Freebird Post

[DocDinar.]

7-4-2012 Freebird: There have been many statements from the CBI and Finance Committee lately referencing the deletion of the zeros from the currency in Jan 2013. This of course does not infer a RV. Actuallly, it points to a redenomination if you take the articles at face value. However, the culmination of all of my research tells us that it is not in Iraq's best interest to remove the zeros without raising the value. Too many powerful governments/corporate investors also hold the 3-zero denominations and have invested heavily into Iraq. Too many debts have been forgiven for anything other than a revaluation to be the goal. The ONLY reason the dinar is at its current value is because it was devalued as part of a war strategy to help defeat Saddam's government (also possibly the first step in an ingenious plan to make historic profits). The justification for the IQD's previous value is still there and we are just waiting for the prime conditions to ensure the success of its return. Inflation and stability are key. The lopsters claim that all the dinar would have to be returned to Iraq but that is not the case. It will be held and maintained by foreign countries as a reserve currency. We do need to be realistic about this though. I see "gurus" claim that a large rate of $4-double digits is possible. That's ludacris; the largest RV in history was China at 30%. We need to put this in perspective and forget the hype. For Iraq to revalue from a tenth of a cent to even on par, or just less than the USD (initially) would make this the most ambitious currency reform project in history by far and presents a ton of challenges for a war torn country like Iraq which had to completely rebuild their infrastructure and banking sector. The SIGR report mentioned that after the political tensions are resolved, the goal for the IQD rate is to be just less than equal to the USD. I believe that is exactly what the rate will be. I believe stability is exactly what we are waiting on and I think they expect to have a deal reached on Erbil, Ministers and the Strategic Council by January, which is why we are seeing that date referenced. Hang in there, after 9 years we're almost there!

[utvolfan]

Docdinar, The Iraqi dinar lost value because of the currency was hyperinflated by Hussein when he printed trillions of currency notes during the first years of UN sanctions. THAT is the reason the dinar is still valued at basically one-tenth of a penny.... Those trillions of dinar notes are still in circulation by way of the "new" dinar, which we as speculators now hold. The zeros will be lopped, the new currency will be introduced with a value of close to 1 USD per dinar. The value of the dinar will be increased, but the amount of currency will be reduced by 1000 times. My one-million dinar will become one-thousand dinar and the total cash in value will be the same. It will be a neutral event, just as the CBI has said, time and time again. The CBI has said this is their plan..... Should we believe the CBI who has done everything they said they would do? Or...Should we believe you, who references "pumper" rumors and conjecture?

[billio0]

Docdinar, The Iraqi dinar lost value because of the currency was hyperinflated by Hussein when he printed trillions of currency notes during the first years of UN sanctions. THAT is the reason the dinar is still valued at basically one-tenth of a penny.... Those trillions of dinar notes are still in circulation by way of the "new" dinar, which we as speculators now hold. The zeros will be lopped, the new currency will be introduced with a value of close to 1 USD per dinar. The value of the dinar will be increased, but the amount of currency will be reduced by 1000 times. My one-million dinar will become one-thousand dinar and the total cash in value will be the same. It will be a neutral event, just as the CBI has said, time and time again. The CBI has said this is their plan..... Should we believe the CBI who has done everything they said they would do? Or...Should we believe you, who references "pumper" rumors and conjecture?

Sorry UTVOLFAN,

I happen to believe FREEBIRD'S analysis, and not yours. Thanks DOCDINAR for bringing us the post.

By the way UTVOLFAN, if you'd like to sell your Dinars now, please post them so we can buy them for next to the nothing you seem to believe they are worth. I shall hold on to mine until the end of this ride.

All you bashers and LOPsters, start your engines now!

[SWFloridaGuy]

Sorry UTVOLFAN,

I happen to believe FREEBIRD'S analysis, and not yours. Thanks DOCDINAR for bringing us the post.

By the way UTVOLFAN, if you'd like to sell your Dinars now, please post them so we can buy them for next to the nothing you seem to believe they are worth. I shall hold on to mine until the end of this ride.

All you bashers and LOPsters, start your engines now!

I with you and Freebird.

