SWFloridaGuy (8/15)

[SWFloridaGuy]

8-15-2012 SWFloridaGuy: Many ask how will Iraq be able to pull off a historic revaluation of this magnitude. It's a fair question and one that's hard to answer because there is no real precedence for it. However, there is also no real precedence for the unique investment opportunity Iraq presents, which we have all recognized and is the reason we are here. Previously there have been 14 episodes where a country's real and nominal effective exchange rate appreciated by 10% or more without discretionary adjustments of the parity by the government (over a two-year window or less), leading to sustained real effective appreciation. Since 1960 there have been 25 episodes of large nominal and real appreciations. Usually these revaluations were the indirect consequence of the appreciation of the anchor currency of the peg against other currencies.

In Iraq's case, their currency is severely undervalued due to UN resolution 661, a devastated infrastructure and they have had to completely rebuild their banking sector. But they have also been on the path to recovery for quite some time. Iraq presents a unique situation and there is a tremendous gap between the current rate and previous values the IQD has held. It has taken almost a decade and it's my belief that after the GOI implements these latest reforms, the recovery process will have reached its pinnacle and be strong enough to support phase 3 of the economic reforms. Studies have shown that the immediate output response of large RVs is positive, i.e. output growth accelerates, but they turn negative after about three years. For years now economists have been studying ways to raise the value of the IQD and sustain that growth as well. If they were planning a straight redenomination with no significant rate increase they would have never spent this much time studying the long term effects, in-country (and out) security issues, counterfeiting, de-dollarization and how to institute a market-based economy where they are respected as a borrow in the eyes of global capital markets.

They have been aided in this endeavor by the IMF, World Bank and many other powerful governments and organizations. Iraq has many options. Oil prices fluctuate so a basket peg would not solve the problem. Iraq may peg the currency to the export commodity (PEP). The CBI could set the daily price of IQD in direct proportion to the daily price of a barrel of oil in terms of USD. That would stabilize the price of oil in domestic terms. That's the best of both worlds (fixed & floating) and would also help promote integration into world markets. Iraq has many options and the CBI and Finance Committee have told us that they are going to make their move (whatever that may be) in 2012. These next few months could be very exciting and my opinion is that it's in Iraq's (and the world's) best interest to revalue, where the Central Banks holding the dinar as a reserve currency would also benefit. This is not something I can prove and it's just my opinion, which may or may not be correct.

Edited August 15, 2012 by SWFloridaGuy

[Jmcc]

I do like your opinion.

[SocalDinar]

Thanks SWFG for your time putting this together.

I am with you on this and do believe the IQD is severly undervalued.

GO Shabs!!

[NWGUY]

8-15-2012 SWFloridaGuy: Many ask how will Iraq be able to pull off a historic revaluation of this magnitude. It's a fair question and one that's hard to answer because there is no real precedence for it. However, there is also no real precedence for the unique investment opportunity Iraq presents, which we have all recognized and is the reason we are here. Previously there have been 14 episodes where a country's real and nominal effective exchange rate appreciated by 10% or more without discretionary adjustments of the parity by the government (over a two-year window or less), leading to sustained real effective appreciation. Since 1960 there have been 25 episodes of large nominal and real appreciations. Usually these revaluations were the indirect consequence of the appreciation of the anchor currency of the peg against other currencies.

In Iraq's case, their currency is severely undervalued due to UN resolution 661, a devastated infrastructure and they have had to completely rebuild their banking sector. But they have also been on the path to recovery for quite some time. Iraq presents a unique situation and there is a tremendous gap between the current rate and previous values the IQD has held. It has taken almost a decade and it's my belief that after the GOI implements these latest reforms, the recovery process will have reached its pinnacle and be strong enough to support phase 3 of the economic reforms. Studies have shown that the immediate output response of large RVs is positive, i.e. output growth accelerates, but they turn negative after about three years. For years now economists have been studying ways to raise the value of the IQD and sustain that growth as well. If they were planning a straight redenomination with no significant rate increase they would have never spent this much time studying the long term effects, in-country (and out) security issues, counterfeiting, de-dollarization and how to institute a market-based economy where they are respected as a borrow in the eyes of global capital markets.

