Sam I Am's Latest Update

[seetrader1]

"Seasons Greetings!

Yes, I'm still alive. Just devoting my time and energy to other things these days. Despite my dinar detox program I must admit that I do still follow some of the douchebaggery in the dinar forums and conference calls, but not with the interest I once had. But, this being the season for giving I figured I'd take a few minutes to offer my comments on some of what I've heard and observed.

First, it seems that since Brad Huebner and Rudy Coenen were indicted for fraud that some of the pumpers have suddenly become quite shy, while others have decided to drop the notion of a big RV. The popular theory now is that the dinar will be allowed to float. By speculating on a float the gurus can sidestep the legal quagmire of misrepresenting the CBI's currency reform plan. That was part of the case for fraud presented against Brad and Rudy. Instead the gurus can now just say that Iraq won't follow through with the CBI's plan but will float the IQD until it returns to its former valuation.

Before I continue let me review what was stated in the indictment. Under the "General Allegations" section we find the following:

7. The term "revaluation" (casually shortened to "RV" in dinar-sales parlance), refers to the contention that at some point in the near future, the dinar will rise against the U.S. dollar, a circumstance which will enrich earlier purchasers of the dinar. BRADFORD HUEBNER, CHARLES EMMENECKER, RUDOLPH COENEN and MICHAEL TEADT repeatedly advanced claims to potential investors over the telephone, through web pages, and through a weekly internet conference call that even relatively small investors in the dinar would, following the "revaluation" or "RV", become wealthy overnight.

8. A "redenomination" of the dinar refers to an actual proposal by the Central Bank of Iraq, announced as recently as June 21, 2011, to re-print the currency to remove three zeroes from the physical dinar banknotes as a matter of convenience. A redenomination of the Iraqi currency would not lead to a revaluation by the same amount, and may have no effect on the currency's value. Under a redenomination, a new currency replaces an old currency, but the value remains the same. Under the proposed redenomination, the Iraqi government would issue a new dinar note that will be equivalent to 1000 current dinars. The exchange rate would be 1.17 new dinars to the dollar, equivalent to 1,170 current dinars to the dollar.

http://www.realscam.com/attachments/f12/1576d1348185792-bayshore-capital-investments-bh-group-bhgroup_indictment.pdf

Some dinarians have read this and still cling to the big RV fantasy, dismissing the wording in the indictment as "smoke". Folks, you don't put a case like this together without making sure it's solid. If there was any chance that Iraq would revalue their currency to any substantial amount the prosecution wouldn't have included any reference to it in the case for fraud IMO. They would just prosecute them on the hedge fund and money laundering stuff.

So we can see here that in the case for fraud the indictment lists the misrepresentation of the CBI's proposal to remove three zeroes (a redenomination or "lop") as an RV that will make investors wealthy overnight. Some of these gurus took notice and quit saying that we're gonna be rich when they remove the zeros. Thus the float theory.

The problems with the float theory are numerous. First of all, countries as unstable as Iraq don't float their currencies as a rule. It would hurt their economy to subject the dinar to the volatility that a free float would present.

Secondly, nothing in Iraq's history suggests that the official value of the dinar is being artificially held down. To the contrary, it appears that it is being propped up considering the difficulty Iraq has had in keeping the market price in the same ballpark as the official value as it fluctuates from 1200-1300 IQD to the dollar. The often touted story from 2004 about the CBI buying back dinar with USD to keep the dinar from appreciating too much was a reference to the market price, not the official value. Remember, the IQD is pegged to the USD so the official value can't appreciate apart from a decree from the CBI. It has been eight years since they had any concerns about the market price going too high in Iraq. The problem now is the value going too low.

Additionally, a float does nothing to reduce the money supply, which is the reason the dinar's value is so low in the first place. Until the money supply is significantly reduced a float would likely result in depreciation rather than appreciation.

It is my belief that when the CBI makes a reference to floating the value of the dinar they're either talking about a managed float of a few % with the official value or they're talking about raising the market price via the auctions by manipulating the money supply within Iraq. They have no intention of putting the dinar on a free float in the international market IMO.