[boon]

Virtually everyone of us members here at DV are not qualified in any capacity to interpret or give any advice on the subject of currency as it pertains to the dinar. Myself included , this topic is so convoluted and deceptive that it is only possible to have a opinion , and we all know about opinions. I read these posts and while I have learned alot in the last three years , the more I learn the more I realize I do not know. I am a rational analytical minded person and I try not to get caught up in the emotion, so I am going to share my take on this just for fun IMHO. One of the things I learned is all currency has two values , in country and out of country, for example prices of gasoline go up and prices of gasoline go down, daily and this is market driven and is more complex but it is tied to the dollar and when the dollar goes up gas goes down and when the dollar goes down gas goes up . Note this also applies to Walmarts , dollar goes up prices come down and dollar goes down and prices go up , they actually shoot up like a rocket and they float down like a parachute. The point is we use the same money day in and day out and as long as we can stretch our budget far enough we do not complain. Our currency being the dollar enjoys a status as key currency and thanks to our government and some back room deals all petroleum for many years has been bought and sold in US dollars henceforth the phrase petrodollars. This is changing , many countries are defecting they are bartering and escaping the US dollar and there is a battle going on . As far as a investment in Iraq goes that is a little bit of a stretch , really when their currency revalues significantly , it already has revalued many times and one has to realize that a revaluation is not strictly a increase it is just a move , however assuming it increases significantly it means very little to the average Iraqi in the short term . Keep in mind if you have no dinar and you have no US dollars , O is O , this is the case when it comes to the poor, In country the price of goods and services will go down and the infrastructure and job opportunities will improve so ultimately there standard of living will improve. Just having the electricity on 24hrs a day will make a big difference, but not so much to the people who do not have electrical appliances in the first place. Point is us rich americans who can afford to purchase this exotic foreign currency and set back and speculate when or if it might increase in value will possibly benefit ! I feel there are several reasons to confidently beleive this currency will increase in value; 1. cbi said so , and shabibi is the only credible Iraqi that I have read and beleive. 2. it makes no sense to print new small denominations that are of such insignificant value to be no use and could not purchase anything , What would you do with a tenth of a penny in the US. 3. One has to read and do alot of research but a document referred to as the plan was released and spells out how the US Treasury , Bush Chaney and I think Greenspan put together the plan to devalue the dinar to punish Sadam so he could no longer fund his army and then furnish US dollars confiscated from Saddam to furnish a currency that was internationally traded so the country could survive and then to ultimately RV the currency ten years later and exchange the old dollars for discounted oil. $32.00 per barrel if I remember right. The fact is no one knows for sure when and how much , but to think that the third wealthiest country in the world will retain the second least valuable currency indefinitely is ludicrous.

[utvolfan]

billio0,

If you choose to believe rumors and conjecture rather than what the CBI has said they will do, that is your choice. I will hold my dinar with the hope that the value will increase AFTER the RD that I can get enough of a return not to lose money on the speculation. Remember, everything the CBI has said they will do, they have done.... Not always on time, but eventually they do what they say they will do. The reason they are saying that the process will be "lop-redenomination- increase value" is because they do not want to lop the zero's without warning and have a country full of people wondering what happened to their dinars. They are telling the people of Iraq that this is a "neutral event". Question: What "guru-pumper" has been right about anything, anytime, anywhere?

[SWFloridaGuy]