They have been aided in this endeavor by the IMF, World Bank and many other powerful governments and organizations. Iraq has many options. Oil prices fluctuate so a basket peg would not solve the problem. Iraq may peg the currency to the export commodity (PEP). The CBI could set the daily price of IQD in direct proportion to the daily price of a barrel of oil in terms of USD. That would stabilize the price of oil in domestic terms. That's the best of both worlds (fixed & floating) and would also help promote integration into world markets. Iraq has many options and the CBI and Finance Committee have told us that they are going to make their move (whatever that may be) in 2012. These next few months could be very exciting and my opinion is that it's in Iraq's (and the world's) best interest to revalue, where the Central Banks holding the dinar as a reserve currency would also benefit. This is not something I can prove and it's just my opinion, which may or may not be correct.

Thank You SWGUY,

You can quote me on this one......."I Believe"!

Go RV!!!

[TonyDownTheShore]

Thanks for the post SWFG

[Choppermike]

The glass IS half full. I like it!

[RickOhio]

SW, that's a damn fine opinion and the exact reason I'm in it! Bravo for this post!

[doctor robbins]

I can understand how sanctions and war can lead to a currency depreciating in value, but I can't see how that makes the currency "undervalued". Yahoo's stock sold for $100 at one point. Now it's selling for $15. Does that make it "undervalued"? Or has the value simply declined?

[mrmcwhipit]

Thanks SWFG appreciate the info

[coleman619]

Thanks for your daily positive spin.

[4aprofit]

I've always said...that you dont spend time or money like Iraq has done...voting on, deliberating over, going before Parliament, etc., etc., etc...with all the issue's of/about their money, the zero's, etc....(Hypothetically, they've probably spent as much on hashing things out over this currency, as they did printing it and distributing it initially...lol)...also, if you know something is heading into the crapper...let it go, forget it, let the case be closed and move on...(They've had appx. 10 years to tank this stuff, while things were much worse over there, and if they have'nt by now...why not?)........On another note, if it was a doomed currency, and/or a scam, as some call it...why have'nt they simply let it float and just see where it ends up...instead of keeping it at an artificially controlled rate?...(What value is there to hide..as per locking it in at a rate that cant even move, as per the true markets values?)...BOTTOM LINE: WHY FOR GOD'S SAKE...WORRY OVER THIS STUFF LIKE THEY HAVE...IF IT'S NOT EVEN FLOATING...AS PER SEEING WHAT IT IS GOING TO DO...BEFORE PRINTING ANYMORE OF THIS STUFF...FOR EXAMPLE...LIKE THE SMALLER NOTES, OR SOME NEW BILLS WITH DIFFERENT LANGUAGES, ETC...IF YOUR GOING TO LET IT ALL GO INTO TANK ANYWAY...WHY WORRY OVER THE NOTES YOU'VE ALREADY GOT THAT ARE WORTHLESS, OR ALL THE WORRYING OVER COUNTERFEITING IF IT'S WORTHLESS, OR PRINTING ANY MORE NEW NOTES THAT ARE'NT EVEN HERE YET...AND/OR HOW THEY NEED TO BE PRINTED FOR THIS OR THAT, OR FOR CERTAIN SECTS LIKING?..IN OTHER WORDS, IF YOU KNOW YOUR GOING NOWHERE WITH YOUR CURRENCY...WHY SPEND THE TIME AND MONEY ACTING LIKE YOU'VE GOT SOMETHING VALUABLE...AS THEIR ACTIONS SPEAK LOUDER THAN THEIR WORDS...ALL IMO!

[Chartman17]

SWFG, your post makes a lot of sense. I like your siting their endeavor to wrap this up by the end of 2012. The Float/Fixed rate of the Dinar makes sense, although my faith in governments' making sense isn't all that great. I believe you have a great sense of the situation and where they might go.

[SocalDinar]

I can understand how sanctions and war can lead to a currency depreciating in value, but I can't see how that makes the currency "undervalued". Yahoo's stock sold for $100 at one point. Now it's selling for $15. Does that make it "undervalued"? Or has the value simply declined?

Hard to compare a country to a corporation that has no real product.

