A Simple Explanation

[ReachingHigher]

On a completely different note -

However this plays out - it will be what it will be.

That being said - if you look at Adam and the others who are planning for post RV scenarios and etc-

It may be that all the "gurus" are employed by the dinar traders to pump sales and "sell" us a pipe-dream

of a 3000x return on our investment....

Maybe they are sincere but have been sold a bill of goods and we're all nuts for believing that this could

bring a return which is so astronomical...Maybe they are only here to sell us books and memberships

and text message services, and con us into donating to their sites for all we have gained here, etc.

I may be as naive as a baby lamb on a spring day, but I find it extremely difficult to believe/imagine that every

single one of the "gurus" is lying or has been deceived and believes they are telling us the "truth" about the

possibilities with this investment.

We all (most of us anyway) understand this is a HIGHLY speculative investment. We realize we may get

little or no return on our investment. But my contention is there is FAR MORE going on here than meets-the-eye,

and I do not believe that anyone on these various dinar forums truly knows how this will play out.

Economist perspectives, Guru perspectives, Guys-with-"BIG"-connections perspectives - we are all still

VERY small fish in a BIG SEA of MEGA/ULTRA/UBER-RICH, power-hungry, King-makers who control

the wealth and the reins of this entire planet. No one here has an inside track to what the PLAN really is

and thus, we wait.

This thread was a GREAT dialogue about what it may or may not be. What may or may not be possible -

but in the end I believe whether small or larger gains are made - we will all be surprised at how this plays out.

We are NOT "big fish", we are not privy to the real situation, and if we were and we shared it they would

have to come and kill us. So, I for one am happy to wait and see what Santa brings us on this veritable

"Christmas" (pick your holiday) morning. It will be what it will be.

Be you pessimist or optimist - LOPster or Millionaire-wanna-be - and no matter how much we want to know

the end of this story NOW - it will only happen when THEY (the GOI, CBI, as well as all the othe other World-Big-Fish)

are ready and not a minute beforehand.

I don't put much weight in the pessimists or the optimists. I just take it all in and wait because no amount

of hand-wringing will make this happen any faster.

Try to relax. If your glass is half full then praise God. If your glass is half empty there is nothing wrong with

your view point either.

Bottom line for me is that many good, honest, hard-working American soldiers gave their lives and limbs

for me to even be here having this conversation and I never want to lose sight of this as the most important

fact to consider. They stood in harms way so I might have this blessing - large or small. So, for me and my

family, we stand in a place of humble gratitude and prayerful anticipation. And when the end of this story is

revealed then we will make sure to find every way we can to "pay it forward".

Peace.

[natjus843]

very good points all around here. it seems that if a differing viewpoint is well thought out and well worded, it is not as likely to be blasted and shouted down. i, for one, like reading different viewpoints. obviously we all want our investment to increase 1000% or more, but as someone who has dealt w/ investments for quite some time, i will have a hard time accepting that until the day it happens. thats not to say i do not have a new boat, house, and truck already picked out (i do), but at the end of the day, even a 100% return is outstanding. do not forget that. while i have done tons of research on the dinar and its likely revaluation, i am more apt to take someones post seriously if it is not littered w/ spelling and grammatical errors.

[Stumpy]

IMO, I've spent 27 months in Iraq, from May 08 until August 10. Many issues arise, infrastructure to say the least. These are a proud people. IMO, everyday, now brings us closer to an RV. All these people who think it was going to happen 2 or 3 years ago, seriously a war was going on. Now since last year and the SOFA agreement and the with drawl of troops(this year), this is the birth of a country. If their money does not RV or regain strength, it would be like Iowa's money a the same value as the current dinar and all the surrounding states are at the current USD value. How could anyone travel, do business or do anything in the surrounding states, they could not! This is my thinking behind my support for an RV anytime here on out. There were a few stories in "The Stars and Stripes", when I was in counrty, reporting of the many tens of millions of dollars Iraq had in US banks, sorry no link. Thanks for reading, let the bashings begin, be kind!

[Guest Wanker]

Would the small notes that have been held back be a big % still not released as well . I read somewhere that the figure is like 10 trillion in small notes that were not released so the figure is more like 15 trillion out there which makes for a different math equation . Not sure if I am right about this however it goes without saying that if certain notes were not released and only a certain amount were printed , then the math is off . Have a nice day, just my 2 dinars on the subject

that would almost make sense

if the lower denoms are being held and have not been put into circulation, then they dont count as the 25t....get it?

so by your example, they have 35trillion printed

[Guest FactChecker]

obviously we all want our investment to increase 1000% or more, but as someone who has dealt w/ investments for quite some time, i will have a hard time accepting that until the day it happens.

people around here are hoping for 100,000% and up, not 1000% (which ain't happening either)

[d00gie]

You know, I've seen very few guest posts on the site, but this thread is just rife with them. Who the F are these people??