Virtually everyone of us members here at DV are not qualified in any capacity to interpret or give any advice on the subject of currency as it pertains to the dinar. Myself included , this topic is so convoluted and deceptive that it is only possible to have a opinion , and we all know about opinions. I read these posts and while I have learned alot in the last three years , the more I learn the more I realize I do not know. I am a rational analytical minded person and I try not to get caught up in the emotion, so I am going to share my take on this just for fun IMHO. One of the things I learned is all currency has two values , in country and out of country, for example prices of gasoline go up and prices of gasoline go down, daily and this is market driven and is more complex but it is tied to the dollar and when the dollar goes up gas goes down and when the dollar goes down gas goes up . Note this also applies to Walmarts , dollar goes up prices come down and dollar goes down and prices go up , they actually shoot up like a rocket and they float down like a parachute. The point is we use the same money day in and day out and as long as we can stretch our budget far enough we do not complain. Our currency being the dollar enjoys a status as key currency and thanks to our government and some back room deals all petroleum for many years has been bought and sold in US dollars henceforth the phrase petrodollars. This is changing , many countries are defecting they are bartering and escaping the US dollar and there is a battle going on . As far as a investment in Iraq goes that is a little bit of a stretch , really when their currency revalues significantly , it already has revalued many times and one has to realize that a revaluation is not strictly a increase it is just a move , however assuming it increases significantly it means very little to the average Iraqi in the short term . Keep in mind if you have no dinar and you have no US dollars , O is O , this is the case when it comes to the poor, In country the price of goods and services will go down and the infrastructure and job opportunities will improve so ultimately there standard of living will improve. Just having the electricity on 24hrs a day will make a big difference, but not so much to the people who do not have electrical appliances in the first place. Point is us rich americans who can afford to purchase this exotic foreign currency and set back and speculate when or if it might increase in value will possibly benefit ! I feel there are several reasons to confidently beleive this currency will increase in value; 1. cbi said so , and shabibi is the only credible Iraqi that I have read and beleive. 2. it makes no sense to print new small denominations that are of such insignificant value to be no use and could not purchase anything , What would you do with a tenth of a penny in the US. 3. One has to read and do alot of research but a document referred to as the plan was released and spells out how the US Treasury , Bush Chaney and I think Greenspan put together the plan to devalue the dinar to punish Sadam so he could no longer fund his army and then furnish US dollars confiscated from Saddam to furnish a currency that was internationally traded so the country could survive and then to ultimately RV the currency ten years later and exchange the old dollars for discounted oil. $32.00 per barrel if I remember right. The fact is no one knows for sure when and how much , but to think that the third wealthiest country in the world will retain the second least valuable currency indefinitely is ludicrous.

Thanks

[jackster]

7-4-2012 Freebird: There have been many statements from the CBI and Finance Committee lately referencing the deletion of the zeros from the currency in Jan 2013. This of course does not infer a RV. Actuallly, it points to a redenomination if you take the articles at face value. However, the culmination of all of my research tells us that it is not in Iraq's best interest to remove the zeros without raising the value. Too many powerful governments/corporate investors also hold the 3-zero denominations and have invested heavily into Iraq. Too many debts have been forgiven for anything other than a revaluation to be the goal. The ONLY reason the dinar is at its current value is because it was devalued as part of a war strategy to help defeat Saddam's government (also possibly the first step in an ingenious plan to make historic profits). The justification for the IQD's previous value is still there and we are just waiting for the prime conditions to ensure the success of its return. Inflation and stability are key. The lopsters claim that all the dinar would have to be returned to Iraq but that is not the case. It will be held and maintained by foreign countries as a reserve currency. We do need to be realistic about this though. I see "gurus" claim that a large rate of $4-double digits is possible. That's ludacris; the largest RV in history was China at 30%. We need to put this in perspective and forget the hype. For Iraq to revalue from a tenth of a cent to even on par, or just less than the USD (initially) would make this the most ambitious currency reform project in history by far and presents a ton of challenges for a war torn country like Iraq which had to completely rebuild their infrastructure and banking sector. The SIGR report mentioned that after the political tensions are resolved, the goal for the IQD rate is to be just less than equal to the USD. I believe that is exactly what the rate will be. I believe stability is exactly what we are waiting on and I think they expect to have a deal reached on Erbil, Ministers and the Strategic Council by January, which is why we are seeing that date referenced. Hang in there, after 9 years we're almost there!

If they do indeed remove 3 zeros, then the rate will change from 1 IQD = US$0.00086 to 1 IQD = US$0.86. That's almost 1 to 1.

Then, to go from 86 cents to 1 Dollar is just a 16% increase, which is 14 points less than China's RV.

3-zero RD, then RV 16% and you've got US$1.00 = 1 IQD. It works, guys.

[utvolfan]

Jackster, Why is the CBI calling this a "neutral event"?

[jackster]

Jackster, Why is the CBI calling this a "neutral event"?

Because they'll print the new dinars in Switzerland? It is a neutral country.

