Central Bank: It is time to re-evaluate the currency, commensurate with the price changes and the wage in the economy

[Doctor Smith]

They better not LOP this... it wont work in their country.. and it wont work for us.

So this means that there will be an in country value and a out-country value basically?

No. That means that most of the large bills have been taken out of circulation in Iraq. The Large bills out of Iraq aren't Iraq"s problem and will be traded in by the Banks and then the governments where they exist.

[FishmanTx]

Fish... A Lop and a redenomination are the exact same thing. Your definition of a redenomination is what posters or false gurus have created to justify in their heads and their followers... how 3 zero removal could mean something else. Meaning, smaller denominations with the same value exchange for your big notes. That makes no sense in the world. Iraq wants to ease the use of cash transactions. That would make it nearly impossible to make cash transactions with a $1 RV and smaller denominations. Unfortunately, it is a myth that has been passed on and has become accepted as gospel. It is unfortunate. Our best bet (in my opinion) resides in no lop/RD at all. I personally would like to see them come out with the $100k notes to ease cash transactions, continue to improve the electronic banking, and work towards reducing the money supply some... while increasing the purchasing power through moderate bumps in the exchange rate. When things are more stable in Iraq they go international and see where it takes them. Hopefully somewhere comparable to the Saudi's rate. Again... just my opinion.

In the general sense of the terms, yes, but as applied here, not necessarily. In the way they are using the term, along with a few other tidbits they've mentioned, it seems they are going to do a partial RD with an RV of the rate. A partial RD is very possible for the removal of "3 zero notes" and to add in the smaller denominations (which were printed a long time ago but are not in circulation). A total of 14 denominations of notes and coins were produced initially. The hierarchy is changed by removing the 25k, 10k, 5k, etc. from circulation but the value of the notes remains the same and they are vaulted "to ease cash transactions". Did anyone notice they have already mentioned the removal of most of the larger denoms from circulation (in country)? It's been mentioned at least 2 or 3 times now in the speeches and news bits.

Re: the Saudi rate, I agree with you on that. I actually expected to be lowballed around 4:1 (25 cents) but they have stated in in quite a few news bits that they want the dinar at more than 1 USD. I say get that national pride going and lets do .86 then. If my info on IMF rules is correct, the rate must hold for 30 days before being allowed to float, pegged or otherwise. I only need 1 day, my appointment day. After that I'll go back to trading coffee, oil, and gold contracts. I hate currencies. LOL ;-)

Fish

[AudiS4]

Hi Fish! I was just letting the thread die out but it doesn't want to. That's good if we are all learning something from each other right? This was an excellent question and please know I don't have all the answers. Scooter or Doc might be better answering this one but I will give it a go.I was referring to internal debt. But it gets a little hazy between what is debt and isn't to me. Are foreign individual investors holding Dinar considered external debtee's? Not sure that's proper English but you know what I mean. External debt basically means Iraq borrowed money from outside of the country. They already received it and it was most likely given to them in the debtee's currency. So an RV would make it much easier to pay that external debtee back as you suggest. I was referring to when anyone holding Dinar decides to cash in the CBI will ultimately be responsible. Where do they get the money to do that... they must borrow from somewhere to fund the cash out. I am not sure that involves external debt but I would have to really think about it. What I do know is that Imports and Exports will be dramatically effected by a 1 : 1 RV. It would be both a blessing and a curse. Iraq would only import goods (other then oil) rather than create new industry to make the goods themselves. Why? Because it would be ridiculously cheap to import everything. That does not sustain a country or create jobs. Iraq could tariff the heck out of those goods which could make the goods coming in cheaper quality and start limiting importers altogether. Trade imbalances would be created and higher interest rates and inflation would be inevitable in my opinion. That would be a concern for the IMF. The social class gap would widen and security becomes even a bigger issue due to crime. This is why I believe an RI or significant RV is unlikely in one chunk. Instead I believe it will be a methodical and reasonable climb that takes into consideration Iraq's market conditions, infrastructure, politics, laws, and social setting. That's how it plays out in my head anyway. I am sure people will point out the errors in my thinking. Be well.

