This is exactly how Iraq can Redenominate!

[ezymoney]

good analysis Mr. Nobody...however without an increase in the exchange rate to coincide with the re-denomination. the value of the dinar stays the same...you can take as many zeros of the dinar as you like, it doesn't matter, the purchasing power won't increase unless the exchange rate increases...1170 dinar still equals 1 usd, no matter how many zeros you remove....in order to increase the strength of the dinar, Irag must revalue it.

[Froto]

Okay, that said..Hypothetically, Today if I go and buy some Dinar it will cost me $1200 or so per 1,000,000 IQD...Right?

If Monday, (he-he), they Redenominate it will cost me $1200 to buy 1,000 IQD...assuming they did not RV..Just lifted the 0's

Sooo, if it costs me $1200 to buy 1,000 IQD (after a hypothetical redenomination), How much will it cost to buy 1,000,000 IQD?

$1,200,000 to buy 1,000,000 IQD!!! RIGHT?

To double check my math...(this is all pretend, okay)

Right now it costs $1200 or so to buy 1,000,000 IQD Do we agree?

If they took away the 0's and 1,000,000 IQD is now, (hypothetically) 1,000 IQD then....

$1200 will now buy 1,000 IQD....(this is still without an RV)

So how much is 1,000,000 IQD???? after a redenomination...realizing 1,000,000 IQD is now 1,000 IQD

If my math is correct it will cost $1,200,000 to buy a (redenominated) 1,000,000 IQD

Somebody check my math! Please!

Now add the RV.....No matter what or when it is, in my opinion after reading the article, the removing, dropping or whatever they do to the IQD internally if will not affect our investment externally...?

Weather I am right or wrong...for some reason this is how my synapsis fired off in my itty bitty brain???

Your math is good, but let's look at it without the dinar dealer's mark-up. Hopefully with the possibilities from the recent news articles, and acceptance of what a redenomination really is, we stop giving our hard earned money to the dealers. Buy all you want, just pay as close to the real price as possible. I'll also use OD for old dinar and ND for new dinar, because they are an entirely different series of notes.

"Okay, that said..Hypothetically, Today if I go and buy some Dinar it will cost me $860 or so per 1,000,000 OD...Right?

If Monday, (he-he), they Redenominate it will cost me $860 to buy 1,000 ND...assuming they did not RV..Just lifted the 0's

Sooo, if it costs me $860 to buy 1,000ND (after a hypothetical redenomination), How much will it cost to buy 1,000,000 IQD?

$860,000 to buy 1,000,000 IQD!!! RIGHT? "

Right.

"Now add the RV....." That has never been done before, so don't count on it here.

"No matter what or when it is, in my opinion after reading the article, the removing, dropping or whatever they do to the IQD internally if will not affect our investment externally...?"

You still have 1,000,000 OD worth $860. Sometime during what should be an ample exchange period, you would have to exchange it for 1000 ND or cash it in for $860. If you still have the 1,000,000 OD after the exchange period, you still have some pretty wallpaper. There could be another use for them, but I heard they don't flush well.

My question is that with all the gurus and experts, where was this definitive info all this time. It was 4 years ago and nobody has brought it up. The implications of this are large, whichever way it goies.

Umm, there has been an equally informative paper pinned to the top of the "Dinar Questions" section for over a year.

Also, more than a few of us have posted quite often on this subject. We're the ones with all of the negative votes.

[TimS]

And we have been hearing it from numerous articles and now even from Shabbs. Also there are reports that I cannot confirm that Iraqi TV has been telling the Iraqis the same for some time now.

Hearing about it "vaguely" from shabs or interpretted from news articles is not the same as the GOI or CBI coming out and publically anouncing thier intentions......like Venezuela did at least a year in advance.

Everyone should stop worrying so much about the math and instead, look at the process....