Somehow I feel that this is a trick question.

However, one definition of neutral is not causing or reflecting a change in something.

So, this removal of 3 zeros will do nothing to the value of the currency.

Other than that, I have never heard about what you're saying in regards to this "neutral event".

[umbertino]

Quote

Because they'll print the new dinars in Switzerland? It is a neutral country.

End Quote

Good one.

[WorkerBee]

Who is Freebird?

[mrmcwhipit]

Whoever Freebird is i like his view of the Dinars plan, and utvolfan is probably just a negative Dinar plant/pumper.

[webup]

Sorry UTVOLFAN,

I happen to believe FREEBIRD'S analysis, and not yours. Thanks DOCDINAR for bringing us the post.

By the way UTVOLFAN, if you'd like to sell your Dinars now, please post them so we can buy them for next to the nothing you seem to believe they are worth. I shall hold on to mine until the end of this ride.

All you bashers and LOPsters, start your engines now!

Thanks for the scoop. Does your company do lawaway and reserve? POh and do you use fedex for customers.....

[icfaith]

Docdinar, The Iraqi dinar lost value because of the currency was hyperinflated by Hussein when he printed trillions of currency notes during the first years of UN sanctions. THAT is the reason the dinar is still valued at basically one-tenth of a penny.... Those trillions of dinar notes are still in circulation by way of the "new" dinar, which we as speculators now hold. The zeros will be lopped, the new currency will be introduced with a value of close to 1 USD per dinar. The value of the dinar will be increased, but the amount of currency will be reduced by 1000 times. My one-million dinar will become one-thousand dinar and the total cash in value will be the same. It will be a neutral event, just as the CBI has said, time and time again. The CBI has said this is their plan..... Should we believe the CBI who has done everything they said they would do? Or...Should we believe you, who references "pumper" rumors and conjecture?

Actually an article just released by Finance Committee of parliament on 3 July, stating the plan is to release the new currency AFTER the lifting of the 3 zeros of the current currency. It says in the 1st sentence, "that the budget next year 2013 will be the new currency after deleting three zeros from the current currency." Which is RV present currency then introduce the new currency. (LINK)

Edited July 5, 2012 by icfaith

[jackster]

Actually an article just released by Finance Committee of parliament on 3 July, stating the plan is to release the new currency AFTER the lifting of the 3 zeros of the current currency. It says in the 1st sentence, "that the budget next year 2013 will be the new currency after deleting three zeros from the current currency." Which is RV present currency then introduce the new currency. (LINK)

Where does it mention an RV?

[Rayzur]

Jackster, Why is the CBI calling this a "neutral event"?

I'm curious, .......has the CBI used the literal words "neutral event" or is that your summation? If the former is the case, that would be incredibly significant.... and if so, do you by any chance have a reference link quoting them using the words "neutral event", ugh...

Thanks....

[billio0]

billio0,

If you choose to believe rumors and conjecture rather than what the CBI has said they will do, that is your choice. I will hold my dinar with the hope that the value will increase AFTER the RD that I can get enough of a return not to lose money on the speculation. Remember, everything the CBI has said they will do, they have done.... Not always on time, but eventually they do what they say they will do. The reason they are saying that the process will be "lop-redenomination- increase value" is because they do not want to lop the zero's without warning and have a country full of people wondering what happened to their dinars. They are telling the people of Iraq that this is a "neutral event". Question: What "guru-pumper" has been right about anything, anytime, anywhere?

Hello again UTVOLTAN,

Sorry you misunderstood me earlier, but I DID NOT say I believed in rumors or conjecture. What I did say was that I believed the recent analysis offered by FREEBIRD to be correct and accurate. It is based on FACTS publicly stated by the Central Bank Of Iraq regarding outstanding IQD NOT inside their country, AND the fact that there are many countries and large investors holding the same 3-zero notes that we have in our possession.

