Can any of the smarter speculators debunk this?

[McFly]

I read this on a website today:

The Dinar may make it to 1000:1, but that is about the best you can expect from this dinar.

Anyone who thinks that Iraq can introduce a currency, increase the supply of it to 26 Trillion (over 3 times more than the US dollar, 3 times more than the Euro) and use this currency for almost 5 years now… an then somehow magically increase the value 120,000%… well you know the old sayings.. I’ve got some land in Florida I’d like to sell you… or maybe a bridge in Brooklyn.

It’s amazing how many people involved in this thing don’t understand simple economics. Econ 101… supply and demand. The Dollar and the Euro get their value from the the demand that is generated from the size of the economies. The US has a $13 trillion dollar GDP, The Euro countries have a $12 trillion GDP. That makes for a tremendous demand for those currencies. Iraq on the other hand has a GDP of about $90 billion… and almost all of that is from oil sales which are in dollars so it does nothing for the dinar. The Iraqi non oil economy is practically nothig. There is virtually no demand for dinar except for speculators. With a money supply 3 times that of the Euro or Dollar. Iraq would have to have their non oil economy grow to approx 3 times the size of the U.S. or Euro nations (that would be a non oil GDP of about $35 trillion) in order to have the dinar rise to 1:1.

Hopefully you see that is a total farce.

If Iraq wants a rate of 1:1 or anything close, they will issue a new currency and re-denominate. In other words, lop 3 zeros from the currency. For every 1000 of this dinar you have, you will get 1 of the new currency. That is if they don’t somehow block money from reentering the country for an exchnage.

Whatever money you have in the Iraqi dinar is at great risk!

Does anyone understand this? Does this hold any water? I understand the counter arguement against the LOP and agree it can't happen. I'm more interested in understanding the GDP point.

Thanks everyone.

[DCupp]

This is so old... It has been talked about and beat to death on here. Dont worrie about this old post. Its false.

Edited September 11, 2010 by DCupp

[tbush]

It’s amazing how many people involved in this thing don’t understand simple economics. Econ 101… supply and demand..

Seems to me this person's own quote must be about himself. If this individual who wrote this would investigate and do proper research into Iraq, let alone just the Middle East in general , I do think that foot would have been intered into mouth with the hopes of being able to take back the uninformed lack of research article this individual wrote.

Edited September 11, 2010 by tbush

[viper51]

ABSOLUTELY NOTHING to support this. Iraq will RV and is being pushed by many powers in the ME and the world. Worry not this guy is way out there.

[MrRich]

I read this on a website today:

Does anyone understand this? Does this hold any water? I understand the counter arguement against the LOP and agree it can't happen. I'm more interested in understanding the GDP point.

Thanks everyone.

I read this when I was researching the dinar early on. I went to my friend about it (the one who told me about the dinar) because I had the same concerns as this guy about the GDP and the numbers. He explained to me that I was looking at it like a fiat currency and this was different because it's backed by oil. Then he started talking about fractional reserve which I still don't really understand but he assured me that that is where this guy gets lost in his analysis. Looking at this like a fiat currency it doesn't make sense, and without considering the fractional reserve aspect you will never be able to justify a significant RV. I guess we should have another discussion about those subjects.

Edited September 11, 2010 by MrRich

[McFly]

Mr. Rich,

Thanks for the explanation. Sorry for a question most of you already answered. I've read about as much on this site as I can to find an answer. This particular quote stumped me.

Thanks again.

[ha ha]

This guy is a newbie. As most newbies are, nobody will listen to him. Just go to read more before you post any thread.

[jjcostanzi]

If McFly was correct how would he explain the RV in Kuwait??

[dinariac]

If McFly was correct how would he explain the RV in Kuwait??

Very correct. Quite a few millionaires were born from the Kuwaiti RV.

[greebs]

Those who will reply will tell you to do your research. Translation-I have no facts to back my claims of a fantasy RV, or you're being negative. What legit investment does not have people weighing in on the positive and negative aspects of that investment. Those claims put forth are strong claims and reasonable. Let's see how many replies are based on fact or have a link, as opposed to opinion.

[dinariac]

To correct my earlier thread, McFly was just posing a question to something he found on a website. Sure would like to know who the author of that piece was, because, after the IQD RV I'll buy the land in Florida and the bridge in Brooklyn

GGGGOOOOOOO RRRRRRVVVVVVVVVVVVVV

[Bumper64]

Lets cut the Newbies a little brake, I think McFly posted a respectable question and was thankful to Scooby Doo for his answer so lets not be so hard on everyone because that is what these forums are used for!

IMO, We were all newbies at one time and most likely got help from those with more knowledge than we had!!

[Dutch Boy]

The EEC or the EU has a population of over 330 million (I believe as of 2 or 3 years ago). The population of the United States is less than 300 million (Same time frame). If it were as simple as who has the greatest population then the Euro would be the world currency.

The strength of the USD, and if I'm not mistaken, the only thing keeping it afloat as the world currency, is that all oil transactions are in USD.

Any comments are appreciated as I am still learning. (IN GOOD TASTE PLEASE).

[Richardk]

If McFly was correct how would he explain the RV in Kuwait??

Sounds like he's still upset he didn't jump into the Kuwait Dinar pool.

Old news and I also read this before I jumped into this pool, water is still nice.

Go Rv/RI

[keepmwlknfny]

This guy who wrote that statement is def missing ALOT in understanding things......he is talking about the US and European economy having a GDP of TRILLIONS of dollars and then saying with Iraq only at billions they cannot have a currency higher in value.....well that is complete BS......look at Kuwait....they have a GDP of only over 200 billion and its 3 times the value of our dollar.....not to mention his statement of what Iraqs GDP is, is a little off....its much higher at over 110 billion.....so the GDP does NOT directly effect a countries value of their currency so I would simply disregard what that original post says.......STAY THIRSTY!!!