Another issue that keeps coming up is the Feasibility Study from the Ministry of Planning in Iraq. Supposedly this study shows us the real value of the dinar at $3.20 but they can't come right out of the gate that high. They need to RV to something like $1.13 and then slowly float up to $3.20.

I would like to put this Feasibility Study nonsense to rest once and for all. It has nothing to do with the IQD. It refers to the official value of the dinar as $3.20 but the dinar's official value has been less than a tenth of a penny since 1995 according to the CBI website, so it has to be at least 17 years old. I think you'll find that the study was published in 1984 and revised in 1990 regarding the old Saddam dinar (thanks to Brian for the info on this).

From the website for the Ministry of Planning we read:

In turn, The Guidance For Technical And Economic Feasibility Studies And Post-Project Assessment Of Development Project (Regulations No. 1 for the Year of 1984 and it’s amendment for the year of 1990) has specifies a series of steps to be undertaken, which lead to the completion of a Capital Budget.

http://www.mop.gov.iq/mop/index.jsp?sid=1&id=295&pid=259

Then if you click on the 7th link that says "The Exchange Rate of Foreign Currency in Economic Feasibility Studies" you will find the study in question.

The real value of the IQD is not $3.20. It's not $1.13. It's not $.86. It's a tenth of a penny. According to the CBI website's financials there's 72 trillion dinar in the M2 money supply. This study was conducted when Iraq's money supply was measured in the billions, not trillions, so it makes no sense to base any analysis or investment decisions on anything in this report.

Then there's the dong. When all else fails pump the dong. Think about it, folks. Vietnam has had over 35 years to raise the value of their currency. And it keeps going down. Why? Because they want it to, that's why.

"The government has pushed to lower the value of the Dong in the hopes of pushing up exports and fostering export oriented economic growth (also referred to as export led development)."

Vietnam's economy is growing, and countries with emerging economies like this prefer a depreciating currency to an appreciating one so that they can pay their debt with cheaper currency and increase their exports.

Prior to the 1970s most mortgages in the US were fixed-rate mortgages. In other words, the homeowner paid the same interest rate for the duration of the mortgage. When double-digit inflation hit in the late 70s many homeowners were paying 7 or 8% interest on homes that were appreciating at nearly 15% a year and interest rates were higher than that. Lenders were losing money and the homeowners were loving every minute of it because they were paying off the mortgage with cheaper dollars on a home that was rapidly increasing in value. Lenders were actually bribing them to refinance. This is what led to the emergence of ARMs (Adjustable Rate Mortgages). Lenders wanted to cover their arses in the event of an unforseen recurrence of high inflation.

In the same way countries like Vietnam can pay their bills with cheaper currency by allowing it to depreciate somewhat, so long as it doesn't get out of control. The only reason Vietnam would have for raising the value of their currency is if inflation was a concern like it was in Iraq from 2006-2009 when they were raising the value of the IQD by about 9% a year. Believe it or not neither Iraq, Vietnam, nor any other country is going to raise the value of their currency just to put wads of cash in the pockets of speculators. That's a shocker, huh?

There's a few other topics being bandied about in the dinar world like Ban Ki-moon and Chapter 7 (irrelevant), and the Kurds (ditto). Breitling is telling people that Germany's currency returned to its pre-war value in eight years so Iraq is dragging their feet a bit. In fact the German deutschemark didn't "return" to anything. It replaced the pre-war currency the German reichsmark in 1948 so any notion that a currency can return to its pre-war value without a redenomination isn't supported by the history of the deutschemark. FootForward is telling people that hedge funds drove the Kuwaiti dinar up to $9 after the Kuwaiti "RV" in 1991 which is about as accurate as his World Series prediction. BGG is still talking about Maliki, Shabibi, Barzani, Talabani, Allawi and everybody else in the GOI and CBI who might have something to do with Iraq's currency reform, as if any of this is going to lead to substantial profits for any of BGG's listeners. And the dinar? Well, last I checked it hasn't done diddly. That's a shocker too, huh? I actually thought that removing Shabibi might bring about some increase in the dinar's value but it looks like his replacement is content to leave it be.

