Deleting the Zeros

[Markinsa]

Nothing is wrong with having (1000) 25 notes equaling (1) 25k note.......except it goes against everything they are trying to accomplish by RD.....by your example, the number of banknotes would skyrocket, and you wouldnt reduce the money supply at all.....thats been a couple of their main reasons for wanting to RD....so how could you add value to the dinar with it being still so inflated??

 

And again, there is nothing wrong with increasing the value without having two different denominations being equal.....thats just not what the CBI has been describing.....would love to see them increase the value over time and just ADD notes to the current series....thats just not what the CBI is talking about doing.....

 

Why would they have two different 100 dinar notes??  I think I lost you on that.....

A whole NEW series with a new currency code and all.....two different currencies.....

 

They will have to have two different 100 Dinar Notes if they RD or LOP.  ALL of the current dinar notes will have to be divided by 1000.  The new notes will be worth 1:1 on par with the dollar.  You can't mix and match when you LOP, otherwise, the people who have their money in the bank will not be affected, for example, You and I have 10, 100 Dinar notes and I deposit my notes in the bank.  I have 1000 Dinar in the bank.  If and when they LOP or RD, I will end up with 1 Dinar in the bank. 

 

You will still have 1000 Dinar.  Is that how you think this is going to work, that they're only going to remove the 3 zeros from the large denominations and leave the small ones alone? 

 

-

[Flatbush Zombies]

The will have to have two different 100 Dinar Notes if they RD or LOP.  ALL of the current dinar notes will have to be divided by 1000.  The new notes will be worth 1:1 on par with the dollar.  You can't mix and match when you LOP, otherwise, the people who have their money in the bank will not be affected, for example, You and I have 10, 100 Dinar notes and I deposit my notes in the bank.  I have 1000 Dinar in the bank.  If and when they LOP or RD, I will end up with 1 Dinar in the bank. 

 

You will still have 1000 Dinar.  Is that how you think this is going to work, that they're only going to remove the 3 zeros from the large denominations and leave the small ones alone? 

 

-

Wrong....you clearly don't get it. I don't know why you can't understand this but I think there's nothing else we can all say for you to understand. Again, this is not new...it's been done before by many countries. You'll have 2 currencies out together for the exchange period with 2 different prices until the rd process is done but both will equal the same in us dollars. It's simple markinsa....why are you doing this to yourself. Other countries have done this....look it up and see for yourself.

[keepmwlknfny]

They will have to have two different 100 Dinar Notes if they RD or LOP.  ALL of the current dinar notes will have to be divided by 1000.  The new notes will be worth 1:1 on par with the dollar.  You can't mix and match when you LOP, otherwise, the people who have their money in the bank will not be affected, for example, You and I have 10, 100 Dinar notes and I deposit my notes in the bank.  I have 1000 Dinar in the bank.  If and when they LOP or RD, I will end up with 1 Dinar in the bank. 

 

You will still have 1000 Dinar.  Is that how you think this is going to work, that they're only going to remove the 3 zeros from the large denominations and leave the small ones alone? 

 

-

How can they have two 100 dinar notes if they lop if there is not one present now??   There is no note available now that would become 100 dinar after removing zeros, and there is not a 100 dinar note out now.....

 

You will be left with 1 NEW dinar in your account which will be the same or equal to my OLD 1000 dinar.....

 

They will be" removing" zeros from ALL current notes and make an equal counterpart in a smaller denomination....

 

25 dinar note for the 25k notes

10 dinar note for the 10k notes

1 dinar note for the 1k notes

 

and then the coins would probly come in at this point.....

 

half dinar for the 500 notes

quarter for the 250 notes and so on.....

 

(all just examples....we wont know exactly what bills and coins they plan on making till its all official)

[Markinsa]

I'm not doing anything to myself. I'm trying to make YOU think.   You guys still don't have the CBI's Plans for Currency Restructure, so why don't you admit that we are all speculating (guessing) to what the CBI will do. I don't believe any of the other countries had an economy that generates as much wealth as Iraq has.  There is NO reason for Iraq to LOP/RD their currency, but every reason to Revalue it.  Why on earth would Iraq want to shoot themselves in the foot by lopping, when all they have to do is increase the value of their currency through a revaluation? 

