SWFloridaGuy (No Lop)

[Rayzur]

You refuted none of the facts I mentioned that relate to conditions that lead countries to redenominate rather than revalue. If you were the CBI would you tell the world you were about to revalue or would you make them think you would redenominate? We have to look at history here and the criteria for each scenario. This will not be a lop. I am not here to create excitement, as I said I am giving my opinion based on years of research. Please enlighten me as to why a redenomination is the only possible outcome and why you know that to be the case. Prove to me how Iraq fits this criteria because THEY DO NOT!! I respect your right to voice your "opinion," respect mine without saying I'm here to create excitement. I very much resent that.

SWF Guy, Lord knows I dont' want to be on the other side of a debate with you. I respect your opinion and thoughts and always have throughout the past year. And dog gone it, I note there are conditions stated as fact, which perhaps are not. To be clear, I am NOT countering your assertion of an RV. I am not countering the spirit of that which you posted. And to be very clear I am NOT saying that a redomination is the ONLY possible outcome. I'm not even going to go so far as to say it is a potential outcome in the specifics of my concern about your post.

The following response is not my logical assumptions or conclusions. These statements are from economists in a written International Banking Community Briefing describing the fundamentals of a redenomination. I'm not saying they in any way indicate a redenomination for Iraq, and in contrast to your request for information, I am saying there appears to be fundamentqals which are in direct contradiction to your stated facts.

Per international banking brief describing the fundamentals of redenomination:

FACT: Redenomination is meant to be employed AFTER a history of high inflation:

1) “Currency redenomination is a process where a country’s currency is recalibrated, after having sustained a history of high inflation and currency devaluation. In this history of high inflation, the unit values of goods and services rise. With this there is also a rise in the values of notes and coins.

During this history of high inflation, prices are quoted in millions and billions and currencies lose their value. The legacy of the past episodes of high inflation results in the rapid increases in the numerical values of prices. Ultimately in order to carry out transactions, large quantities of notes and coins are employed. In effect the basic functions of money as a medium of exchange, ….as a store of value,…. as a unit of account and as a standard for deferred payments becomes severely limited.

It is important for the prerequisites of sustained macroeconomic stability be met before a currency redenomination exercise is undertaken. There must be a social consensus on the importance of macroeconomic stability and the Central bank and Government must be committed to this on a sustained basis.

Redenominations are meant to occur after stabilization of the economy has been achieved, as governments attempt to reform and convince citizens and markets that high inflation is a thing of the past. It is important therefore that the timing must be correct. The Government must be fully committed to the reform. The Central Bank must be sufficiently independent to implement monetary policy. The Central Bank must be technically capable and must have gained sufficient credibility in domestic and international markets.

Currency redenomination can also be a means by which governments attempt to reassert monetary sovereignty. If citizens lose confidence in the national currency, they may begin to use foreign currencies such as the US dollars which creates difficulties for the implementation of monetary policy. Foreign currency substitution means that people are beginning to use another currency to perform those functions that the domestic currency was supposed to perform; as a means of exchange, a store of value, a unit of account and a standard for deferred payments. The central bank therefore loses control of the money supply”.

2) “Many countries have experienced a redenomination exercise including Argentina, Brazil, Bulgaria, Burma, Ghana, Poland, Russia and Turkey”.

FACT: Some of these countries are going to be shocked to find out they are not democracies.

FACT: "Redenomination comes wtih benefits such as:

• Reduction in cost and risks of carrying large volumes of notes.

• Efficiency in payments systems, in particular, ATMs.

• Simplification of accounting records and the ease of expressing monetary values.

• Re-introduction of the culture of using coins.

• Improved overall quality of banknotes in circulation.

• Significant reduction in transactions volume.

• Facilitation of the introduction of the use of vendor machines and car parking meters.

• Promoting tourists expenditures.

• Significant reductions in cost of banknote production".

