A Simple Explanation

[hspotman]

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.

What's the point you are trying to make? When I did the numbers, I used rounded off numbers from the current IQD price, rounded it off to .0009 x 300,000%=2.7. Now I don't know if economist was saying that the current rate x 300,000% would be the rv he thinks we hope for? Or if he was thinking we were hoping for a 300,000% profit from our initial investment. I originally thought he meant the latter, which I thought was crazy because of thinking he meant our investment of (for example) $1,000 to get 1mil dinar, and hoping for 300,000% off of that.....now that would be crazy! But after replies by some here, I found out he may have meant 300,000% by the current rate is what we think the rv will come in at. Geeez, I don't even know anymore....too many numbers getting rambled up in my mind for a Sunday

[d00gie]

What's the point you are trying to make? When I did the numbers, I used rounded off numbers from the current IQD price, rounded it off to .0009 x 300,000%=2.7. Now I don't know if economist was saying that the current rate x 300,000% would be the rv he thinks we hope for? Or if he was thinking we were hoping for a 300,000% profit from our initial investment.

Yes, that's what he was saying. Going from 1/1170 USD/IQD to 3.22 USD/IQD is a 3767.4x, or 376,740% repricing (and a 376,640% return on investment -- only a difference of 100%, LOL!)

The only point I was actually trying to make was from the previous poster, who had mistaken 10,000% for 10,000x (and who modified his post in the meantime to say he'd messed up.) That is all.

[Guest economist]

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.

How is academic number theory funded? And academic applied physics? There are skeletons in every closet.

I'll agree with the idea that academic economists and researchers from other fields are influenced by their funding, at the very least insofar as they pursue research which is likely to net them grants, publication(s), and/or recognition. I'll even go further and state that I firmly believe, and have for some time, that the study of economics itself has taken an alarming turn from being a descriptive science to an engineering discipline, not least of all because economists wish to increase their importance and sphere of influence. But even so, I'm not prepared to "through the baby out with the bath water." There is plenty of economic research which I personally would consider "bad" on both moral and theoretical grounds, but that (clearly) doesn't mean I think the entire discipline is worthless. I certainly don't share your opinion that the ruination of economics and other fields has been deliberately engineered by some over-arching conspiracy.

I'm not sure which college you attended that did not include a discussion of fiat money in its beginning economics courses, but this was actually the first thing I ever learned in economics. A U.S. Dollar, like all fiat currencies, is exactly what one would expect, given that they are manifested in physical form by Federal Reserve Notes: they are units of debt.

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

Yes we do, and as a matter of fact I share your distaste for the Federal Reserve. My point was not meant to defend it or the manipulation of the money supply with which it is charge; it was to illustrate that the fundamental dynamics of monetary economics are well understood by many economists, even if you suppose the "sham" moral philosophies underlying it are not.

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.

I don't see why the choice of Greenspan should be interesting to this debate. I referenced his sentiments about the importance credibility of central bankers and of the central bank to show that I didn't think the Central Bank of Iraq would intentionally mislead anyone. His own personal credibility has nothing to do with his arguments (ad hominem). Nor did I bring him up to discuss the viability of fiat money systems in general. I actually have read this paper, and for those who have not it's Mr. Greenspan's explanation of, and support for, a worldwide gold standard. I agree with it wholeheartedly. At best, I don't think manipulating business cycles through the money supply is in the best interests of the economy in general, and at worst it's a violation of personal liberty. But whether the Federal Reserve exists to stealth-tax the American populace for socialist ends or not, there are still limits to what it can do and how. If one assumes that is, the Fed's goal, then one could also safely assume that it would want to protect the money supply in order to preserve its sphere of influence. I can already predict the responses this will draw, but, for example, why doesn't the federal reserve simply print trillions of dollars and purchase its economic rivals? Because in doing so the purchasing power (since I'm sure someone will object to the term "value") of those dollars would be zero, and the Federal Reserve would lose its power in the resulting economic collapse.

Similarly, if one extends the conspiracy theory to allow for Federal Reserve, U.S. Treasury, and/or interest group manipulation of the Central Bank of Iraq, then the 300,000% scenario still seems just as outlandish, if not more. There is more hope for holders of IQD for an accidental windfall resulting from natural banking processes than there is of riding the coattails of the same big-wigs who want to impoverish them. Or if its more benign, the Federal Reserve could easily determine that producing trillions of dollars of wealth (and I do believe I can say "wealth" as everyone who read these forums and owns dinar is doing so for the prospect of becoming "wealthy" relative to their current standards of living) for a large group of individuals would very likely put significant upward pressure on U.S. (as well as global) price levels, thereby threatening the sphere of authority of the Fed once again.

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.

If may say so, you seem to be expressing a type of "bad-blood" Americanism. You clearly recognize that the monetary engineering that we engage in is replicated by every other country in the world, yet you are reserving criticism solely for the United States. My personal interpretation of the current anger towards the U.S. by foreign central banks and governments is over increased recent "quantitative easing" (which by the way I also disagree with). The fact that China, the EU, the UK, et. al, engage in the same economic and financial intervention that we do would seem indicate tacit approval of those practices in general.

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.]