 

-

[boomer113189]

I'm not doing anything to myself. I'm trying to make YOU think.   You guys still don't have the CBI's Plans for Currency Restructure, so why don't you admit that we are all speculating (guessing) to what the CBI will do. I don't believe any of the other countries had an economy that generates as much wealth as Iraq has.  There is NO reason for Iraq to LOP/RD their currency, but every reason to Revalue it.  Why on earth would Iraq want to shoot themselves in the foot by lopping, when all they have to do is increase the value of their currency through a revaluation? 

 

-

Redenomination leads to a more portable currency and a significant reduction in the dead weight of the money people carry and the associated risk, e.g. attack by robbers.

Redenomination leads to greater confidence in the currency

the dropping of zeros restores credibility and confidence in the local currency and enables the government and the central bank to reassert their monetary sovereignty. It also enhances the effectiveness of monetary policy because it enables the local currency to better serve as a “true legal tender”

re-denomination should be implemented in the latter stages of an economic stabilization package or reform. Historical evidence suggests that redenomination had been very successful in an environment of macroeconomic stability, declining inflation, stable exchange rates, fiscal restraint and prudence and rational expectations of policy credibility.

Redenomination is sometimes used to indicate that era of failed economic policies has come to an end and that the economy is poised to start on a new slate. This helps to increase confidence in the economy and sends a signal to both the local community and the international markets that high inflation and general macro-economic instability are a thing of the past.

[Flatbush Zombies]

I'm not doing anything to myself. I'm trying to make YOU think.   You guys still don't have the CBI's Plans for Currency Restructure, so why don't you admit that we are all speculating (guessing) to what the CBI will do. I don't believe any of the other countries had an economy that generates as much wealth as Iraq has.  There is NO reason for Iraq to LOP/RD their currency, but every reason to Revalue it.  Why on earth would Iraq want to shoot themselves in the foot by lopping, when all they have to do is increase the value of their currency through a revaluation? 

 

-

You cannot RV 72 Trillion! Do you not understand simple economics? If Iraq wants their currency on par with the usd or more then they must RD or keep thins status quo....I would expect a member like easy rider to like your post because he doesn't understand anything about anything so we don't need cheerleaders lol. Iraqs only source of income right now is oil. I suggest you learn basic economics to get YOURSELF to understand and to think as well. Theres no speculation on what Iraq is saying in their articles about an rd....the only thing we are speculating on is if they do it.

Redenomination leads to a more portable currency and a significant reduction in the dead weight of the money people carry and the associated risk, e.g. attack by robbers.

Redenomination leads to greater confidence in the currency

the dropping of zeros restores credibility and confidence in the local currency and enables the government and the central bank to reassert their monetary sovereignty. It also enhances the effectiveness of monetary policy because it enables the local currency to better serve as a “true legal tender”

re-denomination should be implemented in the latter stages of an economic stabilization package or reform. Historical evidence suggests that redenomination had been very successful in an environment of macroeconomic stability, declining inflation, stable exchange rates, fiscal restraint and prudence and rational expectations of policy credibility.

Redenomination is sometimes used to indicate that era of failed economic policies has come to an end and that the economy is poised to start on a new slate. This helps to increase confidence in the economy and sends a signal to both the local community and the international markets that high inflation and general macro-economic instability are a thing of the past.

BINGO!

[keepmwlknfny]

I'm not doing anything to myself. I'm trying to make YOU think.   You guys still don't have the CBI's Plans for Currency Restructure, so why don't you admit that we are all speculating (guessing) to what the CBI will do. I don't believe any of the other countries had an economy that generates as much wealth as Iraq has.  There is NO reason for Iraq to LOP/RD their currency, but every reason to Revalue it.  Why on earth would Iraq want to shoot themselves in the foot by lopping, when all they have to do is increase the value of their currency through a revaluation? 

 

-

We all are speculating on what the CBI WILL do.....cause we wont know till the end......but there really isnt much guessing in what they are SAYING......what they WILL do is another story....what they are SAYING is what this thread has been about and its apparent that there is much confusion on this subject and redenominations for some. 