Fish... A Lop and a redenomination are the exact same thing. Your definition of a redenomination is what posters or false gurus have created to justify in their heads and their followers... how 3 zero removal could mean something else. Meaning, smaller denominations with the same value exchange for your big notes. That makes no sense in the world. Iraq wants to ease the use of cash transactions. That would make it nearly impossible to make cash transactions with a $1 RV and smaller denominations. Unfortunately, it is a myth that has been passed on and has become accepted as gospel. It is unfortunate. Our best bet (in my opinion) resides in no lop/RD at all. I personally would like to see them come out with the $100k notes to ease cash transactions, continue to improve the electronic banking, and work towards reducing the money supply some... while increasing the purchasing power through moderate bumps in the exchange rate. When things are more stable in Iraq they go international and see where it takes them. Hopefully somewhere comparable to the Saudi's rate. Again... just my opinion.

I cant remember off hand, but I thought you were one that was arguing with me earlier? However, I can't agree more with what you have to say. I'm glad I'm not the only one that sees it this way. I'm partial toward the double edged sword, but I see what you mean. I don't quite follow your logic on the $100k note (why do I keep picturing this to be a black note?). How do you reduce money supply with the influx of a larger note? I dont believe it will ease cash transactions simply because a 25k note is already around $20 USD. Unless you're a cash nut, most people dont carry anything larger than a $20 note anyway.

I fully agree with your moderate bumps in the exchange rate to increase purchasing power. How do you all think the American economy became as big as it is? Most was due to consumerism. If Iraq wants a jump start, they should nurture their consumerism.

[Doctor Smith]

I disagree with that. If you refer to the DD CC then I wouldn't put any stock into what they are saying. If not please post which broadcast so we can hear for ourselves.

What is it you disagree with them about? Makes perfect sense to me.

[dinarck]

What is it you disagree with them about? Makes perfect sense to me.

Well, I'm trying to figure out what the Iraqis are using for money. I guess they say hey everyone bring in your 25,000 notes and we will give you 100 of the 250 notes. Say I want to buy this apartment, here is 300,000 of the 250 notes for payment. They are gonna need camels loaded down with lower denoms just to go to the market. I hear the smart card theory but is there any boots on the ground who can confirm the infrastucture is in place to use them. Maybe some one can post links to articles or videos on how this is working. I would really like to get a better idea of what's going on with this. Appreciate it.

[Doctor Smith]

Well, I'm trying to figure out what the Iraqis are using for money. I guess they say hey everyone bring in your 25,000 notes and we will give you 100 of the 250 notes. Say I want to buy this apartment, here is 300,000 of the 250 notes for payment. They are gonna need camels loaded down with lower denoms just to go to the market. I hear the smart card theory but is there any boots on the ground who can confirm the infrastucture is in place to use them. Maybe some one can post links to articles or videos on how this is working. I would really like to get a better idea of what's going on with this. Appreciate it.

What they are doing is using the US Dollar instead of stacks of lower denomination Dinar. I don't know if I would believe anyone if they said they were over there in Iraq. I would have to see for my self. I here they have over 80% of the notes removed.

After our Dinar is traded in for say 1 to 2 dollars the Dinar will be traded in by the treasury for oil from Iraq. This oil will be at an agreed discount rate. And the Dinar will continue to climb to over say 3 dollars. They can either use the oil or sell it for profit. The war will be paid for. Other governments are doing the same thing.

[dinarck]

After our Dinar is traded in for say 1 to 2 dollars the Dinar will be traded in by the treasury for oil from Iraq. This oil will be at an agreed discount rate. And the Dinar will continue to climb to over say 3 dollars. They can either use the oil or sell it for profit. The war will be paid for. Other governments are doing the same thing.

Yeah I have heard this before. I wonder if there is some way we can verify this. Surely someone works in Gov. who could explain to us better how that would work.

[RonSkilbeck]

UUUMM...

Have to disagree. If they remove the three zeros your 25,000IQD becomes 25IQD. If they want to be a member of the WTO then I would think they would need to bring their liability down from trillions to billions. Again the 25,000IQD is not worth 25,000USD. It is worth 25 USD. Bringing it down to 25IQD worth 25 USD isn't screwing anyone except for destroying our dreams of becoming millionares at the expense of Iraq. Yes people will invest in their country anyway. There is billions to be made there. I know that the notion that a redenomination would hurt Iraq and no one would have confidence and all this has been the status quoe for some time but that doesn't mean it's true. For all we know big wig investors and large corporations and countries have known all along that Iraq would have to redenominate before the IQD would raise in value. Just because we don't like it means nothing.