[Guest ha ha]

You know, I've seen very few guest posts on the site, but this thread is just rife with them. Who the F are these people??

like d00gie is any less anonymous? who da F are you?

[Guest doogie]

You know, I've seen very few guest posts on the site, but this thread is just rife with them. Who the F are these people??

never mind.. i'm just myself

[Guest Economist]

Hello again, and thanks for the additional responses.

Come on man!!!!How many times have we been told that 70-90% have been recovered and back in their banks? Run your figures that way!! If it were only 70% then they are only dealing with 7.5 trillion in circulation!! I am no economist but your post has you dealing with the numbers of ALL 25 trillion in circulation!!!

Again, as I stated in my second post on this thread, even if 50%-80% of the IQD in circulation as of February 10th has been withdrawn, the remaining 20%-50% IQD are still far too numerous to possibly allow for appreciation anywhere in range of several hundred-thousand percent. Please reference my second post for my reasoning.

However, as I also stated in the second post, it is extremely unlikely that a significant portion of the IQD supply has been removed from circulation. The explanation why will be a bit long winded, but anyone can understand it with a little critical thinking.

Exchange rates between floating currencies are determined on the open currency market, and this is exactly the reason they are referred to as “floating.” I’m sure everyone remembers basic supply and demand curves from a high-school or undergraduate economics course. It may surprise you to learn that professional economists frequently use the basic graphs, with only slight modifications, emphasized on those courses to aid their understanding of complex events. This is because the market interaction of supply and demand is so consistent as to practically be a law. The higher the price, the less demanded and the more supplied, and vice versa. Currency can be thought of in the exact same way, with a little adjustment to the graphs and terms you may be familiar with.

Part 1: Foreign Exchange Markets

Above is an example of a graph depicting the relationship between the Euro to USD exchange rate and interest rates for USD deposits. The vertical blue line represents the interest rate for USD deposits set by the Federal Reserve, and the red line represents the expected return of Euro deposits, which would be set by the ECB. At a given interest rate of R¬¬¬¬1$ (say you could earn 5% by depositing your USD in an American bank), the exchange rate for USD to Euro is at some level E1$/€ (say 1 to 1). Point A represents the expected return of Euro deposits for the given exchange rate and the interest rate on USD deposits. As you can see, the exchange rate at point A settles where the interest rate on USD deposits is equal to the expected return on Euros (where the blue line crosses the red). This must always be the case because of a phenomenon called Interest Rate Parity (http://en.wikipedia.org/wiki/Interest_rate_parity), which states that any differential in interest rates between floating currencies will automatically be adjusted for in the exchange rate.

To see why, examine the case of the green line, representing a new interest rate on USD, R2$ (suppose the Fed has just announced an increase in interest rates to 10%). Now assume the exchange rate is unchanged at 1 to 1 (E1$/€ ). At this previous exchange rate, the associated interest rate for Euros was 5%, but now investors can earn an extra 5% by converting their Euros 1 to 1 for USD, and they try to do so. But no one holding dollars would be willing to exchange them for Euros at the 1 to 1 exchange rate, so Euro holders must compensate for the reduced interest potential by accepting fewer dollars in return, so the USD appreciates against the Euro, from E1$/€ to E2$/€ . As holders of Euros dump them for USD, the expected return on Euro deposits must increase, as European banks must offer better rates to entice investment.

Part 2: Money Markets

The interaction of currency traders is only part of the determination of exchange rates. As I demonstrated in Part 1, exchange rates are highly dependent on interest rates, which are determined by money markets.

Again, like any market, money markets can be understood as an interaction of supply and demand. In this case, supply is the money supply determined by the appropriate governmental authority (In the US it’s the Fed).

Being fixed at some amount, the supply curve is vertical, exactly the same as the supply curve in the previous example. And like the previous demand curve, the demand for a currency in a money market is downward sloping, because as the cost of holding the currency increases, fewer people will want to do it. In the case of money markets, the cost of holding a currency is the interest rate. At very high interest rates, few people want to hold the corresponding currency because they will be giving up the return they could be earning by depositing it in a bank or loaning it out. The reverse is true of very low interest rates; when loans can be obtained very cheaply, or when very little money can be made with bank deposits, more people will withdraw that money and devote it to other purposes, so the demand for currency increases.

The blue line represents the fixed USD supply determined by the Fed, and the red line represents the demand for USD. (“Real” USD demand is adjusted for inflation). At point A, the money supply Q1 meets with the money demand curve and the corresponding interest rate is R1. Suppose the Fed wishes to reduce the money supply; the quantity of USD falls from Q1 to Q2, and the green line denotes the new supply curve. As the amount of USD decreases, there are literally fewer dollars to go around for loans and day to day purchases, and at the old interest rate R1, the demand for dollars exceeds the supply (point . As in any shortage, the price of USD must therefore increase, and the holders of dollars are now outnumbered by their customers. Therefore, the interest rate must rise from R1 to R2, and the new equilibrium is point C. As a side note, this is exactly how the Fed controls interest rates via the money supply.