 

Just for sh*%ts and giggles, some of those other countries economies such as Turkey, bring in MUCH more money then Iraq does.....

 

Iraq has listed why they would want to RD.....the end result in a RD is still a dinar on par with the USD....its just taking the easy way out....RD doesnt shoot them in the foot, its just a way of erasing the after affects of hyperinflation....its why a lot of countries choose to go that route....its taking the easy road....

[easyrider]

Government recognizes its inability to cancel three zeroes of the dinar 



Writings Monday, February 4, 2013 

Ruled Iraq today to replace the local currency dinar or cancellation of three zeroes are currently pointing out that he was seeking to increase its peak from 1166 to 1000 dinars to the dollar, adding that high value opportunities available with the growing backlog in the central bank, which exceeded $ 65 billion. 
The Secretary General of the Council of Ministers Ali Mohsen Keywords that this project is not a priority for the government at the moment there is no real problem in this area. He added that the replacement of the currency in itself requires a significant adjustment process, as there are still issues with this side after "the fall of the previous dictatorial regime where the mass of currency in circulation is limited, but it's now doubled from what it was at that time and therefore the process of withdrawing this block is large and difficult task. " 
Keywords pointed out that there is a false impression among many involves the deletion of zeros will reduce the volume of cash in circulation in terms of quantity but the fact that he does not reduce even by 1% .. He said the government believes that the change of currency is a good thing if there are appropriate conditions to be applied, but is not only to give him a priority when providing stable conditions. 
The Iraqi official said in a press statement today Athens that "the Iraqi dinar because it is up by one candidate against Atarōhnak economic and financial viability enables dinar to be stronger than it is now .. He noted that the high value opportunities available, especially with the growing backlog in the bank Central, which exceeded $ 65 billion and rising steadily along with high economic growth in Iraq, which is currently one of the most developed countries in the world thanks to the expansion of oil production. 
The secretary general of the Iraqi cabinet that ingredient objectivity and economic available in the direction of the high exchange rate of the dinar against the dollar and said the government is seeking to have that exchange rate 1000 dinars to the dollar in the sense that the price of the currency class hundred dollars a hundred thousand Iraqi dinars adding that any improvement in the political situation in the country will contribute to make this happen faster. The value of the dollar victims of 1166 Iraqi dinars. 
For its part, official sources confirmed within the Central Bank of Iraq that the draft deleted three zeros from the Iraqi dinar would cost the state budget $ 172 billion dinars ($ 150 million). She noted that the replacement of the Iraqi dinar Btabath new which will be issued in three languages ​​Arabic, Kurdish and English and printed to be forwarded to one of four international companies specialized cost $ 150 million spread over printing, transportation, insurance and work outside working hours to destroy the old currency that will be inside Central Bank. 
The CBI said in August last he plans to delete the zeros from the Iraqi dinar to facilitate financial transactions made through cash in most cases. Among the difficulties faced by Iraq if they are to foot the deletion of zeros from the dinar is the withdrawal of about 30 trillion dinars in circulation in the Iraqi market (about 27 billion dollars) and then disposed of and replaced with a new currency. 
For his part, warned economic analyst Ibrahim al-Mashhadani of the implementation of the project to delete three zeros from the currency, pointing out that this project is important and needs to be political and economic stability over the country when applied. He pointed out that such a project can not be passed through a little period of time, he needs more time to study it in detail and see pros and cons to avoid economic problems may occur because of it. 
He Mashhadani that the project needs to stabilize economic and political more before implementation and these two factors are not available at the moment as a result of the exceptional circumstances experienced by the country although it is important in terms of ease money supply that are exposed to fraud and many difficult traded pointing out that countries This experience, which fought were enjoying economic and political stability in countries such as Turkey, which deleted 6 zeros from its currency. 
The economic advisor to Iraqi Prime Minister Abdul Hussein Al-Anbuge, said that the process of deletion of zeros from the local currency will increase the phenomenon of money laundering. He noted that the government informed the Central Bank of the existence of threats to economic security in the event of bank insisted on the deletion of zeros from the local currency. He added that this process costs time and effort of the government and the Central Bank and raises the level of fraud some terrorist groups to carry out smuggling money out of the country