If the CBI or GOI comes out and says "we are re-denominating our dinar by dropping 3 zeroes from the notes to make handling our currency easier" and it will be done starting this date (?)....then we'll know that probably NO RV is coming soon. Why.....because they would not tell us in advance that there will be an RV so every currency trader can load up on thier currency to make a guarranteed profit. It is possible that they could do an anounced LOP with much advance notice to the population so they can adjust to all the ramifications (just look at what Venezuela went through) and they could exchange the large bills for smaller ones....THEN when that process is completed, do a RV without notice. In that case we would all probably double, triple or quadruple our monies sometime down the road. Not the 1000 or 3000 times profit we all dream of, but a profit none the less.

If they are going to straight up RV......I still say we will see no advance definitive statements from the GOI or CBI because of the massive currency speculation that would take place with such advance notification.

JMO

[MrRich]

So, Scooby Doo, if I understand you correctly, you are saying that by removing the three zeros from the current value of 0.00086 it will make the value $.86 which would make 1,000,000 dinar worth $860,000. Is that right?

But I thought if the value went from 0.000848565 to .848565 (again removing the 000's) the rate would be $1.17 (or rounded up to $1.18) because you divide 1.00 into .848565? Math has never been my strong point so I need help here.

That's a common mistake. Yes the rate would be 1.17 (not $1.17) but the (exchange) rate isn't the value. It's the number you use to divide into $1 to get the currency's value. $1/1.17 = $.86. The reason you pay over $1100 for a million dinar now is the markup from the dealer. The true value of a million dinar now is about $860. If there is a straight lop with no RV then we will all lose some money, but that's the risk we took in this. I don't think that's likely though.

[Mr.Nobody]

Response to FROTO

"Okay, that said..Hypothetically, Today if I go and buy some Dinar it will cost me $860 or so per 1,000,000 OD...Right?

If Monday, (he-he), they Redenominate it will cost me $860 to buy 1,000 ND...assuming they did not RV..Just lifted the 0's

Sooo, if it costs me $860 to buy 1,000ND (after a hypothetical redenomination), How much will it cost to buy 1,000,000 IQD?

$860,000 to buy 1,000,000 IQD!!! RIGHT? "

Right.

"Now add the RV....." That has never been done before, so don't count on it here.

"No matter what or when it is, in my opinion after reading the article, the removing, dropping or whatever they do to the IQD internally if will not affect our investment externally...?"

You still have 1,000,000 OD worth $860. Sometime during what should be an ample exchange period, you would have to exchange it for 1000 ND or cash it in for $860. If you still have the 1,000,000 OD after the exchange period, you still have some pretty wallpaper. There could be another use for them, but I heard they don't flush well.

Read more:

I guess what I was trying to say is even though the dinar after redenomination is 1,000,0000 =1,000 IQD ...To the world no matter what they say their value is now, it is still worthless...If all they do is redenominate 1,000,000 IQD = 1,000 IQD = .00086 USD and then a redenominated IQD would be 1,000 IQD = .00086 USD Still worthless...

What I believe is sooner or later they have to RV...After they REDENOMINATE they still don't have a tradable currency....Redenominating is an internal fix inside Iraq to ease transactions...Not an external fix...IMO they still have to raise or RV their currency to a tradable level...? Sooo... what do they do now? RV? I don't know...?

Edited April 22, 2011 by Mr.Nobody

[Froto]

Response to FROTO

You still have 1,000,000 OD worth $860. Sometime during what should be an ample exchange period, you would have to exchange it for 1000 ND or cash it in for $860. If you still have the 1,000,000 OD after the exchange period, you still have some pretty wallpaper. There could be another use for them, but I heard they don't flush well.

I guess what I was trying to say is even though the dinar after redenomination is 1,000,0000 =1,000 IQD ...To the world no matter what they say their value is now, it is still worthless...If all they do is redenominate 1,000,000 IQD = 1,000 IQD = .00086 USD and then a redenominated IQD would be 1,000 IQD = .00086 USD Still worthless...