Part 3: Aggregate Analysis

With these two foundational markets understood, we can now examine the effect of a reduction in the money supply on exchange rates. The following graph appears alarmingly complex, but if you’ve followed the argument so far, then you will understand this as well.

http://www.flickr.com/photos/56135798@N03/5193816076/

This is the literal combination of the two graphs I have already explained. The relationships all remain the same, but I will now switch the currency of focus from USD to IQD. As you can plainly see, a reduction of any significance in the supply of the IQD would lead to higher interest rates in Iraq. Higher interest rates in Iraq equate to higher returns on IQD deposits. Higher returns on IQD deposits would lead to appreciation of the IQD relative to the USD.

Has any of this happened?

The article I linked in my first post was from February of this year. At that point in time, Mr. Salih stated the amount of IQD in circulation to be approximately 25 trillion.

https://www.cia.gov/library/publications/the-world-factbook/geos/iz.html

CBI Discount (Interest) Rate as of December 31st 2009: 8.83%

http://www.cbi.iq/

Current CBI Policy Rate: 6%

That’s a decline over the last year, the opposite trend you would expect if the money supply since that time had been cut in half.

http://www.cbi.iq/documents/inflation_chart.jpg

There’s also no room for disagreement with any of the above on the grounds of changes in price levels in Iraq. As you can see in the chart above, core inflation since February has remained relatively stable with a slight increasing trend, and overall inflation has also increased since the time of the article.

Moreover,

http://www.cbi.iq/documents/exchange_rates_chart.gif

The exchange rate between the IQD and the USD has remained virtually unchanged for well over a year.

ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

USA CPI February 2010: 216.741

USA CPI October 2010: 218.711

8 month inflation rate: 218.711 / 216.741 = 1.00909 – 1 = .00909 x 100 = .909%

Clearly there have not been any significant fluctuations in US price levels during the time in question.

I therefore find it highly unlikely that any of the IQD supply has been taken out of circulation. If someone can refer this discussion to a credible source stating that it has (credible being the free press, the Fed, CBI, the Iraqi Government, the United States Government, etc), I will gladly stand corrected. However, the point is essentially moot, because as I have already shown, even an 80% reduction in the money supply leaves far too many IQD in circulation to allow for the kind of astronomical appreciation that many speculators seem to be expecting.

There are really only two objections one could make to the above. The first is that Mr. Salih may have been lying about the money supply, or made an error in his estimation. This is a defensible point, but I would disagree. The importance of credibility to central bankers is absolutely paramount to their function, probably almost as important as the ability to control interest rates at all. If anyone doubts this, refer to the many speeches and writings of Alan Greenspan, widely regarded as the greatest investment banker of all time, on the importance of credibility.

Additionally, if you don’t trust your own government, the free press, the IMF, the Fed, the CBI, etc., then you’re in a logically tenuous position as you have even less grounds for trusting internet rumor mills where no credibility at all is at stake.

The second objection is that the IQD is not traded on Forex, and so therefore the exchange rates cannot adjust as quickly or as easily as they might otherwise. This is partly true, but it would not outright prevent natural adjustment as money supply conditions change, as any differential could still produce a profit by physically travelling to any bank trading in IQD and USD, and many people have been doing exactly this, hence the availability of IQD in America.

If you would like to examine any of this in more detail, you may reference any monetary economics textbook. The above analysis was taken straight out of International Economics: Theory & Policy, by Paul Krugman and Maurice Obstfeld.

[Inside Track]

never mind.. i'm just myself

Okay d00gie....how did ya do that!

Yeah, what's up with this F__lurry of "Guests"!!!

I am just puzzled how a "Guest" gets to posts.

Think I might give this a whirl myself...hummm.....

Guest, InsideTrack....Hey, I kinda like that!

Sorta makes ya think I'm somebody special. jkd

Keep It Goin d00gie!

[Guest Inside Track]

Okay d00gie....how did ya do that!

Yeah, what's up with this F__lurry of "Guests"!!!

I am just puzzled how a "Guest" gets to posts.

Think I might give this a whirl myself...hummm.....

Guest, InsideTrack....Hey, I kinda like that!

Sorta makes ya think I'm somebody special. jkd

Keep It Goin d00gie!

I figured it out d00gie, it's me, Inside Track. or is it myself again? who knows?

[Guest Inside Track or d00gie]

Come on man!!!!How many times have we been told that 70-90% have been recovered and back in their banks?

we've been told that a thousand times...its never been true, but we've been told that by our gurus...and we believe everything we are told...

