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rockfl9

Let us have a THINK

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On a good month the GOI  will sell $7.5B in oil . We know that is at least 95% of the total income for the month. Pretty much tied to the price of oil.

The lowest grade Iraqi civil servant is paid 500,000 Iqd for the month that is about 430 USD.  Abadi stated in an interview last year that the total operating cost of the GOI ( salaries and pensions ) was 4.5T Iqd ( about 3,7B USD) .

NOW if there would be a one cent RV ( X10 increase )   The cost to the GOI would be increased to 45T Iqd ( about 36B USD) Which would become almost 5 times the oil revenues!!!!

How would the GOI make good on the payroll ?  They could cut salaries or not pay on time as they have in the past but that would only be a temporary solution as the prices of anything imported   and paid in dollars would have to increase,. A major problem.

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:lol: Just because they revalue their currency doesn't mean everyone is getting a pay raise.  

 

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Hi Mark,

NO it is not a pay raise... The civil service law guarantees all salaries.  So they get paid the same amount of dinar at whatever the exchange rate!  So he will  get 500k IQD at the 1 US cent rate .. In fact everything valued in dinar gets the same (official ) value.  The problem is that when the GOI puts up dollars in the "auction" instead of getting 1190 per dollar it only will get 100 !! So to meet the payroll it will have to put up 11 times the dollars to get enough dinar !  Don't you see that as a problem?   It is a basic business rule "You can't pay out more than you take in.

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Rockfish - "You can't pay out more than you take in"....LOL seriously......We (USA) have lived by the exact OPPOSITE of that motto for over hundred years....as has the rest of the world. You need to stop reading books and open the windows & look at the world for what it is...not something uv read....LOPsters & GURU's the gifts that keep on a giving 24/7

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6 hours ago, rockfl9 said:

Hi Mark,

NO it is not a pay raise... The civil service law guarantees all salaries.  So they get paid the same amount of dinar at whatever the exchange rate!  So he will  get 500k IQD at the 1 US cent rate .. In fact everything valued in dinar gets the same (official ) value.  The problem is that when the GOI puts up dollars in the "auction" instead of getting 1190 per dollar it only will get 100 !! So to meet the payroll it will have to put up 11 times the dollars to get enough dinar !  Don't you see that as a problem?   It is a basic business rule "You can't pay out more than you take in.

 

Are you that naive to think the government/employers are going to pay their employees that amount of money??? I'm really astonished that you are that obtuse.  It is a pay raise if the value of the new salary exceeds  the value of the old salary. 

 

The purchasing power of the Dinar increases so they don't have to spend as much Dinar to purchase the same goods and services.  Notice the word "services", that is also called labor, which translates into someone having to do that Labor, which translates into contractors/employees to provide those services.

 

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So you think they will simply adjust the salaries after the RV!  Well that presents a problem of how?  You should have noticed that GOI employees are paid on a rotating basis thruogout the month , a forth in the first week , another fourth in the second, etc. Since it is usually cash paying all at once would be a big hit to the treasury,. Now the question , when do you pull the trigger? The last group  gets paid  at the full old rate  the next three  get partially screwed!  

Another problem is rents , contracts and loan payments how will they be adjusted ?  They present legal issues that are very unlikely to be handled by current laws!

Remember this all has to be handled in secret.

The riots over bad water and poor services would be minor when the govt reduces salaries.  Next consider what and when prices are adjusted. Without a warning would be mass confusion.

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@rockfl9 :lol:  I guess they'll do the same thing if they LOP the Currency.  Are they still going to keep paying them the OLD Value of the Dinar??? :lol:

 

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There are no special adjustments in pay or contracts needed for an RD, and there are (that I can see) no laws possible that would not leave some very upset folks after an RV.  Take 2 folks both living payday to payday and getting 100,000 IQD in pay.  One gets paid just before an RV or RD event, one just afterwards.