If half of Yahoos stock certificates magically disapeared never to be found I would imagine the remaining stocks value would increase, or at least it should

I'm basing my opinion soley on the premise that Shabs has been reducing the money supply

[leanonme]

I agree 100% too!

[Captjohn]

This may turn out to be a revaluation of historic magnitude, however, remember one important point: It's not like the IQD has been floating around 1170 for years and now they want to arbitrarily increase its value by 1000%. The IQD had a historic value of greater than $3.00 prior to Iraq's invasion of Kuwait. It was as a punitive measure that the IQD was artificially knocked down to where it remains today that has to be taken into account. While an increase of 1000% to a position of 1 to 1 is a big move, from an historic perspective, it may be viewed as an adjustment to, or reinstatement to, prior pre-invasion levels. If viewed as such, then the increase doesn't look to be of such an historic magnitude.

[SocalDinar]

This may turn out to be a revaluation of historic magnitude, however, remember one important point: It's not like the IQD has been floating around 1170 for years and now they want to arbitrarily increase its value by 1000%. The IQD had a historic value of greater than $3.00 prior to Iraq's invasion of Kuwait. It was as a punitive measure that the IQD was artificially knocked down to where it remains today that has to be taken into account. While an increase of 1000% to a position of 1 to 1 is a big move, from an historic perspective, it may be viewed as an adjustment to, or reinstatement to, prior pre-invasion levels. If viewed as such, then the increase doesn't look to be of such an historic magnitude.

And thats the way it will play out in the media IMO. Might make front page of the business section but thats about it.

Afterall the media is more focused on the gloom and doom in Iraq. If you believe our press there is nothing but sand and bombs in IRAQ

[doctor robbins]

This may turn out to be a revaluation of historic magnitude, however, remember one important point: It's not like the IQD has been floating around 1170 for years and now they want to arbitrarily increase its value by 1000%. The IQD had a historic value of greater than $3.00 prior to Iraq's invasion of Kuwait. It was as a punitive measure that the IQD was artificially knocked down to where it remains today that has to be taken into account. While an increase of 1000% to a position of 1 to 1 is a big move, from an historic perspective, it may be viewed as an adjustment to, or reinstatement to, prior pre-invasion levels. If viewed as such, then the increase doesn't look to be of such an historic magnitude.

The value of the dinar was lower in 1995 than it is today. The hyperinflation started 20 years ago when the sanctions were imposed after Desert Storm. The value isn't any more artificial than the low valuations for the currencies of Vietnam or S. Korea.

Hard to compare a country to a corporation that has no real product.

If half of Yahoos stock certificates magically disapeared never to be found I would imagine the remaining stocks value would increase, or at least it should

I'm basing my opinion soley on the premise that Shabs has been reducing the money supply

Value is value. It doesn't matter if it's a stock, a currency, or a baseball card. If the value is gone it's gone. You can't wave a wand and bring it back. And the money supply isn't being reduced. The CBI website shows a steady increase.

[4aprofit]

I've always wondered why the Iraqi Dinar was appx. $4.86 from 1932 to 1949..and I wonder what Oil was per barrel back then...probably appx. $1-to-2.00 a barrel?....I've also heard where the Dinar was appx. $4.00...back in the 1970's...when Oil was appx. $10.00 a barrel...I know that Iraq can do whatever they wish..or...is it even up to Iraq?...Will we ever know what all is behind all of what we DONT know?...IMO...Many of the whos, whats, whens, wheres, hows and whys...may NEVER be known...no matter what ANY of US thinks WE know!...lol...

[quadkidd1]

The value of the dinar was lower in 1995 than it is today. The hyperinflation started 20 years ago when the sanctions were imposed after Desert Storm. The value isn't any more artificial than the low valuations for the currencies of Vietnam or S. Korea.

Value is value. It doesn't matter if it's a stock, a currency, or a baseball card. If the value is gone it's gone. You can't wave a wand and bring it back. And the money supply isn't being reduced. The CBI website shows a steady increase.

Just curious.....

Are you invested in IQD???

If you are not is there some reason why you would spend any time here...

Just askin.

Not tyring to start trouble but so many come here to only try to disparage others and for what reason. Some say " I don't like to see people taken advantage of " But aren't there many more worthy causes than this???