The "full faith and credit" backing of the USD refers to the ability of the United States to both tax its citizens and pay its debts. The temporal faithlessness and lack of credibility of various politicians is not a direct factor of the ability of the US to continue servicing debt, although I'll admit to some extent it is an indirect one. The USD has purchasing power because, the Bretton Woods agreement aside, the US generally does fulfill its financial obligations. The same is true of other fiat-currency economies. The moment they do not, or the moment it appears they will not be able to, is the moment their currency will lose purchasing power. In fact, this is probably exactly what happened in Kuwait. The Kuwaiti government momentarily appeared as though it would no longer have the ability to tax its citizens (indeed it looked as thought it would be destroyed), and the purchasing power of the KWD fell. Once it became obvious that Kuwait had not been destroyed, it also became obvious that the KWD was undervalued . However, it is worth noting, that the KWD did not then experience an instantaneous "revaluation." It gradually appreciated over a period of years.

If parallels are to be drawn between the KWD and the IQD, then one would expect a similar situation; gradual, and perhaps rapid, appreciation. This is what happens with floating currencies. They cannot simply be declared to be worth more: that requires a fixed exchange rate regime, which as has been stated many times, that Iraq does not have.

If your statements about the Iran are true they are interesting and news to me, but I don't see the relevance.

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 issue I have with the general tone of your argument is that you seem to think there is a large conspiracy against the American people by the Fed/US Government/Interest groups to plunder the economy through the fiat money system, and yet although this same conspiracy would most likely have its tentacles quite deeply involved in Iraq, you think that it would allow the CBI to undertake actions which would directly lead to the collapse of the USD. Either the CBI is politically independent or it isn't, you can't have it both ways. In either case, I don't see it distributing trillions of dollars in wealth or purchasing power to individuals for the reasons I've already mentioned.

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.

How about if I replace "the likelihood of a 350,000% repricing of IQD w.r.t. USD is virtually nil" with "the likelihood of the super-rich fat-cats, who may or may not be in control of developments in Iraq, deliberately threatening their own power and wealth is virtually nil'?

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.

I'm sensing some Creature From Jeckyll Island in you. Conspiracy theories aside, I actually agree that American society is dumbing-down and shifting away from the production of durable goods (I'm assuming thats what "de-industrialized" means), and I also agree that in a true free-market, i. e. one without myriad governmental intrusions into it, this probably would not be taking place. But that it is being perpetrated subversively I disagree with. While in my opinion our economy is not as free as it should be, that does not automatically mean that everything that happens in it is an aberration. If we are shifting away from manufacturing and physical production, I would tend to agree with fairly basic trade principles and say that its because we are shifting towards that in which we have a comparative advantage, which by the way seems to be financial services.

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'm sorry, but this is wrong. Inflation is an increase in price levels, caused by an increase in the money supply, and wealth effects occur anytime there are asynchronous changes in prices. If the entirety of my consumption is dictated by my budget (which may or may not include credit), and the only two goods I consume are A and B, then I become wealthier when the price of A, B, or both, falls, but not when the price of labor, or whatever determines my income, falls the the same amount. If you don't think that wealth "effects" are the same thing as wealth "creation" then let me ask what you think would happen if whatever you consider to denote wealth were suddenly no longer as scarce as it currently is. You seem to like Greenspan's ideas about gold, so if you agree that on some level money backed by gold is "valuable," what do you think would happen if a new discovery completely removed gold production constraints? O

[Guest economist]

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.

Fine, but which "criminals" are you referring to? The CBI? The Fed? The U.S. Government? This argument is outlandish to me personally, but defensible, if the criminals are holding something physical like oil or gold. But I don't understand why you think that somehow translates to a return for holders of IQD? If the goal here is to engineer a global financial collapse, and of all fiat money, which includes the IQD, then you won't realize 3%, let alone 300,000%. If you think the purpose is to engineer the collapse of solely the USD, then holding IQD is only a hedge against that collapse, not a means of increasing wealth.

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.

Now the reference to Greenspan is interesting. In the paper you mentioned, he directly states why he thinks the early Fed intervened the way it did, and it has nothing to do with conspiratorial banker shenanigans:

"When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates.

The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market -- triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's."

http://www.usagold.com/gildedopinion/greenspan.html

Again, my whole argument here is this:

1. Speculators are holding Dinar because they expect to gain ("profit," "purchasing power," "wealth," etc.) from it.

2. Some speculators think the Dinar will appreciate over 300,000%.

3. If (2), then anyone holding Dinar will realize said gain.

4. There is some very large amount of Dinar in circulation, probably between 5 and 25 trillion.

5. If (3) and (4), there will be enormous total gain.

6. Gain is pursued for the fact that it buys things.

7. If (5) and (6), there will be enormous amounts of "gain" (USD, IQD, Bullion, Tea Bricks, etc.) chasing a limited number of things.

8. If (8), the cost of those things must increase.

9. Increases in cost are proportional to the amounts of "gain" chasing them.

10. If (5), (7), and (9), increase in the cost of things will be very large.

As a side note to those who are confused: a 300,000% currency appreciation is roughly equivalent to a 300,000% return.

