Deletion of zeros .. experts underestimate the effects of .. and the Central Bank considers a reformist project

[easyrider]

Sure you can. It removes the constant reminder of the past hyperinflation.

Why would a massive RV restore confidence? Think about it: you've got a thousand pounds of copper hidden under your bed. It's worth about 3 bucks a pound. Are you gonna be really worried that copper might drop in value? I wouldn't. It's only three grand, that's the most I could lose. No big deal. Now imagine that copper goes from being worth 3 bucks a pound to 3,000 bucks a pound overnight. Meaning you've now got 3 million dollars under your bed. Worried now? I would be. I'd be selling every ounce of that copper ASAP, and I wouldn't even think about buying more copper. I'd be too worried it'd drop in value. I wouldn't be confident that it would retain its recent massive increase in value. Would you? I wouldn't let anyone pay me in copper either. You sell it, then give me the USD, I wouldn't want to hold copper for even a second.

Ease of accounting? Removal of remnants of past hyperinflation? Easier cash transactions? Having to carry less bills? I think some of these reasons are even mentioned in this article.

I want a big RV just as much as everyone else here, but are you really saying that a value neutral RD (which has happened 50+ times in the last 60 years or so) makes no sense, but a massive RV (which has never, ever happened) does make sense?

So therefore you think what the IMF changes that are coming cant be historical because thats exactly what Christine lagarde mentioned. Things are coming that have never been seen in IMF's history yet you keep going off history and you will come up short just wait and see.

Finally, Ms. Lagarde said that the IMF is striving to be even more effective by improving its economic analysis and strengthening the global financial safety. The Fund is also making good progress in reaching final agreement on “the most significant governance changes in IMF history.” She said that the IMF was pushing to pass these reforms, aimed at giving greater representation to emerging market and developing economies, “if not by October, then as soon as possible thereafter.”

Edited October 3, 2012 by easyrider

[imgesing]

EVEN TRADE. When they revalue they lose nothing.

This was so hard for me to understand a while back and I think the basics of this article. Yet I think it also isnt easy to explain. So many try to crunch the numbers and of course that makes sense.

What I believe few can grasp is that when they RV and we trade back they dont lose anything. The actual trade is EVEN.

I heard this from a guy who was talking about the Dinar a few years ago and I just couldnt grasp that concept. THIS IS OBVIOUSLY A SIMPLIFICATION.

Any thoughts on this would be great. They CAN revalue their currency and the amount of which must be reasonable but for them to come up with a high amount is not unreasonable either.

I personally just hope this happens already. The WAITING is over the top!

Peace all.

[Dalite]

You cannot "restore" confidence with a neutral event. Why "absorb" the excess cash when eliminating zeros, whats the purpose of that when it's a neutral event anyway? the neutral theory does not make sense...IMO

This is why they have referenced the concept of changing the responsibility of trillions of Dinar into responsibility to back billions.

Trillions into Billions. The reference has been made in hundreds of articles since 2006, with the biggest concentration since June of 2011, when the plan was submitted tp Parliament.

This is why the neutral theory is the goal of every redenomination.

The other 50 some odd countries who have redenominated did so for the same reason.

Their currency became so valueless due to overprinting that the number of units per note had to be increased 1000 times (3 zeros) in order to give it enough buying power per note to do everyday business.

A 25000 Dinar note, while worth around $21.50 would have to be honored at any future exchange rate amount as their economy increased.

That point is rapidly approaching, but they cannot afford to let the value increase with the responsibility to back trillions.

So, they decided to divide the value of every piece of curremcy by 1000, but, at the same time, make it 1000 times more valuable.

25000 x .00086 equals the same as 25 x .86. TRILLIONS TO BILLIONS - VALUE NEUTRAL.

That reduces their responsibility to only back Billions of Dinar with the same value, while making the exchange rate more realistic for future ( hopefully rapid ) growth.

This is what their citizens are being taught in the original article, and is becoming much more obvious in the various translations.