This is the time of year when gurus traditionally start setting dates and telling everybody it's going to be a very Merry Christmas and a very prosperous New Year (read BIG RV!!!). And of course the holidays come and go and ..... nada! Just a reminder of what to expect.

Last year I wrote a post called A Letter to Santa in which I asked to see some pumpers go to jail. Well Santa delivered four indictments in September so he's halfway there. Good job, Santa! Now I am making the same request this Christmas. How about a few more indictments in 2013? You can do it, you jolly old elf! I know you can!

Merry Christmas everybody!"

[Tripphood]

Wow, very encouraging.

[umbertino]

Wow, very encouraging.

Life in general is not a bed of roses.... Unfortunately.

[Butifldrm]

Sam forgot to list this study:

The Exchange Rate of Foreign Currency in Economic Feasibility Studies <br style="color: rgb(51, 66, 85); font-family: Verdana; font-size: 9px; text-align: justify;"><br style="color: rgb(51, 66, 85); font-family: Verdana; font-size: 9px; text-align: justify;">Below are the central controls related to the exchange rate of the foreign currency to convert the project inputs and outputs from foreign currency to its equivalent in the local currency, and that is by calculating the net discounted present value standard and the internal return on investments in economic analysis that governs investment projects that costs excess one million dinars.

Estimate the shadow price of foreign currency:

1. It is necessary to put central controls to amend the official exchange rate * to reflect the shadow price of the foreign currency, and that is considered one of the necessary requirements to implement the net discounted present value standard and the internal return rate on investment in the economic calculation stated in the instructions, paragraph nine.

The central controls for adjusting market prices distinguished a group of outputs and inputs traded internationally, where the projects production or usage of them is reflected on the abundance of foreign currency in the economy and thus project outputs or inputs used of such are considered purely foreign currency outputs or inputs.

* What is meant by exchange rate: the number of units of foreign currency, expressed in dollar per one dinar.

In particular the following outputs and inputs of foreign currency were distinguished:

· Export-outputs.

· Outputs marketed locally that substitute imports.

· Imported inputs.

· Inputs produced locally that usually go to exports.

· Foreign labor.

According to the pricing rules the value of the output and input (traded) is calculated using export prices (FOB) and import prices (CIF), according to what is listed in the pricing rules.

In other words the pricing rules calculate what the project produces from foreign currency (quantity of exports multiplied by the export price (FOB) in foreign currency or the quantity of substitute imports multiplied by the import price (CIF) in foreign currency, as well as what the project uses from foreign currency and imported inputs multiplied by the import price (CIF) in foreign currency .... etc.).

In a later step, project outputs and inputs must be converted from the foreign currency to its equivalent in local currency (dinars) by using a specific exchange rate for the foreign currency.

2. Justifications for exchange-rate adjustment: there are a number of important and powerful arguments which support the view that the official exchange rate reduces the real value of foreign currency for purposes of calculating the economic national profitability for investment projects and hence for the purposes of investment planning. It is demonstrated in this context to call for assessing the dinar for less than (3.208) dollar (official exchange rate) when assessing project outputs and inputs of traded goods of exports, substitute imports and imports... etc.

The justifications to call for the use of an exchange rate that is lower than the official exchange rate are:

· The use of an exchange rate that is lower than the official rate is the appropriate action at the investment planning level to translate the country’s economic strategy aiming at stimulating central investments in the sectors that encourage the development of non-oil exports, as well as sectors that encourage the expansion of domestic production base in order to reduce imports and compensate it with local commodities. This helps to reduce reliance on foreign exchange earnings from crude oil exports and increases the share of non-oil sectors in the local production.

· The application of the amended exchange rate on project imported inputs will assist in directing investments away from aggregated sectors dependent on imported inputs and the preference of those sectors that rely on locally produced inputs.

· The use of the amended exchange rate helps to correct the balance in favor of the traded goods sectors compared to non-traded goods.

· The real exchange rate has declined rapidly since the early seventies, through rapid rise of the level of prices and local costs which led by the steadiness of the official exchange rate to change in prices and actual local rate costs that gave an advantage for imported goods at the expense of locally produced goods, meaning that it led to deterioration of the competitiveness of alternative replacement goods and export commodities.