[Guest Economist]

In order to analyze the situation correctly, you *do* however have to have a firm command of how the fiat fractional-reserve world monetary system actually works, and that is something that is not taught in any academic economics program, or otherwise discussed in polite society.

Actually, nothing I've said depends on an understanding of the fractional-reserve system. My original post is a logical extension of the exact argument that a great many IQD speculators are prone to: that buying and holding the IQD will produce a return on the order of ~300,000%. If it is true for one IQD holder, then it must be true for all of them, as the CBI cannot "target" individuals to distribute wealth to. So 300,000% to one holder must mean 300,000% to all holders, and 25 trillion IQD in circulation means that 25 trillion IQD is being held by entities other than the CBI, "held" meaning any amount of time.

Also, when was the last time you attended graduate school? Monetary economics is alive and well, and is such a robust field of research and understanding that practically any professional economist could explain the fiat money system to you. In fact, this is so much the case that it may surprise you to learn that many Federal Reserve governors are not monetary specialists. Alan Greenspan was a Wall Street economic consultant before becoming involved in the government.

There are several errors and fallacies with this statement. First, chop 70% off of the U.S. GDP, given that that is the percentage of GDP attributable to "consumption". Then, remove the large chunk of the remaining 30% "produced" in the financial sector. Now, realistically, the U.S. is NOT the most productive country on the planet.

I'm sorry, but the fallacies you've referred to are your own. Your statement demonstrates a fundamental misunderstanding of GDP and its interpretations. Firstly, when comparing the GDP of different countries, consumption spending is included for all of them, so it would make no logical sense to subtract out consumption from one, but not the rest. Consumption spending is already taken into account when GDP's are ranked. Secondly, "consumption" is not what you seem to be suggesting. There are several generally accepted ways of calculating GDP, but the easiest to explain and remember is a simple formula taught in every undergraduate intermediate macroeconomics class: GDP = C + I + G + NX (Gross Domestic Product is equal to consumer spending or "consumption" plus private investment plus government spending plus net exports).

Measuring GDP with the above formula is an attempt to measure the value of all final goods and services produced in a country by measuring how much is spent on them. When the US government buys jets from Boeing, its contributing to government spending category of GDP. When GM builds a factory in Detroit, its contributing to the investment category. When you and I buy toothpaste, food, consumer electronics, music, or anything else meant for consumption, we are contributing to the consumer spending category.

When we export goods/services to other countries, it is counted as a positive addition to GDP. When we import goods/services from other countries, it is subtracted from GDP. Imports always have a negative coefficient in C + I + G + NX. The "net export" part of GDP is the difference between what we export and what we import. If we bring in more goods than we send out, NX is negative.

It makes no logical sense to say that consumption spending should be subtracted out of the GDP for the United States. When you hear that America's GDP is $14 trillion, that's already taken the negative effect of imports into account. If 60% to 70% of that GDP is consumption, then .7 x 14 = $9.8 trillion worth of goods is being consumed here but not imported. Therefore, the United States must have produced it.

From an economic point of view, *would* it?? If the "consumer of last resort", trading worthless Federal Reserve Tokens and floating fraudulent paper in exchange for actually valuable goods and services disappeared, the rest of the world would simply have to trade with each other in terms of actually valuable goods.

No offense intended, but this is a vacuous statement. If you need an illustration of the importance of the United States economy to the rest of the world, I suggest you pick up any issue of Wall Street journal for the last 2 years, and peruse any of the thousands of articles detailed the effect of the US financial crises on the world economy. Federal Reserve Notes, a.k.a. USD, are no more or less worthless than any other currency. No currency on the planet is currently backed by any physical commodity. It is a rhetorical question to ask whether the world would feel the effects of an instantaneous disappearance of its most important country. It's not ethnocentrism, its an economic fact.

A new economy with a Gross Product of the same size IS NOT being "created" suddenly ex nihilo. That would require instantaneous creation of that much annual *wealth-producing capacity*, and at a very robust growth rate of 5%, that would imply an instantaneously mature capital investment twenty times larger -- and at a more likely rate, way more than 20 times larger.

Nor did I say one was. I said a wealth effect that would rival the yearly productive capacity of any individual country on the globe would be taking place, should the IQD appreciate to the oft suggested levels.

It is not in those gaps that I have taken issue, but with the fundamentally flawed premises and logic. Then again, perhaps I'm just not "irrationally exuberant". In any case, interpolation and extrapolation from incorrect data merely produce more incorrect data.

The only data I've used is the 25 trillion IQD figure. I don't believe any of my premises are flawed.

Probability applies to electrons and bomb damage analysis. Occam's razor does not apply to humans, especially diabolical sneaky humans with the power to create Very Large Amounts of currency through fractional-reserve and central banking, and the willingness to do things with it that people would NEVER agree to if it actually had to come out of their own pocket.

