Redenomination does NOT necessarily mean RV

[SMathews]

Not really a rumor but decided to post it here due to the high traffic

http://www.iraq-businessnews.com/2011/04/20/redenomination-and-the-spinal-tap-fallacy/

Redenomination and the Spinal Tap fallacy

Posted on 20 April 2011. Tags: Banking & Finance, iraqi dinar, Redenomination

Fans of the “rockumentary” This is Spinal Tap will recall the scene where the band’s guitarist explains that his amplifiers are louder because their volume knobs “go to eleven.” When asked why this is different from having ten as the highest setting, he simply repeats “these go to eleven.”

Most of us have no trouble understanding that changing the units used to measure something does not change the character of the thing being measured.

A day doesn’t get longer if you keep track of time in minutes instead of hours, four quarts isn’t more than one gallon, and paying for something in pennies instead of dollars doesn’t make it more expensive.

Yet somehow people continue to claim that a redenomination of the Iraqi currency will have important economic effects. (See this story.) Replacing all the dinars currently in circulation with new ones at a rate of 1,000 to one, thereby “knocking off three zeros,” is supposed to reduce the money supply, for example. Instead of the commercial banks holding 27 trillion dinars as central bank reserves, they will “only” have 27 billion.

People won’t have to carry as much money once all the thousand dinar bills have been replaced by one dinar bills. And so on.

It would obviously be ridiculous to insist that an amp that “only” goes to ten would be softer than one that “goes to eleven.”

Isn’t the claim that it matters how many zeros there are on a bank note an example of the same fallacy?

Edited April 21, 2011 by SMathews

[Q77]

The Am*erican Con*tractor was right again.....

AC has the best Intel...he truly is boots on the ground...and he knows what he is talking about.........can anyone even deny this?!!

[TAE]

INTERESTING.

JUST WENT TO THAT LINK & READ THAT.

THANKS FOR SHARING. ALWAYS WELCOME ALL VIEWS.

[bluejay]

I hate to buy into this, but I have to say it makes sense, I will never give up on my investment, but I have become less hopeful that something really great os going to happen....Thanks for the post....

[SMathews]

Your Welcome. A friend shared this with me this morning at work since they know that I am an investor. I'm trying to stay grounded.

I hate to buy into this, but I have to say it makes sense, I will never give up on my investment, but I have become less hopeful that something really great os going to happen....Thanks for the post....

[Casper]

Thanks for sharing this with us. Looks legit.

[JuryPicker]

If you truly buy this then you need to go ahead and sell out while you can. Maybe AC can buy your currency off of you. You do know that their buying power will still remain the same also right? Inflation will run away with them. Not sure I would look up to an article that would mention spinal tap.

[Ha Ha Ha]

Thanks for sharing this SMathews (know it's not your words and you didn't write the article) but no matter what anyone here brings to the table thats conflicting the 'pumpers' will all turn out here today and pick this all apart. Even in black & white they will still corrupt it.

To JuryPicker: That's all ya got? Picking on the spinal tap mention.

If you truly buy this then you need to go ahead and sell out while you can. Maybe AC can buy your currency off of you. You do know that their buying power will still remain the same also right? Inflation will run away with them. Not sure I would look up to an article that would mention spinal tap.

Edited April 21, 2011 by Ha Ha Ha

[Mamafaith]

I hate to buy into this, but I have to say it makes sense, I will never give up on my investment, but I have become less hopeful that something really great os going to happen....Thanks for the post....

Don't buy into propaganda...I mean advertising campaigns

[Ha Ha Ha]

AND! The pumpers have arrived! LOL

Sorry Mama but that site is NEWS I try to read that every morning but SMathews beat me to it today. That's not advertising. Nice attempt though. lol

Don't buy into propaganda...I mean advertising campaigns

[bluejay]

If you truly buy this then you need to go ahead and sell out while you can. Maybe AC can buy your currency off of you. You do know that their buying power will still remain the same also right? Inflation will run away with them. Not sure I would look up to an article that would mention spinal tap.

I guess I don't fully understand then, how does there purchasing power stay the same if they RV to $3.00 USD after they remove the 3 - 000, please help me understand.. Thanks.....

[Zemaduvant]

I guess I don't fully understand then, how does there purchasing power stay the same if they RV to $3.00 USD after they remove the 3 000, please help me understand.. Thanks.....

I would have to agree, if they re dominate, and don't revalue it seems like there dinars would be worth change, and have no ability to buy anything..Really the one thing that makes this revalue probable is the fact that there money doesn't buy much..

[JuryPicker]

Thanks for sharing this SMathews (know it's not your words and you didn't write the article) but no matter what anyone here brings to the table thats conflicting the 'pumpers' will all turn out here today and pick this all apart. Even in black & white they will still corrupt it.