No. Old IQD is worth $0.00086 each. New IQD would be worth $0.86 each. When you would do an exchange, old for new, you don't lose or gain a dime.

[suntiger]

No. Old IQD is worth $0.00086 each. New IQD would be worth $0.86 each. When you would do an exchange, old for new, you don't lose or gain a dime.

You would lose money here in the U.S. Not one bank would exchange your old dinar for new dinar for free!

[imgesing]

In my opinion a LOP or the theory of removing the zeros in the way most are trying to predict is off.

To devalue their notes will create instability not stability. The implimentation of this is a subject in of itself.

The impact to the US is something which also needs to be looked at. As one man stated (and I believe rightfully) the USA owns their currency. That is a literal statement.

In other words we will see if Bush's statement of the war not costing the USA a penny holds true. Yet, with the news of US involvement in this and all the political impact as well as showing investors stability in investing in the country it would appear to me that in order to stay firm they will not remove the zeros in a way which will hurt this investment. I believe they will remove the internal currency as they stated and try to redistribute the lower denoms in an effort to shift the dollars buying power. Will we all do well? YEP But the bigger picture is they are looking at this in terms of the next 5 or 10 years. They stand to become the largest player in the ME if this is handled correcxtly. It is one of many reasons I strongly believe that an RV with out a lop will be taking place. Most seek to find a way for them to back up the exchange rate and do not consider what is needed to do an RV. They can RV higher than most here project. When they do RV what ever you hand in is exchanged for the same so it is an even exchange at that point. What they have in place is blue oil. Very refined and pure oil. They prospected only 40% and are now finding more oil every day. That is not even considering the natural gas and metals.

They are a country sitting on so much wealth that it is almost hard to conceive of.

I am not 100% positive of my assessment and at least I am willing to say that, and yet I dont believe this will be a low RV and I know it wont LOP (yet remove the zeros is something we shall see). It would seem to me that based on everything we have read so far leads me to believe this is going to be a straight RV. It is the only way in which IRAQ will be able to keep its economic strong hold and recovery. It remains to be seen but dont lose hope due to theories. The position IRAQ finds itself in is one which has never been before. To think they are doing anything without the plan in place for many years is ignorant.

Peace. And I respect each of your opinion.

[easyrider]

No. Old IQD is worth $0.00086 each. New IQD would be worth $0.86 each. When you would do an exchange, old for new, you don't lose or gain a dime.

if this is the case wtf was the point of all this if this goes down the way you have said then we wasted all of our time on these sites without gain and other investors give me a break.

[imgesing]

Dont worry EasyRider it wont happen that way because the good OL USA is the conductor of this. If you dont believe me read the news. Do you think all that has been invested will be shot out the window?

My friends, this isnt about you and me... We are small time investors who hang onto the fringes within a much bigger scale of things. So, all of our peeps here who inform us with their magical formulas and trying to match this up with history of other countries, although it is informative and partially valid... IT REALLY ISNT THE SAME HERE...

It is going to happen and we will all be smiling nicely. Because if we dont, THE US TREASURY DOESNT... and neither does the world... and so on and so on. You can say they dont care in IRAQ but they at this point understand just how important global economics are. Sit back and enjoy the remainder of the ride and people will you please keep your hands inside the cart. LOL

Peace ALL the ride is almost over.

[AK47]

We have to be prepared for a lop if they decide that is best for Iraq...after all, they do not care about us. I am hoping for an RV without a lop. As was said many times by many people, Iraq is in it for Iraq! Hope for the best but be prepared for the worst. Pray for a life-changing RRRRRVVVVVVVVVV!

[zaborniake]

Ugh. More LOP talk. Isn't there a forum for this? I don't mean to be rude, but this subject has been beaten into the ground. Iraq is not Venezuela or Turkey. This is a unique situation. Thank you for the post and insight. I'm simply LOP'ed out!