Hopefully you have noted I am quoting in all of this.... Its not from my brain. I'm assuming you quoted some source in stating the facts you give, as am I, in quoting a different source of conflicting information. I'm hoping you can look at this opposing set of factors, and work them into a set of logical constructs which nonetheless support an RV. I have yet to find something credible in refuting this RD foundation as a possibility, and am counting on you to take issue with them.... (please note,.....take issue with the facts, not me... lol... I'm sitting next to you on this one in wanting nothing more than an RV). I appreciate your logic and hope you can tear this one up and put it to bed...

Thanks SWFG

PS. Personally I really don't care if you create excitement...its probably good for us... the place could use a good dose of something to wrap our brains around, and I'm, all for a couple of good circus seal tricks to offset the doom and gloom of recent :D

[TRERUMPH]

DONT BELEIVE THE HYPE, IS A SEQUAL, AS AN EQUAL CAN I GET THIS THRU TO YOU, THE L.O.P. IS NOTHING WITHOUT A DOUBT, BUT THE RV IS WHAT IS ALL ABOUT, SO COM ON DINAR VETS, LETS LET IT ALL BE SHOUTING IT OUT.......... GOOOOOOOOOO RRRRRRRRRR VVVVVVVVVV!!!!!!!!!!!!!!!!!!!!!! ( IN MY RAPPER VOICE)

[doctor robbins]

My god it's right there on the CBI website!!! http://www.cbi.iq/index.php?pid=History

After the Gulf War in 1991, and due to the economic blockade, the previously used Swiss printing technology was no longer available. A new, inferior quality notes issue was produced. The previous issue became known as the Swiss dinar and continued to circulate in the Kurdish region of Iraq. Due to excessive government printing of the new notes issue, the dinar devalued quickly, and in late 1995, US$1 was valued at 3,000 dinars.

When Shabibi was talking about revaluation in that video he was talking about what economists mean by revaluation, not what gurus mean. He wasn't talking about increasing the value 1000 times. He was talking about increasing it enough to slow down inflation.

[RRSport]

FACT: Democratic governments only redenominate in response to hyperinflation

Hi unless someone else has already mentioned and I missed it.

Iraq did suffer from hyperinflation hence why they have banknotes such as a 25,000.

They dont have inflation issues currently but in the past they did.

Edited June 27, 2012 by RRSport

[zul]

So Iraq is going to LOP and function with 30 billion IQD @ 0.86 ( about 26 billion USD). :lol:

[doctor robbins]

So Iraq is going to LOP and function with 30 billion IQD @ 0.86 ( about 26 billion USD). :lol:

It's quite possible. A lop won't leave them with anything less than they have now. People have been saying they are broke and need to RV for over two years now. Apparently they don't.

[MovieMaker]

Thanks SWFloridaGuy, interesting thread.

[SWFloridaGuy]

Hey there Rayzur. It's always so great to see you. You always have such a great way of presenting your opinions. Very well-spoken. Here is where I am getting some of my opinions. As you mentioned this is not a simple issue and I certainly don't pretend to know which direction Iraq will go for sure but when I look at countries that historically have taken the route of redenomination and compare their goals with what I believe Iraq's to be, I come up with a very different outcome and many factors both political and economic play into this. Here some interesting studies:

References: Maxfield, Sylvia. 1997. Gatekeepers of Growth. Princeton: Princeton University Press.

McNamara, Kathleen. 2005. .Making Money: Political Development, the Greenback and the Euro.. Manuscript, Georgetown University.

Mosley, Layna. 2003. Global Capital and National Governments. Cambridge: Cambridge University Press.

Polanyi, Karl. 1957. The Great Transformation: The Political and Economic Origins of Our Time. Boston: Beacon Press.

Przeworski, Adam, Michael R. Alvarez, José Antonio Cheibub and Fernando Limongi. 2000.

Democracy and Development: Political Regimes and Material Well-Being in the World, 1950-1990. Cambridge: Cambridge University Press.

