IQD on the "oil standard?"

[ndantona]

This is my very first post -- so here goes..........

The value of the USD used to be based on the gold standard -- whereby the currency circulated was based on the value of the physical gold ingots stored in the reserves. In other words, if the USA wanted to print more currency, they had to have more ingots stored.

Now that the USD is off the gold standard, the value of the dollar is based on the country's (and world's) trust in the credit worthiness of the USA based on any number of things (economic strength, military strength, whatever). Needless to say, this "trust" can be fleeting whereby any particular event (domestic or international) could cause the dollar to plunge (like China no longer willing to buy our debt, for example). The printing presses can churn out more bills whenever the government dictates -- without the constraint of basing those bills on any physical measurement of wealth.

This leads me to the IQD. I have always wondered how in the world the Iraqi banks could absorb an increase in the value of the IQD from 1170 to the USD; to, say, 1 IQD to 1 USD. Many have said that Iraq need not have all the dollars to pay in the redemption of the dinars, but would pay off a lot of it in oil -- a natural resource of value to the world. Notwithstanding the fact that Iraq has the fourth largest oil reserves in the world, that would still be a helluva lot of oil to pay.

Could someone explain this a bit more -- how Iraq can practically and realistically pay off the world's holders of the IQD (post RV) with the natural resources it has? They are still some time away from developing their full extracting capacity to their targeted output of 6 million barrels a day --but even at that rate, is it still enough to pay everybody off?

Intuitively, it seems far fetched -- and that is why, when it comes to getting an RV that would make me wealthy, I am only guardedly optimistic. Again, if anybody can explain this, I would appreciate it.

Thanks...........

Nicky

[ShawnW]

This is my very first post -- so here goes..........

The value of the USD used to be based on the gold standard -- whereby the currency circulated was based on the value of the physical gold ingots stored in the reserves. In other words, if the USA wanted to print more currency, they had to have more ingots stored.

Now that the USD is off the gold standard, the value of the dollar is based on the country's (and world's) trust in the credit worthiness of the USA based on any number of things (economic strength, military strength, whatever). Needless to say, this "trust" can be fleeting whereby any particular event (domestic or international) could cause the dollar to plunge (like China no longer willing to buy our debt, for example). The printing presses can churn out more bills whenever the government dictates -- without the constraint of basing those bills on any physical measurement of wealth.

This leads me to the IQD. I have always wondered how in the world the Iraqi banks could absorb an increase in the value of the IQD from 1170 to the USD; to, say, 1 IQD to 1 USD. Many have said that Iraq need not have all the dollars to pay in the redemption of the dinars, but would pay off a lot of it in oil -- a natural resource of value to the world. Notwithstanding the fact that Iraq has the fourth largest oil reserves in the world, that would still be a helluva lot of oil to pay.

Could someone explain this a bit more -- how Iraq can practically and realistically pay off the world's holders of the IQD (post RV) with the natural resources it has? They are still some time away from developing their full extracting capacity to their intended output of 6 million barrels a day.

Thanks...........

Nicky

My own personal understanding is this. The Dinar was not devalued over time due to GDP, oil production, or anything like that, but due to the sanctions and restrictions put on it from the UN. The true value of the dinar never left. Now they did have to print much more currency to be able to survive paying 50,000 dinar to go out to dinner, but if you look at the numbers there is somewhere around 25 trillion dinar in circualtion supposedly. Before all of this there was about 25 billion, so if they RV at around the previous number of 3.22 and pull all of the bills with 000's on them back in they can reduce the currency in circualtion back to its previous state ( 25 trillion minus 000 is 25 billion) and the only thing that has happened is that the currency is functioning at the state it was valued before all of this mess started.

Now that is my opinion, so take it for what its worth.

Shawn

[eastcreek]

This is my very first post -- so here goes..........

The value of the USD used to be based on the gold standard -- whereby the currency circulated was based on the value of the physical gold ingots stored in the reserves. In other words, if the USA wanted to print more currency, they had to have more ingots stored.

Now that the USD is off the gold standard, the value of the dollar is based on the country's (and world's) trust in the credit worthiness of the USA based on any number of things (economic strength, military strength, whatever). Needless to say, this "trust" can be fleeting whereby any particular event (domestic or international) could cause the dollar to plunge (like China no longer willing to buy our debt, for example). The printing presses can churn out more bills whenever the government dictates -- without the constraint of basing those bills on any physical measurement of wealth.

This leads me to the IQD. I have always wondered how in the world the Iraqi banks could absorb an increase in the value of the IQD from 1170 to the USD; to, say, 1 IQD to 1 USD. Many have said that Iraq need not have all the dollars to pay in the redemption of the dinars, but would pay off a lot of it in oil -- a natural resource of value to the world. Notwithstanding the fact that Iraq has the fourth largest oil reserves in the world, that would still be a helluva lot of oil to pay.

Could someone explain this a bit more -- how Iraq can practically and realistically pay off the world's holders of the IQD (post RV) with the natural resources it has? They are still some time away from developing their full extracting capacity to their targeted output of 6 million barrels a day --but even at that rate, is it still enough to pay everybody off?

Intuitively, it seems far fetched -- and that is why, when it comes to getting an RV that would make me wealthy, I am only guardedly optimistic. Again, if anybody can explain this, I would appreciate it.

Thanks...........