[Froto]

if this is the case wtf was the point of all this if this goes down the way you have said then we wasted all of our time on these sites without gain and other investors give me a break.

"...if this goes down the way you have said..."

It's not exactly what I have said or predicted. All I have ever said about a redenomination has been to counter all of the erroneous information that gets spread ad nauseum on this forum.

EVERY post that starts out like "The CBI wouldn't LOP because..." or "a redenomination is impossible because..." , goes on to state something that is totally false. Every one of them. There have been two credible and very informative papers posted on this forum. The reason why many people can't comprehend them or ignore them completely escapes me. My guess is that is is much easier to believe something that you wish to be true.

I'll stand behind the fact that everything that I have posted about redenominations (LOP if you must) is historically and mathematically correct. Only you, over time, can tell if we have "wasted all of our time on these sites".

[Darin]

"...if this goes down the way you have said..."

It's not exactly what I have said or predicted. All I have ever said about a redenomination has been to counter all of the erroneous information that gets spread ad nauseum on this forum.

EVERY post that starts out like "The CBI wouldn't LOP because..." or "a redenomination is impossible because..." , goes on to state something that is totally false. Every one of them. There have been two credible and very informative papers posted on this forum. The reason why many people can't comprehend them or ignore them completely escapes me. My guess is that is is much easier to believe something that you wish to be true.

I'll stand behind the fact that everything that I have posted about redenominations (LOP if you must) is historically and mathematically correct. Only you, over time, can tell if we have "wasted all of our time on these sites".

I guess, a better question to ask..... How can you lop from a program rate? The program rate basically excludes a lot of high-valued potential assets that would help value the IQD.

Today, an IMF article was posted regarding this material in that for they would need to monetize their non-liquid assets, in return it would push the value up.

Better described here:

- Good read....

IMF - I am sure would rather see an increase value versus a re-denomination.

Another interesting article floating around today is how the MOP sees a $1.13 value - but that was based upon old info.

So the value could be higher.

If you dig, you will find that the factual information may point to something else, but those who don't educate themselves may see otherwise.

[maeunc]

Okay.......this re-denomination was a LOP....pure and simple. With NO revaluation included, hence, they put out information to the population well in advance about the re-denomination so they could start to understand the impact and process of the physical mechanics of it. We don't care why they did it, what matters is how they did it.

IMO Iraq will not be able to put out any info like this ahead of time IF they are going to LOP, then RV or straight up RV because investors would then be able to buy up the currency to make a huge profits. If they just do a LOP like Venezuela, they will be able to put out info for their people ahead of time to educate them because a LOP won't increase the value of the currency, therefore not causing currency investors to speculate.

So, we should take the following from the Venezuela re-denomination example........

If Iraq intends to LOP only, we should see info about it distributed to the population ahead of time so they can get educated with the process.

If Iraq intends to LOP, then RV or straight up RV.....we will not see anything publically anounced ahead of time in order to keep currency investors from buying up the currency to capitalize on the RV

JMO

I have a contact in Iraq who has no problem explaining the process of "dividing by 1000" and the actual value of his 25K not not decreasing even though he will exchange it for a 25 note. He reports that this is what has been explained to the citizens as the plan. It was supposed to happen in January but has been postponed. In the Fall of 2010 the powers that be aired "infomercials" (for lack of a better term). They were 3-4 min segments that were staged in a bank and explained the process for deletion of the zeros and how the new currency would hold the same value as what they have now. In January/Feb these segments were available on YouTube. They have since been removed. I know this is not what we want to hear but it is fact.

Months ago I attempted to share the information I have from my contact the "leaders" of another board and was told that my contact is misinformed. I hope that is the case.