Rogowski, Ronald. 1989. Commerce and Coalitions: How Trade Affects Domestic Political Alignments. Princeton: Princeton University Press.

Schamis, Hector and Christopher Way. 2003. "Fixing to Win: Political Cycles and Exchange Rate Based Stabilization." World Politics (October).

Simmel, Georg. 1907[1978]. The Philosophy of Money. Translated

Upward adjustment in the value of a country's currency relative to currencies of other nations resulting in a higher exchange rate in relation to others' currencies. In a revaluation, a country's central bank raises the official exchange rate of its national currency in relation to other currencies. This ordinarily is done by a country with a substantial Balance of Payments surplus. BALANCE OF PAYMENTS SURPLUS is an imbalance in a nation's balance of payments in which payments made by the country are less than payments received by the country. This is also termed a favorable balance of payments. It's considered favorable because more currency is flowing into the country than is flowing out. Such an unequal flow of currency will expand the supply of money in the nation and subsequently cause a decrease in the exchange rate relative to the currencies of other nations. This then has implications for inflation, unemployment, production, and other facets of the domestic economy. A balance of trade surplus is often the source of a balance of payments surplus, but other payments can turn a balance of trade surplus into a balance of payments deficit.

Why do governments engage in the redenomination of their currencies? In an era when money is backed by confidence (fiat money) rather than by gold and silver, governments may be tempted to manipulate the value of the public.s currency stocks as a revenue-generating measure. One means of manipulation is inflation: a government can reduce its own domestic currency-denominated obligations by allowing a dramatic expansion of the money supply. Another means of manipulation is currency reform, in which the government introduces a new currency, but makes it difficult for citizens to convert their holdings of old currency. Ignacio Mas (1995) suggests that, while the use of currency redenomination as a mechanism of confiscation is more the exception than the rule, it has been used as such throughout history. For instance, when governments require citizens to exchange old currency for new during a very short period (e.g. one day in Laos in 1976, or three days in Nicaragua in 1988 and in the Soviet Union in 1991), it is very likely that not all old currency will be exchanged. The old currency that is rendered worthless is essentially revenue . indirect seignorage -- for the government.

This account suggests that we might think about two types of redenomination: the more common case, in which redenomination is motivated by hyperinflation (and by a desire to signal that inflationary days are over); and the less common case, when redenomination is motivated by the government.s desire to squeeze additional resources from society. This does not predict that democratic governments will be more likely, in general, to redenominate; but it does suggest that redenomination in the absence of high inflation is more likely in authoritarian societies, or during instances of civil conflict (as in Nicaragua in 1988, or in Rwanda in 1993).4

We might expect an ideological dimension to decisions to redenominate. If redenomination has no distributional consequences, then it is difficult to make a case for the role of ideology.

When redenomination is seen as taboo, governments are less likely to employ it. But, if redenomination has been used by past governments . or by the same government in previous years . it may become less tainted, less an admission of policy failure. As a result, I expect that the probability of redenomination at a given point in time is higher in countries that have employed redenomination in the past.

Redenomination is more likely in nations where it has been used in the past. The total past experience with redenomination increases the hazard of its use.

Redenomination is a more likely response to economic problems in more heterogeneous societies, and in younger nation-states.

Another potential measure of the need for redenomination is the exchange rate; specifically, the presence of excess zeros is indicated by a countrys US dollar to local currency exchange rate. This rate varies markedly across countries and over time, reflecting the fact that some currencies are nearly on par with the dollar, while others are worth very little compared to the dollar. When I include the natural log of the exchange rate variable in the models reported, it rarely is statistically significant. Interestingly, there is only a small positive correlation (.16) between inflation and the dollar/local currency rate. Inflation rates turn out to be a much better correlate of the hazard of redenomination. They support the contention that inflation, or an inflationary past, makes redenomination more likely.

