Redenomination does NOT necessarily mean RV

[aaanth]

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People won’t have to carry as much money once all the thousand dinar bills have been replaced by one dinar bills.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

it should always be noted that "the iraqi businessnews.com" is NOT a news agency. it is a blog. it is and always has been an anti-RV site. everything that comes of its pages are anti RV. it is my opinion that it takes the anti RV side to play devil's advocate to get people to go there and read their crap. it is, again, NOT A NEWS AGENCY!!

[JuryPicker]

it should always be noted that "the iraqi businessnews.com" is NOT a news agency. it is a blog. it is and always has been an anti-RV site. everything that comes of its pages are anti RV. it is my opinion that it takes the anti RV side to play devil's advocate to get people to go there and read their crap. it is, again, NOT A NEWS AGENCY!!

Thank You

[DAME1]

SMathews

Why didn't you put the rest of the article in? As you continue to read, it clearly states, on the other hand that much currency in circulation wouldn't matter. They've set up mechanisms to deal with large amounts of currency through Electronic banking....

Slum Dame.

[Dalite]

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!

The problem is that there no 25 dinar notes.....

The 25000 note loses 3 zeros to give same buying power, and the loaf of bread also looses 3 decimal places.

End result, 25000 note recognized as 25 dinar, and still has the same buying power as the 25000 did, with out the liability of the extra 3 zeros.

[umbertino]

Quote

End result, 25000 note recognized as 25 dinar, and still has the same buying power as the 25000 did, with out the liability of the extra 3 zeros

End Quote

Which translates to Investors as being shafted.

[SMathews]

As I previously mentioned in a separate post, it was given to me by a co-worker. I posted what was emailed to me.

The post provided the link so others could go to the site & read it themselves if they wanted. Feel free to post the rest if you want.

SMathews

Why didn't you put the rest of the article in? As you continue to read, it clearly states, on the other hand that much currency in circulation wouldn't matter. They've set up mechanisms to deal with large amounts of currency through Electronic banking....

Slum Dame.

[eileen]

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.

Thank you for your post. This is what makes sense. This thing is much bigger than we realize. It cost the U.S. trillions plus all the men and women we lost in this war for it all to LOP. I realize its about oil but it also involves currency and investing.

[Spoolin]

I believe you guys should go to the DD site and scroll to the bottom of the home page and right in the middle is their latest CC with experts such as Breitling and Rudy. They pretty much put a big damper to this crap AC is spewing........

[Dalite]

Thank you for your post. This is what makes sense. This thing is much bigger than we realize. It cost the U.S. trillions plus all the men and women we lost in this war for it all to LOP. I realize its about oil but it also involves currency and investing.

Well, it ain't over 'till it's over.

The audio file mentioned in the previous reply is quite encouraging and connects a few more dots.

My understanding of how this works is changing daily, as more info/disinfo is released.

It's still a moving target.