To JuryPicker: That's all ya got? Picking on the spinal tap mention.

Sorry Man, I do like spinal tap. I'm leery of any article on any website. Especially coming from a site that is owned by a Insurance Broker in Jordan. It's all speculation.

[Mamafaith]

AND! The pumpers have arrived! LOL

Sorry Mama but that site is NEWS I try to read that every morning but SMathews beat me to it today. That's not advertising. Nice attempt though. lol

3

Propaganda: ideas, facts, or allegations spread deliberately to further one's cause or to damage an opposing cause; also : a public action having such an effect

Main stream media and the likes globally are filled with it, I'm not a pumper, but I'm not naive either. If I wanted to continue to misinform people on a large scale I'd use the news outlets to spread propaganda

[Casper]

This reminds me of the saying ; "You can bring a horse to water but you cannot make them drink".

3

Propaganda: ideas, facts, or allegations spread deliberately to further one's cause or to damage an opposing cause; also : a public action having such an effect

Main stream media and the likes globally are filled with it, I'm not a pumper, but I'm not naive either. If I wanted to continue to misinform people on a large scale I'd use the news outlets to spread propaganda

Edited April 21, 2011 by Casper

[Driver]

Not really a rumor but decided to post it here due to the high traffic

http://www.iraq-businessnews.com/2011/04/20/redenomination-and-the-spinal-tap-fallacy/

Redenomination and the Spinal Tap fallacy

Posted on 20 April 2011. Tags: Banking & Finance, iraqi dinar, Redenomination

....... Yet somehow people continue to claim that a redenomination of the Iraqi currency will have important economic effects. (See this story.) Replacing all the dinars currently in circulation with new ones at a rate of 1,000 to one, thereby “knocking off three zeros,” is supposed to reduce the money supply, for example. ....

People won’t have to carry as much money once all the thousand dinar bills have been replaced by one dinar bills .....

I can't say that I totally agree. Something will have to be done regarding the value. If the value of a dinar does not change, people will have to carry around even more money.

One single dinar note with a face value of 1,000 takes up a lot less space in your wallet than one thousand individual dinar notes having a face value of 1.

[dinarmite]

I can't say that I totally agree. Something will have to be done regarding the value. If the value of a dinar does not change, people will have to carry around even more money.

One single dinar note with a face value of 1,000 takes up a lot less space in your wallet than one thousand individual dinar notes having a face value of 1.

Same here, this is step one, then step two would be RV, this way it makes sense. Just raising the zero's (no lop just redemon) will not help the value, I feel both go hand in hand.

[Dalite]

Everyone does understand that to drop 3 zeros also moves the decimal 3 places to the left on the exchange rate, right?

For Iraq to retain the buying power of a 25,000 dinar note with a 25 dinar note, the exchange rate has to equal 1.17..

Now the rate would be 1.17 dinar to each dollar. That would be .86 USD to the Dinar. Since there is no mechanism in the currency to handle fractions, and 86 is larger than 50, this is rounded up to a dollar... By the same token 1.17 is rounded down to 1.0

This is only in Iraq at present, but it give a window to where it is going.

If Shabbi were to turn this loose at a rate of 1.17 (no RV, just RD), FOREX will determine the market value.

No pumping, no hating, just pointing out what the numbers say.

[ezymoney]

There has be a revaluation...otherwise the article is accurate... A loaf of bread valued at "ex. 25000 dinar, still cost 25000 dinar whether yo u pay with a 25000 dinar note or 100, 25 dinar notes...removing the zeros alone doesn't change things...however if the value of the dinar increases against the USD, or other currency for that matter...then it will take less dinar to buy that same loaf of bread...simple economics...food for thought!

[Darin]

I can't say that I totally agree. Something will have to be done regarding the value. If the value of a dinar does not change, people will have to carry around even more money.

One single dinar note with a face value of 1,000 takes up a lot less space in your wallet than one thousand individual dinar notes having a face value of 1.

A straight up redenomination without changing the value of the IQD will not give the citizens more purchasing power. It also would not really reduce the amount of cash to cary.

For the most part, the entire thing will be a wash.. For example, lets say I go to the market to buy a jug of milk for 5k IQD. I carry one IQD note, and that IQD note is 5k IQD. Upon a redenomination, pricing of goods in the market have their 000s removed. Now, I have the option to go to the market and use a 5k IQD note or a newly redenominated 5 IQD note to purchase my jug of milk. End result, I still have to carry 1 note. If anything, there could simply be confusion based upon the 000s and non-000s and pricing of goods within a market. I do not see where this really helps the citizens much, as they will still have to carry around the same amount of notes (# of notes, not value-wise).

Just my thoughts.... I'm sure there are some benefiting factors regarding doing a RD, but, who knows.