Here's an example of an oil rich country who (like Iraq) went through hyper-inflation http://www.reconversionbcv.org.ve/englishversion/pdf/fundamentalscurrencyredenomination.pdf and removed the three zeros. You decide.

[mentalmagic]

So does anyone have a good rebuttal for the $27 trillion that Iraq would still have honor? Please! Ha. I have yet to see an opinion on here not have several explanations. I need something to make me feel better about that one. I'm curious how that could be handled and pull off an RV?

The CBI had 27 Trillion in circulation, but they have stated recently they removed at least $3 Trillion from circulation. That leaves 24 Trilion dinar in circulation within and outside the country.

What they are doing is using the US Dollar instead of stacks of lower denomination Dinar. I don't know if I would believe anyone if they said they were over there in Iraq. I would have to see for my self. I here they have over 80% of the notes removed.

After our Dinar is traded in for say 1 to 2 dollars the Dinar will be traded in by the treasury for oil from Iraq. This oil will be at an agreed discount rate. And the Dinar will continue to climb to over say 3 dollars. They can either use the oil or sell it for profit. The war will be paid for. Other governments are doing the same thing.

I can assure you they cannot RV at anywhere near $2 or $3 USD per 1 dinar. That is simply impossible. They would first have to LOP then revalue at those high numbers. An RV above $3 without removing the zeros would cause Iraq to have more money in circulation than is available in all nations of the World. It's simply not going to happen. They either LOP and RV, or they simply RV at a very low adjusted rate. Bear in mind, countries like South Korea have large denominated currency that is actualy worth LESS than the current IQD, yet they are members of the WTO and their economy is thriving. So those who say Iraq cannot keep their current value and be members of the WTO are simply misinformed. Look up the IQD and compare it to South Korean WON. You will discover powerful and thriving South Korea has a Won valued BELOW the Iraqi dinar. That should put all this talk of Iraq must revalue to bed.

Edited April 23, 2011 by mentalmagic

[dinarck]

Here's an example of an oil rich country who (like Iraq) went through hyper-inflation http://www.reconversionbcv.org.ve/englishversion/pdf/fundamentalscurrencyredenomination.pdf and removed the three zeros. You decide.

Agreed Venezuela Lopped.

The CBI had 27 Trillion in circulation, but they have stated recently they removed at least $3 Trillion from circulation. That leaves 24 Trilion dinar in circulation within and outside the country.

I can assure you they cannot RV at anywhere near $2 or $3 USD per 1 dinar. That is simply impossible. They would first have to LOP then revalue at those high numbers. An RV above $3 without removing the zeros would cause Iraq to have more money in circulation than is available in all nations of the World. It's simply not going to happen. They either LOP and RV, or they simply RV at a very low adjusted rate. Bear in mind, countries like South Korea have large denominated currency that is actualy worth LESS than the current IQD, yet they are members of the WTO and their economy is thriving. So those who say Iraq cannot keep their current value and be members of the WTO are simply misinformed. Look up the IQD and compare it to South Korean WON. You will discover powerful and thriving South Korea has a Won valued BELOW the Iraqi dinar. That should put all this talk of Iraq must revalue to bed.

Agreed.

[Doctor Smith]

Here's an example of an oil rich country who (like Iraq) went through hyper-inflation http://www.reconvers...enomination.pdf and removed the three zeros. You decide.

I'm sure their may be a few at the top in Iraq that would want all the oil money for themselves instead of revaluing the currency. Re denomination (lop) won't change the value of the money though.

Will they be allowed to lop after the world has spent trillions on the war in Iraq? We didn't spend trillions taking out a Dictator in Venezuela. Especially when it isn't necessary to lop? Poverty with a lop or wealth for all with an RV/RI.

[dinarck]

I'm sure their may be a few at the top in Iraq that would want all the oil money for themselves instead of revaluing the currency. Re denomination (lop) won't change the value of the money though.

Will they be allowed to lop after the world has spent trillions on the war in Iraq? We didn't spend trillions taking out a Dictator in Venezuela. Especially when it isn't necessary to lop? Poverty with a lop or wealth for all with an RV/RI.

What you just said makes alot of sense but what I am going on is what Shabibi said. It all comes down to numbers and they have too many of them in circulation.

[Doctor Smith]

The CBI had 27 Trillion in circulation, but they have stated recently they removed at least $3 Trillion from circulation. That leaves 24 Trilion dinar in circulation within and outside the country.

