Debunking the myths of the infamous bunny-ear (lop)

[Kent]

There seem to be a lot of short phrase/sound bite myths that are mentioned about a lop. I am an investor and have just as much interest in an RV as anyone. In light of k98nights post, ( http://dinarvets.com/forums/showthread.php?7506-CBI-The-foreign-exchange-abroad-(draft)-and-seek-to-erase-the-zeros-from-the-dinar ) this should be informative. This post is long, but I

[desimo]

In plain terms, what would a lop mean to the exchange rate. What would 50,000 in dinar be in usd?

[Kent]

In plain terms, what would a lop mean to the exchange rate. What would 50,000 in dinar be in usd?

The study says a 1 zero lop is the most common, but it is different based on what they are trying to accomplish each time. Answering your question, a 3 zero lop would turn your 50,000 dinar into 50 dinar, but since all currency is redominated, a 3,000 dinar loaf of bread starts selling tomorrow for 3 so the change is value neutral.

That also means that your current rate of 1,170 dinar to the dollar would become 1.17 to the dollar.

[Wayne & Leah High]

so 100,000 IQD with a 3 zero lop would be $100 USD???

[eileen]

That would be a kick in the mouth to all the nations holding IQD, but first and foremost, all the precious lives lost--what the U.S. and the allies have sacrificed...

[Kent]

That would be a kick in the mouth to all the nations holding IQD, but first and foremost, all the precious lives lost--what the U.S. and the allies have sacrificed...

eileen, respectfully, I think you misunderstand. The study says that governments perform a lop to make a statement to the world and their people that problems are past and their currency has credibility. It is a value neutral exchange so it is not an insult to anyone. It would be the same as changing from red money to green if the world thought green looked more credible and if it was somehow more practical to use in daily life. Foreign governments do not lose in the exchange. In the case of Iraq, it might be a way of bringing their currency more in line with a GCC rate.

Another way of looking at this politically is, that our objective was to create a stable, free capitalist democracy in the in the middle east. It is often said that the US has never asked for more land than is required to bury our dead. Our nation didn't go looking for oil or a return on investment. If this is part of Iraq becoming more interdependent on foreign trade, more self sufficient and less dependent on the US, then this is a small step in that victory. The US isn't losing a dime if they do this. It is not an antagonistic move in any way.

(I should add, that lops can be antagonistic when they limit the amount of currency that can be returned or set very quick time limits on the exchange. That is a confiscatory policy conducted by authoritarian regimes and would not apply in Iraq.)

[muydinar]

That would $uck! I hope you're way off! I could deal with a 1 zero lop.

[armondtoth]

eileen, respectfully, I think you misunderstand. The study says that governments perform a lop to make a statement to the world and their people that problems are past and their currency has credibility. It is a value neutral exchange so it is not an insult to anyone. It would be the same as changing from red money to green if the world thought green looked more credible and if it was somehow more practical to use in daily life. Foreign governments do not lose in the exchange. In the case of Iraq, it might be a way of bringing their currency more in line with a GCC rate.

Another way of looking at this politically is, that our objective was to create a stable, free capitalist democracy in the in the middle east. It is often said that the US has never asked for more land than is required to bury our dead. Our nation didn't go looking for oil or a return on investment. If this is part of Iraq becoming more interdependent on foreign trade, more self sufficient and less dependent on the US, then this is a small step in that victory. The US isn't losing a dime if they do this. It is not an antagonistic move in any way.

(I should add, that lops can be antagonistic when they limit the amount of currency that can be returned or set very quick time limits on the exchange. That is a confiscatory policy conducted by authoritarian regimes and would not apply in Iraq.)

So Kent if I read this correctly all we would be doing is changing in or higher denoms for smaller denoms but with equal value?

[hypr2001]

Finally someone egts it I think. The whole principal is realativley painless if you dont look at the millions of dollars people think they have earned by purchasing dinar. I am all for making millions but if the lop is the way that the country decides to go, then that is a choice that will be made for the good of the Iraqi Economy. You may not get 1000 fold return BUT if after a lop they let the currency float, you can realistically double your money. Granted, it would wash out a ton of pipe dreams but it is a possibility. GREAT POST on the realities of what may happen. God knows I dont wish it to happen that way but would rather expect it and it not happen then to not expect it and it be a reality.

