagree. Turkey is a clear example of where a country RD'n had 2 currencies co-exist with 2 different exchange rates for at least an entire one year period of time. This is fact. This sis also the model Iraq says they are following for their RD. This is also fact. They CAN RD and have both currencies co-exist with 2 different rates. The old notes at .00086 and the new notes at .86. That's EXaCTLY what tureky did and it was successful.

[keepmwlknfny]

Well the best answer is don't listen to people who have never traveled more than 1000 miles from their house ........cause even the big old USA RD'ed in the 50'-60's

and if they want to argue with that ..they need history lessons ......and there is nothing that you can say to them to help ..........

but you can't RD over a long period of time ......it has to take place all at once .......remove 1......and implement another at a new rate .........you can't run two at different rates at the same time ......Its all or nothing ........currency has to be exchanged at face value (thats its whole purpose )....its a promissory note

just because its paper dose not mean it devalues cause its old ....if you can read the SN*....and the amount on the face ......banks have to give you the market value ......currency dealers are a different story

and if the T bill has a face value of 100,000 .....the it will be cashed at 100,000 at maturity not 89,000

now that dose not mean the the value on the world market ...cant change and effect how much of some one else's currency you will receive ....but the original Bill ......will give you the original amount ....from the country of origin .........no matter what the value is on the world market

But thats exactly what does go down during a RD.....some countries give short exchange periods and others longer like a year....there is nothing that says they have to do it all right now or that they cant even take a couple years.....

And with a RD you have two different currencies and they do carry two diff values, they are just adjusted for however many zeros you remove.....

Like when Turkey went through theirs, (these numbers are just examples, might not be exact) but the old Lira was still 1.8 mill to 1 USD......while the new Lira that was out at the same time woulda been about only 1.8 to 1 USD....

But since RD doesnt change the value or worth of what your holding, I am trying to understand how selling bonds/T-bills would mean they cant lop....

Im just looking for SOLID reasons why they cant lop just as much as the next guy, but have yet to really find anything of the sort.....

[MrFnHappy]

Well the best answer is don't listen to people who have never traveled more than 1000 miles from their house ........cause even the big old USA RD'ed in the 50'-60's

and if they want to argue with that ..they need history lessons ......and there is nothing that you can say to them to help ..........

but you can't RD over a long period of time ......it has to take place all at once .......remove 1......and implement another at a new rate .........you can't run two at different rates at the same time ......Its all or nothing ........currency has to be exchanged at face value (thats its whole purpose )....its a promissory note

just because its paper dose not mean it devalues cause its old ....if you can read the SN*....and the amount on the face ......banks have to give you the market value ......currency dealers are a different story

and if the T bill has a face value of 100,000 .....the it will be cashed at 100,000 at maturity not 89,000

now that dose not mean the the value on the world market ...cant change and effect how much of some one else's currency you will receive ....but the original Bill ......will give you the original amount ....from the country of origin .........no matter what the value is on the world market

I'm left speechless after reading this post...