1 USD = 1167 IQD

After 300,000% appreciation from .00086 to 2.58: 1167 IQD x 2.58 USD = 3,010.86 USD

Gross Profit of $3,010.86 - Initial investment of $1 = Net Profit of $3,009.86

$3,009.86 / $1 = 3,009.86 x 100 = 300,098% return

[fatbob]

The banter back and forth is awesome guys. I could read your back and forth comments all day. This is really great stuff. Thanks for the discussion.

[d00gie]

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.

I'm not sure which college you attended that did not include a discussion of fiat money in its beginning economics courses, but this was actually the first thing I ever learned in economics. A U.S. Dollar, like all fiat currencies, is exactly what one would expect, given that they are manifested in physical form by Federal Reserve Notes: they are units of debt.

As I previously asserted, your very first lesson in economics was incorrect. I shall proceed to prove it. Don't feel bad -- the lawyers get this wrong, too.

(click to enlarge)

The image above is of a Series 1963 dollar bill. Since 1963, the design of the One-Dollar bill has not changed in any important, substantial way -- only the dates and signatures have changed. Today, the dollar bill still says "FEDERAL RESERVE NOTE" at the top (with the attendant green serial numbers and Treasury seal), it says "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE", and it says "ONE DOLLAR".

These are three Lies.

How can I say something so scurrilous and 'un-American' about our money? I mean, it says One Dollar, and George By-God Washington is right there on it, like he's always been, right? Well, first, I would say that it hasn't always been the case that GW is on the One-Dollar bill, but more importantly, I can give concrete reasons why these three assertions implied by the dollar bill about itself are false.

First, it is not a "Note" in the legal sense of the term.

Second, it is not "Legal Tender" for all debts, public and private, at least not according to the Constitution for the united States.

And third, it is most definitely not a 'Dollar', or even in any way representative of a 'Dollar'.

The easiest way to demonstrate that the dollar bill shown above is not a "Note" is by showing an actual Note. There were no One-Dollar "Federal Reserve Notes" before the Series 1963 "Notes" so we'll need to look at another denomination.

Here is a Series 1950 Ten-Dollar bill, also a "Federal Reserve Note".

(click to enlarge)

Now, this actually is a "Note".

A "Note" according to the West Dictionary of Law is "A Commercial Paper that contains an express and absolute promise by the maker to pay to a specific individual, to order, or to bearer a definite sum of money on demand or at a specifically designated time." It is also known as a "Promissory Note":

The individual who promises to pay is the maker, and the person to whom payment is promised is called the payee or holder. If signed by the maker, a promissory note is a negotiable instrument. It contains an unconditional promise to pay a certain sum to the order of a specifically named person or to bearer—that is, to any individual presenting the note. A promissory note can be either payable on demand or at a specific time.

So, this is a "Note" because it says "THE UNITED STATES OF AMERICA WILL PAY TO THE BEARER ON DEMAND TEN DOLLARS". It has a maker: "The United States Of America", a payee: "The Bearer", a condition of payment: "On Demand", and an amount: "Ten Dollars". It follows, then, that the Series 1963 One Dollar bill is not a "Note" because, due to the removal of the words "Will Pay to the Bearer on Demand", it fails to meet the legal requirements for a "Note".

Without going any further, we can also observe that this IS NOT TEN DOLLARS!!! Because if it were, then why would we need to have the United States of America Pay us (The Bearer) the sum of ten Dollars when we present this Note for redemption (i.e. On Demand)?!?!? It is not, in fact, ten dollars, merely a promise to pay ten Dollars.

While removing the promise to pay from the Series 1963 and all subsequent Federal Reserve "Notes" subtly transforms what one of these bills asserts itself to be, it DOES NOT change what one of these bills IS. Or is not, as is the case here. If a promise to pay ten dollars wasn't ten dollars before, then a bait-and-switch promising even less does not magically transmogrify a One-Dollar Federal Reserve "Note" into a 'Dollar'. In fact, it reduces all such Federal Reserve "Notes" to the ignominy of "Tokens" or "Coupons" which have no legal status whatsoever. A modern dollar bill is no different than 20 wooden nickels. As banker John Exter once observed, "Federal Reserve Notes are an I owe you nothing currency", or as I sometimes say, "There's no 'There' there."

Going back to the 1950 Federal Reserve note, we notice that the obligation at the top left corner was also different before 1963. In incredibly small print, it still says "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE", but has the additional language ", AND IS REDEEMABLE IN LAWFUL MONEY AT THE UNITED STATES TREASURY, OR AT ANY FEDERAL RESERVE BANK." So, not only is this a 'Promise to Pay', but it is also "Redeemable" in "Lawful Money". Thus, we can conclude that not only is this not 'Ten Dollars' (whatever a 'Dollar' is), but also that it is not 'Lawful Money' (whatever that means.)

So what do we conclude about the modern dollar bill? While we can't say a whole lot about what it is (there being no 'There' there), we can make quite a few airtight conclusions about what it is not: it is NOT a 'Dollar', it is NOT 'Lawful Money', it does NOT promise to pay 'Dollars', and it is NOT redeemable for 'Lawful Money'. Most importantly, this begs the questions "What, then, IS a dollar?", "What IS 'Lawful Money'?", and more generally, "What the heck happened?!?"