Probability applies to anything that can be evaluated in terms of outcomes. Occam's Razor does apply to humans, because it is by its very nature an aesthetic philosophy, formulated by humans, and often applied to human nature.

The U.S. is no longer an industrialized economy, and the entirety of the "production" that the U.S. has engaged in for the last 15 years *is* monetary engineering. No "wealth" is being created here by monetizing Iraq's oil any more than "wealth" was created when the U.S. duped the rest of the world into buying trillions worth of bogus mortgages and their attendant derivatives, or when people monetized their resultant artificially overpriced houses to buy scads of pointless, non-wealth-storing or -producing crap.

http://www.cfr.org/publication/10647/group_of_eight_g8_industrialized_nations.html You seem to be erroneously taking issue with the semantics of my post. The United States is considered an "industrialized" economy. And ironically, your statement above exactly illustrates the kind of instability instant, disproportionate wealth creation engenders. Wealth was created by the housing bubble. Very few people realized that wealth. As the bubble burst, wealth was destroyed. Whether the production of the US economy is devoted to "scads of pointless, non-wealth-storing or -producing crap" is a personal opinion of yours, which I do not share.

Again, this fails utterly to take into account the way central banking actually works, and ignores the obvious contradictory data point of Kuwait. And again, probability is meaningless where complex systems of clever humans are involved.

I think I can safely rely on the humans in question not to attempt to destabilize the entire world economy, and therefore their own assets, dubiously clever or not. As this would be an outcome, I can say that I think having repeated the experiment enough times would frequently yield this result, meaning it is highly probable.

[Guest Economist]

You people just don't get it.

You and all the other self proclaimed economists try to make predictions

without first knowing the real figures or facts which in turn produce

flawed results, and then you try to defend those results.

First you need to find out how much currency was removed from circulation

before you can even start to determine your results.

If the free press does not have the "real figures," then where would you propose that I obtain them? As I've noted several times now, even if the currency has been reduced by 80%, which I don't see any evidence of, the wealth effect of an instantaneous 300,000% would be globally devastating.

I agree, maybe these guys work for the CBI and are trying to fool everyone!!! GOOD TRY!!!!!!!!! GO RV!!!!!!!!!!!!

I can't tell whether this is a serious comment or not. If it is, it presents a logical contradiction. Why would the CBI try to trick speculators into selling their dinar? Selling would reduce the demand for, and the value of, the dinar.

On a completely different note -

However this plays out - it will be what it will be.

That being said - if you look at Adam and the others who are planning for post RV scenarios and etc-

It may be that all the "gurus" are employed by the dinar traders to pump sales and "sell" us a pipe-dream

of a 3000x return on our investment....

Maybe they are sincere but have been sold a bill of goods and we're all nuts for believing that this could

bring a return which is so astronomical...Maybe they are only here to sell us books and memberships

and text message services, and con us into donating to their sites for all we have gained here, etc.

I may be as naive as a baby lamb on a spring day, but I find it extremely difficult to believe/imagine that every

single one of the "gurus" is lying or has been deceived and believes they are telling us the "truth" about the

possibilities with this investment.

I haven't meant to discredit any individual or any site. I don't know who has said what or who supports what. I'm not accusing anyone of lying about anything, nor am I even suggesting IQD is a bad investment. The only thing I'm trying to discredit is the notion that IQD will produce a 300,000% return.

Bottom line for me is that many good, honest, hard-working American soldiers gave their lives and limbs

for me to even be here having this conversation and I never want to lose sight of this as the most important

fact to consider. They stood in harms way so I might have this blessing - large or small. So, for me and my

family, we stand in a place of humble gratitude and prayerful anticipation. And when the end of this story is

revealed then we will make sure to find every way we can to "pay it forward".

No offense intended, but I'm pretty sure the American soldiers who have laid down their lives in Iraq haven't done it so you could have to opportunity to speculate on the IQD. Discussing the realistic profit potential of the IQD in no way discredits the men and women who have served in the war; it is a completely separate issue. I think most would agree that they have done so because they are shining examples of dedication and duty.

[hspotman]

The only thing I'm trying to discredit is the notion that IQD will produce a 300,000% return.

Maybe you should have been an English teacher instead of an economist. This is a wrong statement you made here. No one here is claiming this to be a 300,000% return on their investment , they are saying maybe 1000%-3000%. A 300,000% return would mean an rv of $300 , or if my math is off a bit here, it would mean an rv of no less than $30. We are hoping for a $3+ rv. How can you justify the IQD value pre-Sadam, and the KWD pre-Gulf War and now? True, most in this world scoff at even a 100% return, let alone 1000% return....but as many here have said, this is a once in a lifetime chance. Do you even own any dinar? If so, why are you scoffing at us. if not,WTF do you care?? Leave us to our "Pipe Dreams", we will have the last hoorah in the end!