[whodat1]

Very correct. Quite a few millionaires were born from the Kuwaiti RV.

Do you know any of them? just asking.

[Carmine]

This guy who wrote that statement is def missing ALOT in understanding things......he is talking about the US and European economy having a GDP of TRILLIONS of dollars and then saying with Iraq only at billions they cannot have a currency higher in value.....well that is complete BS......look at Kuwait....they have a GDP of only over 200 billion and its 3 times the value of our dollar.....not to mention his statement of what Iraqs GDP is, is a little off....its much higher at over 110 billion.....so the GDP does NOT directly effect a countries value of their currency so I would simply disregard what that original post says.......STAY THIRSTY!!!

"Anyone who thinks that Iraq can introduce a currency, increase the supply of it to 26 Trillion (over 3 times more than the US dollar, 3 times more than the Euro) and use this currency for almost 5 years now… an then somehow magically increase the value 120,000%…"

I believe the author's intent was not only to address the size of a country's GDP but to address the relationship to its money supply and the length of time the currency has been in use. I'm a 'newbie' here and know nothing about world currencies but I think we should look at both sides of the argument rationally. I think we all understand the concept of supply and demand so in the author's view, if there is an oversupply of IQDs with little demand for that currency as compared to others, there will be very little movement in the exchange rate. Furthermore, the value of a currency is also affected by the confidence that the market places on that currency. I think that it is instructive how varied exchange rates are in different economies around the world. For example, against the USD, the Chinese CNY is 6.77 and the Japanese Yen is 84.10 (World's 2nd and 3rd largest economies), the S. Korean Won is 1177.30 (equivalent to the IQD), the Columbian Peso is 1802.57, and the Indonesian Rupiahs is 8950.35... just an observation.

I see this as a speculative investment and heed the mantra to invest only what I can afford to lose. With the losses I have taken over the years in the collapse of the stock market, the reduced value of my real estate, and lottery tickets... I figured why not? For at one point, though Enron and Worldcom were speculative, so were Google, Apple and Gold.

[Doc31]

Thanks for the post!

[MrRich]

This guy who wrote that statement is def missing ALOT in understanding things......he is talking about the US and European economy having a GDP of TRILLIONS of dollars and then saying with Iraq only at billions they cannot have a currency higher in value.....well that is complete BS......look at Kuwait....they have a GDP of only over 200 billion and its 3 times the value of our dollar.....not to mention his statement of what Iraqs GDP is, is a little off....its much higher at over 110 billion.....so the GDP does NOT directly effect a countries value of their currency so I would simply disregard what that original post says.......STAY THIRSTY!!!

keepm, I agree with your point about Kuwait so long as their money supply isn't 25 trillion dinar. I think that's the point the guy was making and even Scooter agrees that Iraq really needs to tighten up their money supply to justify a significant RV. He's still working on obtaining those numbers last I heard.

[gman51]

I read this on a website today:

Does anyone understand this? Does this hold any water? I understand the counter arguement against the LOP and agree it can't happen. I'm more interested in understanding the GDP point.

Thanks everyone.

First of all: The U.S. hasn't had a $13 trillion GDP for over 20 years. 2010 GDP was less than $1 trillion. In fact, it was less than $900 billion. Our national debt was close to $13 trillion.

Second: If Iraq hasn't enough GDP to support an RV upwards of $2.50, then how was it worth that very amount in 2000 when oil was $15 to $20 a barrel. (Saddam raised it to $3.22, but the world traded it at $2.50)

Third: Iraq has an estimated GDP in 2015 of $5 trillion, if all the current oil contracts (that are signed, sealed, and delivered) meet half of their production goals. That is only oil revenues. Iraq also has the number one natural gas reserves in the world, the number one Sulpher reserves in the world, and they used to be called "The Bread Basket" of the Middle East. They are currently working feverishly at attaining that goal also.

Iraq is the place to be right now for investment possiblities. There is money pouring in from all over the world. Our investment is one of the soundest currently available.

[bayoubobby]

First of all: The U.S. hasn't had a $13 trillion GDP for over 20 years. 2010 GDP was less than $1 trillion. In fact, it was less than $900 billion.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29

[Carmine]

First of all: The U.S. hasn't had a $13 trillion GDP for over 20 years. 2010 GDP was less than $1 trillion. In fact, it was less than $900 billion. Our national debt was close to $13 trillion.

Second: If Iraq hasn't enough GDP to support an RV upwards of $2.50, then how was it worth that very amount in 2000 when oil was $15 to $20 a barrel. (Saddam raised it to $3.22, but the world traded it at $2.50)

Third: Iraq has an estimated GDP in 2015 of $5 trillion, if all the current oil contracts (that are signed, sealed, and delivered) meet half of their production goals. That is only oil revenues. Iraq also has the number one natural gas reserves in the world, the number one Sulpher reserves in the world, and they used to be called "The Bread Basket" of the Middle East. They are currently working feverishly at attaining that goal also.

Iraq is the place to be right now for investment possiblities. There is money pouring in from all over the world. Our investment is one of the soundest currently available.

GDP (official exchange rate): $14.26 trillion (2009 est.)Last year's GDP for the US, the world's largest econony by far, was $14.9 Trillion! https://www.cia.gov/library/publications/the-world-factbook/geos/us.html. Second, was Japan at $5 Trillion. And Iraq?... $66 Billion.

[McFly]

Thanks much. That was a helpful breakdown. I appreciate it.