Removing three zero's from the nominal rate/value

[fortytwo]

Hey guys gotta question. Ive read the statements from shabibbi and allawii and IMF and CBI etc. etc. and in the latest post, the IMF said it approved or recommended the removal of three zeroes from the nominal value. Now if I were to guess, I would think that was LOP talk, but many people in the know were excited to hear this. I would assume that the key word here is the "nominal value" (and hence the reason people got excited by this), but im not sure I exactly understand why this is a positive statement towards the rv happening. Can anyone explain?

[vette6367]

Hey guys gotta question. Ive read the statements from shabibbi and allawii and IMF and CBI etc. etc. and in the latest post, the IMF said it approved or recommended the removal of three zeroes from the nominal value. Now if I were to guess, I would think that was LOP talk, but many people in the know were excited to hear this. I would assume that the key word here is the "nominal value" (and hence the reason people got excited by this), but im not sure I exactly understand why this is a positive statement towards the rv happening. Can anyone explain?

LINK PLEASE???????????????

[Kandi77]

If they do away with the "000" bills, then they have to issue new lower denoms. It wouldn't make much sense to do that if you weren't raising the value of your money. Basically if you had a $25000 bill, you could exchange it for 1000 ea $25 bills. That would be a lot of cash to carry around if the value stayed the same. But if they raise the value of the dinar closer or higher to the USD, then each of the $25 bills would have buying power. Hope that makes sense.

There is a lot of info on the site about the LOP and removing the Zeros, do a search and you will find plenty of information to help you.

Edited February 9, 2011 by Kandi77

[breeze101]

Its my understanding that it would give more value to each dinar by taking 3 0s off of the exchange rate (.00085) or such rather than deleting 3 0s of of the currency itself. If I'm wrong I'm sure I will be corrected shortly

[keepmwlknfny]

In normal terms removing zeros is a LOP....which would leave us with a minimal gain.......because of differences in the two languages Im not sure we can be 100% sure if they mean LOP or just removing those bills from circulation while raising the value of the currency.....of course all the gurus and people in the know are going to tell you its the latter but they dont know for sure.....but they will do anything to spin anything negative into something good for us....just be prepared for either cause this isent a guarantee quite yet.....

[TRERUMPH]

Hey guys gotta question. Ive read the statements from shabibbi and allawii and IMF and CBI etc. etc. and in the latest post, the IMF said it approved or recommended the removal of three zeroes from the nominal value. Now if I were to guess, I would think that was LOP talk, but many people in the know were excited to hear this. I would assume that the key word here is the "nominal value" (and hence the reason people got excited by this), but im not sure I exactly understand why this is a positive statement towards the rv happening. Can anyone explain?

WHY DO WE ALWAYS HAVE SOME ONE TALKING ABOUT A LOP LET THAT $#!T GO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1 THERE CAN BE NO LOP FOR TWO TO THREE YEARS SO STOP SAYING THAT $#!T!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[jola]

In normal terms removing zeros is a LOP....which would leave us with a minimal gain.......because of differences in the two languages Im not sure we can be 100% sure if they mean LOP or just removing those bills from circulation while raising the value of the currency.....of course all the gurus and people in the know are going to tell you its the latter but they dont know for sure.....but they will do anything to spin anything negative into something good for us....just be prepared for either cause this isent a guarantee quite yet.....

That's exactly how this whole thing should be explained for the newbies.

One dinar from me. +

[roger01]

Okay so changing the nominal value would be removing the 0s of the face of the bills and not nessessarily changing the real value of the dinar. So 25,000 changes to 25 but keeps its real value of 25,000. The biggest question is... are they talking about raising the 000s from the exchange rate or the nominal rate of the dinar itself? My question mathmatically, is how do you go from a .0085 to 1000 (at a 1000 to 1 exchange rate) if they are only changing the nominal value and not the real value? According to my math, at the current rate of .0085 they would have to multiply the current rate 117,647.05 times to have an exchange rate of 1000 to 1 (25x1000=25000). Not a mathematician here! Can anyone explain math wise? Obviously my math depends upon which way they go and if they don't change the real value or not (a real LOP!)

And for those that just arent realistic enough to consider the math and what they could do (LOP or not) please don't bash. I'm looking for the math behind it, not total luck! After spending two years of my life there, I want them to pay out too!