Democratic governments are disinclined to redenominate because of concerns about the public.s response.

IMF PRESSURE: The third covariate included in Model 1 is a dichotomous variable, indicating whether a country is under an IMF program during a given year. This variable assesses one form of external influence on redenomination (and on economic reform more generally): direct pressure from the IMF, via some sort of structural adjustment lending. The significant hazard rate estimate (2.55) suggests that IMF programs have a strong influence on a countrys chance of redenominating in a given year. The IMF does influence redenomination decisions and, perhaps, inflationary outcomes.

Governments with the need to redenominate (higher inflation) may be more inclined to do so earlier in their terms (with more years until the next election). This result also supports the conclusion that the lagged election coefficient which remains statistically significant reflects the practical difficulties of redenominating just after an election, rather than a political resistance to doing so. If we use years left in the chief executives term (YRCURNT, from DPI), the result is similar: the variable is associated with a statistically significant reduction in the hazard of redenomination. Furthermore, if we include instead a dummy variable for presidential (vs. parliamentary) systems, the hazard estimate is statistically significant, and it suggests that redenomination is less likely in presidential systems.22 These results, then, give credence to the .blame avoidance. view of fractionalization rather than to the .lack of political will. view

At the same time, however, not every nation with an objective need to drop zeros from its currency does so, and not every nation does so at the same pace. This suggests that there are causal pathways through which politics may influence redenomination decisions. It is not that economic factors do not play a role, but that political variables also can. I discuss three overlapping mechanisms through which politics may affect redenomination concerns about credibility (internationally as well as domestically), factors in the domestic political economy. (election timing, government time horizons, partisanship, and fractionalization), and the influence of money on social identity.

The quantitative analyses also would benefit from the inclusion of other explanatory variables. Civil conflict, for instance, may play a role in redenomination, at least in some (and perhaps so in more heterogeneous) polities. Some of the redenominations in the dataset occur in nations riven by civil conflict -- Angola, Sierra Leone, Nicaragua, and Rwanda. While these countries often experience high levels of inflation, such redenominations may be motivated more by the government.s desire to seize revenue, or to reduce the funds held by rebel groups, than by the desire to establish credibility or to stem currency substitution.

Repeated Redenomination: Hypothesis 5 suggests that redenomination is more likely if it has been used in the past. Governments. hesitation regarding dropping zeros is reduced when past governments have done so. To test this intuition, I add a .number of past redenominations. variable to the main model. This variable records the number of times (since 1960) that a country has removed digits from its currency. Again, I omit the .under IMF. variable from the model, given its collinearity with the redenomination count measure.

Authoritarian and democratic governments may have political reasons for redenomination. Democratic governments are likely to redenominate in response to high inflation. Authoritarian governments may redenominate even without high inflation, particularly in the presence of civil conflict. The results of this estimation (Model 7) are reported in Table 3. As before, the inflation and election variables are statistically significant. The past redenominations variable also is significantly associated with a much greater hazard of redenomination. This relationship, of course, is due in part to economic policy: as the positive correlation between the IMF program variable and the redenomination count suggests, nations. economic difficulties often persist over time. Countries with the need to redenominate in 1970 may again have this need in 1980. The hazard estimate also leaves open the possibility, again, for political considerations to affect redenomination: once the redenomination dam has been broken, it becomes a more viable political option. (DOESN'T SOUND LIKE A VIABLE OPTION FOR A COUNTRY AS WEALTHY, PROMISING, AS HEAVILY INVESTED IN AND SUPPORTED AS IRAQ).

Exchange rate: average official exchange rate, US dollar to local currency, from International Financial Statistics. When redenominations occur, the IMF adjusts the exchange rate data to account for the change, so that all of a nation.s data reflect .new. currencies. Given the subject of this project, these readjustments were reversed. Where a country had a redenomination in January to June, data for the previous years are converted to old values. Where a country had a redenomination in July to December, data for the present year also are converted to old values. If the data source does not provide a month for the redenomination (e.g. the Democratic Republic of the Congo), it is assumed to have occurred in the first half of the year.