Nicky

Iraq doesn't have to pay anyone in anything other than IQD.

You must think of the ramifications of that statement before you proceed with, "how am I going to make money out of this deal ?"

Let's say that you spent 1000 USD and received 1 million IQD. When the RV happens you will go to a bank or other currency trader and it/he will pay you what the 1 million IQD is worth, in whatever currency you choose. If that's USD, remember that Iraq is not paying that USD to you but someone in the currency market who thinks that he/she will be able to trade it for at least that amount on the Market.

Hope that helps, and realize that I am NOT an economist/ finance person, but this is just some of my understanding. Hope what I've said is correct.

Someone else who knows more, please chime in.

[brandedbabe]

My own personal understanding is this. The Dinar was not devalued over time due to GDP, oil production, or anything like that, but due to the sanctions and restrictions put on it from the UN. The true value of the dinar never left. Now they did have to print much more currency to be able to survive paying 50,000 dinar to go out to dinner, but if you look at the numbers there is somewhere around 25 trillion dinar in circualtion supposedly. Before all of this there was about 25 billion, so if they RV at around the previous number of 3.22 and pull all of the bills with 000's on them back in they can reduce the currency in circualtion back to its previous state ( 25 trillion minus 000 is 25 billion) and the only thing that has happened is that the currency is functioning at the state it was valued before all of this mess started.

Now that is my opinion, so take it for what its worth.

Shawn

This situation you speak of is called a lop and has been debunked several times over. Read a bit about the law passed and look to scooters post for info. Keepemwalkingfunny has probably had the best info as to why this won't happen...

[ShawnW]

This situation you speak of is called a lop and has been debunked several times over. Read a bit about the law passed and look to scooters post for info. Keepemwalkingfunny has probably had the best info as to why this won't happen...

No I am not talking about a lop. I am talking about and RV and reducing liquidity. Both will need to be done. A lop would not change the value ofthe dinar.

There is WAY too much paper money in circulation if that is anywhere near the true number. My guess is that most of it will be converted to electronic currency like most of the world is using now.

Then we can all be on the FIAT system.

Shawn

[Snatcher]

No I am not talking about a lop. I am talking about and RV and reducing liquidity. Both will need to be done. A lop would not change the value ofthe dinar.

There is WAY too much paper money in circulation if that is anywhere near the true number. My guess is that most of it will be converted to electronic currency like most of the world is using now.

Then we can all be on the FIAT system.

Shawn

Well I'm confused Shawn...How can you say it will stay the same if the remove the 000 from a 25000 note...you would be giving everyone 25 dinar instead of the 25000 dinar that they had...then cashing them in for the RV price...In my book 25 dinar x lets say $3.22 = $80.5o , 25000 dinar x 3.22 = $80,500. How is that the same...Our investment goes up in smoke...So how would a LOP not change the value of the Dinar?

Edited August 31, 2010 by Snatcher

[ShawnW]

Well I'm confused Shawn...How can you say it will stay the same if the remove the 000 from a 25000 note...you would be giving everyone 25 dinar instead of the 25000 dinar that they had...then cashing them in for the RV price...In my book 25 dinar x lets say $3.22 = $80.5o , 25000 dinar x 3.22 = $80,500. How is that the same...Our investment goes up in smoke...So how would a LOP not change the value of the Dinar?

Sorry we are talking two different subjects here. I am talking about reducing the amount of actual cash this is floating around. It will not affect the Cash in or RV. If you look at how much the rest of the civilized world has in actual cash money, versus total currency, you will see that Iraq is VERY disproportionate due to the fact that they did not have a digital banking system until recently. I was looking at some numbers earlier and as of 2007(current numbers Are higher but I don thave the exact s in front of me).

The Us Curently has 759B in Cold Hard Cash

But when you add The total of all physical currency part of bank reserves + the amount in demand accounts ("checking" or "current" accounts).

plus most savings accounts, money market accounts, retail money market mutual funds,and small denomination time deposits

you get 7.44 Trillion

I dont have all the Iraq figures yet but at 25 Trillion in Cash, that is just too much money. Now will that make then come out at lower number to start and then start pulling in some currency to raise the value.... maybe, but that is just my opinion on it after looking and I am not claiming to know it all, just sharing my thoughts.

I guess what I need to do is compare Iraqs numbers to some other Gulf countries and see where it stands.

Shawn

[bahtman]

ndantona,

Just read Economist RV Explanation Part I and Part II under the Rumor forum pinned at the very top and you will understand how it is possible for Iraq to afford the RV.

[ShawnW]

ndantona,

Just read Economist RV Explanation Part I and Part II under the Rumor forum pinned at the very top and you will understand how it is possible for Iraq to afford the RV.

Thanks, I have and will go reread again, the problem is I have had to come up to speed very quickly on this as I only learned about it around a month ago. So the problem is that I read it...........along with 30,000 other posts in the last month. lol

thanks for the tip

Shawn

[kamm]

Thanks, I have and will go reread again, the problem is I have had to come up to speed very quickly on this as I only learned about it around a month ago. So the problem is that I read it...........along with 30,000 other posts in the last month. lol

thanks for the tip

Shawn

Welcome to the wild ride that we have been on for so long. I first got into it in 2005 so I am ready for it to be over with. Hopefully its almost over, looks you got in just in time. Steve