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Kent

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

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Sorry guys, I have not quite get it..................I love the logic but it somehow still does not make sense to me........ need some real help here!

If you are honest hard working Iraqi shopkeeper or innkeeper, you would have probably accumulated a sizeable amount of 25K dinars. Then you wake up to find that each 25k note is now worth 25 NEW note. Now you are told the dinar is at par with the US dollar.............ie 1:1

You use this NEW 25dinar note to buy other goods from a neighbouring country, saying it is now worth 25usd. Then you catch yourself thinking:

My original 25K note was also worth around 25 usd............? Has there been an increase in value? NO! ?????????

The colour of the notes has changed.....THE VALUE HAS NOT!

Is the wealth of the average Iraqi better off with the overhaul or restructuring of the currency?? Hardly....

Instead there will be so much frayed nerves all over the place.......some old folks who have been hoarding the notes in the mattresses will probably think that everyone is out fleecing /conning them....

The govt will have to produce alot of coins to replace the old notes.

Question: why waste the money creating the new currencies in the first place when the is no increase in value.

Internally within the country, the currency restructuring may eventually make sense.

To the world, the Iraqi Govt says that the currencies whether in hard 25K notes on digitally on paper will have 3 zeroes removed based on the newly restructured format:

1,000,000 becomes 1000

25,000 becomes 25

1000 becomes 1

The new exchange rate is now 1:1 or 1:14 (whatever)

The original exchange rate of 1usd :1147dinars is now superseded........... sorry.

instead of 1dinar = 0.00085 usd, 1 dinar is now = 1 usd...... trust me.

If Iraq can do this, what is stopping Iran, Indonesian, Vietnam and a hosts of other nations?

I need some fresh air now............ can someone smarter than me please explain? thank you

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Believing that this is somehow about giving the Iraqis more money to spend is folly. If that were the case, the govt. could just start writing checks to the citizens at any exchange rate. It's about developing a tradable currency.

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Kent I really hope that you are wrong ,but the logic of it makes sense. The only thing that I think will make this currency revalue is if the Superpowers have the ability to make huge amounts of revenue from it . We investors are minute by comparison and the thought that we are any part of the consideration is IMO ridiculous

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The FM called it a redom... not a lop

Lop and bunny-ear are both derogatory slang words that are used by investors to describe a redenomination where zeros are removed. You won't see the word lop in a public statement. If you read the study or if you read the brocure posted by bellypod ( http://www.reconversionbcv.org.ve/pdf/TripticoColorIng.pdf ) you will see what I feel the recent announcements are describing when they talk about deleting 3 zeros from the currency. Notice that the wording of the statements talk of removing 3 zeros from the currency, not removing the currency that has 3 zeros. Note also that simply retiring a bill from circulation thru an exchange (as we have done with our large denomination bills in the US) is not a redenomination at all.

scottiraq04 has also found a really good and more recent paper: http://www.gamji.com/article6000/NEWS7367.htm

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