If they do ReDenominate by dropping 3 zeros, that is precisely how it will play out - take that to the bank - history proves the concept.

The only remaining variable is the exchange rate. Does it move up to 1000:1 prior to ReDenominate, or to 1:1 concurrent with the redenomination?

Either way, still a value neutral event.

Why would any country want to give the same value to trillions of items, when they could reduce the responsibility to billions?

One thing they will not do, is to drop the exchange rate to .86 to 1 without dropping 3 zeros ( dividing by 1000) first.

They will be crossways with history by doing so, and have nothing to back the change in value.

I personally don't look forward to this happening, but it isn't my choice; it is theirs.

Iraq will do what is best for Iraq, not what is best for people speculating that iraq will do what is best for them.

[RVPleaseToday]

Hundreds of articles describe a redenomination. Zero articles describe a revaluation (the CBI would never announce such a thing ahead of time is the logic).

So I'm looking for a black kitten for my kid, who really wants a black cat. But I am the analytical type and want to get a lot of advice, so I ask a bunch of different cat experts about a cat I spotted at the pet shop.

"Expert #1, what do you think of that black cat on display in the window of the pet shop," I ask. "Sir, that cat is white, not black," the expert says. Undaunted, I move to the next expert.

"Expert #2, what do you think of that black cat on display in the window of the pet shop," I ask. "Sir, that cat is white, not black," the expert says. Undaunted, I move to the next expert.

"Expert #3, what do you think of that black cat on display in the window of the pet shop," I ask. "Sir, that cat is white, not black," the expert says. Undaunted, I move to the next expert.

"Expert #4, what do you think of that black cat on display in the window of the pet shop," I ask. "Sir, that cat is white, not black," the expert says. Undaunted, I move to the next expert.

"Expert #5, what do you think of that black cat on display in the window of the pet shop," I ask. "Sir, that cat is white, not black," the expert says.

Having now five cat experts that have insisted to me that the cat I'm looking at is indeed white, rather than black, I'm beginning to lose confidence in buying the cat.

So I say to the owner of the pet shop who is selling the cat, "I really like that kitten in the window you have, but my son wants a black cat and everyone I've had look at the cat says it is white. Is the cat black or white?"

"Sir," he replies, that's the blackest cat I've ever seen."

Edited October 3, 2012 by RVPleaseToday

[sandyf]

"noting that" the process of deletion of zeros does not mean an improvement in the value of the currency, as the change the unit of measurement has nothing to do at all improved value of the currency, and the latter is linked to factors real express efficient economic performance. "

he added Aboudi's (range): "that based on the work of the Central Bank does not seek to process the deletion of zeros only, but to restructure the currency and the associated issue currency denominations large to facilitate large transactions and other categories of small to facilitate small transactions,"

He talks about redenomination and restructuring in the same breath. You cannot do both. Why talk about small notes in the restructure when they would come with the redenomination.

A redenomination requires a new currency code, so they have 2 exchange rates, a restructure just changes the existing currency.

If you were planning a revaluation that was similar to a redenomination you could not talk about it. Easy way out is to talk about an RD and just not commit to a plan.

[Dalite]

"noting that" the process of deletion of zeros does not mean an improvement in the value of the currency, as the change the unit of measurement has nothing to do at all improved value of the currency, and the latter is linked to factors real express efficient economic performance. "

he added Aboudi's (range): "that based on the work of the Central Bank does not seek to process the deletion of zeros only, but to restructure the currency and the associated issue currency denominations large to facilitate large transactions and other categories of small to facilitate small transactions,"

He talks about redenomination and restructuring in the same breath. You cannot do both. Why talk about small notes in the restructure when they would come with the redenomination.

A redenomination requires a new currency code, so they have 2 exchange rates, a restructure just changes the existing currency.

If you were planning a revaluation that was similar to a redenomination you could not talk about it. Easy way out is to talk about an RD and just not commit to a plan.

Not sure, but I think the introduction of 100 and 200 dinar, as well as coin to the mix would be considered as a reconstruction.