In order to answer the question "What is a Dollar?" I will defer to someone with 4 degrees from Harvard (and even though one is, lamentably, he would agree, a J.D., the other three are in Chemistry). Dr. Edwin Vieira is the undisputed expert on the Constitutional Law of Money and Banking. But if one wishes to dispute his expertise, one must first read and refute his 2002 masterpiece "Pieces of Eight: The Monetary Powers and Disabilities of the U.S. Constitution", 2nd ed. It's only 2 volumes with 1600+ meticulously researched pages supported by 6000+ footnotes.

But to cut to the chase, you can read his article "What is a Dollar?":

http://www.fame.org/HTM/Vieira_Edwin_What_is_a_Dollar_EV-002.HTM

[BobW]

What happened to "A Simple Explanation"??

[d00gie]

What happened to "A Simple Explanation"??

Apparently, it's not.

[Inside Track]

"A Simple Explanation" = NEMESIS

d00gie....Your Brilliance is appreciated...

You're outta my league on this topic.

WOW!!

[d00gie]

Awshucks. (blushes)

This subject, at the juncture of history, economics, and law, is THE root issue with what is seriously fcuked up with the world. Let me float a few hundred trillion in bad checks, and I can give you the illusion of prosperity, too, while profiting immensely from the resultant welfare, warfare, and debt enslavement.

"A Simple Explanation" = NEMESIS

d00gie....Your Brilliance is appreciated...

You're outta my league on this topic.

WOW!!

[Inside Track]

Okay . . . d00gie...Now, I'm ready to talk!!!!

The unregenerated heart of Man will ultimately self-distruct..

It's only a matter of time....and as Dr. Gentry said..."That day is almost spent!"

[drox]

Fantastic dialogue guys! Doogie and the economist you have great points. You have certainly pointed out I have much to learn and that I won't be running for President anytime soon!

I posted these comments hoping for some input on a thread. It is clearly in layman's terms and oversimplified compared to your conversation, but I would appreciate both of your thoughts on it. Poke holes in it and please show me another way. Thanks!

Potential Good News and Bad News about cashing in and some opinion of what is in front of us. I am only seeking truths and encourage discussion. My research has taken me full circle to the opinion below...it is still open and evolving. I realize it conflicts with many people I care about on this forum and others. Use what you like filter what you don't like. You deserve different perspectives though.

My views on the Dinar have evolved through research and not "contacts". As most are aware, I am and have been enthusiastic about the investment. However, I am skeptical of the timing and especially the projected outcome and overzealous predictions of others. I feel numerous things must fall into place in order for a substantial RV/RI to occur. I am more of a believer now that it will grow with time as Iraq builds the economy and fine tunes it's investment laws, bank participation and systems, infrastructure, security, and especially its employment opportunities. You cannot grow an Oak tree in a flower pot. The economy must have a stable foundation and the necessary tools and climate to support a large exchange rate revaluation.

Remove yourself from your wants and needs for a moment and think about it from a logistical and a logical stand point. If the majority of Iraqi's have little or no savings and of that...15%-25% are unemployed... How does a $3 RV/RI truly help them? Will it immediately give them a job? Will they be happy for their neighbor (that had savings) who became instantly wealthy for no reason... while they got nothing? Will they celebrate alongside, or will they want to take it away from them out of envy? How would you feel about your neighbor or even your country if you were in the majority which is the losing end? It would most likely create the mother-of-all division between the poor and the wealthy. An unbridgeable gap in classes. Crime would be a nightmare. If you think that bumping up their purchasing power from their wages will make up for it... I wouldn't hold my breath. Prices will quickly move up relative to the rate. Pricing controls could potentially alleviate that problem. Except... well, the Parliament better create a bill and vote on it today if it is going to RV in the next 2 week as many suggest. By chance, have you seen any articles about controlling prices of goods and services in daily commerce? How about wages?

Have you thought about what an RV of that magnitude would do without stability? Iraq will be forced to import almost all goods except for oil and gas. Why? Because it will be unbelievably cheaper to import than to create the goods at home. Why is that a problem? Because Iraq needs a work force to employ citizens. That means they have to inspire entrepreneurs to create new business and industry. If it is cheaper to import all goods then no industry will be created. Iraq remains a one industry(oil) country at the mercy of oil price fluctuations. That would be cutting off your nose to spite the face.

A strong business climate is critical to woo investment. If not strong, then at least one that is understandable and has a semblance of structure. Profit is not always the decision maker. International corporations must make responsible decisions on behalf of their shareholders in ventures. Countries too! Security, currency convertibility, infrastructure( electricity/utilities) are just 3 factors of concern in Iraq. As of 2010, Iraq was ranked 175 out of 178 countries in Transparency International’s corruption perceptions index. It was ranked 178 in 2008! Investors have to contend with requests for bribes and kickbacks from government officials at all levels. Competition and consumer protection laws that are critical for leveling the business playing field in Iraq are needed. It will cut down on unfair business practices like price-fixing by competitors, bid rigging, and abuse of dominant position in the market. In the 2010 Doing Business Report, the World Bank ranked Iraq 153 out of 183 on the ease of doing business. I tend to follow the Iraqi economists comments. Do you ever notice the Iraqi economists are always calling for investment growth by both foreign and domestic partners to increase the purchasing power for the citizens? Do they ever mention revaluation the way we discuss it?