Edited November 21, 2010 by hspotman

[RichNick123]

Maybe you should have been an English teacher instead of an economist. This is a wrong statement you made here. No one here is claiming this to be a 300,000% return on their investment , they are saying maybe 1000%-3000%. A 300,000% return would mean an rv of $300 , or if my math is off a bit here, it would mean an rv of no less than $30. We are hoping for a $3+ rv. How can you justify the IQD value pre-Sadam, and the KWD pre-Gulf War and now? True, most in this world scoff at even a 100% return, let alone 1000% return....but as many here have said, this is a once in a lifetime chance. Do you even own any dinar? If so, why are you scoffing at us. if not,WTF do you care?? Leave us to our "Pipe Dreams", we will have the last hoorah in the end!

Hotspot,

Sorry but he is correct. Grab your calculator and multiply .00086 by 300,000%. 300,000% gives yu a multiplier of 3,000.

Sucks don't it!

[Guest Economist]

Maybe you should have been an English teacher instead of an economist. This is a wrong statement you made here. No one here is claiming this to be a 300,000% return on their investment , they are saying maybe 1000%-3000%. A 300,000% return would mean an rv of $300 , or if my math is off a bit here, it would mean an rv of no less than $30. We are hoping for a $3+ rv. How can you justify the IQD value pre-Sadam, and the KWD pre-Gulf War and now? True, most in this world scoff at even a 100% return, let alone 1000% return....but as many here have said, this is a once in a lifetime chance. Do you even own any dinar? If so, why are you scoffing at us. if not,WTF do you care?? Leave us to our "Pipe Dreams", we will have the last hoorah in the end!

Do you mean a math teacher? I'm not sure what an english teacher would know about rates of return, although I'd expect a teacher of any kind could handle the math involved.

1 x 10 = 10

100% x 10 = 10

1 = 100%

To convert a multiplier to a percentage, multiply it by 100.

Current IQD to USD Exchange Rate: $.00086 http://www.xe.com/currency/iqd-iraqi-dinar

Desired IQD to USD Exchange Rate: $3.00

$3.00 / $.00086 = 3488.37 this is a multiplier. The dinar needs to appreciate 3488.37 times the current rate. It's not a percentage. To convert this multiplier to a percentage,

3488.37 x 100 = 348,837% So in a sense I was wrong; the rate of return you're hoping for is closer to 350,000%.

As I said before, I myself hold dinar and expect to make a phenomenal 200%-300%. I'm not scoffing at anyone. On the contrary: I'm presenting any information here that can be verified ad nauseam in any economics textbook, or by any economist, so that the debate about the IQD can return to reality. How do you expect to have any rational discourse if the you see any viewpoint which doesn't match your own as an insult? I would think it to be far more insulting to ask you to trust me some "confidential source." Fortunately, the accuracy of what I'm saying doesn't depend on trust. It's an extremely simple generalization of the premise you and others are arguing, with extremely simple calculations. The only assumption that I think I've made is in assuming that those in charge of the IQD supply do not want to devastate the global economy.

If any of you are interested and have the spare time, take a trip to your local community college or university and have a chat with an econ professor. Economists love to talk about economics, and we love to be challenged. See if any of them disagree with anything I've said.

[d00gie]

Actually, nothing I've said depends on an understanding of the fractional-reserve system. My original post is a logical extension of the exact argument that a great many IQD speculators are prone to: that buying and holding the IQD will produce a return on the order of ~300,000%. If it is true for one IQD holder, then it must be true for all of them, as the CBI cannot "target" individuals to distribute wealth to. So 300,000% to one holder must mean 300,000% to all holders, and 25 trillion IQD in circulation means that 25 trillion IQD is being held by entities other than the CBI, "held" meaning any amount of time.

You've misunderstood what I said -- I said "In order to analyze the situation correctly, you *do* however have to have a firm command of how the fiat fractional-reserve world monetary system actually works, and that is something that is not taught in any academic economics program, or otherwise discussed in polite society." (emphasis added)

I would again assert that if one truly understands how the inherently fraudulent mechanism of central banking works, then it is absolutely reasonable to conclude that the IQD could be "arbitrarily" revalued, for all IQD in circulation, and have it stick.

Also, when was the last time you attended graduate school? Monetary economics is alive and well, and is such a robust field of research and understanding that practically any professional economist could explain the fiat money system to you.