[Muhammad]

It may be a partial truth in what Kent has said but does he realize about what is reinstatement of IQD without lopping any zero off from it really means if UN Security Council committee has to pronounce to the whole world their final verdict against Iraq as not guilty when the allegation for possession of WMD is untrue and unfounded, very soon? Chapter 7 must be removed first to reinstate Iraq - and concurrence of Chapter 7 and RI, not RV, is highly possible prior to their upcoming Parliamentary Elections. IMO!

[Muhammad]

It may be a partial truth in what Kent has said but does he realize about what is reinstatement of IQD without lopping any zero off from it really means if UN Security Council committee has to pronounce to the whole world their final verdict against Iraq as not guilty when the allegation for possession of WMD is untrue and unfounded, very soon? Chapter 7 must be removed first to reinstate Iraq - and concurrence of Chapter 7 and RI, not RV, is highly possible prior to their upcoming Parliamentary Elections. IMO!

Correction: ...removing Chapter 7...

[Kent]

That would $uck! I hope you're way off! I could deal with a 1 zero lop.

Please, God make me wrong!

[Kent]

So Kent if I read this correctly all we would be doing is changing in or higher denoms for smaller denoms but with equal value?

Correct. But then I also think they would either float or do a small RV in conjuction with the LOP to put the currency rate where they think it needs to be. I think there is some money to be made, I just don't think it's the thing dreams are made of.

[Kent]

It may be a partial truth in what Kent has said but does he realize about what is reinstatement of IQD without lopping any zero off from it really means if UN Security Council committee has to pronounce to the whole world their final verdict against Iraq as not guilty when the allegation for possession of WMD is untrue and unfounded, very soon? Chapter 7 must be removed first to reinstate Iraq - and concurrence of Chapter 7 and RI, not RV, is highly possible prior to their upcoming Parliamentary Elections. IMO!

Muhammad, I think I understand the difference between an RV, an RI and a LOP. I am not sure how that relates to a final verdict of not guilty of WMD. If there is a connection there that drives one of the choices, please feel free to explain. I don't get the connection.

[popo24]

I think more people need to really read and understand this thread.

[skers05]

for all the people that still believe an rv could still happen without a lop please explain to me one thing. There is curently around 800 biilion US dollars on the world market and around the same for the euro. If Iraq were to rv their currency without a lop they would have around 25 trillion dinars on the market. I also have heard plenty that the Iraqi dinar under Saddam Hussien was around 3.44 to every 1 US dollar now that was just a rate that was given by Saddam Hussien himself because the Iraqi dinar was never traded on the free market

[Barbann]

It may be a partial truth in what Kent has said but does he realize about what is reinstatement of IQD without lopping any zero off from it really means if UN Security Council committee has to pronounce to the whole world their final verdict against Iraq as not guilty when the allegation for possession of WMD is untrue and unfounded, very soon? Chapter 7 must be removed first to reinstate Iraq - and concurrence of Chapter 7 and RI, not RV, is highly possible prior to their upcoming Parliamentary Elections. IMO!

Wasn't there a post stating that wmds had been found afterall?? If so it would definitely impact the release from Chapter 7 and the fact that they had been falsely charged. Of course my personal opinion about this is that Saddam is gone, his regime is dead, so set Iraq free to pursue it's destiny so long as they are assured not to return to the same type of dictatorship.

[pbbcolo]

Hey Wayne, nothing dinar related but I'm curious if by some small chance you lived in Garland, Tx on Nash Street when you were a kid? I had a childhood friend with the same name just curious. Thanks!