It is my opinion we will see a series of small movements until it is traded internationally. The large investors will "buy it all up" argument holds no water. There is a Finite amount of currency in circulation as it is. You can only purchase from the amount or supply of Dinar for sale. Market price and availability rule the supply/demand game. I personally believe that Chapter 7 release/modification is crucial, but not the solitary need. Many things must take place. I feel in order for a large revaluation of the currency to occur, the currency must be internationally recognized first. Otherwise, banks will not consider cashing in your Dinar for any currency. Why? Because there are NO guarantees they will ever get the money back without international recognition. How tough is it to just get a Home Equity loan these days from your bank? Let alone giving you $15 million for your 5 million Dinar? Forex and others exist for the purpose of currency exchange for this reason. Banks don't usually go to the various central banks themselves.

So...I have posed the question in my posts... Who will cash you in if the currency is not internationally recognized? No one came up with an answer so I did a little digging. I feel it has good and bad implications....Hope this helps ease your mind.

Me: Hey Ali... thanks for your service.

I have an important question to ask that I can get my head around. If the CBI (Shabibi) revalues the Dinar at say $1 per IQD... how would we cash in? Doesn't the IQD need to be recognized internationally first? I can't imagine banks and yourself will pay people for the currency without some sort of recognition internationally. Will Shabibi increasing the rate be all you need? What must transpire for you and the banks to deem it an acceptable risk? It would seem the banks would want certain guarantees they can cash out too. Does it need to be on Forex? Will the Federal Reserve just back it? As much detail as you can give would be great! Thanks so much for your response.

Ali:

Whatever the CBI declares the rate to be, we'll exchange it at, because we exchange back to the CBI to cover our buys. If they will buy the dinars from us at $1 per dinar, we will do the same for our customers.

Thanks

Ali

He seemed to answer the question creatively and about as vanilla as possible. I don't blame him and I am also very grateful for his correspondence and clarification. So... if the RV/RI happens soon, you thankfully DO indeed have a method of cashing in. You will have to go through the Dinar Broker's like Ali with Dinar Trade. They are the ONLY ones that can work with the CBI unless the currency becomes internationally recognized. So, all of the banks we talk about, are not likely to cash you out. Not sure about the ones that sell it to you now.

So the question is... If the CBI is cashing you out through the Broker's as Ali suggests... then how HIGH can the currency truly re-value? If there is 27 TRILLION DINAR in circulation how on Earth is the CBI going to be able to even pay the out-of-country currency investors alone? They can't! Not without it being internationally recognized first. The burden would HAVE to be spread out and diversified across the globe to even have a snowball's chance! If you are planning on buying more currency... I HIGHLY suggest you do so in preparation for this being a much longer term investment then many would have you believe. I am not saying it can't happen at all. Anything is possible. I think it will happen logically. Kuwait's situation was merely a light switch to flick on. Iraq is starting from scratch. Think of it as a corporation emerging from bankruptcy. I sure hope that I am wrong and others are right! It will go up... the question is when and how much.

[56chvy]

Well, here have you SMART guys been the last year(s) when all the "Gurus" were touting the $1-$5 RV???

Most of us are just a bunch of "unskilled economists" looking for something that's "too good to be true".

Looks like we finally found it...

The disillusionment is going to be rampant around here if we come in @ less than a dime. BAD THINGS WILL HAPPEN TO A LOT OF PEOPLE!!!

And the screaming and crying will be heard to the high heavens.

I STRONGLY RECOMMEND THAT SOMEONE MOVE THIS DIALOGUE TO THE BUSIEST THREAD WE HAVE, AND TELL ALL THE LITTLE PEOPLE TO GET READY FOR A "BIG LET-DOWN"!!!

[d00gie]

Huh???

So... Should I call you Dingus McStupid when it comes in at a rate > FRN$2 that will actually pay for all of Iraq's obligations to quite a few countries??

I guess all the movement in the last two weeks -- events that have NEVER happened in the last 6 years -- is totally meaningless.

If you have an actual point, make it, otherwise STFU.

Well, here have you SMART guys been the last year(s) when all the "Gurus" were touting the $1-$5 RV???

Most of us are just a bunch of "unskilled economists" looking for something that's "too good to be true".

Looks like we finally found it...

The disillusionment is going to be rampant around here if we come in @ less than a dime. BAD THINGS WILL HAPPEN TO A LOT OF PEOPLE!!!

And the screaming and crying will be heard to the high heavens.

I STRONGLY RECOMMEND THAT SOMEONE MOVE THIS DIALOGUE TO THE BUSIEST THREAD WE HAVE, AND TELL ALL THE LITTLE PEOPLE TO GET READY FOR A "BIG LET-DOWN"!!!

Edited November 22, 2010 by d00gie

[d00gie]

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'm sorry, but this is wrong. Inflation is an increase in price levels, caused by an increase in the money supply, and wealth effects occur anytime there are asynchronous changes in prices.

As with the incorrect definition of the U.S. Dollar, economist(s) have been brainwashed with an incorrect, cart-before-the-horse definition of inflation based on price rather than money supply.