Read more: http://dinarvets.com/forums/index.php?/topic/63180-central-bank-it-is-time-to-re-evaluate-the-currency-commensurate-with-the-price-changes-and-the-wage-in-the-economy/page__st__180#ixzz1KMSEW8yG

Recently removed at least 3 trillion. And a year ago or so I heard they stated 70% were already removed. So it doesn't sound like their is an unmanageable amount left to me.

why would they be removing any large notes at all if they intend to lop?

[Doctor Smith]

So according to these figures their is less than 5.1 trillion Dinar left in circulation (large bills) World Wide. And Iraq is not going to have to cash in the Dinars outside of country. They will slowly be traded back to Iraq for oil.

[Ex-wingnut]

I can assure you they cannot RV at anywhere near $2 or $3 USD per 1 dinar. That is simply impossible. They would first have to LOP then revalue at those high numbers. An RV above $3 without removing the zeros would cause Iraq to have more money in circulation than is available in all nations of the World. It's simply not going to happen. They either LOP and RV, or they simply RV at a very low adjusted rate. Bear in mind, countries like South Korea have large denominated currency that is actualy worth LESS than the current IQD, yet they are members of the WTO and their economy is thriving. So those who say Iraq cannot keep their current value and be members of the WTO are simply misinformed. Look up the IQD and compare it to South Korean WON. You will discover powerful and thriving South Korea has a Won valued BELOW the Iraqi dinar. That should put all this talk of Iraq must revalue to bed.

Please don't take this the wrong way but if you really can assure that what you said is true, please provide the facts. Not what your gut is telling you, not what you've read in a source that can't be proven as reliable, not what another country has done because Iraq is the only country in question here, not what someone else said that you agree with, etc. Now I'm not saying that what you're saying is true or not because what you wrote seems to be based on your opinion, maybe I'm wrong, but if you can, please provide proof. Everyone can voice their opinion, speculate, make comparisons to other situations or believe what they want but not backing it up with real facts mean absolutely nothing. So come on man, be the first to step up to the plate and provide some reliable sources/facts on what the RV will come in at and remove all doubt of what you stated because honestly I didn't see any facts about the RV in your statement.

Thanks in advance!

[dinarck]

So according to these figures their is less than 5.1 trillion Dinar left in circulation (large bills) World Wide. And Iraq is not going to have to cash in the Dinars outside of country. They will slowly be traded back to Iraq for oil.

What figures? If they are removing any large bills from Iraq it is only an attempt to curb inflation.

So according to these figures their is less than 5.1 trillion Dinar left in circulation (large bills) World Wide. And Iraq is not going to have to cash in the Dinars outside of country. They will slowly be traded back to Iraq for oil.

And Iraq is not going to have to cash in the Dinars outside of country. They will slowly be traded back to Iraq for oil.

Please show me where this has been verified.

[rnldtippitt]

We (US) have in the neighborhood of 3 trillion in currency floating in our markets with a GDP of 14.6 trillion (2010). Iraq's estimated GDP @ 2.7million barrels (which continues to grow) is 98.5 trillion - Do the math. It is perfectly feasible.

[drox]

In the general sense of the terms, yes, but as applied here, not necessarily. In the way they are using the term, along with a few other tidbits they've mentioned, it seems they are going to do a partial RD with an RV of the rate. A partial RD is very possible for the removal of "3 zero notes" and to add in the smaller denominations (which were printed a long time ago but are not in circulation). A total of 14 denominations of notes and coins were produced initially. The hierarchy is changed by removing the 25k, 10k, 5k, etc. from circulation but the value of the notes remains the same and they are vaulted "to ease cash transactions". Did anyone notice they have already mentioned the removal of most of the larger denoms from circulation (in country)? It's been mentioned at least 2 or 3 times now in the speeches and news bits.

Re: the Saudi rate, I agree with you on that. I actually expected to be lowballed around 4:1 (25 cents) but they have stated in in quite a few news bits that they want the dinar at more than 1 USD. I say get that national pride going and lets do .86 then. If my info on IMF rules is correct, the rate must hold for 30 days before being allowed to float, pegged or otherwise. I only need 1 day, my appointment day. After that I'll go back to trading coffee, oil, and gold contracts. I hate currencies. LOL ;-)

Fish

Great Discussion everyone! Awesome that everyone can debate respectfully.