· This action shows that the official exchange rate overestimates the value of the dinar, compared to the foreign currency and from the promoting goods substituting imports and export commodities point of view of.

And in support to this view is the state’s utilization and in a broad approach to the customs and quantitative protection policies especially for consumer goods, as well as export subsidies that exports have through an amended export exchange rate.

3. Estimate the amended exchange rate of the Iraqi dinar to be used in technical and economical feasibility studies and for (1.134) dollar per dinar. This price should be approved for 3 years until re-appreciation by the competent authorities.

http://www.mop.gov.iq/mop/index.jsp?sid=1&id=308&pid=295&lng=en

[dinarck]

Ummmmm no Butifirm......he addressed it and did so correctly. That study is years old back before the dinar we hold was even in existence. That was back when the old Sadam dinars exchange rate was around 3.00 but its actual value was more around 1.00. That study simply says we need to start trading around one instead of three.

[boomer113189]

good stuff

[keepmwlknfny]

Wonder if any of the gurus will try dismissing this information........

Maybe they will win a douchebag award for at least attempting it! LOL

[Butifldrm]

Ummmmm no Butifirm......he addressed it and did so correctly. That study is years old back before the dinar we hold was even in existence. That was back when the old Sadam dinars exchange rate was around 3.00 but its actual value was more around 1.00. That study simply says we need to start trading around one instead of three.

OMG, dinarck, I stand corrected. For years I thought this feasibility study was performed around 2009.

I tried to post the evidence, but would not let me.

http://www.mop.gov.iq/mop/index.jsp?sid=1&id=295&pid=259

[doctor robbins]

Valid points all around. How can a currency go from $3.20 to $1.13 when it's at $.00086?

[bg888]

Then there's the dong. When all else fails pump the dong.

Hee Hee... he said pump the dong

sorry all, couldn't help myself

[Darin]

Valid points all around. How can a currency go from $3.20 to $1.13 when it's at $.00086?

In reality, it can't without significant justifaction for doing so.

The methods used to value their currency would totally have to be re-vamped. An adjustment comparable, yet more of a substantial change from how the U.S. went from the gold standard to their current system.

Anyone who has held dinar for a large period of time, knows that the most reasonable and expected hope is for it to gain value over time as the economy grows. That outlook at the moment seems quite bleak and may take longer than most imagine.

The questions I would like answered are the following:

How much truly exists & how much do foreign individuals hold.. Does the American population hold a large amount of what makes up of the trillions in existence? If so, why would the CBI allow such a large amount to be spread all over the world.

What did the CBI have for intentions for the future of the dinar? Wouldn't it be putting a lot of liabilities into external hands, or is it a way of additionally forgiving debt by closing borders and doing a LOP?

Which, the difference of what is held outside of borders could be made up for by increasing the value by removing those liabilities as they are held externally. Who knows, I by means am no expert, as I am just a follower.

But anyone who has invested hopes to at least make a profit... Which ideally is reasonable, even though we all likely over paid for what we currently hold. (Mark-ups through currency traders).

But one thing that continues to boggle my mind is if they were to intend to R/D, why such the delay? Why not just hurry up and do it already.. What is taking so long? Why not get it over with... If I take a short loss, so be it, as I am sure most would rather see this come to an end than currently waiting for an unlikely dream.

[SnowGlobe7]

I think they delay because every day they receive more dollars for dinars. The longer they hold out...the more dollars they have.

IMO

[Darin]

I think they delay because every day they receive more dollars for dinars. The longer they hold out...the more dollars they have.

IMO

But.... for each dinar sold for USD, upon a R/D it is likely to be converted back from IQD back to USD for those that held it. Meaning, that upon a R/D, a lot of their reserves designed to convert would drop significantly for all foreigners holding dinar. (Including banks, etc.) Thus dropping the demand itself for those sold on a big R/V. Significantly dropping their reserves, but at the same time reducing their money supply. As per a balance sheet, it would basically be a nearly neutral event such as cash assets are reduced while the liabilities are reduced as well minus any spread/profits that occur per transaction.