The Oxford English Dictionary, Second Edition (2nd ed. is 1989 vintage, none newer yet that I know of, I could be wrong) is the standard arbiter of the use of words in the English language.

For the word "inflation", the first relevant definition is:

"6. Great or undue expansion or enlargement; increase beyond proper limits; esp. of prices, the issue of paper money, etc. spec[ifically] An undue increase in the quantity of money in relation to the goods available for purchase; (in lay use) an inordinate rise in prices." (emphases added)

So it *specifically* says that it is an undue increase in the quantity of money in relation to available goods. It also says that "an inordinate rise in prices" is a *lay* definition. As in colloquial, or imprecise, or non-professional, or if you like, un-professional.

Here are the examples of usage the OED gives under this definition:

The 1838 Barnard quote says: "The property pledge can have no tendency whatever to prevent an inflation of the currency." (emphasis added)

Under this, the 1864 Webster's definition says: "Undue expansion or increase, from over-issue; said of currency." (emphasis added)

The 1922 Encyclopedia Britannica says: "Inflation had the effect of reducing the pre-war unit of value." (emphasis added)

The 1949 London Times says: "Inflation is used to describe the situation in any country where there is an excess of currency and credit in relation to the work to be done, an excess of purchasing power and effective demand in relation to its goods available, with prices and wages, and prices again, rising in consequence." (emphases added)

This last definition is important, because it cuts to the heart of the misuse of the term. It is *descriptive* of a "situation", NOT *definitive*. Indeed all the other uses such as "inflation of prices" are merely *imprecise, descriptive, colloquial uses* of the term which do not convey *meaning*, but merely *sense*.

Even definition number 8, "inflation-proof" says "to protect from the effects of monetary inflation." (emphases added)

Changes in price ARE NOT "inflation" or "deflation". They are changes in price. Period. Changes in price due to changes in the money supply are not inflation/deflation -- inflation/deflation IS the change in the money supply itself.

I don't always agree with everything that Gary North writes, but the following, from his article "If Deflation is Coming, Sell Your Gold" ( http://www.lewrockwell.com/north/north680.html ) is spot on:

Austrian School economists define inflation as follows: "an increase in the money supply." All other schools of thought define inflation as follows: "an increase in our favorite price index."

Austrian School economists define deflation as follows: "a decrease in the money supply." All other schools of thought and define deflation as follows: "a decrease in our favorite price index."

(This should not be construed to be a blanket endorsement of Austrian economics, which suffers from one flaw common to the other schools -- that usury is "okay" and that it is socially and morally acceptable to exploit the purported "time value of money" to realize gain without honest work.)

I am also deeply reticent to quote Milton Friedman, whose false-right money printing paradigm is as laissez-faire as the Republicans' false-right warfare socialism is "republic"-an. I.e., NOT. However, one thing he said is dead-on: "Inflation is always and everywhere a monetary phenomenon." The emphasis here is not on "price", but on "money".

In other words, the correct definition of inflation describes something which is directly quantifiable by actual records (the "money" supply), whereas the mealy-mouthed "living economics" so-called "definition" of "inflation" is not directly quantifiable, but only expressible in worthless "price indices" which exist merely to give their promoters more ways to lie about the true state of the economy (and, of course, as a jobs program for otherwise productively unemployable "economists".) This is a distinctive hallmark of Keynesian, Fabian, Orwellian "economics" -- nowhere in The General Theory of Employment, Interest, and Money is the word "inflation" defined.

I do apologize for imposing the brunt of the sins of an entire academic discipline on you, and I don't get the sense that you're an apologist. My frustration is that I've had more than one Ph.D. "economist" parrot with rote, machine-like regurgitation, "But, but -- the standard definition is a general increase in prices. (stupid non-Economist)" It's the only answer they have, because they and all their American Economic Association and Central Bank funded hack friends, (not to mention "The Literature", funded by the same Socialists) have been bombarded and misled with these garbage notions since they took Econ 101. Their brains literally lock up, because they can't imagine that their entire reality is a fabrication. "But, but -- this one goes to 11. (stupid non-Heavy Metal Musician)" [No offense here is meant to Heavy Metal Musicians by unfortunate and unfair analogy with "economists".]

So where did this bogus "Inflation is an increase in the general price level" so-called "standard" so-called "definition" come from? It's certainly not a correct use of the English language. Somewhere in the 20th Century, this insinuated its way into the "dismal science" imposed Newspeak view of the world. Whence came it? When did the textbooks change it?

If the entirety of my consumption is dictated by my budget (which may or may not include credit), and the only two goods I consume are A and B, then I become wealthier when the price of A, B, or both, falls, but not when the price of labor, or whatever determines my income, falls the the same amount. If you don't think that wealth "effects" are the same thing as wealth "creation" then let me ask what you think would happen if whatever you consider to denote wealth were suddenly no longer as scarce as it currently is. You seem to like Greenspan's ideas about gold, so if you agree that on some level money backed by gold is "valuable," what do you think would happen if a new discovery completely removed gold production constraints? O

Ah, the "limitless gold" argument. Indeed the inflation of the money supply in Spain due to the influx of gold and silver from the New World caused prices to rise in a destructive manner. However, Spain still managed to spend it all. There was no "lender of last resort" to keep the party going and exacerbating, even magnifying, the damage by providing an artificial (and fraudulent) excessive supply of circulating medium. I'd put the question back this way: who should I trust to preserve the scarcity of currency (and thus its function as a store of value) -- a bunch of "monetary scientists" subject to all the human flaws of error, whimsy, caprice, greed, lust for power, and venality -- or the nuclear strong force that consistently holds 47 or 79 positively charged protons within a femtometer of each other?

