Rate question

[hfdmedic]

This is a simple question that is probably going to require a complicated answer, (funny life is that way too). I have a hard time spelling world economics much less understanding them, but one point of a large rate has been standing out in my mind for awhile and I would like someone to shoot holes in it.

I understand that the Dinar can only come in at a rate that the Iraqi economy can sustain, so they are limited on how high they can go, but what about a low rate? One of the continual arguments I have seen for a larger rate is that if it comes in too low, big investors will jump in. Why would this be bad for Iraq?

It seems to me that if they were to come in at a low rate on a managed float, this would be huge. I believe most “investors” are like me, I have a “sell point” were no matter what, if the Dinar hits that rate, I’m out. (for me 0.40) So let’s say the rate comes in between 0.50 and 1.00; a bunch of us “small” investors jump out, but a bunch of larger investors jump in. We cash out at the new rate, others buy at the new rate and it hasn’t cost Iraq a single Dinar. I understand that under normal circumstances this would cause a wild fluctuation in the exchange rate, but under a managed float would the rate not be stabilized by the CBI? After awhile the Dinar could be allowed to gradually increase to the preferred rate. During this gradual climb investors would be slowly cashing out as the rate hits what ever their “sell point” is.

It seems to me that under this scenario they could “pay” for the initial RV, and then slowly pay off the larger investors.

Please feel free to respectively shoot holes in my scenario, that’s why I’m asking the question.

[Officer151]

Please , please, please someone give us another RUMOR please. He's asking for it, let him have it!

[cris]

Because george soros wants it to RV high....lol

[krmayo]

There was an explanation of why it would not come in low months ago (5-6 months) by an economist..I don't have the link. It was a rather lengthy read, but covered your question. She, I believe it was a she, said it would not come out low because that would introduce higher inflation. Don't ask me to explain, just repeating what I read. Someone else probably remembers the article and maybe the poster.

[Dinarisready]

Realistically we would be looking at a rate between 1.13 and 3.20 from the mouths of the IMF and Iraq themselves......I dont think that coming in at a lower rate will be any issue for them as far as "speculators eating them alive" ......you can bet that at even a lower rate there will be a TON of people cashing in and the CBI will be able to get a boat load of their larger bills back.....most of the "damage" so to speak is already done as far as the amount of Dinar being bought from them. Yes you will still have larger hedge funds and investment groups jumping in once it revalues but even then at a higher rate there probly wont be any where near as much Dinar being bought as there is or has been to this point seeing as how low the cost is now and how much you can recieve for such a low price. So I dont think they are worried about being eaten alive by big investors by coming out lower at around a dollar. Alot of the big time players are probly already in this and are sitting on hundreds of millions of dinar if not billions. So if you raise the value to lets say 1 dollar, I doubt that these same groups would still be purchasing the same amount of Dinar as they are now at such a low price.......

[GO RV!!]

They have to get the LARGER denominations off the market ASAP - the one's with 3 zero's to be specific... Think Re-denomination, something that happens in an RV scenario and that has been discussed on the forum. Having large bills on the market makes doing business casually more difficult - people have to have a larger range of denominations for those that may present a larger "Zero'd" note. Some businesses may state they will not accept notes with more than two zero's for example. Just like a pizza joint in the United States saying they don't accept $100 dollar bills - it's just too taxing and risky on the smaller cash they need to keep on hand - basically changing people's purchases - not handing them large sums of cash that present themselves with "random" customers.

So they first will want to encourage people (can be done MANY ways - for example a deadline or date you have to cash the large denominations in by before they become worthless in value) to "cash-in" on their dinar holdings if they are holding larger denominations. They will essentially "buy" these off the market and will get these notes back in their hands in Iraq and not in general circulation. They could also institute an easier "trick" to encourage people by saying you have to trade larger denominations in directly with specific banks - therefore they don't need to establish a DEADLINE from the start they just point people in the right direction.

Bottom line is they will NOT want to value their currency much less than say the Kuwaiti Dinar - for several reasons. Having a similar value to Kuwait for example, would ease "business" between the two nations. It would also add stability to both countries currencies - less likely they would be affected in a (Global) currency war for example. Anything less than "par" for that region of the world and they will have a TON of foreign speculation on mainly their currency (Yes, people will invest in other things, but currency is more damaging to them). It's like knowing an investment had a high certainty to go up 20% a year for many years to come - who wouldn't at least buy a few "shares" or in this case - own some of the foreign currency in their "basket" of Investments.