Fish... I don't know what a "partial RD" could be to be honest. I think they LOP/RD everything or they don't at all. The 14 denominations have only been referenced 1 time in any article I have ever seen back in 2006.

http://www.cipe.org/...ynopsis_ep6.pdf So I am not sure of the validity.

The three guests from the Central Bank discussed the bank’s

plan to enhance the Iraqi banking sector and financial markets

throughout 2006. They highlighted a series of steps that have

already been taken, including:

• Establishing the Central Bank’s independence from the

Ministry of Finance

• Training 70% of the bank’s staff on international best

practices

• Printing a series of 14 new Iraqi Dinar notes and coins

If they did make those denominations, my question would be do they have the Kurdish language on them? When General Hugh Tant discussed the Iraqi Dinar currency back in 2003/2004 he said they have 6 denominations and at some point they(Iraq) would consider making it 8 and some coins if needed. Seems like they would have made all at the same time if it was planned all along and make the US pay for it. So for what purpose is the question to ask? Was it because they knew inflation was going up and they wanted bigger notes to ease the use of cash transaction? Such as what I contend, which is the 100k and maybe even a 500k that would have taken them to the 8 that Taft mentioned? I think they realized at that time that electronic banking was still a work in progress so they may need bigger notes. Others obviously contend that 14 denomination article suggests a LOP which does correlate with the 3 zero articles that came out at that time. And then others argue that they want the large 3 zero notes out and then just remove 3 zeros from the exchange rate. That one makes no sense to me at all.

I believe the first exchange rate bump will be around the 750 mark. An improvement but not what we are all hoping for by any means.

[RadioTom]

I've been holding dinar for 4 years now so I am just as surprized over this as the next guy. If I'm wrong let me know, but it looks pretty clear when you listen to Shabs speak about redenomination (removing 3 zeros) in the recently posted youtube video below....

Here it is again:

Pay close attention to the 7:30 mark of the video when he say's they have a definate plan to remove 3 zeros (redenom). Sounds alot like what

Venezuala did to thier currency....which didn't make anyone a large return on investment. I've never bought into the Lop theory, but it will really tick me off if it goes that route.

I recommend anyone googleing "what does redenomintation mean" in order to get a clarification of what Shabs is speaking about. I hope I'm wrong my fellow investors. Hope it's all smoke and mirrors, but sadly....

I can't say for sure.

I hope someone who is well informed (more so than me) can shed some new light on this subject instead of going off the deep end.

[drox]

I cant remember off hand, but I thought you were one that was arguing with me earlier? However, I can't agree more with what you have to say. I'm glad I'm not the only one that sees it this way. I'm partial toward the double edged sword, but I see what you mean. I don't quite follow your logic on the $100k note (why do I keep picturing this to be a black note?). How do you reduce money supply with the influx of a larger note? I dont believe it will ease cash transactions simply because a 25k note is already around $20 USD. Unless you're a cash nut, most people dont carry anything larger than a $20 note anyway.

I fully agree with your moderate bumps in the exchange rate to increase purchasing power. How do you all think the American economy became as big as it is? Most was due to consumerism. If Iraq wants a jump start, they should nurture their consumerism.

Hey Audi that wasn't me arguing with you earlier. The 100k note is not to reduce money supply at all. It is exclusive from that altogether. I believe it would be to make and facilitate cash/marketplace transactions easier by not having to carry so many smaller notes. It would be the CBI and GOI choosing to not LOP and work with the currency and money supply they have in place now. I believe that if Iraq Lops their is only so much the currency can increase in time. If it becomes equal to the dollar (1:1) by dropping 3 zeros off the currency and the exchange rate then appreciation is limited somewhat. Once their economy takes off like a rocket could it go up to 1 dinar to every $20? Not likely. But... if they work with what they have and work towards reducing the money supply through various means while the economy grows substantially then the sky is the limit. They are only limited by how they choose to reduce that money supply versus the need for investment within country for social and infrastructure. That fits nicely into what you are saying about consumerism. Let the market dictate the exchange rate value. CBI and GOI just need to concentrate on getting the supply down in a responsible way. Just my thoughts on it.

[Doctor Smith]

I've been holding dinar for 4 years now so I am just as surprized over this as the next guy. If I'm wrong let me know, but it looks pretty clear when you listen to Shabs speak about redenomination (removing 3 zeros) in the recently posted youtube video below....