Although, the new coin/currency options being introduced would carry the new currency code, it could be a matter of concurrent operations.

Also, the CBI has often referred to deleting the zeros, then introducing the new currency.

Nothing conclusive yet; only what they say they are going to do.

[Biker]

Hate being negative but its still the same old thing, Talk Talk Talk, thats all these folks do. Never any action, Like i said time and time agin. They talk to be herd and hear them selfs, and get headlines for politacal reasons.How many times have we herd this same song and dance from these Folks .I lost count .

[sandyf]

Not sure, but I think the introduction of 100 and 200 dinar, as well as coin to the mix would be considered as a reconstruction.

Although, the new coin/currency options being introduced would carry the new currency code, it could be a matter of concurrent operations.

Also, the CBI has often referred to deleting the zeros, then introducing the new currency.

Nothing conclusive yet; only what they say they are going to do.

At this point in time there is no new code for Iraq.

Zambia will redenominate on 1 st Jan and code was published on 31st August

[Dalite]

At this point in time there is no new code for Iraq.

Zambia will redenominate on 1 st Jan and code was published on 31st August

I completely agree on the currency code.

It has been known for a long time that a new code would be created to allow both currencies to coexist .

I don't anticipate them introducing a new currency code until after July 2013, if they manage to avoid civil war, dictatorship, or future occupation.

In the meantime, if Maliki nationalizes the CBI, all bets are off.

Also, for those who are thinking about getting rich on Iran's currency "RV", Iran was planning on ReDenominating it's currency, before it fell into the abyss. If you think it was overprinted when that was announced, just try to project how much more has been printed since.

[mrmcwhipit]

Wow that sure is alot of talk for a neutral event lol

[DinarBam]

Two things come to mind -

1. In a value neutral event, poor is still poor

2. There is no reason to believe at this point, that any action to be taken by the GOI is imminent regarding the IQD.

Hopefully, the continuous daily speculation regarding this investment provides our members with entertainment value. If on the other hand, you find youself frustrated or angry over all of this, just leave your Dinar in a safe place and forget about it. It will still be there a couple years from now. If anything important happens in the mean time, you'll know. Don't let the Dinar suck any life out of you. RD, RV, Delete Zero's, HCL, Chapter 7, endless poorly translated articles, etc, etc.... The middle east is a mess, odds on anything truly good happening soon aren't very good. That's just the way it is (imo). I just hate to see our members get frustrated with each other in an endless debate over the same things year after year. Just keep in mind that not a single discussion, chat or disagreement over the meaning of an article has changed the fact that the Dinar you hold is still worth approx. what it was a few years ago and you're no closer to knowing what will happen than you were.

Debate all of this in good humor and respect because only hindsight will determine whose ideas were foolish or brilliant and right now, what difference does it really make?

[mrmcwhipit]

A neutral event indeed. But doesn't account for the dinar value to increase. Stop me if im wrong... but isn't that the second step?? Just not mentioning it here??

Correct , the big question is how the 3 zero notes will be treated out of country?

[sandstorm]

Correct , the big question is how the 3 zero notes will be treated out of country?

Well out of country.....you might be screwed. they often close borders during a redenomination. if they rd...and allow oitside exchange...it will be the same way as if it were in country. Dont believe the gurus.....they have lied

[dontlop]

Well out of country.....you might be screwed. they often close borders during a redenomination. if they rd...and allow oitside exchange...it will be the same way as if it were in country. Dont believe the gurus.....they have lied

who often closes their borders for redenomination .. i cant find that occurance .. if it happens often you would think it would be on the web somewhere ... what lies are being told here about the borders being open or closed ?

id just like to read about an example or 2 .. on closing of borders for redominations

Edited October 3, 2012 by dontlop

[dontlop]

i understand iraq borders were closed for 6 days while some of the saddam notes were exchanged to deter speculators ... but why would they feel it necessary to close the borders ?

could it be that they knew it wouldnt matter once the new currency was out ... no matter where it was .... it would have to be honored .. if it didnt have to be honored .. why close the borders?