Some say they would sell at .50 USD/ 1 Iraqi Dinar... well I'll tell you there are probably a few more people for eveyone of those people that would "sell" at that rate on here that would gladly "cash in" and then jump on forex, etc and buy a percentage of their "cash" in their savings with more Iraqi Dinar if it's still at a low rate like that... Regardless, the cat will be out of the bag and everyone and their unborn kids will be investing in SOME of it.... unless they can't afford it - which could be because it has a higher value (several times one unit of their currency for example)...

Just my .02

- Fresh

[hfdmedic]

cris

Dinarisready & GO RV!! Gracias!

[tripthelight]

Getting the larger denominations off the market is the key here. They do that at the same time they release the smaller denominations and POOF! It's done. That's why it won't come in at too low a rate. They want those holding those higher bills to cash out right away, not hold them.

[cbs71]

Getting the larger denominations off the market is the key here. They do that at the same time they release the smaller denominations and POOF! It's done. That's why it won't come in at too low a rate. They want those holding those higher bills to cash out right away, not hold them.

Yep, exactly! They want the larger denoms off the market and the only way to do this....is to RV it at a favorable rate..not a high, high rate per se, but a favorable one..

My prediction still stands at $3.22

God bless us all!

[rwharnden]

Great explanation gang!

[SteveI]

Yep, exactly! They want the larger denoms off the market and the only way to do this....is to RV it at a favorable rate..not a high, high rate per se, but a favorable one..

My prediction still stands at $3.22

God bless us all!

Good evening. There are quite a few great statements in this topic and I wanted to share my feelings based on common sense, prior news articles and Viper51's comment today. Viper51's comment was very accurate. I was not able to spend very much time on this forum today due to business obligations, but was able to make a few calls to a few friends and asked them for their comments.

I believe the budget is the second most important factor besides the formation of the government recently formed. I have no issues with the few extra days it is taking to do this right.

If you recall Scooter put together a very exceptional presentation in which Chapter II - Expenditure and disability outlined the exchange rate in that 2010 budget. I believe the primary reason that it never panned out was the lack of a strong government in place to execute and maintain it.

What that being said, it is extremely important to approve a budget that is accurate and inclusive of the new projected oil reserves and price per barrel. The release of this budget will lay the foundation for the economic success for Iraq for years to come and making a mistake now would or could be catastrophic.

I have been asked about the 2% every 90 days and I am still trying to find that. I can assure you it just did not pop into my imagination, but I did read those facts in print.

According to many contacts in which if they are on tonight will confirm that Shabibi has pushed for a value close to Kuwait or even a bit higher. I just checked and KWD is at 3.54610 just a moment ago. It was before I left my other office was at 3.55782, of if the new rate comes out at 3.55, this will give the 2% (.076) plus or minus adjustment will help maintain a currency balance.

I did a few quick calculations and according to the reserves and price per barrel of assets, a much higher rate could be supported.

It is my opinion that Shabibi was to see a managed float for a period of time close to the Kuwait Dinar. If and when the Iraq currency becomes a Basket Currency then its price will be driven by supply and demand.

With all of the positive statements my partners is hearing reflects some wanting Iraq currency to return to post Saddam rates.

Remember this topic is a round table discussion and I am in no way predicting any rate or date, but expressing my firm beliefs on experience and continued news articles that support my feelings.

My contacts seem to feel that the budget approval is a very high priority within the elements of tasks that need to be addressed and accomplished.

I do apologize for not spending more time here today but that was just not possible and thank Viper51 for an outstanding job in helping this DV family stay current.

My last comments is regarding a future conference call. The last call we did was a spur of the moment call because we happen to all be available to do it. This next call is a bit more complex due to everyone's schedule and I did hear from zzzzzzzzz and it is on the top of his list but also runs a very large business and has to address daily activities.

If there is anything I can do to help this DV family, I will be the first one to jump in line and try.

Our times are in God's hands; our souls are in His keeping.

God Bless all of you and thank you for letting me share my views.