 

If getting paid just after an RD you get 100 New IQD instead of 100,000 IQD and the value is the same,  Its the same as your previous pay as well.  No one is upset as everyone is getting the value they expect.  If payed before the RD you can exchange your 100,000 iQD for the same 100 NewIQD you would get paid after and vice-a-versa.

 

But look at the same (1000 to 1) RV.  If paid just before the RV, the RV makes that pay 1000x the value you are used to.  But if after the RV, your pay is reduced by 1000x (as Markinsa suggests), then being paid just after the RV gets you the old value.  The person paid before is ecstatic, the one paid after not so much.   What set of laws could be passed that makes everyone happy?  I can't think of how such a thing could be structured.

 

Of course since the CBI will run out of its reserves in about 10 seconds of those folks wanting to exchange their 1000x pay, in short order everyone will be upset, but that's another issue.

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Well I think a LOP (or redenomination ) is at least possible while an large RV (say a penny or more) is not.  So while they can't RV, they COULD LOP.  Whether they will or not, I have no idea.    I don't think there is really any pressing economic need to do so, but perhaps its more of a political decision than an economic one, so who knows.

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EC,   In a way you are correct. The Iraqi economy has stalled for 2 years. Mainly due to low crude income. No need to RD now . But as things pick up the money will start moving again .  The question for the CBI is do they just continue reprinting the old or is it the time to drop the zeros and enter a modern style. By that I mean a 1,5,10,25 series of dinar. The CBI appears to have pocketed enough reserves to cover the cost .   

The CBi Gov has said that it will be an orderly change .  No loss no gain .   Usually that means 3 -6  months between announce and release.  If they wish to do it for the next budget cycle ( which would be ideal ) time is running out.

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Right, I'd call the decision to "enter a modern style. By that I mean a 1,5,10,25 series of dinar."  a political decision not an economic one.  South Korea has (and historically has had, though it moves around) an exchange rate even less than the IQD (with 1,000 5,000 10,0000 and 50,000 Won notes) and that has not been a major factor in the ups and downs of their economy.  Iraq might profit some by stranding some currency stolen by ISIS but its not clear how effective that would be (i.e. that currency may already have been laundered).  So maybe they will, maybe they won't but the Iraqi economy will not be much impacted either way in my view.

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Perhaps I should have added, that IQD holders might (and I think should) be worried about their currency being stranded as well (I sold mine for a slight loss shortly after buying it many years ago).  It all depends on how the RD or LOP is done.  Its quite possible, even likely I'd say, that the current IQD will be accepted at major Iraqi banks for many years.  The shorter time limit is likely to pertain to the limit of GETTING current IQD.  But the danger will be the impact of the RD on IQD coming in from outside the country.  If they really clamp down on that, then those holding IQD outside of Iraq may have trouble getting it exchanged and to the extent that they can arrange for this (which might well involve some, at least technically, illegal transactions to get it across the boarder) it will certainly incur additional expenses.

 

Other things to consider would be (all in my view of course), that once (and IF) they RD then that puts a nail in the coffin of the RV i'd say.  Even if you believe an RV is possible now, having s 1 NewIQD bill that is worth $10 (the equivalent of a 1 penny RV now) has great problems for consumers given all the stuff that costs less than $10 (lots of coins).  Of course in my view an RV is financially not possible now anyway and remains so after an RD as well. 

 

Also once (and again IF) an RD is announced I'm guessing there will be a flood of sellers which wold greatly reduce the price you can get.  Of course for those that do not have enough tied up in this to care that might not be an issue.

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Agreed,  But an RD would throw a clinker in the RV. They would not do both.  The cbi cant flush out the lost and stolen value without  a new issue .   

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On 9/20/2018 at 1:41 AM, EverCurious452 said:

Well I think a LOP (or redenomination ) is at least possible while an large RV (say a penny or more) is not.  So while they can't RV, they COULD LOP.  Whether they will or not, I have no idea.    I don't think there is really any pressing economic need to do so, but perhaps its more of a political decision than an economic one, so who knows.