[Darin]

I have a contact in Iraq who has no problem explaining the process of "dividing by 1000" and the actual value of his 25K not not decreasing even though he will exchange it for a 25 note. He reports that this is what has been explained to the citizens as the plan. It was supposed to happen in January but has been postponed. In the Fall of 2010 the powers that be aired "infomercials" (for lack of a better term). They were 3-4 min segments that were staged in a bank and explained the process for deletion of the zeros and how the new currency would hold the same value as what they have now. In January/Feb these segments were available on YouTube. They have since been removed. I know this is not what we want to hear but it is fact.

Months ago I attempted to share the information I have from my contact the "leaders" of another board and was told that my contact is misinformed. I hope that is the case.

Interesting..

But, I believe it was Kuwait who basically repeatedly made notice that they had no intent to Re-instate the value of the currency. I think they went as far as to pull out a full-page newspaper article explaining they had no intention... And basically the next day they went and did the opposite.

Gosh, I wonder why they would do something silly like that??

[maeunc]

Interesting..

But, I believe it was Kuwait who basically repeatedly made notice that they had no intent to Re-instate the value of the currency. I think they went as far as to pull out a full-page newspaper article explaining they had no intention... And basically the next day they went and did the opposite.

Gosh, I wonder why they would do something silly like that??

LOL.... we can only hope!!!!

[Darin]

LOL.... we can only hope!!!!

Remember, even Shabs said.. "If I knew we were going to re-evaluate, I would not be able to tell you."

So........ People sit back and speculate what will happen. Signs may point to a LOP/RD, but is that what will really happen? I am sure they mislead their own people as well if they were going to RV. (Especially given the US Military presence).

Interesting read would be to look at the IMF article that was posted today about moving to Article VIII

Monetizing non-liquid assets. (A potential necessity to make a vital move to become full-fledbe members of the WTO).

[HopefulTxn]

I guess, a better question to ask..... How can you lop from a program rate? The program rate basically excludes a lot of high-valued potential assets that would help value the IQD.

Today, an IMF article was posted regarding this material in that for they would need to monetize their non-liquid assets, in return it would push the value up.

Better described here:

- Good read....

IMF - I am sure would rather see an increase value versus a re-denomination.

Another interesting article floating around today is how the MOP sees a $1.13 value - but that was based upon old info.

So the value could be higher.

If you dig, you will find that the factual information may point to something else, but those who don't educate themselves may see otherwise.

Given the official rate that is stated in that study, it would seem that it is at least 7 years old. Their monetary system has increased in size dramatically since then. To make an accurate comparison we would need to know what year that the study was performed and check the financial information for that time vs. today.

Interesting..

But, I believe it was Kuwait who basically repeatedly made notice that they had no intent to Re-instate the value of the currency. I think they went as far as to pull out a full-page newspaper article explaining they had no intention... And basically the next day they went and did the opposite.

Gosh, I wonder why they would do something silly like that??

I believe the article you were referring to stated that they were not going to honor the old notes, not the old rate. In the end they deemed about $2 billion USD worth of KWD as unexchangeable. From what I have been able to find, wealthy exiled Kuwaiti's that took refuge in Saudi Arabia were still honoring the rate of ~$3.50 during the occupation period. That the main reason for the value change was due to Saddam declaring the KWD in Kuwait an illegal currency in October of 1990 and imposing a 1:1 exchange to the IQD, which at the time held a value of about 10 cents. They appear to have maintained the status-quo that Saddam had imposed during his reign of Kuwait, until they could replace the currency and re-open the banks, which they did in mid-March 1991 - and the new currency had a value of ~$3.47.

[Kent]

This was a good analysis. Don't know where you got the time. My question is that with all the gurus and experts, where was this definitive info all this time. It was 4 years ago and nobody has brought it up. The implications of this are large, whichever way it goies.

No criticism intended, but none of the Venezuela discussion is new. For a quicker read, look at the Venezuela brochure link in Bellypod's post a year ago. It was used to promote that redenomination.

Often such opinions have not been popular in the past and people who hold them tire and leave or quit posting.