[mike5961]

My God, do you people ever plan on letting this go. Well let me shed some light on this matter at hand. Here is how I see this: The people of Iraq are already broke because their money is worth nothing. They CBI have already said the new denoms and the large denoms will be used together untill the end of 2010 at the same value. They are going to remove the 0's by taking the large notes out of circulation period. There is no lop of the money in general. Its pretty simple for some because you cant just lop part of your currency and not all of it. Further more do you think that all of these countries would have bought trillions, and then some of the countries have even went as far as forgiving Iraq for all or most of what Iraq owed them. And what about Iraq's oil deals, and all the big companies wanting to invest money in Iraq. What about wanting to be a member of the WTO so they can import & export plus sell their stock right? Iraq wants to be able to play with the big boys again all around the world. You are looking at the one country in the world that has the ability to be the richest in five years or so. So they dont try to get the worlds attention by loping their money when the money has never really went down in value since they printed the large denoms in 2004. Last note and I rest my case, do you really think the UN and IMF would consider letting Iraq out of chapter 7 by starting with a LOP. How does this show the world any stability when it comes to their money please tell me. China forgives them for 80% of what they owe them and Iraq tells them oh by the way all the dinar you have is not worth what you thought it would be. Kuwait has invested billions of dollars that they had to help iraq's banks, and Iraq has not even paid them back for the war they caused. Do you think Kuwait would have invested money in a country that owes them and is going to LOP their currency now. Please just stop and read between the lines and use some common sense. There will be a great return on this investment for all of you real soon because Iraq has way to much at stake around the world, and they owe their own people some money, food, water, and electric. They cant do any of this without money that has some value to it. The big day is near for all that deserve this, and that is Iraq's people first, and then the rest of the world will reap the benefits of Iraq doing the right thing for all. Remember the strongest countries will rule the world, and Iraq knows what they have to offer the bigger countries its not just the oil trust me. This takes currency with a strong value and stability, and it shows weekness if they were to lop at anytime. This is just my opinion, but a smart one at that. Love Uncle Mike

[CODE777]

Hi Kent. A simple question. If a person has 1000000.00 IQD at this time and this drop in zeros take effect that means the person's capital just became 1000.00 IQD. That doesn't look good for this particular person or does it?. Can you enlihgten me please?

[popo24]

My God, do you people ever plan on letting this go. Well let me shed some light on this matter at hand. Here is how I see this: The people of Iraq are already broke because their money is worth nothing. They CBI have already said the new denoms and the large denoms will be used together untill the end of 2010 at the same value. They are going to remove the 0's by taking the large notes out of circulation period. There is no lop of the money in general. Its pretty simple for some because you cant just lop part of your currency and not all of it. Further more do you think that all of these countries would have bought trillions, and then some of the countries have even went as far as forgiving Iraq for all or most of what Iraq owed them. And what about Iraq's oil deals, and all the big companies wanting to invest money in Iraq. What about wanting to be a member of the WTO so they can import & export plus sell their stock right? Iraq wants to be able to play with the big boys again all around the world. You are looking at the one country in the world that has the ability to be the richest in five years or so. So they dont try to get the worlds attention by loping their money when the money has never really went down in value since they printed the large denoms in 2004. Last note and I rest my case, do you really think the UN and IMF would consider letting Iraq out of chapter 7 by starting with a LOP. How does this show the world any stability when it comes to their money please tell me. China forgives them for 80% of what they owe them and Iraq tells them oh by the way all the dinar you have is not worth what you thought it would be. Kuwait has invested billions of dollars that they had to help iraq's banks, and Iraq has not even paid them back for the war they caused. Do you think Kuwait would have invested money in a country that owes them and is going to LOP their currency now. Please just stop and read between the lines and use some common sense. There will be a great return on this investment for all of you real soon because Iraq has way to much at stake around the world, and they owe their own people some money, food, water, and electric. They cant do any of this without money that has some value to it. The big day is near for all that deserve this, and that is Iraq's people first, and then the rest of the world will reap the benefits of Iraq doing the right thing for all. Remember the strongest countries will rule the world, and Iraq knows what they have to offer the bigger countries its not just the oil trust me. This takes currency with a strong value and stability, and it shows weekness if they were to lop at anytime. This is just my opinion, but a smart one at that. Love Uncle Mike

TLDR. You can't assume that when they say '3 zeros' that it is only the notes that have 3 zeros. If they lop 3 zeros, then you can replace that with 3 decimals. 25000 becomes 25, 1000 becomes 1, 250 becomes .25, and then they have new notes to reflect these changes.