 

Edited February 26, 2013 by easyrider

[Markinsa]

You cannot RV 72 Trillion! Do you not understand simple economics? If Iraq wants their currency on par with the usd or more then they must RD or keep thins status quo....I would expect a member like easy rider to like your post because he doesn't understand anything about anything so we don't need cheerleaders lol. Iraqs only source of income right now is oil. I suggest you learn basic economics to get YOURSELF to understand and to think as well. Theres no speculation on what Iraq is saying in their articles about an rd....the only thing we are speculating on is if they do it.

BINGO!

 

 

Why not?  Obama spends 6 Trillion every 4 years.

 

Oh, and btw, at the end of Decemeber 2012, the CBI reported approx 31Trillion outside of the Banks, not 72 Trillion, so when the RV happens the Wealth of the Banks increases too.

 

-

 

-

[easyrider]

if they lop, it is just  a neutral value event..? So why are they even talking about "how the other countries did not improve the value of their currency SIGNIFICANTLY..? 

 

 

 

"Agreed politicians and economists Iraqis that the process of deleting three zeros from the Iraqi currency current risk because of conditions of the country and the lack of security and stability and the spread of corruption, where Iraq is seeking to reform the system of currency management and ease of use and reducing the number of banknotes of four billion to one billion and 800 million paper, from by deleting three zeros and the issuance of a coin . ." 

 

And lopping does not reduce the number of banknotes...

Correct.

[keepmwlknfny]

Correct.

If they are adding coins, the number of notes will be reduced.....

 

Lets say they are not lopping and just removing all the larger bills from circulation, the money supply is not reduced, its left inflated and you are increasing the number of banknotes by enormous amounts......the main reason for doing this is for reducing the money supply....it doesnt work.....

 

You of all people know this.....

[Markinsa]

If they are adding coins, the number of notes will be reduced.....

 

Lets say they are not lopping and just removing all the larger bills from circulation, the money supply is not reduced, its left inflated and you are increasing the number of banknotes by enormous amounts......the main reason for doing this is for reducing the money supply....it doesnt work.....

 

You of all people know this.....

 

 

How? If they RV right now, nothing changes in Iraq.  The same number of notes, the same number of Dinar, just an increase in value.  The number of notes will decrease because they won't be needed any longer and they will be deposited into the bank.  The number of notes outside the bank and outside of Iraq will decrease because they are being turned in and converted to some other form of cash. 

 

-

[Darin]

If they were to be reducing their money supply of hard currency, for every unit of currency that is drawn in, that value could be applied to the remaining money supply that exists outside of banks.

We see the reverse actions occur in the U.S. - Everytime money is printed and our money supply expands, all the new notes/currency takes away from the value of the existing currency.

 

See, the CBI likes their monetary expansion as it remains a stable rate. I think it is somewhat foolish to let the hard currency rise to 31/32 trillion when what allowed for them to print (expand their monetary base) could as easily applied to existing currency.

 

It is a simple balancing equation. If A = M x R (Assets[Liquid] = Money Supply *x* Rate), when the CBI has a rise in "A" they counter it by raising "M." Why not maintain "M" as the constant and allow "R" to fluctuate to balance the equation?

 

Sadly, whether they lop or float the value, I believe it won't be for awhile so we get to continue this debate for quite some time.

[zul]

If they are adding coins, the number of notes will be reduced.....

 

Lets say they are not lopping and just removing all the larger bills from circulation, the money supply is not reduced, its left inflated and you are increasing the number of banknotes by enormous amounts......the main reason for doing this is for reducing the money supply....it doesnt work.....

 

You of all people know this.....

 

Keep

YOu are not listening to yourself....

 

Money supply is the total amount of money in economic system. If Iraq were to remove all the larger bills from circulation, that's a huge amount of money taken out of the system. Not only that, but the number banknotes will be reduced at the same time....