The Modern History of Exchange Rate Arrangements: A Reinterpretation,. University of Maryland.Government Fractionalization: from Beck et al.s Database of Political Institutions, the government Herfindahl index. This measures concentration (and fractionalization) by calculating the sum of the squared seat shares of all parties in the government. When there are fewer parties in the governing coalition, the index takes on higher values (with the index ranging from zero to one). When there are no political parties in the legislature, the variable is coded as blank. This variable is available for 1975-2000.

IMF participation: from Vreeland (2003), as updated (through 2003) by Vreeland and Gandhi, using information from IMF Annual Reports and the IMF Survey. I updated the Vreeland and Ghandi data for 2001-2003 using information from IMF Annual Reports. In all cases, programs included are Standby Arrangements, Extended Fund Facility Arrangements, Structural Adjustment Facility Arrangements, and Enhanced Structural Adjustment Facility Arrangements.

Inflation: annual percentage change in consumer prices, from the World Development Indicators. For transition countries in the early 1990s (approximately 100 country-years), these data are supplemented with consumer price data found in the Economist Intelligence Unit.s Country Profiles.

Past Redenomination: A count of the number of occasions, 1960 to 2003, on which the government has redenominated its currency. This variable ranges from zero to 6.

Presidentialism: dichotomous variable, based on Cheibub and Gandhi.s INST variable (0=dictatorship, 1=parliamentary democracy, 2=mixed democracy, 3=presidential democracy). Coded 1 where INST equals 3.

Proportional representation: dichotomous variable, coded 1 for proportional electoral systems, from Beck et al.s Database of Political Institutions.

Right party executive: based on the EXECRLC variable from Beck et al.s Database of Political Institutions. .Right executive. is coded as 1 when EXECRLC=R, and coded as zero when EXECRLC=L or C. Similarly, .left executive. is 1 when EXECRLC=L, and zero when EXECRLC=C or R. This variable is available for 1975-2000.

Right party government: based on the GOVRLC variable from Beck et al.s Database of Political Institutions. .Right government. is coded as 1 when GOVRLC=R,

Thanks SWFloridaGuy, interesting thread.

Well, good evening. Looks like I'm not the only late night owl who couldn't sleep tonight. Good to see you.

Edited June 27, 2012 by SWFloridaGuy

[zul]

It's quite possible. A lop won't leave them with anything less than they have now. People have been saying they are broke and need to RV for over two years now. Apparently they don't.

They are planning to dedolarize. When that happens, I'm sure they'll have a lot less (than they have now). And considering, 24 yrs ago they have $80 billion worth of dinar with just 17 million population......., I simply find it quite impossible for them to function with just $26 billion worth of dinar now.

Edited June 27, 2012 by zul

[caz1104]

Ok ok. I can tolerate the drama lop queens who think that they are changing the world and saving lives. Ya know, they are silly.

But to make a unbridled, careless, comment like that! Lebrons game is 95% run at the rim and get the call everytime. Kobe is clearly the greatest in the game and probably the best ever to play.

Kobe is clearly in the discussion (best NOW),but best ever............................I think MJ might have something to say bout that.

[caz1104]

I remember the good ole days when keepm had some high source and secret intel and there was to be an RV before November 20th 2010. Stopped listening to much after that. The reality is NOBODY knows what is going to happen with the dinar!! After being on this site for many years and seeing all the articles released there is arguments to both sides. I for one appreciate those who continue to bring the smarts that I lack in breaking down the daily news from Iraq.

Well said,the constant badgering over the unknown is ridiculous imo. No one knows what Iraq is going to do regardless of how many articles are read or how much one thinks he/she knows about economics or foreign currencies. Best to all

[dhardage]

This is'nt Dominatrix-r-us.com?..................................nooooooooooooooooooooooooooooooooo. Two years wasted.