[breeze101]

WHY DO WE ALWAYS HAVE SOME ONE TALKING ABOUT A LOP LET THAT $#!T GO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1 THERE CAN BE NO LOP FOR TWO TO THREE YEARS SO STOP SAYING THAT $#!T!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

because people are getting into this investment and trying to educate themselves, as I'm sure you did at some point. The real question would be why does it bother you that someone would want to better their understanding? I thought the nature of this site was to inform and educate as well as connect people with similar interests.? I guess I could be wrong, seems lately there is alot of "tell me what I want to hear" going on. Have a great day

[roger01]

Just saying they wont LOP, when you may not even understand the terminology and how the Iraqis are translating it doesn't cut it! Iraqis terminology is not exactly like ours, thats why we're reading between the lines and looking at all senarios!

keepmwlknfny is tracking!

[coldwarvet]

I think it is important to interpret Governor Shabibi's comments in their entirety, not just take part of a quote to make one's case. Prior posts have shown that Shabibi tied the term "delete the three zeros" to raising the value of the dinar so that it would be comparable to the USD. A LOP would not achieve that. Raising the value to .86 IQD = 1 USD, or some value in that neighborhood, would. IMHO.

[Slaydadea]

LOP X RE EVALUATION DIVIDED BY INTEL SQUARED TO THE THIRD POWER = INDEPENDENCE. I'm not a Mathematician either, don't forget your church, family and friends. You can't spend it all anyway.

[keepmwlknfny]

WHY DO WE ALWAYS HAVE SOME ONE TALKING ABOUT A LOP LET THAT $#!T GO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1 THERE CAN BE NO LOP FOR TWO TO THREE YEARS SO STOP SAYING THAT $#!T!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I believe you are mistaken my friend........who misled you?? Where are you getting there cant be a LOP for two to three years? lol

[roger01]

coldwarvet the only problem (I know this is a negitive statement, but a valid one) is that if they (LOP) the nominal value (face value) and the (real value) on the dinar 25,000 becomes 25, and thats it) and raise the exchange rate at the same time, they could give a value of 2-3+ bringing it back to what it was in the 1980s. Remember back then they weren't using 25000 dinars, it was 25 dinars. It wouldn't defeat their purpose, just our dreams. Why I believe they will keep the value the same and only change the exchange rate value is because most of thier debt was forgiven! If it wasn't I would tend to believe a full LOP would happen, but because thats not the case, it gives me hope!

[imgesing]

FACTORS in determining currency value... This is for those of you who havent been educated in monitary economics... Hope this helps some...

IRAQ is in a GREAT place for upward drive of their currency... Please read>>>>

who determines currency values?

Currency value is determine by the purchasers of the currency. These are primarily travelers, governments and Forex traders. FOREX stands for Foreign Exchange. There are many factors that currency traders, governments and businesses take into consideration in determining the Fair Market Value of a currency.

Fair Market Value is the price at which a willing buyer and a willing seller come together. The buyer must factor in many elements and considerations to try to accurately assess a currency's value at any given time. There are approximately 180 different currencies in the world now. Let's consider some of the factors that are used to determine a currency's value.

Factors Affecting Currency Value:

1. Political Conditions in the Country - This includes the stability of the government, the amount of corruption, bribery and the degree of law and order. Also includes a country's relationships with other countries and especially their relationship to US, UK, China and Russia. The form of government in the country is also a factor used to assess the value of a currency. Consider the widely varying forms of government in Saudi Arabia, China, UK, Venezuela and Thailand, just to name a few.

2. Economic Situation - This includes factors such as jobs, unemployment, work ethic, infrastructure, inflation and direction of the economy. Is it older or newer in orientation; computers and high tech, or more farming and manufacturing.

3. Perception from Outside - The perceptions and attitudes of other countries toward a country are as important as the reality of the country's actual situation. News, media, movies, newspapers, rumors and spin can create perceptions. How much is known about a country? The less that is known, generally, the lower the value of a currency.

4. Demographics - A young population may mean better prospects for the future, people who are more open to change and development and a growing size of the workforce. The overall population of a country is a factor. How much weight does this country have on the world scene.

5. National Leaders - The openness, trustworthiness and likeability of visible leaders is a factor. This includes political leaders, sports figures, business owners and celebrities. Here are some national figures who affect their countries, either for better or for worse. Kim Jung Il, David Beckham, Nicole Kidman, Madonna, Osama bin Laden, Barack Obama and Vladimir Putin. These help form the world's perception of a country.