[Doc31]

Mind blowing Negative Media Campaign continues...more on this from other posters soon.

Stay tuned to the LOP channel, the no-RV channel, the 2012 channel, and every other channel designed to discredit, disallusion, dissuade, and dismay the masses.

O No...I must sell all my IQD because their 1/10000th of a currency is going to increase to 1/100th....alas...dreams destroyed, hopes hindered, and smiles stymied. All because the richest nation on the planet doesn't have the resources to back a true currency value...sigh.

Yep ... but you know there has been some decent debate here (before we got into the testosterone challenges) ... some were philosophical, some shear desire, some fantasy, some via mathematics, some skewed mathematics, some other skewed mathematics, and some with big suppositions.

And I agree I've never seen so many "GUEST" posts ... and the addition of more guests by the same guest to provide an audience in agreement with that guest ... lol ... too funny ... the tone, language and syntax didn't vary ... man-up

A few of you appear to have at least some command over the subject ... and I've never seen such long SPONTANEOUS posts (lol) ... at the very least, some of you just have wayyyyyy too much time on your hands.

While I know that I have tacked this on way too late in the post to ever be seen ... what I would love to see is the same kind of comparison of economies/etc/etc not to America but to Kuwait and Saudi Arabia ... you know with similarly related GDPs, products, relationships ... AND a discussion about Kuwait's RV and how they could or couldn't expect to maintain it at the entry rate ... then how they did and do.

You see we love to use Kuwait as the reason to buy IQD ... then that is the last time we ever want to speak about it. How about it (ladies and/or) gentlemen? No, I don't expect that to ever happen ... which leaves me a lot like JoeP

Peace

Doc31

[Doc31]

Oh, BTW did anyone mention the DFI funds anywhere in there? I don't remember seeing $890B or so (3 month old figure). Might be wrong and of course it might have been included in someones calculations.

Please don't tell me what it is really for ... big $$ disappear in Iraq every day ... and I'm sure someone will justify it's useage for whatever they want.

Just wondering

[d00gie]

While I know that I have tacked this on way too late in the post to ever be seen ... what I would love to see is the same kind of comparison of economies/etc/etc not to America but to Kuwait and Saudi Arabia ... you know with similarly related GDPs, products, relationships ... AND a discussion about Kuwait's RV and how they could or couldn't expect to maintain it at the entry rate ... then how they did and do.

This would be extremely useful. I imagine it's on here *somewhere* already. Anyone?

[Guest DiNaR DoCtOr]

Economist- You had mentioned that the type of revaluation some are talking about would create destructive amount of wealth, but I wonder what your thoughts are about the "depressed" wealth of Iraq over the last thirty years. War with Iran, first gulf war, OIF, and sanctions have depressed the wealth of Iraq. I see your point about the creation of wealth if it was truly going from point A (exchangerate we have now) to point B (desired exchange rate). But, I feel that a point C (exchange rate prior to factors that hinder thier wealth). So my question for you is: Would there really be as much real wealth creation from a RV if the country's wealth has been artificially depressed for so long? Feel free to remove wealth with production or money. I feel that my point that the exchange rate we see now is humanly and not a reflection of the natural rate, resulting in lower wealth creation you mentioned. Thank you for making this a better debate.

[hspotman]

I'm too tired, and WAY too ADD to read through this whole thread again, but let me ask you(economist) or anyone else what you think of this scenario....and I HOPE all of you give me endless negatives and debunk this scenario.......Knowing how unfair/corrupt/stupid/etc ours, and all other country's governments are, what's to stop them from telling Iraq to only give them(the governments) the re-valued rate so they can stimulate their economies themselves, and not give it to us citizens of their countries. We all know how our government's want as much control over us as possible, so why give "us" the power of wealth? Please "neg" me and debunk this scenario, and tell me this has been discussed before in length and I am a complete idiot for even thinking of such a theory. Or tell me that I need to research these forums more, because it has alrady been discussed and debunked.

[d00gie]

I'm too tired, and WAY too ADD to read through this whole thread again, but let me ask you(economist) or anyone else what you think of this scenario....and I HOPE all of you give me endless negatives and debunk this scenario.......Knowing how unfair/corrupt/stupid/etc ours, and all other country's governments are, what's to stop them from telling Iraq to only give them(the governments) the re-valued rate so they can stimulate their economies themselves, and not give it to us citizens of their countries. We all know how our government's want as much control over us as possible, so why give "us" the power of wealth? Please "neg" me and debunk this scenario, and tell me this has been discussed before in length and I am a complete idiot for even thinking of such a theory. Or tell me that I need to research these forums more, because it has alrady been discussed and debunked.