Here it is again:

Pay close attention to the 7:30 mark of the video when he say's they have a definate plan to remove 3 zeros (redenom). Sounds alot like what

Venezuala did to thier currency....which didn't make anyone a large return on investment. I've never bought into the Lop theory, but it will really tick me off if it goes that route.

I recommend anyone googleing "what does redenomintation mean" in order to get a clarification of what Shabs is speaking about. I hope I'm wrong my fellow investors. Hope it's all smoke and mirrors, but sadly....

I can't say for sure.

I hope someone who is well informed (more so than me) can shed some new light on this subject instead of going off the deep end.

They aren't going to tell you exactly what they are going to do. Something might happen soon. Remove the zero's from the currency or the exchange rate? Except for the electricity their isn't any substantial inflation. He doesn't mention the word re-denomination.

[RadioTom]

Shabs didn't say redenomination but he did say they will remove 3 zeros soon. Which by definition means "redemonination". Again, I'm looking for more than opinion peices. Thanks!

[katshamm]

The CBI had 27 Trillion in circulation, but they have stated recently they removed at least $3 Trillion from circulation. That leaves 24 Trilion dinar in circulation within and outside the country.

I can assure you they cannot RV at anywhere near $2 or $3 USD per 1 dinar. That is simply impossible. They would first have to LOP then revalue at those high numbers. An RV above $3 without removing the zeros would cause Iraq to have more money in circulation than is available in all nations of the World. It's simply not going to happen. They either LOP and RV, or they simply RV at a very low adjusted rate. Bear in mind, countries like South Korea have large denominated currency that is actualy worth LESS than the current IQD, yet they are members of the WTO and their economy is thriving. So those who say Iraq cannot keep their current value and be members of the WTO are simply misinformed. Look up the IQD and compare it to South Korean WON. You will discover powerful and thriving South Korea has a Won valued BELOW the Iraqi dinar. That should put all this talk of Iraq must revalue to bed.

Comparing Iraq to South Korea is apples to oranges. Korea does not offer oil to the world and within 2-5 years one of the wealthiest countries. JMO

Edited April 23, 2011 by katshamm

[dinarck]

Hey Audi that wasn't me arguing with you earlier. The 100k note is not to reduce money supply at all. It is exclusive from that altogether. I believe it would be to make and facilitate cash/marketplace transactions easier by not having to carry so many smaller notes. It would be the CBI and GOI choosing to not LOP and work with the currency and money supply they have in place now. I believe that if Iraq Lops their is only so much the currency can increase in time. If it becomes equal to the dollar (1:1) by dropping 3 zeros off the currency and the exchange rate then appreciation is limited somewhat. Once their economy takes off like a rocket could it go up to 1 dinar to every $20? Not likely. But... if they work with what they have and work towards reducing the money supply through various means while the economy grows substantially then the sky is the limit. They are only limited by how they choose to reduce that money supply versus the need for investment within country for social and infrastructure. That fits nicely into what you are saying about consumerism. Let the market dictate the exchange rate value. CBI and GOI just need to concentrate on getting the supply down in a responsible way. Just my thoughts on it.

Hey Drox,

Was hoping you could bring your insights on how Iraq could bring it's dinar in circulation down. I mean I guess they could give USD for it. I could see it if thier electronic banking was in order but that could take years to dwindle it that way which is fine. I am willing to wait 5 or even 10 years as long as the trillions in circulation are addressed first. Then and only then would a straight up RV make sense. I guess I am just hoping there is another way to RV with this much dinar in circulation. What do ya think?

Edited April 23, 2011 by dinarck

[drox]

Hey Drox,

Was hoping you could bring your insights on how Iraq could bring it's dinar in circulation down. I mean I guess they could give USD for it. I could see it if thier electronic banking was in order but that could take years to dwindle it that way which is fine. I am willing to wait 5 or even 10 years as long as the trillions in circulation are addressed first. Then and only then would a straight up RV make sense. I guess I am just hoping there is another way to RV with this much dinar in circulation. What do ya think?

Hey Dinarck... Let me answer that question by re-posting something from my friend Chas32 about reducing the money supply. Very smart guy on the site. I couldn't say it any better then he does.

Posted in January before the Japan Earthquake hit...