6. Isolation versus Openness - Continuum China is becoming more open, more transparent. This helps. Cuba is very closed and isolated. Venezuela is becoming more isolated by some of its recent actions. China's markets are becoming more open. Cuba, Kyrgyzstan, Russia and Japan, all have differing levels of openness with the outside world, which affects the value of their currency.

7. Natural Resources - The kind of and amount of exploitation of a country's natural resources certainly helps create a perception of value, or lack thereof, of a country's currency. Mining of minerals, forests, oil, fish and other resources are considered. Also the level of technology to development these resources.

8. Weather Factors such as drought, tsunamis, earthquake and floods are taken into consideration. How frequent are they and how is the country's response to them. These also affect desirability, safety and perception of a country. Is it a tourist destination?

9. War and Conflicts - With which other country is a country at war, and who is it's allies? Their military strength and technology, their willingness to go to war and for what, are important factors in assessing a country's strength, stability and the value of its currency.

10 . Education - This includes languages spoken, level of computer know-how, Internet connectedness, culture and religion. Scientists, entrepreneurs, authors and inventors are all affected by the type and quality of education in a country.

In conclusion, currency values are determined by many factors. Not just one issue, but a composite of many must be considered. In trading currencies, such as in FOREX, trades are usually made in pairs. Values must be relative to something. So how is a country doing relative to another country is also significant. Common Forex pairs are US dollar and Japanese yen, Euro and US dollar, for example. These and other factors determine the value of a currency. Some are tangible, some intangible. Some are fixed and some are manageable. Sometimes it is the news of the moment and sometimes the long-term situation. That is why currency values are often changing and there is no one place or person who determines currency values. And why currency exchange, based on fluctuating currency values, can be an exciting, lucrative, volatile, fun or disastrous form of business or investment.

[andy3978]

The New Dinar was made and distributed in 2004 I believe which wasnt too long ago. Why would they bother designing and printing this currency (25,000 etc notes) only to remove 3 zero's anyway? Why waste the time and expense of doing this...why not simply print 5's, 10's, 20's, 50's etc right from the get go? Seems pointless to me and a tremendous waste of time and resources.

I agree that a 25,000 note is not practical for daily transactions. I suppose they could always keep them in circulation for larger transactions and add the smaller notes into circulation.

Lastly I believe that by removing 3 zeros would absolutely and unequivocally piss off the people, companies, firms, and governments that invested in them. It would be nothing short of robbery. People invest with the hope/expectation of a return. By Lopping, the investor would be at square one having Dinar worth the same as their initial investment...yet having to PAY the spread to cash out.

[roger01]

I agree with what you wrote," that it would piss investors off" leaving us all feeling that we got robbed. But essentially if they did LOP and changed the exchange rate back to 2-3+, your not getting robbed! If you bought back when it was say 1462 to 1, for 25000 dinar, you paid 21.00 and some change, if they LOP you have 25 dinars. If they up the exchange rate back to say 3.00 you made 75.00 off of 21.00. So your not getting robbed, just our dreams of 75,000 is taken away. Their imports would still be cheaper because they gave value to their imported prices of goods because its still higher than say the dollar. As for all of the factors, yes I agree the rate will be based on multiple factors. The biggest determining factor to see is if they introduce smaller demoninations into the system 1,5,10,20, or 25 dinars while taking most of the large bills out of the system as did the United States. We have 10,000 bills, but whos go them now... the Federal Reserve... most were probably destroyed or only used in large banking transactions. But if we had one, then its face value is still the real value today. If they dont introduce smaller bills then I believe our chances of them setting  a "higher" exchange rate I believe is deminished. While I think they could still go to say 1.70 while leaving the current bills in play, they would still have to introduce smaller bills. Though, the bills they have in play could still be used, because the value is still the same  in country, just worth more externally.  Also, while they look at the state of their economy, I doubt they will look that foundly on leaving the current bills of 25,000 dinar, unless they get close enough to hitting that 10-12 mbpd output.

Edited February 9, 2011 by roger01

[leola]

YOU MIGHT TAKE INTO ACCOUNT,,,,THAT THE BANKING BUSINESS HAS GONE ELECTRONIC,,,NO ONE CARRIES AROUND SUIT CASES FULL OF MONEY,,IF THEY ARE NOT DOING SOME ALLEGAL SUFF.... IN THE CASE OF THE DINAR,,,THE VALUE FELL SO LOW,,,THAT,,SMALL BILLS WERE USELESS (COINS EVEN MORE SO ). SOME FEEL WE WILL HAVE BOTH A LOP AND THEN A REVALUE....IF I CONTINUE FROM HERE I WILL GET BASHED,,,MAYBE SOME ONE ELSE WOULD LIKE TO PUT THE GENIE BACK IN THE BOTTLE ????? THEY WILL EVENTUALLY,,HAVE TO PUT SMAALL BILLS IN CIRCULATION,,AND A HIGHER VALUE MUST BE ATTAINED..