You cannot RV 72 Trillion! Do you not understand simple economics? If Iraq wants their currency on par with the usd or more then they must RD or keep thins status quo....I would expect a member like easy rider to like your post because he doesn't understand anything about anything so we don't need cheerleaders lol. Iraqs only source of income right now is oil. I suggest you learn basic economics to get YOURSELF to understand and to think as well. Theres no speculation on what Iraq is saying in their articles about an rd....the only thing we are speculating on is if they do it.

BINGO!

 

72 trillion is made of of money created by central bank PLUS credit created by commercial banks. And credit is not money.

[nostradamus]

 Its not.....people refuse to educate themselves....and are more apt to believing what they wanna hear.....

 

We are all here for the same purpose...we all want a RV....but its almost like some are afraid to face the reality of the situation in fear of being deemed negative?  I cant quite put my finger on it....cause there are some intelligent people here but its like they shut off their brains for certain things. And of course having multiple "gurus" confusing people and misleading them, it only causes more problems.

 

Spend time outside these forums to learn about redenominations and you will see that what the CBI is saying they want to do......

 

If I told you that your 25k note will be able to purchase the same amount of goods as (1) new 25 note would that be tough to understand?

 

If I told you that the exchange ratio between old and new currencies was 1000 old for 1 new would that be tough to understand?

 

If you went to the store and you saw two prices on the shelf for lets say a coke for instance, 1000 old dinar OR 1 new dinar, would you be able to deduct that the 1000 dinar note (old) has the same purchasing power as a 1 dinar note (new)??  That they are equal in value?  That they are worth the same?  One just doesnt have all the zeros on it....

 

Not so much tough to understand as tough to make the changes from using USD back to using the dinar with the three zero notes having a converted value. I spend time outside this forum and  I think that this is a unique situation and Iraq does not exactly match the same characteristics as the examples of other countries that have lopped their currency. Their GDP has been increasing sharply and inflation has been managed over the years. I leave all possibilities open for what will happen but am not going to rely on the media's propaganda to drive my analysis of the eventual outcome. 

[sandyf]

when countries RD everyone bank account automatically change to the redenominated value value.     lets say you have 10 million in ur warka account  and they make the old to new banknotes 1000 to 1 your 10  million dinar will be changed to 10 k worth of new dinar

 

This is quite correct. All accounting software runs on a base currency, In Iraq this would be IQD. If they were to redenominate a new currency code would be issued and all all software would need to be upgraded to incorporate the new code. A new set of accounts would be created with the new base currency and all data, balances etc copied to the new accounts. Everything would now show at the new rate.

On the specified date they would start using the new accounts.

 

A very large RV would be the equivalent of an RD without a currency change and I fail to see how this could actually be put into practice. I just live in hope that I am missing something.

[keepmwlknfny]

How? If they RV right now, nothing changes in Iraq.  The same number of notes, the same number of Dinar, just an increase in value.  The number of notes will decrease because they won't be needed any longer and they will be deposited into the bank.  The number of notes outside the bank and outside of Iraq will decrease because they are being turned in and converted to some other form of cash. 

 

-

Think of it like this.....if Muhammad goes into the bank to exchange his single 25k note in for lower denominations, like lets say (1000) 25 notes, you just increased the number of banknotes by 999......

With roughly 10 percent of the population using bank accounts you think the citizens are suddly gonna deposit all thwir hard cash and just at a flip of a switch trust the banks? The majority would exchange bills for bills.....therefore you would more then likely increase the number of bank notes, but not necessarily the money supply.....

Keep

YOu are not listening to yourself....

 

Money supply is the total amount of money in economic system. If Iraq were to remove all the larger bills from circulation, that's a huge amount of money taken out of the system. Not only that, but the number banknotes will be reduced at the same time....

 

72 trillion is made of of money created by central bank PLUS credit created by commercial banks. And credit is not money.

Are you really gonna tell me that physical cash does not make.up some of th e money supply? You know th ere are different money supply numbers? You have a physical money supply M1 and a total money supply M2......the total money supply is made up of M1 and other things, therefore if you increase the physical amount, you increase the total amount.....