So...I guess I do not understand the reason of why you are here...Rock is on a mission to save all of us.  Are you trying to do the same thing?  IF I really believed in a lop, I would be gone.  Never to ever ever ever enter into another catblasted dinar site ever again.

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11 hours ago, Botzwana said:

So...I guess I do not understand the reason of why you are here...Rock is on a mission to save all of us.  Are you trying to do the same thing?  IF I really believed in a lop, I would be gone.  Never to ever ever ever enter into another catblasted dinar site ever again.

Why would you bring common sense & logic into a one way narrow minded discussion? - LOL

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So...I guess I do not understand the reason of why you are here...Rock is on a mission to save all of us.  Are you trying to do the same thing?  IF I really believed in a lop, I would be gone.  Never to ever ever ever enter into another catblasted dinar site ever again.

 

Well I don't come here very often, but yes I DID create the account after (rather long after) I had sold my dinar.  For me it wasn't really about dinar.  What I was interested in was the clash of different ways of thinking.  People get into buying dinar due to a belief in hitting it big, being in the know, the excitement and seduction of it all.  I get that as that is why I bought it in the first place.  But then fact based critical thinking took over and I realized I had been foolish.  The RV is not possible, its all a myth.  So I sold.  I think that same process is common to many folks, but obviously not all as many still hold onto their IQD.  I wanted to why?  What do they see that I don't or what do I see that they don't.  i.e. what is going on here?  

The clash of fact based critical thinking Vs belief is a serious issue in our culture today and it seemed like this rather narrow domain, in which I had some personal experience, might be a good area in which to explore that issue.  But when I asked question of dinar holders I just got flip one liners and drive by posts and insults.  No one wanted to seriously engage on the topic.  Few believers are open to questioning their belief and I couldn't get past that block even in this limited domain.

 I expected to be restricted to the tank, and was but then I was also put on permanent mod review.   Having to have every post approved by a moderator pretty much makes discussion impossible, even if there was anyone open to such discussion which didn't seem to be the case anyway.  So I stop by every few months  just out of curiosity, but rarely try to post.  

 

How about you Botzwana, you are a IQD holder, so what do you get out of coming to this site?

 

and whoever the moderator is that has approved my last few posts here (I'm guessing its Markinsa), thank you!

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I often check on old stocks that i have sold off. I think that many people do.  No harm.  Everyone has their reasons why. 

When I first started i would never visit the Lobster section.  There was no reason to as i never considered the possibility. 

But once i studied the numbers it warranted coming down here. Just prudent to study all angles of any venture.

I still hold some dinar. Not much though. I still like to gamble but never expect a return.... Maybe hope for one but never expect it

Just a fun game to play like craps... 

But I have tripled my money i had invested in the dinar investing in other things. And very risky things that just happened to pay off.

These gains are very solid as i hold tangible assets that can only be lost by acts of Congress.. But still always a risk.

300% is a awesome gain but not retiring on it thats for sure.

 

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Hello Socal,    You have helped to make my point .  Real investing requires a look at ALL angles.    If you look hard enough every investment has a down side.  Play devil's advocate.  Weigh the  of loss. Even if it should turn out that Dinarians were to at least get their money back they will get cheaper dollars, a loss of purchasing power.

One important point with the Dinar RV is ' Where will the money come from ??" The answer must eventually come  from the CBI. But we know that the CBI's reserves are s limited.   All that oil money goes to the GOI the CBI only gets a commission for it's service.  If you think of the dinar as a share of stock in the CBI it is only worth its pro rata share of the banks gross assets.

I think the GOOROO POO that RVers believe is that IF CBI were to declare that the dinar is equal to 10 cents US , that some banks will begin doling out cash to buy dinar .

NOPE.  The bank has to have a customer willing to pay the 10 cents FIRST.. Who would take that risk?

 

 

 pro 

 

 

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One important point with the Dinar RV is ' Where will the money come from ??" The answer must eventually come  from the CBI. But we know that the CBI's reserves are s limited.   All that oil money goes to the GOI the CBI only gets a commission for it's service. 

