50 dinar note removed from circulation

[staunch]

well, you have to admit, this was a suprise move.  Kinda jumbled up the thinking on this. I am glad i don't have any 50's

[RVPleaseToday]

I've never been convinced that the CBI had enough consensus in the GOI to lop; but, they could certainly ultimately switch one note of each denomination, for a newly designed one, every couple of months, demonetizing the old design, until  there are no more of the old design left.

 

This would be a nightmare scenerio for people outside of Iraq holding Dinar. It's very unlikely dealers in the U.S. would be willing to make that switch here. So, Iraq, gradually, over the year, solves their problem with currency outside the country, doesn't have to RV until few outside Iraq have any of the new currency, and saves themselves a fortune.

Edited February 28, 2015 by RVPleaseToday

[vietnam1969]

I better check my stash and see how many I have to put in a  " No Good Notes " envelope.  

[Markinsa]

Sorry.  I am sure you mean new but here is a pic of one.  

 

This is a 1991 Sadaam 100 Dinar Note.

 

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[Texstorm]

Well my take for what it's worth is that Iraq has started with the removal of the 50 dinar notes first because there is no room for them when they go one to one, next will be the 250 dinar notes and then the 500 dinar series. After that I believe that they are going to go one to one starting with the 1000 -25000 after all of the old notes are pulled in or turned into digital money, they will release the new denoms. There will be a 1 dinar =$1, then 5 dinar=$5, then 10 dinar=$10, then $25 dinar=$25, then they will release the 100 Dinar= $100 and the fils will then take up the fractions. Iraq cannot pull a pure float. The middle east is too unstable to sustain a float ! One damn war would tumble a float and there is no way in hell that they can maintain stability to their economy under those circumstances. Iraq is set up on the petro dollar and that is the western standard, Iraq's government is also set up on the western standards that we call democracy, there is no way for them to unpeg from our system and receive the help that we give them otherwise. Iraq must be willing to unify all tribes and regions to be able to fight and die for a United Iraq. The United States is not over there to divide Iraq, we are over there to bring them together. Believe me if there is a float I will be the first to cash in because if you think peace is going to happen in the middle east you are not paying attention. Again a pure float is not an option ! In the United States if we go to war our economy does not crash, a dollar is still worth a dollar, that's why Iraq will stay on the western dollar. Thanks And 36 tons of GOLD does not float !

[rockfl9]

Tex , I dont follow your logic , if they remove not replace the 250 and 500 how will the merchants make change? We see no indication that small merchants are accepting plastic. It is mainly a cash society. Sure many federal worker may get paid with a card but they then go to the ATM which only dispense the 3 zero notes. If an Iraqi pays a 9,250 tab with a 10K ,what does he get in change? The answer should be newly minted 250 and 500 dinar coins . But if they do that an RV goes out the window.

I agree that the CBI will not do a float , But it cant do anything like a 1:1 with a peg. A peg means you have the require reservs to back it up , and they dont

As far as the gold .. I dont know if that is private ( jewelry and coins, bars ) Sovereign ( GOI ) or actually in the CBI? If it is in the CBI THEN they just swapped USD for it!

[Texstorm]

Ok Rock sorry that I wasn't clear, I believe that Iraq will phase out and declare that all of the lower denoms starting from 50-500 dinar series obsolete. Then they will go one to one with the USD so a 25000 dinar will instanly be worth $25000 usd ( instant money) after or before or during that time all new denoms will become one to one, with a brand new $1/ $10/$25/$100. All of the old denoms will eventually become electronic dinar and destroyed. The zeros will be gone in an instant without a LOP! Iraq has the reserves in oil and gas in the ground that is what reserves are based on modern technology. All of the oil companies base their portfolio off of reserves to acquire money for drilling or to show net worth. I know you think that it's impossible, improbable and not going to happen, I guess that we will find out in the near future, you think Iraq cannot afford an RV, I  think Iraq cannot afford to flounder and so it must RV.

[rockfl9]

Tex , I need to see your time line. First , we know they will collect all the 50s. Buy May 1 all tabs will be rounded up or down to the nearest 11 cents (US) value. Probably could live with that. Next take away the 250 , now they round to the nearest 22 cents of value. Next the 500 and they round to the nearest 43 cents value. Deciding how to price things and making change becomes a problem!

I think before they get to this point they will replace the notes with metal coins.

How do you magically go 1:1 with the USD unless they Add trillions to the reserves OR just plain decree it AND no one outside of the country would believe it. That's the myth of the RV. In order to sell a dinar for a dollar there must be someone that will pay a dollar .. Right now the CBI is it.

Let's hope iraq doesn't flounder as you say but works it's way thru this crisis.

[Texstorm]

Ok Rock Iraq is working through the crisis as you say and but  I just don't believe that they are broke as you have stated. Iraq just bought 36 more tons of gold, I don't know how many weapons, tanks, helicopters etc. If the USA backs Iraq that's all that is needed to pull off an RV of 1 to 1. I don't know where you come up with your math Rock but it doesn't make sense to me, but then i'm not an economist or mathematician. As always I appreciate your thoughts !  

[staunch]

none of this makes sense with their latest move to remove the 50.  If they were gonna RV to say 1:1, why not remove the highest 3 denoms and just move the decemal on the monetary value and add some lower denoms.  done deal.  If they were gonna lop, they would basically have to issue all new denominations, so again, why remove the 50 now.  If they were gonna float, i wouldn't think you would remove your lowest denom. as it will just increase in value so that it's impossible to make change on the streets.

 

I give up............just doesn't make sense

Edited March 1, 2015 by staunch

[RVPleaseToday]

The only way it makes sense is if they are going to maintain the current exchange rate. But, then, nobody wants to hear that.

[staunch]

well, i wasn't going to say that because, your right, i don't want to hear it.  unfortunately it's the only thing that does make sense right now.  I just hope there is another plan.  Removing the 50's was unexpected and imo unnecessary at this time, so there is more to it than just this.

Edited March 1, 2015 by staunch

[rockfl9]

Tex, I am not sure what the problem with the math is , let me put it in money you understand better . Suppose the US were to stop using the penny nickel and dime. You make a purchase of $2.85 with $3, You should get .15 change , but 15 cents doesnt exist . the clerk must round up the purchase to $3 . You loose the 15 cents.

?Why would the USA need to back the Iraqi currency ? We may extend credit for military goods but expect to be repaid in full , .

RVP and Staunch. Removing the 50 was because replacing the notes was a money looser. It will cause some pain in the market place they will adjust and allow the replacement cost to be redirected ..My guess a 100 dinar coin. Note that this does not change the total AMOUNT of dinar in existence , the bank just exchanges for larger notes.

You are correct holding the current exchange rate makes the ONLY sense until the crisis is over.

[rockfl9]

Rare money catalog lists the 2003 series 50 dinar note at $1. Find a dealer before the market gets flooded!

[Texstorm]

Rock you have a new friend joining you shortly down here in the tank, y'all have a great day !