Edited February 9, 2011 by leola

[roger01]

Somewhat like looking at the exchange rate like futures, though this isn't technically a stock, and that's not how they set current exchange rates. Its based on what your worth now! they can change that in the future as they grow.

[andy3978]

I agree with what you wrote," that it would piss investors off" leaving us all feeling that we got robbed. But essentially if they did LOP and changed the exchange rate back to 2-3+, your not getting robbed! If you bought back when it was say 1462 to 1, for 25000 dinar, you paid 21.00 and some change, if they LOP you have 25 dinars. If they up the exchange rate back to say 3.00 you made 75.00 off of 21.00. So your not getting robbed, just our dreams of 75,000 is taken away. Their imports would still be cheaper because they gave value to their imported prices of goods because its still higher than say the dollar. As for all of the factors, yes I agree the rate will be based on multiple factors. The biggest determining factor to see is if they introduce smaller demoninations into the system 1,5,10,20, or 25 dinars while taking most of the large bills out of the system as did the United States. We have 10,000 bills, but whos go them now... the Federal Reserve... most were probably destroyed or only used in large banking transactions. But if we had one, then its face value is still the real value today.

1 million Dinar cost $1,000. If they lop then instead of 1 million we have 1,000 IQD. If they RV that at say 1:1 then your Dinars are worth $1,000 USD. Minus off the taxes and bank spread and you just lost on the investment.

If they RV at say 30 cents on the dollar then you just lost out even bigger (THAT is a prime example of robbery).

If they RV at say 3:1, now your Dinars are worth $3,000 minus off the taxes and spread...yea you made a little money but factor in the roller coaster ride this thing took and some people have been sitting on them for 7 years. Is a $1,500 profit over 7 years really a return at all? $1,500/7 years = $214.xx/ year. Was it worth it? For me...the answer is a resounding Hell No!

I mentioned this once before and it may be worth repeating. If they were to remove 3 zeros, then RV at a stupid rate...say 25 cents on the dollar, then Iraq just made out like bandits. Investors LOST big time and Iraq is sitting on a pile of USD's. Example: You pay $1,000 for 1 million IQD. They lop it and now you have 1,000 IQD. They RV at 25 cents and your Dinars are worth $250. Meanwhile Iraq has $1,000 of YOUR USD's and all you have is IQD you can cash out for $250 minus the tax and spread. THAT is how Iraq can rob the world.

Do I think they would do that...lol not if they plan on doing any business with anyone ever again.

A lop is used to fight inflation; Iraq's inflation is in check so they dont need to do it. The only thing that is slightly troubling to me is that it just seems to good to be true. That I can become an overnight millionaire. Just seems too easy and that does frighten me. However I do know one thing for absolute certain...if I never got involved with IQD's, it would definitely not lop and would RV at 3:1 and I'd throw myself into oncoming traffic

[roger01]

I get your theory somewhat on the whole going electronic, but you fail to understand that this isn't America, there are not ATMs or banks other than in the Major cities. And there aren't alot of them even in those cities. They don't have debt cards to swipe at every gas station like in the US. Thier infastructure is working toward it, but not there yet!

I get the whole if you have 1,000,000 then they LOP and you have 1,000. In that case, the're trillions just became billions... So they will not be aloud to come in at a rediculous rate of .25, as they're right back where they were in the 1980s, they would go back to that 3.00 range not .25.

As for inflation, yes that's not an issue at this point, but just because history shows that that's usually when its done, doesn't mean they cant now!

People would still do business with them, because there's oil there and theres a market opening up for everything!

Gotta head home, I'll respond more later! Trust me friends, I want this too! I'm just trying to figure out what they're going to do. To bad we cant bribe Shalabi, but we could read his books and find out his frame of mind on certain topics?!!

[0331]

I’ve looked up the current money supply of Kuwait and the US money supply.

US M1 and M2 appear to be in the Billions. M3 seems to be as high as 10 Trillion. Kuwait’s money supply M1 is about 25 Billion.