Edited November 17, 2010 by SteveI

[Nova]

Steve, thanks so much for taking the time...... I could not agree with your conclusions more. Thanks again

[SteveI]

Steve, thanks so much for taking the time...... I could not agree with your conclusions more. Thanks again

Thank you. I really feel good as to the direction this is going and the rewards the Iraqi people we finally get to experience. Not only will they benefit, the entire world and ourselves who decided to invest into this country.

God Bless all who invested in this country.

[hopesway]

I only heard about the Dinar a few weeks ago. It seems "to good to be true" and when I mention it to some people they act like they want to pat me on the head as if to say "have fun in your fantasy world". I am having a hard time getting my head around it! But I talked to my hubby, we bought some and are hoping for the best!

[BtrFuture4All]

'hfdmedic' -- thank you for bringing your question to the table, and thanks to others who stated their case for their beliefs. I can understand the statements from both sides. SteveI, I appreciate your jumping in with info from your contacts. This is what this Forum is about. Thanks to all !!

[fatbob]

Thanks for the info Steve. Any thoughts on a time frame?

[deb51]

Thanks Steve...we missed you today!!! Would love to know the atmosphere and mood over there if you are able to get out and about!!!

[Loingsign]

Thanks a million Steve....(no pun, promise)

At this point my friend, I think you can leave out the disclaimer. We know you give honest information and it's not official....just unofficial.

God Bless you for your hard work

Edited November 17, 2010 by Loingsign

[Dinar329]

They have to get the LARGER denominations off the market ASAP - the one's with 3 zero's to be specific... Think Re-denomination, something that happens in an RV scenario and that has been discussed on the forum. Having large bills on the market makes doing business casually more difficult - people have to have a larger range of denominations for those that may present a larger "Zero'd" note. Some businesses may state they will not accept notes with more than two zero's for example. Just like a pizza joint in the United States saying they don't accept $100 dollar bills - it's just too taxing and risky on the smaller cash they need to keep on hand - basically changing people's purchases - not handing them large sums of cash that present themselves with "random" customers.

So they first will want to encourage people (can be done MANY ways - for example a deadline or date you have to cash the large denominations in by before they become worthless in value) to "cash-in" on their dinar holdings if they are holding larger denominations. They will essentially "buy" these off the market and will get these notes back in their hands in Iraq and not in general circulation. They could also institute an easier "trick" to encourage people by saying you have to trade larger denominations in directly with specific banks - therefore they don't need to establish a DEADLINE from the start they just point people in the right direction.

Bottom line is they will NOT want to value their currency much less than say the Kuwaiti Dinar - for several reasons. Having a similar value to Kuwait for example, would ease "business" between the two nations. It would also add stability to both countries currencies - less likely they would be affected in a (Global) currency war for example. Anything less than "par" for that region of the world and they will have a TON of foreign speculation on mainly their currency (Yes, people will invest in other things, but currency is more damaging to them). It's like knowing an investment had a high certainty to go up 20% a year for many years to come - who wouldn't at least buy a few "shares" or in this case - own some of the foreign currency in their "basket" of Investments.

Some say they would sell at .50 USD/ 1 Iraqi Dinar... well I'll tell you there are probably a few more people for eveyone of those people that would "sell" at that rate on here that would gladly "cash in" and then jump on forex, etc and buy a percentage of their "cash" in their savings with more Iraqi Dinar if it's still at a low rate like that... Regardless, the cat will be out of the bag and everyone and their unborn kids will be investing in SOME of it.... unless they can't afford it - which could be because it has a higher value (several times one unit of their currency for example)...

Just my .02

- Fresh

But doesn't Iraq have to have an equal number of US dollars in their reserves to cash-in the investors. Let's say there's, for argument's sake, 5 Trillion IQD outstanding. If the rate came in at $3, wouldn't they have to have 15 Trillion US dollars to cover that? When they only have a yearly economy in the billions, I don't see how that's possible.

[vision]

Good evening. There are quite a few great statements in this topic and I wanted to share my feelings based on common sense, prior news articles and Viper51's comment today. Viper51's comment was very accurate. I was not able to spend very much time on this forum today due to business obligations, but was able to make a few calls to a few friends and asked them for their comments.

Thank you, Steve. Your time and knowledge are very much appreciated!

Is this what you are looking for (2nd to last paragraph)?