I.e., Joe goes to bank and orders 1,000,000 dinar for $1,000... They R/D 1000:1 (where 1,000 dinars = $1, giving old notes a potential expiration date) Joe returns to bank and exchange his 1,000,000 dinar back for $1,000. Now Joe wouldn't get $1,000 back exactly as he simply would incur fees for the transaction, but to keep this simple the bank therefore would return $1,000 that was given the day prior in return of the 1,000,000.

How many people will take their old notes and exchange them for the new notes that lack the 3 zeros? I doubt as many - but some might in hopes to redeem any losses incurred.

Those types would likely re-buy in at similar amounts and likely have the cash to do so. For the average person, I would imagine they would not re-buy (Those that invest $1,000-5,000)... Simply because the cash in hand would best be kept for themselves because such a small ROI would be expected versus the hopes of a previously hope & dream of a larger ROI %.

So, in my theory, a R/D will reduce their cash asset reserves, but it will also reduce their liabilities accordingly. It will simply be quite neutral while the CBI makes profits from the spread upon transactions. But the spread is quite minimal 1166/1164.

But the act of a R/D itself is likely to cost money (labor, printing costs, material costs, education campaigns, destruction or disposal of old notes).

I think for many of us, regardless of what we read, hear, or see, we will continue to hold until a R/D is entirely confirmed (including the new ISO code & detailed instructions on how the R/D will occur).

[doctor robbins]

But one thing that continues to boggle my mind is if they were to intend to R/D, why such the delay? Why not just hurry up and do it already.. What is taking so long? Why not get it over with... If I take a short loss, so be it, as I am sure most would rather see this come to an end than currently waiting for an unlikely dream.

The CBI intends to RD. The GOI isn't so eager, and they have to approve the changeover. I think there are several reasons for hesitating, but the most important is probably security.

[rockfl9]

To make an RD revenue neutral and fair they need a law making it unlawful to profit from the exchange! The legislation can be easily coppied from RD laws from Turkey,Venezuela ect. with Iraqi tweeks. But the parlament thinks it is not as important as other work at this time... HCL, Kuwait at al.

[dinarck]

Hey Darin. How's it goin?

At this point who really cares if they RD or not? The question is how would they raise the value of the IQD to anything significant enough for us to make any profit? I think its crystal clear that large increases in currency value simply cannot occur in economics. The shock would cause too many negative effects. Plus what makes Iraq so special? If they can RV by 100% or 1000% or even 100,000% then why can't the US? I mean we have more oil than Iraq and a 12 trillion a year GDP yet only Iraq could raise their currency value? Obviously not. The whole notion of giant currency increases is false. It never has and never will be part of economics. Even if Iraq's GDP and oil production grew, what leads you to believe their currency value would as well? There is no corelation between the two.

Let's say they continue on the crawling peg upwards. Say 100% a year. I suck at math so how many years would that take to get to .01? I am pretty sure its a lot. Anyway during this time how would speculation not be out of control? I mean if you were a currency trader, what currency would you buy? That's right.....the one that has increased in value 100% each year. Now your currency is in super high demand which technically increases its value even faster. Now again......what makes Iraq so special that they would be able to do this but no other country can. They can not and the reason is simple. Inflation. There is simply no way they could increase the value that quickly without causing massive inflation in the process. Period.

[keepmwlknfny]

The CBI intends to RD. The GOI isn't so eager, and they have to approve the changeover. I think there are several reasons for hesitating, but the most important is probably security.

......and stability.... +1

[blanc]

I am just trying to wrap my mind around where you stand. If I believed in a lop I would not even waste my time here debating the issue period. I pretty much do not come on sites anymore because of all the hype and just by chance saw this thread. This is not intended to argue with you on the issue of lop verses no lop. Do you own dinar? And if so why hold if lop? If not why bother? Folks that believe all the TK hype kinds will keep following and keep in buying. I have moved on from all the hype myself and spend my time on other things like making a living, gardening and just plain spending my money on things worth while.

God Bless

Blanc