No, sorry. but please stop by and see us. We now accept Visa, American express and DONG.

[caz1104]

No, sorry. but please stop by and see us. We now accept Visa, American express and DONG.

How bout Discover? Also I got plenty of Ding,very little Dong DOH

[sandstorm]

Swfloridaguy,

it looks like you win the popularity contest. I hope you get your deleting the three zeroes. When and if it happens, i hope all the people in your following remember who it was that told em how great it was.

[dhardage]

How bout Discover? Also I got plenty of Ding,very little Dong DOH

awwwwwww sorry caz........You know there are meds for that now, right?

[caz1104]

awwwwwww sorry caz........You know there are meds for that now, right?

Thanks for reminder of my shortcomings

[jackster]

Ok ok. I can tolerate the drama lop queens who think that they are changing the world and saving lives. Ya know, they are silly.

But to make a unbridled, careless, comment like that! Lebrons game is 95% run at the rim and get the call everytime. Kobe is clearly the greatest in the game and probably the best ever to play.

The first sentence was uncalled for. We don't need that type of name-calling.

Second, on second thought, I'm not going to comment about basketball.

[Realdinar]

The first sentence was uncalled for. We don't need that type of name-calling.

Second, on second thought, I'm not going to comment about basketball.

Its the truth, I thought you researched facts? Look up drama queen...lol!

Kobe is clearly in the discussion (best NOW),but best ever............................I think MJ might have something to say bout that.

youre right, mj is king...lol

[caz1104]

Swfloridaguy,

it looks like you win the popularity contest. I hope you get your deleting the three zeroes. When and if it happens, i hope all the people in your following remember who it was that told em how great it was.

When this thing finally pops there will be plenty of time to gloat............................until then who really cares. We cant influence/change anything that will occur so why sweat it. Ride it out or jump off is about our only choices as I see it. No dis-respect was meant to anyone with this post-just sayin.

The first sentence was uncalled for. We don't need that type of name-calling.

Second, on second thought, I'm not going to comment about basketball.

Good morning sir

[jackster]

Its the truth, I thought you researched facts? Look up drama queen...lol!

youre right, mj is king...lol

Calling people drama queens is inappropriate.

[glorygirl3]

Great Post. I love reading SWFGUY.

[jackster]

When this thing finally pops there will be plenty of time to gloat............................until then who really cares. We cant influence/change anything that will occur so why sweat it. Ride it out or jump off is about our only choices as I see it. No dis-respect was meant to anyone with this post-just sayin.

Good morning sir

Good morning, caz.

[tedro]

Quote

I know I sure as hell can't wait to not care about this, once whatever is going to happen, happens.

End Quote

I'll dare to state this very stance is shared by 99.97% of us including myself.

Count me IN on this statement!!

By the way.....talking about smart folks with degrees and certificates etc........I once had a PHD guy working for me in the oil & gas industry (Dr. Numnuts)..........he was book smart, but otherwise he was a bafoon in all respects including common sense. He had a famous red tie that displayed, at least, 6 different types of meals thereon (not part of the tie design, but more like leftovers). Just saying!!

[caz1104]

Good morning, caz.

DRAMA QUEEN!!!!!! just a little wed morning humor

Count me IN on this statement!!

By the way.....talking about smart folks with degrees and certificates etc........I once had a PHD guy working for me in the oil & gas industry (Dr. Numnuts)..........he was book smart, but otherwise he was a bafoon in all respects including common sense. He had a famous red tie that displayed, at least, 6 different types of meals thereon (not part of the tie design, but more like leftovers). Just saying!!

getting an education here in the states is nothing to brag about...................me included. I agree book smart does'nt necessarily equate into common sense & vice versa.

[txwWrestling]

Its the truth, I thought you researched facts? Look up drama queen...lol!

youre right, mj is king...lol

Let's not forget about the great Larry Bird lol