I have little or no interest in the political scene there or here in the USA as it pertains to my investment, and I have no problem with you or anyone here at DV believing otherwise. What I do have a problem with is when such theories are presented as fact, which is no different that what the so-called GURU's speculate about, and the potential damage it may have to those DV members who have much to lose in the way of their enthusiasm when such theories are presented. They look to hear and read about things that are uplifting rather than defeating, and in some instances they have actually spent too much and are not considered astute investors at all. They have hope, which is far more than they ever got anywhere else, and as such I feel compelled to always be mindful and supportive of them when I post or respond to anything here at DV.

As an investor I have 2 primary goals for my investment: that it is a relatively safe place to park my money, and that it will eventually net me a profit. I rarely concern myself with when or how that will occur, and aside from hoping to hear from like-minded investors here at DV, all else comes under the heading of trivia to me.

I shall never mean you or anyone else here any disrespect in what I have to say, and quite honestly at my age I have next to nothing to lose in my IQD investment, and everything to gain.

Thanks again for taking the time to reply.

Edited July 5, 2012 by billio0

[utvolfan]

The "neutral event" has been in several articles regarding the CBI's plan. Remember the CBI has said that the zero's will be lifted from the "nominal value of the currency".

Here is the definition of "nominal value of currency":

Money also has an associated nominal value. The nominal value of money is the stated, fixed standard for comparing money (e.g., $1 is always 100 cents). The nominal value of money does not take inflation, the money's actual purchasing power, or currency exchange into consideration.

Read more: The Definition of Nominal Value | eHow.com http://www.ehow.com/facts_6767133_definition-nominal-value.html#ixzz1zjWBqekV

Based on that definition a 25,000 note becomes a 25, a 10,000 note becomes a 10, a 5,000 note becomes a 5. That's a LOP. Learn it, live it, love it...Because that is what is going to happen.

Yes, the value of the dinar goes from approximately 1/10 of a penny to 1 USD, but the quantity is reduced by 1000 times. THAT is a neutral event. No gain, no loss.

Billio0, what government holds dinar? Not the US.... There is no record by the Fed or the UST that indicates any dinar is being held.

Please prove me wrong. Otherwise, I will believe what the CBI says rather than the rumor mill....Or the pumpers that feed the rumor mill.

[utvolfan]

umbertino posted this on another thread.

Umb, thank you!

QUOTE

Wednesday, January 25, 2012

Since I first started visiting dinar forums one thing that has bothered me is the fact that most of the "experts" on this investment have a background in something other than finance, economics, or investment analysis. Many of them come from the world of MLM, selling products like Xango or Fuel Legacy. Some are former military personnel. Some work as contractors or in the oil business. One guy was a corporate recruiter. Another worked in the restaurant business. One guy was even a snake breeder. Not exactly what I was looking for.

Well I found one man who has discussed the dinar at length who is indeed qualified to discuss this investment, but some of you probably won't like what he has to say. His name is John Jagerson. He runs a website called Learning Markets, and his videos were included on one of the first posts I did back in September. Recently he commented on my blog which frankly surprised me. I replied and invited him to participate in a brief discussion for my readers which he agreed to do. I may not agree with John on everything, but I respect his credentials and his opinions and welcome his thoughts on investing in the IQD.

Q I appreciate your taking the time to answer a few questions for us. Could you give us a brief bio with your credentials?

John: I graduated from Utah Valley University with a degree in Business Administration where I emphasized in accounting and finance. I later completed the PLD at Harvard that has a strong international business focus. I have spent most of my career as an entrepreneur, which led me in two directions that eventually converged to form my current occupation. The first direction was to become involved in private equity (AKA venture and angel capital), which gave me experience in investment and risk analysis. The second was my experience (early in my career) importing products and equipment from Asia. While I was doing that I was frequently hedging currency risk and the currency-trading bug bit me. I haven’t turned back.

In 2003 I left entrepreneurship briefly and went to work with Investools, which was a roll-up of several online companies focused on investor education and information. Investools later acquired the options-brokerage thinkorswim (Barrons’ #1 rated), which was later acquired by TDAmeritrade after I left the company. I was a Vice President at the firm and was responsible for content, training, and client education. Working at thinkorswim Group I had the opportunity to get to know how individual investors work. This gave me a lot of insight into the biggest mistakes they make as well as the commonalities among successful traders.