Why not stand outside the Casino.... Any Casino... and save those poor saps from being taken advantage of by the colossal Corporate giant.

Just saying...

FYI if I need saving I will holler... and I mean loud . But as for here all is quiet.

Quad drops the mike and walks off...........

Quad

[Tripphood]

Just curious.....

Are you invested in IQD???

If you are not is there some reason why you would spend any time here...

Just askin.

Not tyring to start trouble but so many come here to only try to disparage others and for what reason. Some say " I don't like to see people taken advantage of " But aren't there many more worthy causes than this???

Why not stand outside the Casino.... Any Casino... and save those poor saps from being taken advantage of by the colossal Corporate giant.

Just saying...

FYI if I need saving I will holler... and I mean loud . But as for here all is quiet.

Quad drops the mike and walks off...........

Quad

HOOORAY FOR QUAD!!!!!!!! Amen Broother!....STANDING OVATION

Oh,...... sorry........did I say that out loud?

[Carrello]

Just curious.....

Are you invested in IQD???

If you are not is there some reason why you would spend any time here...

Just askin.

Not tyring to start trouble but so many come here to only try to disparage others and for what reason. Some say " I don't like to see people taken advantage of " But aren't there many more worthy causes than this???

Why not stand outside the Casino.... Any Casino... and save those poor saps from being taken advantage of by the colossal Corporate giant.

Just saying...

FYI if I need saving I will holler... and I mean loud . But as for here all is quiet.

Quad drops the mike and walks off...........

Quad

Ditto Quad! It just make you wonder, but then again, why waste the time.......

[easyrider]

Just curious.....

Are you invested in IQD???

If you are not is there some reason why you would spend any time here...

Just askin.

Not tyring to start trouble but so many come here to only try to disparage others and for what reason. Some say " I don't like to see people taken advantage of " But aren't there many more worthy causes than this???

Why not stand outside the Casino.... Any Casino... and save those poor saps from being taken advantage of by the colossal Corporate giant.

Just saying...

FYI if I need saving I will holler... and I mean loud . But as for here all is quiet.

Quad drops the mike and walks off...........

Quad

I dont think he does and he is not the only one to admit that they dont own dinar any longer but frequent the site because of a hobby or trying to save people from financial burden which in my mind is just rediculous.

Edited August 16, 2012 by easyrider

[dinaris4me]

they have been increasing the value a little at a time over the last several years, why wouldn't they continue to do that and if it is undervalued why not increase it a little at a time as they have been doing?? It would have a lot less of a shock to their economy and they could stop it when ever it no longer was seen as a value. Why do all of this and then wait and wait and the increase the value 100,000%? Doesn't seem like a very good plan.

[SocalDinar]

The value of the dinar was lower in 1995 than it is today. The hyperinflation started 20 years ago when the sanctions were imposed after Desert Storm. The value isn't any more artificial than the low valuations for the currencies of Vietnam or S. Korea.

Value is value. It doesn't matter if it's a stock, a currency, or a baseball card. If the value is gone it's gone. You can't wave a wand and bring it back. And the money supply isn't being reduced. The CBI website shows a steady increase.

I learned long ago that big business is all BS. Ive seen $500K taken off quotes at the drop of a hat, Magic Numbers dropped on my desk, I've seen collusion at all levels. Watched docs destroyed hours before men in black suits from Virginia show up. Big Business is all BS and Im a small player.

You are naive to think that values are not manipulated every day of your life in ways that effect you.

Now as far as the money supply not being reduced please educate us with CBI Financials that indicate that as of 2012 the CBI is increasing the money supply.

Thanks

[4aprofit]

We have heard that Iraq has 2, and/or maybe even 3 sets of books...and when is the last time we heard about if they got the audit done on the Federal Reserve...lol...What Iraq is or is'nt doing...none of us may never know...but what we DO know...is that the U.S. Dollar is deteriorating faster than the Dinar...which is why some hold it...I guess one way to put it is like this...hold some of both and see which one is still good eventually..IS IT ALL A GAMBLE?...SOME SAY IT IS, SOME SAY IT IS'NT!...WE WILL SEE.....LOL...