Edited October 3, 2012 by dontlop

[boomer113189]

Sandstorm is right about if they Redenominate it will be the same as if it in country or out it will be the same . as of boarders being closed i doubt they would ever do that

[rockfl9]

Dontlop::::When Sadam RDd the dinar back in the 90s (I think) the borders were closed for 48 hours and lebonese and jordanian dealers were cut off and lost all..That was a dictators call. I dont think the CBI will be that ruthless ,However as a practical matter they may call-in the old notes in stages.For example when coins become available in ample supply they may put out a 30 day notice for the equivalent small notes. There may not be enough time for the dealers to buy them back and ship to Iraq... They become worthless.

[zul]

This is why they have referenced the concept of changing the responsibility of trillions of Dinar into responsibility to back billions.

Trillions into Billions. The reference has been made in hundreds of articles since 2006, with the biggest concentration since June of 2011, when the plan was submitted tp Parliament.

This is why the neutral theory is the goal of every redenomination.

The other 50 some odd countries who have redenominated did so for the same reason.

Their currency became so valueless due to overprinting that the number of units per note had to be increased 1000 times (3 zeros) in order to give it enough buying power per note to do everyday business.

A 25000 Dinar note, while worth around $21.50 would have to be honored at any future exchange rate amount as their economy increased.

That point is rapidly approaching, but they cannot afford to let the value increase with the responsibility to back trillions.

So, they decided to divide the value of every piece of curremcy by 1000, but, at the same time, make it 1000 times more valuable.

25000 x .00086 equals the same as 25 x .86. TRILLIONS TO BILLIONS - VALUE NEUTRAL.

That reduces their responsibility to only back Billions of Dinar with the same value, while making the exchange rate more realistic for future ( hopefully rapid ) growth.

This is what their citizens are being taught in the original article, and is becoming much more obvious in the various translations.

If they do ReDenominate by dropping 3 zeros, that is precisely how it will play out - take that to the bank - history proves the concept.

The only remaining variable is the exchange rate. Does it move up to 1000:1 prior to ReDenominate, or to 1:1 concurrent with the redenomination?

Either way, still a value neutral event.

Why would any country want to give the same value to trillions of items, when they could reduce the responsibility to billions?

One thing they will not do, is to drop the exchange rate to .86 to 1 without dropping 3 zeros ( dividing by 1000) first.

They will be crossways with history by doing so, and have nothing to back the change in value.

I personally don't look forward to this happening, but it isn't my choice; it is theirs.

Iraq will do what is best for Iraq, not what is best for people speculating that iraq will do what is best for them.

When they say redenomination, they are talking about their future/new currency. The new currency will have 1 : 1000 ratio.

And i agree with you, they will not drop their exchange rate to 0.86 or 1, without first REDUCING their money supply. And that's what CBI has been saying numerous times ~ that they want to reduce their money supply.

Dividing their (current) denomination by 1000 or LOP, WILL NOT reduce the money supply. Keeping track of time in minutes instead of hours does not make the day any longer.

Ordinary Iraqis still need to carry a wheel barrow full of 25 dinar notes to buy a house worth a mllion dinar (after lopping), no different to when they had to carry a wheel barrow full of 25,000 notes to buy a house worth a billion. If one of their objectives is to simplify their payment system...., i think they need a closer look in this dept.

Hard to say delete 3 zeros = divide every piece by 1000 because that does not reduce the money supply.

The only way to reduce the money supply is to remove the 3 zeros notes from circulation...........

Edited October 4, 2012 by zul

[DayGee]

Dividing their (current) denomination by 1000 or LOP, WILL NOT reduce the money supply.

What? If they "lop" their money supply (M2) goes from 70 trillion to 70 billion. That isn't a reduction?