For a brief period I was also a principle for a small CTA (NFA registered) focusing on forex trading, but left the industry when regulation changes in the U.S. pushed so many domestic traders overseas. I currently still write two option advisory letters that have done well. I ended 2011 profitably, which is “pretty good” in my book even if I didn’t blow the doors off.

I have written three books published by McGraw Hill. Two of these were about the international currency market or “Forex”. The third is on gold investing. I am currently writing a book on the coming (in my opinion) bond market collapse. I regularly write and record videos for online publications including Nasdaq.com, Scottrade, International Stock Exchange (ISE), LearningMarkets.com, Mint (an Intuit company) and Alpari among others.

OK that was not brief and I apologize for that but I thought it would be helpful to make sure that people wondering about the dinar know that I am not just speculating. I have experience in this business and I can show them how to find real information for themselves.

Q: That's quite all right. Have you reported on other redenominations that were pumped as big profit opportunities?

John: Yes and no. I have reported on RVs and RDs in the past, but the dinar is an unusual situation that is being pumped unlike anything I have seen before. Everyone in the business knows that RVs and RDs are virtually impossible to trade so pumping would have just been seen as nonsense. The IQD RV is being pumped successfully because they are using it to scam non-professionals who don’t know how the currency market works.

I was “introduced” to the dinar RV by a friend who asked me what I thought. I told him RVs don’t work that way and that it sounded like a “rain maker” scam, but he invested anyway. I did a little investigation into how this scam was working and starting writing about it in 2008. I felt like this was a good thing to take a stand on since so many service men and women are being taken advantage of by the scammers.

I have written about other redenominations (Turkey, Mexico, Venezuela, Zimbabwe, Germany, Japan, China, Kuwait, Iraq, and Vietnam) and revaluations (China, Japan & Switzerland). Both redominations and revaluations happen but none of them have or could work like dinar-RV investors think. – I have also written about other investor scams like advance-fee frauds, target date funds, HYIPs, and mail-order bullion dealers.

Q: I'm sure a lot of my readers are saying "how can you call the dinar a scam? I bought dinar at BOA or Chase". How do you respond?

John: It is legal to exchange currencies with a service bureau or a bank in the U.S. There are still a few that will even exchange the dinar. However, that is not the same as advising that this is a “good investment opportunity.” That is the scam. The currency is just paper issued by the Iraqi government.

Q: You say the IQD hasn't revalued since 2003, but many investors will tell you that they have doubled their money since they purchased.

John: A real RV is the result of intentional action by the central bank. Most currencies fluctuate in value over time without any interference from the bank. It is definitely possible to have bought the dinar at some point over the last few years and to be in a profitable position right now but that was not the result of an intentional RV. The real question is whether the dinar can continue to appreciate versus the dollar now?

Whenever I hear this I get pretty skeptical though. Where is the proof? There are plenty of folks who can show they bought between 1500 and 1100 to the dollar, which is where the official rate has ranged since the new series was issued, but counting costs and spread that is a far cry from a money-doubler. There was a VERY brief period in 2003 when the dinar was exchanged at over 1900 to the dollar, but I have yet to see anyone prove that they bought during those few months. Keep in mind that these aren’t my numbers. These are from the Central Bank of Iraq. I always tell people to go look it up themselves and make sure they are getting their information from the source rather than a pumper.

Q: Can you tell us definitively how the Kuwaiti dinar redenomination unfolded?

John: Stage one – Fall 1990

Iraq invades and replaces the Kuwaiti dinar with the Iraqi dinar as the “official” currency. The Kuwaiti government was essentially in exile. However, because of the way currencies were managed in the early 1990’s the official rate for the KWD never changed. The UN condemned the invasion and no one of any consequence recognized the right of Iraq to replace the government and currency of Kuwait. There are many anecdotes floating around that you could have bought the KWD for a fraction of its original value on the black-market for a few weeks during that period but I don’t know of anyone brave enough to come forward and admit (and prove) that they did it.

Stage two – Winter 1991

The U.S. led invasion and liberation of Kuwait was chaotic to say the least for money supply in Kuwait. I have again heard anecdotes of people being able to buy KWD on the black market during this period but the official exchange rate was still the same. The old Kuwaiti government was restored following the withdrawal of Iraqi troops. This is really important => Unlike Iraq, the same government, currency, central bank, money, and civil system was in place before and immediately after the Iraqi invasion.

