RV concept is a hard one to "buy"

[jvincer]

I bought into this investment in Aug. of '05. I have been visiting this site for a year and 3 months. Something that I have never been able to wrap my head around (even though I very much hope and wish for) is how a currency can RV (6 years ago the people in my investment circle were referring to this as "pegging").

I get that Iraq is on top of an ocean of oil. What I don't get is why would the rest of the world be OK with one country's currency INSTANTLY becoming worth a thousand times what it was worth yesterday. Won't that in a sense devalue any other country's currency when comparing it to the dinar. If today, one DINAR is worth less than 1/10 of a U.S. penny and then tomorrow 1 DINAR becomes worth 1 DOLLAR, then didn't we just devalue the DOLLAR.

When I bought dinar initially, the guy who sold it to me said it would "peg" to the dollar as soon as the Iraq Constituion was finalized...Awesome...that happened not too long after I bought it and I'm still not living on my yacht...but thats ok because I didn't believe him anyway.... instead I thought the dinar would eventually regain its respectable value GRADUALLY by being traded on a world market (i didn't know this to be called the FOREX at the time).

I understand that if I posted something like this in the rumor section I would receive the second class citizen tag of "newbie"... I posted here because I am assuming this section has more intelligent feedback to offer... someone, please shed some light if you have the time

[roger01]

Think of it this way, if thier currency can go from 2.32 to .0004 over night when the way kicked off, why cant it jump back up. Their resources didnt change, infact the oil numbers have increased. maybe not output yet, but finding estimates have. Pegging it would be against another group of currencies from what I understand, like an SDR basket?

Think of it this way, if thier currency can go from 2.32 to .0004 over night when the war kicked off, why cant it jump back up. Their resources didnt change, infact the oil numbers have increased. maybe not output yet, but finding estimates have. Pegging it would be against another group of currencies from what I understand, like an SDR basket?

Read more:

check out my two post for more reading on what seems to be going on. I think we may have up to another year possibly. Though it may happen even sooner. Hang in there.

[leola]

nice answer ROGER,,,,,,PERFECTION IS HARD TO TOP.....

[Rome M]

If you check out the past numbers, you can see more of how the value can jump without affecting our monetary system. Using Oanda you can see in Nov 1995 the value was 1 IQD to 1.666 USD, then just mid November it drops 4300 xs ( I think that is about right) to 1 IQD = .00038 USD.

Now, given all of their problems, sanctions, dictator, war, and whatnot we can easily grasp the idea of their currency dropping in value by thousands, all within a week.

Now, why can't we grasp the concept that this can rise just as quickly coming out of such hardships mentioned above, including all of the advantages Iraq holds today? It is merely a rebalancing and returning to normalcy. To us, we see only the current trend, and it makes gaining wealth look too easy or too good to be true.

However, if I had the same 3 mil dinar I have now, but back in 1994 I purchased it, it would be 15 years before I have the chance to regain back to normal (assuming the RV is soon). If I died in 2002, I would die a broke man. It is all about WHERE we fall in the re-balancing, not HOW.

It is not a devalue of anything, nor in all absolutes, it is not even a true profit. It is merely going back to what it was, balancing back out, getting back what was lost. Just like a chemical reaction, equal and opposite reaction and all that.

Some get caught in a position to benefit, others may be caught to lose, but the overall re-balancing occurs regardless.

We should be greatful we may be able to experience the re-balancing in a position of wealth and prosperity.

[dnardreams]

Just one thing I would say. The countries of the world are ok with this RV skyrocketing because they are invested in Iraq's economy, whether it be in the Dinar, or the stockmarket, or different oil contracts, whatever it may be. So when the Dinar RV's it will increase not only the wealth of these naions through there currency investments but it will make them money on there other investments because no people in Iraq qill hav their own independent wealth to invest in their country, further stimulating the Iraqi economy and making all of these foreign governments even more money. The world is invested in Iraq and the RV will set off a chain reaction that will make the world's nations enough money to offset any decrease in any nations currency. Just one man's opinion, hope it helps.

Edited January 9, 2011 by dnardreams

[rjboots1]

Jvincer, the biggest reason that the re-valuation of the dinar will not affect other currencies negatively is simply that the dinar is currently not recognized or traded internationally. So from a global standpoint the dinar doesn't even exist. And the last time it did was 20 years ago when it was worth over $3 US. So it's a non-issue from that standpoint. And you know the rest, i.e. the natural resources, the economic development opportunities that all the other countries are going to try to exploit for their own benefit, the other central governments (IMF) that own dinar, etc., etc., etc. It truly is a win-win, and there's no reason NOT to do it. Everybody makes money, Iraq gets back in the international game, their people get meaningful incomes back, the rich get richer, and a million or so of us not-so-rich get a chance to play with the big boys (at least for a while). It's like Christmas again, only with no charge bills!

[pureau79]

If you check out the past numbers, you can see more of how the value can jump without affecting our monetary system. Using Oanda you can see in Nov 1995 the value was 1 IQD to 1.666 USD, then just mid November it drops 4300 xs ( I think that is about right) to 1 IQD = .00038 USD.

Now, given all of their problems, sanctions, dictator, war, and whatnot we can easily grasp the idea of their currency dropping in value by thousands, all within a week.

Now, why can't we grasp the concept that this can rise just as quickly coming out of such hardships mentioned above, including all of the advantages Iraq holds today? It is merely a rebalancing and returning to normalcy. To us, we see only the current trend, and it makes gaining wealth look too easy or too good to be true.

However, if I had the same 3 mil dinar I have now, but back in 1994 I purchased it, it would be 15 years before I have the chance to regain back to normal (assuming the RV is soon). If I died in 2002, I would die a broke man. It is all about WHERE we fall in the re-balancing, not HOW.

It is not a devalue of anything, nor in all absolutes, it is not even a true profit. It is merely going back to what it was, balancing back out, getting back what was lost. Just like a chemical reaction, equal and opposite reaction and all that.

Some get caught in a position to benefit, others may be caught to lose, but the overall re-balancing occurs regardless.

We should be greatful we may be able to experience the re-balancing in a position of wealth and prosperity.

Good points... Another thing to consider is that most currency is "fiat" currency and it's value is derived through the practice of "fractional banking" from GDP "potential" vs something like the gold standard. Therefore, it will be worth pretty much whatever Iraq's GDP can support.

[okiea&p]

Enjoying this thread . I have had the same thoughts as the O.P. I guess what goes up must come down , so the opposite should hold true ? Good explination of fiat currency , I have seen that term alot , but never really comprehended the concept til now . T.Y . keep up the discussion !

Edited January 9, 2011 by okiea&p

[jvincer]

Thanks guys.... that definitely helped clear some things up for me... I appreciate all of your insights