[Darin]

No criticism intended, but none of the Venezuela discussion is new. For a quicker read, look at the Venezuela brochure link in Bellypod's post a year ago. It was used to promote that redenomination.

Often such opinions have not been popular in the past and people who hold them tire and leave or quit posting.

Okay, so we have a list of countries that may have re-denominated in the past.. But has there ever been much specualtion upon the belief these countries would RV??

I'm curious.. I know Venezuela R/D, Turkey R/D, and so forth.. But were people buying up their currency in hopes they would RV?

Was the current rate completely under-valued because it was a program rate?

I am just curious... I haven't done much digging into those scenarios. The comparisson is basically done by how the situations relate, not so much on why each country was in that postiion or how they sat economically.

[Kent]

Okay, so we have a list of countries that may have re-denominated in the past.. But has there ever been much specualtion upon the belief these countries would RV??

I'm curious.. I know Venezuela R/D, Turkey R/D, and so forth.. But were people buying up their currency in hopes they would RV?

Was the current rate completely under-valued because it was a program rate?

I am just curious... I haven't done much digging into those scenarios. The comparisson is basically done by how the situations relate, not so much on why each country was in that postiion or how they sat economically.

Darin,

The best study on redenom. I have seen is http://www.unc.edu/~lmosley/APSA%202005.pdf and it discusses the why and the outcome and it is based on looking at (I can't recall the exact number) like 70 redenominaitons.

Regarding your question about a revaluation, there are certainly examples of market change and Kuwait is an example. My understanding is that the government didn't revalue the currency, the market did - down during the war when locally in Kuwait, stores were reluctant to accept it, and then up again afterward. People made money in that change. Germany apparently consolidated more than a single currency in the shadow of WW II and that resulted in a modest (true) revalue. I am not aware of another example where a government (or government entities) redefined the value of their currency the way everyone hopes for an RV in this curcumstance. I've literally asked for years and no one gas given an example (please, someone chime in if you can cite one). In truth, "this time may be different". We all hope so. Some are not as convinced as others. In a frustrated response to many who, in my opinion give false reasons that this time MUST be different, I offered this post based largely on the Mosley study:

http://dinarvets.com/forums/showthread.php?7545-Debunking-the-myths-of-the-infamous-bunny-ear-(lop)&highlight=

Conviction regarding an RV must be based on economic optomism about Iraq and their economy (Oil growth, the fact that they can support a diverse economy including agriculture, etc.) In my opinion, that must be factored against the amout of currency they can afford to support without causing massive inflation in any change. (think about the current discussion in the US about QE2 or quantitative easing by the Fed and the fear that it would cause inflation of costs and devaluation of the dollar). In forming your opinion, you have to largely assume that a true RV is the same thing as printing the same percentage of new, additional money and putting it in curculation (some exceptions). What would happen to the US economy if we told everyone tomorrow that they can come to the bank and get $1,000 of blue dollars in exchange for $1 of current "green"? Process that question and then ask yourself why Iraq is different and by how much?

Seriously, if anyone reads this and they have a good example of a true, substantial RV I'd love to hear it. Sorry to sound pessamistic. ...don't want to rain on anyone's party. I have dinar and want it to change like everyone else.

[Darin]

Thanks Kent..

You bring a pretty good perspective to the table. It is hard to imagine such a JUMP in value like you stated.

However, it also seems that you would thing the overall goal would be to increase the value without re-denominating.

When inflation took over in previous years, they didn't re-denominate to counter inflation, they added bills (the 3 0s)... Now that inflation has been pretty stable, you would think they would intend to do the same thing before, but in a reverse motion. Remove the 3 0s from circulation. This would also help reduce the entire circulatoin and reduce the value within circulation.

Ironically, a reasonable substantial RV would help draw in those big notes. And as they are soiled, destroyed, or held by the CBI. the overall total currency in circulation is reduced.

so many scenarios to consider, and I honestly think that even economics majors likely have a hard time keeping up with the correct solution.