Stage three – September 1991

The KWD was redenominated with new bills in 1991. This means that the old bills held by the public were exchanged for new bills. Sometimes redenominations are done at a ratio (referred to as “lopping”) but this one was 1:1 straight across. Theoretically it is possible (this is a big “if”) for some investors who had bought KWD on the black market during the occupation to have made a big return but there are no known institutional investors who have admitted engaging in that activity and I suspect that the few people who did it are keeping quiet since war-profiteering is generally an unpopular if not illegal thing to do.

KWD Exchange rates

The KWD has been pegged to a basket of currencies (dominated by the dollar) or the dollar itself since 1975. Since the mid-1980s when the dollar was released to float more freely the KWD has had an exchange rate that has ranged between $2.78 and $3.10. This includes the period of the Iraqi invasion and the U.S. invasion of Iraq in the early 2000s.

The bottom line is that if you had 1,000KWD worth $3,000 before the invasion you still had 1,000 new KWD after 1991 that was still worth about $3,000 assuming you were able to exchange your hard currency. No one profited from the invasion.

Q: What about the claims that some people made a fortune on the KWD?

John: As I mentioned above I have heard rumors and stories about profits being made by people who were buying KWD for a few weeks on the black market in the fall and winter of 1990, but where is the proof? There is none. In any case, these stories don’t help the hopes for the Iraqi RV because the same money and government existed before and after a 6 month war in Kuwait, which is why it is even theoretically possible to have made some profits. The only thing the Iraqi dinar has in common with the pre-1990 IQD is the name. Everything else has been changed. The government, central bank, and quantity of money supply has been changed since the invasion.

Q: Did any currency dealers profit from the Kuwaiti dinar?

John: Theoretically it was possible to profit from the KWD if you had purchased it on the black market during the Iraqi invasion. There was a brief window of time that it was possible. However, it’s a lot like saying “oh I knew Apple was going to come back so I bought it at the absolute lowest price and sold it at the highest.” That sounds great but where is the proof? Even if he did its still moot. The KWD was the same thing with the same government backing it before and after the invasion. You can pull the historical exchange rate right from the central bank’s website. The IQD is a different currency, different government backing it, different supply, etc, etc.

Q: If a dinar guru claims that he profited from the Kuwaiti dinar would you say he's lying? Adam Montana for example made such a claim in a book he wrote.

John: Yes, but can I prove it? No, but I can’t prove he doesn’t have magic beans either. It seems extremely unlikely that he was present in Kuwait and prescient enough to buy the KWD on the street when it was available before the Americans went in. If he did it then it should be easy to prove.

Q: To your knowledge, what is the most substantial RV in history?

John: In absolute value terms the most significant RV in history was the RV of the Chinese Yuan in 2005 that is still ongoing. The exchange rate has actually moved in favor of the yuan 31%. However, there are slim pickings for this kind of RV. Usually an RV is done to lower your currency’s value. The Bank of Japan does this periodically by budging its exchange rate down by a few percentage points that usually evaporates within a few weeks. The Swiss National Bank did it last year when they pegged to the Euro but the change was just a few percentages then as well.

The IQD has fluctuated but has not been revalued since it was reissued in 2004. The Central Bank of Iraq (CBI) has been raising interest rates to head off inflation which probably helped protect its official peg of 1170 to the U.S. dollar. However last year, inflation started getting away from them and the unofficial exchange rate (as reported by the CBI) is now about 1200 to the dollar.

Q: Have investors ever managed to make a profit off of a redenomination?

John: Its pretty tough, but it is possible. The problem is usually one of liquidity because it is really difficult to buy and sell most of these currencies that go through a redenomination. If you want to do it, the most reliable way to make money from a redenomination is to short the currency. The vast majority of redenominations lead to a currency that continues to fall. You would have made money shorting the TRY in 2005 or the MXN in 1995, which were both trading actively in the forex at the time. This problem is that this is exactly the opposite of what IQD buyers are waiting for. They believe the IQD will go up after an RD, which has pretty much never happened.