Why do all the anti-lop people get so upset when its mentioned like its supposed to be common sense, when its really much more complicated than anyone here thinks.

[popo24]

Hi Kent. A simple question. If a person has 1000000.00 IQD at this time and this drop in zeros take effect that means the person's capital just became 1000.00 IQD. That doesn't look good for this particular person or does it?. Can you enlihgten me please?

I'll help you out here. Let's use round numbers. Iraq exchange rate is .00085, and 25000 dinar = roughly $22 USD. Lop 3 zeros (or decimals is another word) and you have exchange rate of .85 and 25 dinar = $22 USD.

[skers05]

Mike5961 can you please give a good argument to my question on page 2 it would be greatly appreciated. I guess my little mind cant see outside the box on this one. any thoughts would be greatly appreciated

[Muspublisher]

My God, do you people ever plan on letting this go. Well let me shed some light on this matter at hand. Here is how I see this: The people of Iraq are already broke because their money is worth nothing. They CBI have already said the new denoms and the large denoms will be used together untill the end of 2010 at the same value. They are going to remove the 0's by taking the large notes out of circulation period. There is no lop of the money in general. Its pretty simple for some because you cant just lop part of your currency and not all of it. Further more do you think that all of these countries would have bought trillions, and then some of the countries have even went as far as forgiving Iraq for all or most of what Iraq owed them. And what about Iraq's oil deals, and all the big companies wanting to invest money in Iraq. What about wanting to be a member of the WTO so they can import & export plus sell their stock right? Iraq wants to be able to play with the big boys again all around the world. You are looking at the one country in the world that has the ability to be the richest in five years or so. So they dont try to get the worlds attention by loping their money when the money has never really went down in value since they printed the large denoms in 2004. Last note and I rest my case, do you really think the UN and IMF would consider letting Iraq out of chapter 7 by starting with a LOP. How does this show the world any stability when it comes to their money please tell me. China forgives them for 80% of what they owe them and Iraq tells them oh by the way all the dinar you have is not worth what you thought it would be. Kuwait has invested billions of dollars that they had to help iraq's banks, and Iraq has not even paid them back for the war they caused. Do you think Kuwait would have invested money in a country that owes them and is going to LOP their currency now. Please just stop and read between the lines and use some common sense. There will be a great return on this investment for all of you real soon because Iraq has way to much at stake around the world, and they owe their own people some money, food, water, and electric. They cant do any of this without money that has some value to it. The big day is near for all that deserve this, and that is Iraq's people first, and then the rest of the world will reap the benefits of Iraq doing the right thing for all. Remember the strongest countries will rule the world, and Iraq knows what they have to offer the bigger countries its not just the oil trust me. This takes currency with a strong value and stability, and it shows weekness if they were to lop at anytime. This is just my opinion, but a smart one at that. Love Uncle Mike

Mike, I think you're failing to see his point. I understand where you're coming from in regards to their currency being worthless. But if they take off three 0's from the 25,000 notes, they also do that across the board - irrespective of the "new" notes being issued. Sure you can use a 25,000 note to buy something in Iraq, but it will only be recognized as $25. To further the exercise, as they take off three zeros, they also do it to the exchange rate to where 1170/1 becomes 1.17/1 - and thus the RV at 1.17.

However, just because they do this, it doesn't mean we have to exchange into US dollars immediately. I feel the future of Iraqi currency WILL be on par, at minimum, with other currencies in the Middle East. But, IMO, I do think it means we won't be cashing in millions.... we'll be cashing in a few thousand (1,000,000IQD becomes 1,000IQD @ 1.17 = $1,170 US dollars..... or you could hold and 1,000IQD @ a future rate of 3.17 = 3,170. And a three-fold increase on your investment.).

[beau777]

But you can't hold it past the end of 2010 or the big bills will be worth nothing.