[SteveI]

But doesn't Iraq have to have an equal number of US dollars in their reserves to cash-in the investors. Let's say there's, for argument's sake, 5 Trillion IQD outstanding. If the rate came in at $3, wouldn't they have to have 15 Trillion US dollars to cover that? When they only have a yearly economy in the billions, I don't see how that's possible.

I do not believe so, but that is an excellent question and I just cut and paste it to my notes and will ask my partners. My knowledge is limited to the requirements but I do have some very close friends that this is their area of expertise and can answer this very accurately.

Thank you for a great question. I am going to call one of them now and try and get right back to this.

God Bless.

No answer. I will send a quick email.

Edited November 17, 2010 by SteveI

[Dinar329]

I do not believe so, but that is an excellent question and I just cut and paste it to my notes and will ask my partners. My knowledge is limited to the requirements but I do have some very close friends that this is their area of expertise and can answer this very accurately.

Thank you for a great question. I am going to call one of them now and try and get right back to this.

God Bless.

No answer. I will send a quick email.

Thanks Steve for your time! This has been my nagging question all along....where does the money come from? I read the Economist explaining how a 1:1 revaluation was allegedly planned from the beginning and that made some sense. I have heard no definitive answer to this and it seems to me this should be the underlying question on everyone's brain. Thanks again for checking into this!

Regards,

[tampa1000]

I do not believe so, but that is an excellent question and I just cut and paste it to my notes and will ask my partners. My knowledge is limited to the requirements but I do have some very close friends that this is their area of expertise and can answer this very accurately.

Thank you for a great question. I am going to call one of them now and try and get right back to this.

God Bless.

No answer. I will send a quick email.

Steve, I appreciate all your advice and input!!! I remember reading here on DV that 3/4 of the US currency is outside of the US in other countries reserves... With that thought if the US RV that does not mean that all the dollars will be returned and exchange. So when we see the Dinar RV not all Dinars will be rush back to Iraq for an exchange for Dollars. As i understand the Dinars here in the US with 000's would go to the Federal Reserve to either be destroyed or used for the purchase of oil. It would be nice to know for sure how this will go down. Does anyone really know??? Thanks in advance for your input! GO RV!!!!!!!!

[SteveI]

Steve, I appreciate all your advice and input!!! I remember reading here on DV that 3/4 of the US currency is outside of the US in other countries reserves... With that thought if the US RV that does not mean that all the dollars will be returned and exchange. So when we see the Dinar RV not all Dinars will be rush back to Iraq for an exchange for Dollars. As i understand the Dinars here in the US with 000's would go to the Federal Reserve to either be destroyed or used for the purchase of oil. It would be nice to know for sure how this will go down. Does anyone really know??? Thanks in advance for your input! GO RV!!!!!!!!

Thanks Steve for your time! This has been my nagging question all along....where does the money come from? I read the Economist explaining how a 1:1 revaluation was allegedly planned from the beginning and that made some sense. I have heard no definitive answer to this and it seems to me this should be the underlying question on everyone's brain. Thanks again for checking into this!

Regards,

I just got off the phone to help answer that. With regards to the US, and remember I am only talking about the US. All Iraq currency will go back to the Federal Reserve and destroyed. The money will be deposited on the Federal Reserve Books. Then, I was told that the monies on reserve (federal reserve books) will be applied to future oil and or other contracts. The person I spoke to is highly educated in this field.

He said that it will be like one large mortgage and the future contracts will reduce the federal reserve balance on an ongoing basis against that mortgage. I now understand it better now that it was explained to me like that. I learned something myself from your great questions. So all they need is oil to pay back the federal reserve balance which they have plenty of.

God Bless and stay safe.

Edited November 17, 2010 by SteveI

[SteveI]

THANK YOU! I have seen this explanation many times and have done enough research to know that this is accurate but this is the first time I've seen it written down in such a concise way. Much appreciated!

~Carrie Ann

Carrie Ann, you and me both, but I had to have the smart guys explain it to me so it did not go over my head. Now I understand why the reserve is not even an issue regarding a new rate. That made me feel so much better knowing the true working of this complex arrangement.

I am working on getting our team together very soon to share more news. I have been talking to my partner in Baghdad regarding our contracts which is tied to the new 2011 budget. I have some good positive information I will be sharing.

God Bless.

Edited November 17, 2010 by SteveI