It seems that when the IQD was valued above the dollar, the money supply was around 25 Billion. It is now 25 Trillion or more. When the Iraqi Dinar was devalued it was necessary to print larger bills, increasing the money supply into the trillions.

It only seems reasonable for the reverse to happen. If they are going to return to an increased value, as they once had, wouldn’t they also return to the same money supply?

Does it seem reasonable to believe that while Kuwait has a money supply of 25 billion Dinar, valued at over 75 Billion US Dollars, Iraq will have a money supply of 25 trillion, valued at 25 – 75 Trillion USD.

If Iraq exchanges their 000 denominations for 5’s 10’s and 25’s this brings their money supply back to billions rather than trillions.

Currently a 25,000 dinar is worth ~ 20 US Dollars. If Iraq were to redenominate and revalue at 1 USD, this would serve the purpose of the Iraqi people and crush my dreams.

Someone say it isn’t so.

Developments in Money Supply (M2)

(KD Million)

Change from 2006/07

to 2007/08

End of Period

2005/06

2006/07

2007/08

Value

%

Money Supply (M2):

14524.7

17130.1

20393.5

3263.4

19.1

Money (M1), of which :

3844.8

4021.3

4856.3

835.0

20.8

Sight Deposits

3268.7

3382.1

4190.5

808.4

23.9

Quasi-Money:

10680.0

13108.8

15537.2

2428.5

18.5

KD Deposits

8864.0

11667.8

13921.1

2253.3

19.3

Foreign Currency Deposits

1815.9

1440.9

1616.1

175.2

12.2

Edited February 9, 2011 by 331

[fortytwo]

WHY DO WE ALWAYS HAVE SOME ONE TALKING ABOUT A LOP LET THAT $#!T GO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1 THERE CAN BE NO LOP FOR TWO TO THREE YEARS SO STOP SAYING THAT $#!T!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

"why do we always"?..... it says youve been a member for two weeks. I am very aware of the possibilities for and against a LOP. It was this one question regarding the nominal value that I did not understand. I have ten million dinar, and I obviously didnt spend $12,000 if I thought it was going to LOP. I prefer to educate myself on both sides of a situation. Obviously, by your blind faith, your repetitive use of exclamation points, and clever attempt to mask the word **** with dollar signs, you have little regard for education. In words that you can understand, go f^*< yourself idiot.

Edited February 10, 2011 by fortytwo

[somewhereiraq]

Got this article from DD..... here's the inflation everyone says is needed for the LOP:

2-9-11 New tariff on imported goods angers Iraqi’s

Highlights/Thoughts

Click on the title of this posting to get the details of this posting on TCN

1. Iraq plans to increase customs duties in March, which will lead to increased prices of imported materials and reduce the purchasing power of Iraqis

2. This comes at a time when Arab countries are trying to control prices to avoid the wrath of their people

3. The GOI says the goal is to protect local products and an economy that has suffered so much because of the embargo and the violence following the invasion

4. After removal of the customs duties by the coalition countries, there was a large influx of goods

5. Many local industries disappeared because they could not compete with cheap products that filled the market after the lifting of the customs duties

6. The new tariff will be as high as 80% for some goods, including fruit and vegetables, home appliances, and other items

7. Inflation will go up while Iraq faces the problem of rising world prices of raw materials

8. The law is scheduled to go into effect on March 6th. The law has been published for 3 months in the Gazette

9. The law will protect local agriculture

10. An economist said it is clear the GOI wants to reduce dependence on oil through increased support for local production

11. Oil accounts 65% of GDP, but only represents 1% of the sector

12. Agriculture accounts for 3% of GDP. It was 8% in 1975

13. Inflation reached 3.3% during 2010, but it is up to 5.5% without including the new tariffs

Posted by justwaitingforit at 7:27 AM

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[roger01]

Technically they don't need inflation to do it, just because it hasn't been done at those low levels of inflation in the past, doesn't mean they cant. Its a "tool", so to speak. Normally, when LOPs occur in history...inflation usually is higher than 100% +. So 5% is low in those terms. As for the whole LOP theory, I believe if they do LOP, then the exchange rate will go back in the 2.70-4.00 range, not the 1 to 1 range. Like you said, they would be back to the pre-Saddam numbers in terms of economy. If they don't LOP, I think it could be anywhere up to 1.70. I think they will have to get rid of some of their liquidity!!! Like reducing 27 trillion to that 10 trillion. Most of which I think can be done because its really just 000s in a computer somewhere, they just cant lend it out!