I'll politely ignore the first question, other than to say my degrees are in Math, Physics, and Computer Science. How is academic monetary economics funded? What percentage of "professional economists" have had their bread buttered by the banking system, for the purpose of perpetuating a skewed view of monetary reality? As we have recently seen with the "global warming" débâcle, relatively modest quantities of cash can be used to purchase and socially engineer an academic, media, and political "reality" that is a complete sham. The only difference with modern "economics" is that the sham has been successfully entrenched for the better part of 100 years, and the referees of "peer-reviewed" articles have long since progressed from being paid to lie to being paid because they have been trained to believe the lie.

As a demonstration, I'll ask you this question, which virtually no Ph.D. economists or lawyers can correctly answer. Under U.S. law on the books today, what *is* a U.S. Dollar? You would think this would be part of Econ 101, or at least Money and Banking 301. It is not.

In fact, this is so much the case that it may surprise you to learn that many Federal Reserve governors are not monetary specialists. Alan Greenspan was a Wall Street economic consultant before becoming involved in the government.

So... we have non-monetary specialists engineering the monetary system as opposed to a free market in money. That's lovely.

The choice of Alan Greenspan is interesting. You might want to read his 1966 essay "Gold and Economic Freedom", about which he much later stated that he "would not change a word." Yet, in the meantime he sold out, intellectually, to the banking cartel.

No offense intended, but this is a vacuous statement. If you need an illustration of the importance of the United States economy to the rest of the world, I suggest you pick up any issue of Wall Street journal for the last 2 years, and peruse any of the thousands of articles detailed the effect of the US financial crises on the world economy.

So... the rampant fraud and moral hazard from the economic, financial, and monetary engineering at the root of the financial crisis make us important to the rest of the world? I was of the impression that it's really pissing the rest of the world off right about now.

Federal Reserve Notes, a.k.a. USD, are no more or less worthless than any other currency. No currency on the planet is currently backed by any physical commodity. It is a rhetorical question to ask whether the world would feel the effects of an instantaneous disappearance of its most important country. It's not ethnocentrism, its an economic fact.

Correct, FRNs ("USD"), which are demonstrably not U.S. Dollars, are equally worthless as all other fiat currencies. But that does not change the fact that they are worthless. The standard explanation is that they are backed by the "full faith and credit" of the U.S. Aside from the fact that our government servants have routinely demonstrated their faithlessness, and that the creditability of the U.S. (or lack thereof) is finally becoming clear, the fact is that, since the U.S. unilaterally reneged on its obligations under Bretton Woods in the early 70's, the USD (i.e. "petrodollar") has been implicitly backed by the fact that oil is only traded in New York and London, and only in USD, an arrangement which is maintained by the threat of military force (paid for with deficit spending of borrowed or printed FRNs). It is a classic mercantilist advantage for the USD. [iran is merely the most recent oil-producing nation to find itself branded a "terrorist" state, not so much because of nukes or Hezbollah, but because it no longer accepts FRNs for its oil. Nobody can come out and *say* that, though.]

This is, in fact, why the IQD will be able to be revalued, and in fact, will be a currency superior to any other, including USD. The IQD will essentially directly be a petrocurrency, with one less degree of indirection than the USD/FRN (which could never be directly backed by oil.) And once Iraq rejoins OPEC, and other nations' oil can be priced in IQD, the transformation of the world monetary system from USD backed by the gold confiscated from the public by FDR on May Day, 1933, and stored in Fort Knox, to a world monetary system backed by oil in the ground (and controlled by the central banks) will be complete, and the collapse of the USD can successfully ensue.

The only data I've used is the 25 trillion IQD figure. I don't believe any of my premises are flawed.

Probability applies to anything that can be evaluated in terms of outcomes. Occam's Razor does apply to humans, because it is by its very nature an aesthetic philosophy, formulated by humans, and often applied to human nature.

Probability applies to outcomes of a large enough sample of independent, random events, not what a relatively small number of central bankers choose to engineer into the world monetary system. In this case, the proposition that "the likelihood of a 350,000% repricing of IQD w.r.t. USD is virtually nil", is the simplest explanation, but it need not be overwhelmingly likely the correct one.

http://www.cfr.org/publication/10647/group_of_eight_g8_industrialized_nations.html You seem to be erroneously taking issue with the semantics of my post. The United States is considered an "industrialized" economy.

You're *really* not helping yourself by referring to a CFR document. Yes, it is considered an 'industrialized' economy, but it is being consistently de-industrialized, dumbed-down, and destroyed, something in which the Rhodes/Milner groups have taken a significant rôle.

And ironically, your statement above exactly illustrates the kind of instability instant, disproportionate wealth creation engenders. Wealth was created by the housing bubble. Very few people realized that wealth. As the bubble burst, wealth was destroyed. Whether the production of the US economy is devoted to "scads of pointless, non-wealth-storing or -producing crap" is a personal opinion of yours, which I do not share.