If you are wondering about making money from the actual “redenomination” process then the answer is no. A redenomination does not affect the total value of the currency. If you had 120,000 IQD that are currently worth $100USD (1,200 USD/IQD) and the dinar remonetizes tomorrow by dropping three zeroes to a new exchange rate of 1.2 IQD to the dollar then you are flat. You would have to exchange your 120,000 dinar for 120 new dinar, which are worth $.833333 each or $120 in total. A redenomination results in the same aggregate value. Outside of the costs incurred in the transaction there are no gains or losses.

Q: Is it possible that the US Treasury will take our dinar and use them for oil credits? This is a common claim made to explain how the RV process will work.

John: I don’t know why they would. The Treasury has FX reserves but not in any amount that would put a dent in oil imports from Iraq in the far future. Besides that, why would spending (injecting more dinar) into the world market drive its value up? Increasing supply drives prices down not up. Secondly – and this is really important - Oil is priced in U.S. dollars and most exporters sterilize their capital flows to prevent becoming dollarized or to head off inflation and some kind of massive reserve of the dinar would make that very difficult. The last thing I always ask when this question comes up is how do they know that the Treasury has some massive dinar reserve? Where did that data come from? It didn’t come from the Treasury. Like most of these rumors and “facts” it was just made up by the scammers.

Q: Can fractional reserve banking allow investors to cash in $2 trillion or more?

John: Not without creating a significant shift in the value of the U.S. dollar. Money supply is measured in different ways but one of these – M1, which is a measure of liquid dollars and deposits in the economy - is just over $2 Trillion now. So you would basically be doubling the liquid dollars in the market. Can a fractional system absorb that from a practical perspective? No.

Q: Would you be willing to debate Kaperoni, Space Cowboy, Medic, Breitling ... etc. on this?

John: Yes, in person or in writing. Anytime.

END QUOTE

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[webup]

Hello again UTVOLTAN,

As an investor I have 2 primary goals for my investment: that it is a relatively safe place to park my money

I think it's a given that the Iqd is one of most volatile currencies on the planet.

A safe place to '

Park money' is not in a fractious middle eastern country that's for sure.

[eastcreek]

Docdinar, The Iraqi dinar lost value because of the currency was hyperinflated by Hussein when he printed trillions of currency notes during the first years of UN sanctions. THAT is the reason the dinar is still valued at basically one-tenth of a penny.... Those trillions of dinar notes are still in circulation by way of the "new" dinar, which we as speculators now hold. The zeros will be lopped, the new currency will be introduced with a value of close to 1 USD per dinar. The value of the dinar will be increased, but the amount of currency will be reduced by 1000 times. My one-million dinar will become one-thousand dinar and the total cash in value will be the same. It will be a neutral event, just as the CBI has said, time and time again. The CBI has said this is their plan..... Should we believe the CBI who has done everything they said they would do? Or...Should we believe you, who references "pumper" rumors and conjecture?

So, let me get this straight, utvolfan. You bought into an investment that you think will make you no money. Now that just makes perfect sense, doesn't it????? Not...

[utvolfan]

Eastcreek, I bought my dinar 2 years ago. The CBI was not talking about a lop at the time. I thought there was a good chance there would be an increase value that would make a great profit, because it is undervalued. Even the IMF says it is undervalued. AND...It will go up in value, but not BEFORE they lop the zeros.

Since you seem to think that it is a sure winner..... Did you get a second mortgage on your house and spend every penny you had on dinar???? NOT!

[jg1]

If they were going to LOP, why is the Iraq government taking so long to study the impact. Just look at Mexico when they LOPPED. I dont think they studied it much at all. It helped them enormously.

So, why would they be studying it so much unless they were thinking about other options, like an RV.

[utvolfan]

I THINK (JMO) that they are studying it to assure that the people of Iraq understand what is happening to their currency. If you lived in Iraq, owned a 25,000 dinar note, woke up one morning , and was told that the note was now only a 25.... It could be some unhappy campers in the sand box. I think that is why they are posting so many articles to try their best to make they people understand that the quantity goes down, but the value goes up. Neutral... No loss, no gain. JMO