The US is absolutely desperate at this point to try (futile as it will be) to prop up the FRN/USD and the economy. The US *wants* us to convert our IQD to FRN/USD. The artificial increase in demand for FRN/USD will tend to prop up the USD index, which, should it drop below 71, could have the bottom fall out. Then, there's the 35% tax boost (pun intended), which will reduce the amount of worthless Treasuries that they have to either pawn off on, say, China, who isn't buying nearly as many anymore, or otherwise monetize through backdoor channels such as JPM, City of London, etc., (oops, I mean "households", as shown in the last Fed Z.1) as they have also been doing. Then there's the attendant spending on real estate, to prop up that collapse. (The spending on hookers, booze and Corvettes goes without saying. Woohoo! Oil "Wealth" effect!)

But if people are smart, they'll take delivery of gold, or even better, silver American Eagles in a barter exchange. That would be an actualization of the "wealth" into a store of value that is effective during economic crises of all stripes, in one of which we are most certainly enmeshed.

[marcuscurtis]

I have been out of town for the weekend. Reading through this it is obvious I missed a really great debate. I am tring to catch up on all the points now. I just want to just take a moment and commend d00gie. I really enjoyed reading your responses. I enjoyed every post you made in this thread. very good work sir! Thanks for posting

[d00gie]

TYVM.

I have been out of town for the weekend. Reading through this it is obvious I missed a really great debate. I am tring to catch up on all the points now. I just want to just take a moment and commend d00gie. I really enjoyed reading your responses. I enjoyed every post you made in this thread. very good work sir! Thanks for posting

[urbanfarmer]

d00gie,

I, too, enjoy your well thought out comments. I feel as if I am back at University! I will be rereading the entire thread again, to try to get a clear grasp of what exactly is being said.

Many THANKS again for your time and expertise. And, you too, guest-economist, who ever you are; it would not be as a good a read without your counter comments.

Urban

[d00gie]

How is academic number theory funded? And academic applied physics? There are skeletons in every closet.

An excellent point. I worked about 15 years in bioinformatics and geodesy and image processing. Up until I started digging into this subject, I'm sad to say I think I probably never collected a paycheck that didn't come from the federal coffers, one way or another.

I'll agree with the idea that academic economists and researchers from other fields are influenced by their funding, at the very least insofar as they pursue research which is likely to net them grants, publication(s), and/or recognition. I'll even go further and state that I firmly believe, and have for some time, that the study of economics itself has taken an alarming turn from being a descriptive science to an engineering discipline, not least of all because economists wish to increase their importance and sphere of influence. But even so, I'm not prepared to "through the baby out with the bath water." There is plenty of economic research which I personally would consider "bad" on both moral and theoretical grounds, but that (clearly) doesn't mean I think the entire discipline is worthless.

No, the entire discipline is not worthless, just as Math, Physics, Biochemistry, etc. are not.

The real issue is that fiat currencies (which, at least, in the US, are unconstitutional 'bills of credit') and fractional reserve banking (lending what you don't have, and collecting interest on it) are criminal frauds (in the legal sense) which are allowed to operate under the Color of Law. These frauds have operated for so long, and so profoundly distorted the political, financial, educational, media, and other societal systems away from what they would be under the Rule of Law, that it is fair to say that, intentionally or not, they have indeed altered the very reality in which we would otherwise have found ourselves.

Currency and credit which could not have come into existence, were the Rule of Law being observed, fundamentally alter the dynamic of what is "economically viable". I've unfortunately worked on things that I thought to myself "man, I wouldn't want to be on the receiving end of this", and so (again, unfortunately, in hindsight) I am acutely aware of the types of things these monetary distortions have made possible. I single out Economics for special disdain, perhaps, because it is the technical discipline that renders the monetary fraud (and thus the entire societal distortion) possible.

I certainly don't share your opinion that the ruination of economics and other fields has been deliberately engineered by some over-arching conspiracy.

One of the most useful statements about the identification of 'deliberate engineering of over-arching conspiracy' is right in the Declaration of Independence:

when a long train of abuses and usurpations, pursuing invariably the same Object evinces a

design

I think it's fair to say that the Founding Fathers were not "Conspiracy Nuts", and not just because the process for refining aluminum for tinfoil hats hadn't been invented yet.

I have given you two very concrete examples of 'glitches in the Matrix', concerning things about which you have been *very* well trained and schooled, which at the very least should induce sufficient cognitive dissonance to make you go, "hmm." If your mind is open, you might be able to take the next step, which is to honestly investigate how these antinomial "facts" managed to get left behind. And if you undertake this investigation critically, it will be impossible not to ask yourself, "How else have I been misled?"

If you assume nothing, and attempt to answer this question without reference to what you *think* you know, I assure you that you *will* stumble across individual instances in a long train of abuses and usurpations pursuing invariably the same Object, statistically significant enough in number to evince a Design.

I'm sensing some Creature From Jeckyll Island in you.

That, and a number of other things. Undoubtedly the book is ridiculed in "respectable" circles, and while the book is not perfect, that would be a mistake. The book I would recommend to you for a better understanding of oil economics and geopolitics is "A Century of War" by William Engdahl.

Speaking of G. Edward Griffin, you might watch this interview with Norman Dodd, who was the staff director for the Reece Committee on Tax-Exempt Foundations in the 1950's. Ignore the titles and introduction, and simply *listen to what he has to say*.