Semantics are important. Just as inflation is an increase in the money supply, NOT, as it has been erroneously redefined in recent years, a rise in the general price level, no "wealth" was CREATED. Assets were merely repriced temporarily due to an artificial expansion of credit. This is indeed a wealth "effect", but it is not wealth creation, which can only come from successful productive investment, something which never entered into the housing bubble. Even the houses that were built during the bubble, while "productive", were an egregious malinvestment, resulting in net losses, and the misallocation of labor and capital away from other more economically efficient uses.

I think I can safely rely on the humans in question not to attempt to destabilize the entire world economy, and therefore their own assets, dubiously clever or not. As this would be an outcome, I can say that I think having repeated the experiment enough times would frequently yield this result, meaning it is highly probable.

I wouldn't trust these criminals as far as I could throw them. Destabilization of the world economy by the humans in question needn't destabilize their own assets, and if they are actively attempting to engineer said destabilization, more's the better, because their assets can be intentionally protected. And if the point of the managed destabilization is not merely profit (which of course would also come from having protected assets) but social reengineering, then losing a few crumbs is not a problem.

The best example of this type of "experiment" (which was neither an independent nor random trial) is the Great Depression, which was caused by the explosion of credit by the newly-created Fed in the "Roaring Twenties", and its collapse when a credit contraction was engineered (of course, after the bankers were safely in cash and bonds.) This prepared the mass psyche for the social reengineering and de-Americanization of the New Deal.

[pamp]

You guys are so smart! A joy to be here!

[hspotman]

Hotspot,

Sorry but he is correct. Grab your calculator and multiply .00086 by 300,000%. 300,000% gives yu a multiplier of 3,000.

Sucks don't it!

Ah, I read wrong how he meant it then. I was going by what "we" invested into it, using $1,000 for a million IQD as a round number. And then just adding the 5 extra zeros for a 300,000% return. We are all thinking/hoping $1 mill IQD with a 1000% return at 1 to 1 will get us $1,000,000. I knew I must have been reading it wrong to think someone could actually think we thought 300,000% , my bad.

Edited November 21, 2010 by hspotman

[hspotman]

I "do" have a question for you though, Economist. Since you say you "do" own IQD, did you only get into it thinking you would double or triple your money? Because that is what alot of friends(who deal in the stock market) are telling me they think this might do. If so, wouldn't that only bring the value of the IQD to .00258(.00085 multiplied by 3)? When I did the calculations on my calculator, at the current rounded off current rate of .0009 multiplied by 300,000%, that gives a rate of $2.57. So if this is what you meant by a 300,000% return, then yes we do think or hope for that. Pre-Saddam IQD rates were higher than that weren't they, as well as pre-Gulf War and current KWD rates were more too, right? Why do you not think it will get back to that, or even close? A 1 to 1 would give us 1000% return on our invested money,so a 3 to 1 return would be 3000%, correct? A little too early now, haven't finished my java yet .

[Niko]

Guest-Economist the IQD rate has been held in check b/c of ch 7 is my understanding.

It doesn't matter what your religion or belief system may be, or how "good" you imagine an astronomical revaluation would be for the Iraqi people, the probability of an investment in IQD of less than $330,000 producing $1,000,000 in so extremely low that it may as well be zero. The probability of an investment of less than $3,000 producing $1,000,000 is absolutely zero.

What do you base this comment upon besides your opinion?

Edited November 21, 2010 by Niko

[Niko]

lol nm just read doogies posts. Ignore my ?s

Thanks doogie!

Guest-Economist what do you think about Obama's policies reagarding the economy? Just curious. I think you can have two people look at the same data and draw different conclusions. Thanks again for the posts and discussion though.

Thanks

Edited November 21, 2010 by Niko

[GolferDan]

OK not a mathematician or an economist but I can use a calculator. If you take the current .00085 and multiply by 10,000% you come up with 8.5 ..

never mind must have hit something wrong lol

Edited November 21, 2010 by GolferDan

[d00gie]

[From per cent., abbreviation of per centum, by the hundred : per, per; see per + centum, hundred; see dek in Indo-European roots.]

Orig. usually with full stop (per cent.), as if an abbreviation of per centum, which is the form most used in Acts of Parliament and most legal documents, but see CENT¹. Now freq. without full stop, and as one word.

A. Phrase. a. By the hundred: for, in, or to every hundred: with preceding numeral expressing a proportion, as of a part to the whole amount, or esp. of interest to principal.

Multiplying by 100% is like multiplying by 1.0. In other words, 100 percent of 42 = 42.

So cut two zeroes (no, not 3!) off a percentage to get the multiplier.

350,000% is 3,500x.

1/1170 USD/IQD = .000854701 USD/IQD.

350,000% x .000854701 USD/IQD = 3,500.00 x .000854701 USD/IQD = 2.991452991 USD/IQD = ~3 USD/IQD.

Edited November 21, 2010 by d00gie