If Iraq decides to re-denominate their currency what will the reaction of the Iraqi citizen be? We already know that the people of Kurdistan were “incensed at what they perceived to be an outrageous devaluation of their currency“, when changing from the Swiss dinar to the New Dinar. Historically Iraq has never Lopped their currency and Iraq has historically a high exchange rate compared to the USD. Iraq has a rich history in leading nations in the middle east in agriculture, education, research and development, oil, education, medical fields and a place were Europeans use to vacation at. Past practices can be a predictor of future events. There also is not enough research on re-denominations that fail and why countries do nothing to their currency. There also is conflicting views on the theory of money supply in the short term. Since no explanation has been given to what short term means, where does this leave us on what Iraq is going to do with their monetary policy or the range of the new rate? What streams of income will be generated by Iraq’s development plan to pay down the debt that in return will diminish the money supply? The article, The Iraqi Dinar between the illusion of zeros and the game of economy ,with this ending, “this is not impossible and tomorrow is not too far.” So if some consider this as a game, how can anyone say that Iraq can not RV and at what amount or range is possible. In the article How Money is Created, there is this to ponder, “The matter of money creation is poorly understood. There is a common misconception that banks or governments create money. Governments only borrow money into existence from the banks. Banks can and do manage and redistribute money and wealth. Only people and natural resources represent potential wealth. Only people can, by their labor, produce useful wealth, which can be traded, either 1) directly by barter, 2) thru the use of currency, or 3) thru the creation of money. Remember, all people who buy or sell, i.e. are producers or consumers, are traders” .. This is how money is created, and extinguished. The stability of a money issue, then, is only tangentially related to any assets that might guarantee it. With Iraq’s rich history and if the people of Iraq are given the opportunity by their leadership, nothing is impossible in the eyes of one researcher, that Iraqi citizens do deserve this new rate. Iraq's GDP could have been more than 50 times its projected GDP in 2010. In other words, had there been peace in Iraq, every Iraqi citizen would be earning over $9,600 instead of the $2,300 in 2010.(5b) Some might say this is not a good answer and they would be correct. But remember research can take one to ideas, one might not want to think about and even to denial of one’s preconceived learned precepts. This is ok, and only thru true discourse will discovery unfold before one’s mind, whether one likes it or not.

The CBI can sell Treasury Securities (bonds) to reduce the money supply. In selling those Treasury Securities to the public and commercial banks, other nations, financial institutions, and the average citizen/investor. The CBI gives you a piece a paper stating that they owe you a certain amount of money in 10 years or 30 years plus interest in exchange for your cash. They give you a slip a paper and take your cash, effectively reducing the amount of cash in circulation. The CBI can also reduce the money supply by raising what's called the reserve requirement. If the CBI raises the reserve requirement on banks, then banks cannot loan out as much cash, and this reduces the amount of cash in circulation and reduces the money supply. The CBI can also raise the discount rate, this is the interest-rate the CBI charge banks for their loans. Remember an excess of money supply is only inflationary if people spend it, and if that spending exceeds the economy's capacity to produce.

If the world was really concerned about money supply take a look at Japan: “Japan's key money supply gauge rose 2.9 percent in January from a year earlier, as companies piled up demand deposits while remaining reluctant to make fresh business investment amid the slow economy, the Bank of Japan's survey showed Monday. The average daily balance of M2 came to 766.5 trillion yen. Economists polled by Kyodo News had projected a 3.0 percent increase on average.) (2a)

Brazil, China and India right now are lowering their money supply by raising their reserve requirement. Brazilian Real M2 in their currency 35,855,505,000,000, China’s Yuan Renminbi M2 in their currency 30,878,521,000,000, I think I see a few trillions here. I wonder if the four mention countries are going Lop their currency or implement other policies, to control inflation and money supply?

“Brazil starts to mop up $39bn; rate rise likely, February 25, 2010 10:10am

The central bank of Brazil has announced a rise in reserve requirements for larger banks, reversing the lower levels permitted during the crisis. Two moves are intended to soak up 71bn reais ($39bn) from the Brazilian financial system:” (1) reserve requirements for time deposits will be raised to 15 per cent from 13.5 per cent; (2) additional requirements for demand and time deposits will be raised to 8 per cent from 5 and 4, respectively. The moves will take place on March 22 and April 9. Brazil joins China and India, which have already begun raising their reserve requirements. The move is expected to be followed by an increase in the central bank’s benchmark rate, currently at a record low of 8.75 per cent - perhaps as early as March (Reuters).

Chas32