If we are gonna talk about these things you have to understand some of these basic concepts.....

[keepmwlknfny]

Why not?  Obama spends 6 Trillion every 4 years.

 

Oh, and btw, at the end of Decemeber 2012, the CBI reported approx 31Trillion outside of the Banks, not 72 Trillion, so when the RV happens the Wealth of the Banks increases too.

 

-

 

-

And so does their liabilities.....

[sandstorm]

What is wrong with having 1000 25 Dinar notes equaling one 25,000 Dinar note?  What's so hard about understanding that increasing the value of the Dinar does not have to equate with having two different denominations of the same currency having equal value?  With your reasoning, the 10000 dinar note will be worth 10 Dinar, and the 100 Dinar note will be worth 10 cents? What happens when they have two 100 Dinar Notes, which one is going to be with $100 and which one is going to be worth 10 cents?

 

With your thinking the will have to replace ALL of the current notes in circulation and replace them with new notes.  How are they going to handle the electronic funds?  Are they just going to divide every bank balance by 1,000 to come to a new balance? 

 

-

why would they do that? The are trying to erase a large cluster block of cash. Why replace a currency to just put equal amounts back in? Why delete zeroes that leave you with trillions.....just to put the same trillions back in? Your defeating the whole purpose of the monetary reform. they are trying to reduce trillions to billions....thats the goal

Correct.

throughout the cycle it does. the whole purpose is to replace and destroy the old notes. they are retiring them...demonitizing and thusly ceasing to exist. yet... they will be withdrawn over period

Keep

YOu are not listening to yourself....

 

Money supply is the total amount of money in economic system. If Iraq were to remove all the larger bills from circulation, that's a huge amount of money taken out of the system. Not only that, but the number banknotes will be reduced at the same time....

 

72 trillion is made of of money created by central bank PLUS credit created by commercial banks. And credit is not money.

72 trillion would be the liability for the cbi only. no other central banks gonna have to pay up. this is iraqs puppy to pay...no one else

[Darin]

Redenomination leads to a more portable currency and a significant reduction in the dead weight of the money people carry and the associated risk, e.g. attack by robbers.

Redenomination leads to greater confidence in the currency

the dropping of zeros restores credibility and confidence in the local currency and enables the government and the central bank to reassert their monetary sovereignty. It also enhances the effectiveness of monetary policy because it enables the local currency to better serve as a “true legal tender”

re-denomination should be implemented in the latter stages of an economic stabilization package or reform. Historical evidence suggests that redenomination had been very successful in an environment of macroeconomic stability, declining inflation, stable exchange rates, fiscal restraint and prudence and rational expectations of policy credibility.

Redenomination is sometimes used to indicate that era of failed economic policies has come to an end and that the economy is poised to start on a new slate. This helps to increase confidence in the economy and sends a signal to both the local community and the international markets that high inflation and general macro-economic instability are a thing of the past.

It won't reduce the amount of notes you carry....

You still carry four 25 notes

or you

You still cary four 25,000 notes

Value is the same.

Does not reduce cash carried unless they include fills. Now your still dealing with additional carrying of denominations (i.e. Coins take up the lower denoms in the same ratio such as a 50 coin would equal 50 dinar note).

 

Stil, one would have to think having to differentiate between using

old dinar, new dinar, and US dollars that it would be a PITA. Guess what the average citizens is going to desire to resort to? USD.. That's what I would do.

It's convertible. Its desired. And many places are already used to it.

[gatoraces]

this has 'longest thread ever' possibilties

[boomer113189]

It won't reduce the amount of notes you carry....

You still carry four 25 notes

or you

You still cary four 25,000 notes

Value is the same.

Does not reduce cash carried unless they include fills. Now your still dealing with additional carrying of denominations (i.e. Coins take up the lower denoms in the same ratio such as a 50 coin would equal 50 dinar note).

 

Stil, one would have to think having to differentiate between using

old dinar, new dinar, and US dollars that it would be a PITA. Guess what the average citizens is going to desire to resort to? USD.. That's what I would do.

It's convertible. Its desired. And many places are already used to it.

if they RD there currency most people would use the newer currency notes