I think we're on the same page here, but wasn't quite sure what you meant by the quote above..  The foreign reservers of the CBI are replenished when the GOI exchanges its oil dollars for dinars to pay its budget.  The foreign reserves are drained when importers exchange dinars for dollars to buy foreign stuff.  Those two roughly balance out to keep the foreign reservers covering the money supply at the current exchange rate.  I say roughy as clearly there is some wiggle room here.  Maybe 10% or 20% or even 50%, but not the 1,000% that a  penny RV would cause.  The "where will the money come from" issue is why I say that a 1 penny or more RV is not possible.

 

SD: 300%, sweet!  What you avoided by selling and using that money elsewhere is the "opportunity cost" of the IQD investment.  Even if you get most of your money back it won't have been working for your over that time.

 

Over my 30+ years of investing I've taken a few high risk high possible ROI flyers and none of them have paid off.  With some I got most of money back and a couple I lost everything.  But i was always careful to only invest a small (<4%)  fraction of my portfolio in such things so it was not a big issue.  I've also been an early employee at 4 or 5 high tech startups where I got pre-IPO stock and had any of those "hit" I'd have made a few million in one shot.  None did.  But I always a plan-B which was just living within my means, consistent long term value based investing and over 30+ years that has made for a very nice retirement (which I haven't quite started yet but in a year or two expect to do so).

 

My critique against the IQD is NOT that its high risk with suitably matching high potential ROI, but that its high risk with literally zero potential ROI.

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On ‎9‎/‎26‎/‎2018 at 9:33 AM, SocalDinar said:

I often check on old stocks that i have sold off. I think that many people do.  No harm.  Everyone has their reasons why. 

When I first started i would never visit the Lobster section.  There was no reason to as i never considered the possibility. 

But once i studied the numbers it warranted coming down here. Just prudent to study all angles of any venture.

I still hold some dinar. Not much though. I still like to gamble but never expect a return.... Maybe hope for one but never expect it

Just a fun game to play like craps... 

But I have tripled my money i had invested in the dinar investing in other things. And very risky things that just happened to pay off.

These gains are very solid as i hold tangible assets that can only be lost by acts of Congress.. But still always a risk.

300% is a awesome gain but not retiring on it thats for sure.

 

SD, I agree it's not unusual for one to re-look past speculations/investments, I've done it myself for years....what is highly unusual is for folks that have "sold" out to go on forums and question others or troll. Most SANE folks would agree this is a little out there, and that's when motives are questioned.

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I don't think that checking an old investment's current value is the same as participating in discussion about that investment.  I used to follow the Motley Fool's model portfolios.  I mention that as the Fool provides forums for each stock they deal with and on those forums there are those that are in favor of buying (and many of them presumably have bought) and those that favor selling (and many of those have presumably sold) as well of course as folks that are holding or never bought.  So I don't think having made a decision to buy or sell necessary dampens one's desire to discuss that particular investment.   Further if it seems odd to continue such interactions after having made a sell decision I don't see why it would not be equally odd to continue such interactions after having made the buy decision. 

  

Trolling (i.e. going after individuals just to go after them) is just bad behavior period.

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3 hours ago, caz1104 said:

SD, I agree it's not unusual for one to re-look past speculations/investments, I've done it myself for years....what is highly unusual is for folks that have "sold" out to go on forums and question others or troll. Most SANE folks would agree this is a little out there, and that's when motives are questioned.

I agree.   No reason to argue about this venture . As you know I no longer question 

anyone’s choice of investments .  I don’t do ANY other social media and enjoyed this site and the people here so I still post 

Its easy to get caught up in arguments ( not really debates ) but I do my best to stay clear. . But I do need to do better at staying away from religious arguments....

pointless but I’m trying .

 

As far as the dinar goes I hope people kick butt and make some good money.  I sarcasm here.  I have plenty already .and really believe a windfall as anticipated here would ruin me.  But that just me!!

 

I apreciste your comments

 

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