[rtc926]

As naive as I want to be, the realization is that none of us will become overnight millionaires. Unless you invested $500,000+ USD into purchasing IQD, you wont make millionaire status.

There are approx. 20 trillion dinars in circulation... If they RV to even 1:1 they would have to cover withdrawals up to that amount which would bankrupt a lot of financial institutions.

The reason a lop is beneficial to them;

25,000 dinars now worth $21 will be worth roughly the same amount.... then when they get onto the Forex (which wont happen until US troops leave IRAQ, and the world sees stability in the region) the IQD will start to gain value anywhere between $1-3/ against the USD. This increase would be the buying power Iraq needs.

So what should you do? If you want to sit on the money for another 2 years, you will have earned 100-300% profit... Is it worth it? When I was in Iraq in 2004, I bought up 2,000,000 dinars of which I still hold onto... At the time I got them for a steal from an interpreter that needed quick cash @ the rate of 1750 Dinar per dollar. If you think holding onto your cash for 7 years for 300% is worth it... Then great. Otherwise, I would stop buying dinar, and start investing in the real future of Iraq, the ISX.

Just as investors got rich in the 70's and 80's in Americas booming stock markets... This is your chance also.

[magawatt]

Not really a rumor but decided to post it here due to the high traffic

http://www.iraq-businessnews.com/2011/04/20/redenomination-and-the-spinal-tap-fallacy/

Redenomination and the Spinal Tap fallacy

Posted on 20 April 2011. Tags: Banking & Finance, iraqi dinar, Redenomination

Fans of the “rockumentary” This is Spinal Tap will recall the scene where the band’s guitarist explains that his amplifiers are louder because their volume knobs “go to eleven.” When asked why this is different from having ten as the highest setting, he simply repeats “these go to eleven.”

Most of us have no trouble understanding that changing the units used to measure something does not change the character of the thing being measured.

A day doesn’t get longer if you keep track of time in minutes instead of hours, four quarts isn’t more than one gallon, and paying for something in pennies instead of dollars doesn’t make it more expensive.

Yet somehow people continue to claim that a redenomination of the Iraqi currency will have important economic effects. (See this story.) Replacing all the dinars currently in circulation with new ones at a rate of 1,000 to one, thereby “knocking off three zeros,” is supposed to reduce the money supply, for example. Instead of the commercial banks holding 27 trillion dinars as central bank reserves, they will “only” have 27 billion.

People won’t have to carry as much money once all the thousand dinar bills have been replaced by one dinar bills. And so on.

It would obviously be ridiculous to insist that an amp that “only” goes to ten would be softer than one that “goes to eleven.”

Isn’t the claim that it matters how many zeros there are on a bank note an example of the same fallacy?

I have trouble balancing a checkbook so I'm trying to work my way through this too, but I see it a bit differently.

If the amp in the movie revalues from 1000 watts to 1100 watts and each increment of the knob equaled a 100 watt increase, cranking it to eleven would make it louder because each increment is an absolute measure of volume,

If the "pot" on the amp goes from "silence" to "loudest" the numbers (no matter how many you use) are a relative measure of volume

If you revalue a second to equal 12,226,200,254 cycles of cesium oscillation instead of the current 9,192,631,770 cycles I think you would find your day much longer (about 32 hours long).

If you increase the value (revalue) the dinar to equal the value of 1 US dollar instead of 1/1170 of a US dollar you would find (in Iraq) that a loaf of bread would cost far fewer dinars that it currently does.

Money is the medium of exchage.

Value is the worth of the money.

Increase the value X10 and knock of a 0.

Increase the value X100 and knock of two 0s.

Increase the value X1000 and knock of three 0s.

Changing the units of measuring the worth of an object doesn't change the it's value. Changing the value of an object does change the units of it's measured worth.

[REDRV]

I guess I don't fully understand then, how does there purchasing power stay the same if they RV to $3.00 USD after they remove the 3 - 000, please help me understand.. Thanks.....

A can of coke cost 1000 dinar in Iraq (this is just an example) or $1 ....... when it reinstates, if they reverse what they did, you would receive 1000 1 dinar bills in exchange for your 1000 dinar bill and 1 dinar is still 1 dinar in Iraq ,,,, outside Iraq it will be what it is ....... ( jmo )

[dinardarius]

So when the KD hit the forex and went high, was that just a ?

[bluejay]

A can of coke cost 1000 dinar in Iraq (this is just an example) or $1 ....... when it reinstates, if they reverse what they did, you would receive 1000 1 dinar bills in exchange for your 1000 dinar bill and 1 dinar is still 1 dinar in Iraq ,,,, outside Iraq it will be what it is ....... ( jmo )

I can understand this but then there are those that claim $1000.00 IQD will equal $1.00 USD....Thanks for the reply..