Ordinary Iraqis still need to carry a wheel barrow full of 25 dinar notes to buy a house worth a mllion dinar (after lopping), no different to when they had to carry a wheel barrow full of 25,000 notes to buy a house worth a billion. If one of their objectives is to simplify their payment system...., i think they need a closer look in this dept.

They've said that if they RD they'll introduce 200 dinar notes worth 8 times what a 25,000 dinar note is worth, so it'd require a wheel barrow 8x smaller, at least. And buying a million dollar house with cash? That's crazy anyway. Yeah, the poor in Iraq deal only in cash, but someone buying a million dollar house isn't poor, they're not going to show up at the closing with a wheel barrow. That's just nuts.

Hard to say delete 3 zeros = divide every piece by 1000 because that does not reduce the money supply.

The only way to reduce the money supply is to remove the 3 zeros notes from circulation...........

That simply isn't true. 70 trillion to 70 billion. My calculator tells me that 70 billion is 69.93 trillion less than 70 trillion. That's a reduction, and a pretty big one.

[zul]

What? If they "lop" their money supply (M2) goes from 70 trillion to 70 billion. That isn't a reduction?

They've said that if they RD they'll introduce 200 dinar notes worth 8 times what a 25,000 dinar note is worth, so it'd require a wheel barrow 8x smaller, at least. And buying a million dollar house with cash? That's crazy anyway. Yeah, the poor in Iraq deal only in cash, but someone buying a million dollar house isn't poor, they're not going to show up at the closing with a wheel barrow. That's just nuts.

That simply isn't true. 70 trillion to 70 billion. My calculator tells me that 70 billion is 69.93 trillion less than 70 trillion. That's a reduction, and a pretty big one.

U misunderstood me totally.

That's the reason why i used min / hour as an analogy. If you change 1 hour to 60 minute....you are not reducing anything.

70 trillion x 0.00086 is exactly the same as 70 billion x 0.86. = 60.2 billion

Meaning....if you have to carry 100 pcs of 25,000 notes to do your shopping today, you will still have to carry 100 pcs of 25 dinar (25k delete 3 zeros) notes tomorrow (after LOP), to buy the same things you bought yesterday. It's a neutral event, everything remains the same. The money value remains the same. How can the value remain the same if the money supply has been reduced..? Think about it;.

[sandyf]

Dontlop::::When Sadam RDd the dinar back in the 90s (I think) the borders were closed for 48 hours and lebonese and jordanian dealers were cut off and lost all..That was a dictators call. I dont think the CBI will be that ruthless ,However as a practical matter they may call-in the old notes in stages.For example when coins become available in ample supply they may put out a 30 day notice for the equivalent small notes. There may not be enough time for the dealers to buy them back and ship to Iraq... They become worthless.

There was no previous RD, it was a new issue of the IQD.

If there is an RD the exchange rate on the IQD will not change but retain the current value of $0.00086. The new currency will have a new code,IQx, and will have an exchange rate of $0.86, based on 1000/1.

This is the only way that currencies can coexist, Turkey went from TRL to TRY.

The Yuan currently has 2 exchange rates, CNY(onshore) and CNH(offshore).

[sandyf]

U misunderstood me totally.

That's the reason why i used min / hour as an analogy. If you change 1 hour to 60 minute....you are not reducing anything.

70 trillion x 0.00086 is exactly the same as 70 billion x 0.86. = 60.2 billion

Meaning....if you have to carry 100 pcs of 25,000 notes to do your shopping today, you will still have to carry 100 pcs of 25 dinar (25k delete 3 zeros) notes tomorrow (after LOP), to buy the same things you bought yesterday. It's a neutral event, everything remains the same. The money value remains the same. How can the value remain the same if the money supply has been reduced..? Think about it;.

What you say is quite right. I do not subscribe to this 'reducing the money supply' theory. The CBI accounts show that between 2010 and 2011 the amount of issued banknotes rose from 27 trillion dinar to 33 trillion dinar, hardly a reduction.

I would accept that the CBI may have tried to replace the larger notes in circulation with smaller notes, eg 500 & 250's.