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*Disclaimer*

I know Keepm isn't the only person that believes a LOP is more likely due to the large amount of hard currency Iraqi Dinar that is purported to be in circulation, but I thought I would call him out due to his notoriety (or fame, which isn't necessarily positive, BTW) relating to LOP-talk.

*/Disclaimer*

Now, with that having been said, I'd like to request an explanation.

YES, I have read and researched plenty on the whole straight-RV and LOP debate.

YES, I am familiar with the concepts of both.

YES, I know this has been asked a multitude of times in the past, and although I realize that linking to an old article would be prudent, I will refrain from doing so to keep this thread more exciting to read and seemingly unique, in its own right.

Keepm... wlkn... funny...

You seem like a cool, down-to-earth, logical-minded, hard-facts-driven dude. You probably drive an Acura TSX or TL, 2004 to 2007 year model, amIright?

Anywhen...

I would like you to explain, using your own opinion mixed with some creative usage of threat linking and outside source posting, the exact, and I mean exact procedure and start to end cycle for an Iraqi Dinar note (or whatever denomination of said currency would be easiest to use for calculation reasons, even if it doesn't currently exist in circulation) throughout the entire exchange process to a USD and back again, through the hands of the following entities: Iraqi citizen, United States citizen, big-time/large quantity investor, and foreign (meaning non-Iraqi) government or central bank.

Written another way, I want to know exactly how you would explain, upon revaluation of the Iraqi Dinar, or redenomination and subsequent revaluation, value for value with the USD an amount of IQD goes through the process and how it is verified and "backed-up" by reserves and banking procedures. I'm looking for specific, detailed, source-backed actual exchanges processes.

The reason I see this being impossible to do is that you may not have this knowledge, may not be willing to provide it, or it just plain isn't possible to do. I want to know it because I see a major flaw in thinking that the value of one currency in relation to another, which typically is based entirely upon the acting currency holder's definition of his own currency, cannot be supported for exchange if there is a larger amount in circulation upon revaluation than the entire money supply in the world. First, if there are 24 trillion IQD (hard-currency) in circulation, and those bills were all to be immediately brought to the CBI with the expectation of USD being plopped into duffel bags and carted out of the country, you would be looking at 75ish trillion USD if it were to revalue 3USD : 1IQD, correct? Now, you and I, and every other logical-minded person in the world realizes this will never happen. Iraqi citizens, for one, are not going to change out for USD if their IQD is worth more after a revaluation and all goods and services are going to be encouraged to be paid for with IQD. So count off the largest portion not needing to be available to be exchanged, some... 20 trillion? Which, after revaluation would be 60ish trillion USD worth of IQD? RIGHT?

So... 4 trillion... 12 after RV...

Do some magic for me, can they support an immediate cash-in of 12 trillion USD if everyone were to come-a-knockin'? They have, what... 50 billion USD reserves? Not including any liquidation of assets or DFI funds being returned?

I'm guessing, after fractional banking and including the DFI and liquidation of assets, I've seen the number of 430billion USD being thrown around, I believe...

I'm guessing that they would have more than enough to cash that out in steps. Or am I wrong? Please explain the exchange process/procedure from IQD in Iraq into the above-mentioned entities' hands and how it would return to Iraq and be expected to be accounted for and released as a USD note.

One, I don't see that ever happening. All of the investors that trade it back into banks in USA will be credited in fake, not-backed-up digital United States money in their bank accounts and bank will send the note to the Federal Reserve and expect the amount back. The FED will then take and do what with the note? Sell it back to Iraq for oil? For USD? For sexual favors? I kid, I kid...

But really, how does it get back to Iraq and why would it be expected to be able to be accounted for with hard currency in circulation or in reserves from the CBI? I just don't see that. It's all electronic funds. There's nothing to hand off and exchange. Maybe some, but not 12 trillion USD worth... no way, no how. I don't care what anyone says, that just won't happen, so they won't need to have that available to be withdrawn in paper money from their vaults. The US government isn't going to demand 300 tons of paper money flown back to the US in exchange. The whole exchange process is just digital/electronic/internet-al...

Can you also please draw me an exchange chart with bubbles and arrows showing the direction of the exchange flow and how it gets back. And please make it pretty and preferably interactive (I'd like to click on the bubble and see a pop-out window of text describing what is in the bubble). Yes, I'm insane to ask for this, and no, I don't expect you to provide anything close to it. But, well...

There it is.

Thanks Keepm, you're the best. Damn...

Why am I walkin' funny...

Hmmm... that's the last time I drink the bottle of tequila with the worm in it at a pre-RV celebration party at Okie's house...

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*Disclaimer* I know Keepm isn't the only person that believes a LOP is more likely due to the large amount of hard currency Iraqi Dinar that is purported to be in circulation, but I thought I would c

Wow, what exactly are you asking? If you are asking about the exchange after a straight up redenomination, just like has happened in over 50 countries in about the last 80 years, the answer is simpl

Why are you even on this site?

I believe that the CBI enacts a monetary policy where they are required to back their entire currency with foreign reserves. Therefore, if every dinar holder (whether it be foreign governments, banks, and including Iraqi citizens wanted to turn their IQD into USD, it would be possible). Their foreign reserves are liquid assets backing their currency. Their currency is backed 100% by foreign reserves. What we don't take into consideration is the monetizing of the non-liquid assets. How would that effect the value? What about the release of other frozen assets?

I was reading something posted back in 2009 stating that the CBI was using some of their foreign reserves to pay external debt. Paying off debt is important, and likely needs to be done in a currency that can be exchanged internationally. So we have to question if those funds were replenished. If not, when will that be? And if so, by how much?

We also have to consider the frequency of transaction upon putting the IQD into a flexible exchange system. More transactions will equal more profit for the CBI as they take their cut from the spread. This will help increase the foreign reserves. Hard currency will be drawn in from circulation. But will likely be met with electronic currency in the international market.

The CBI may required 100% reserves to back their currency, but I bet the USD is not backed 100% by foreign reserves.

We also have to question, if they enter the international market, do they enter at their current rate? Or do they enter at a higher rate? If their current rate is stable, and inflation is low, how come they can't enter at their current rate? The market would set the rate. For all those that buy IQD, they would have to send trade-able currency to purchase dinar, thus increasing their reserves. But if the market drove up the price too fast, the reserves may not be able to pay out.

Its all interesting to think about.

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*Disclaimer*

I know Keepm isn't the only person that believes a LOP is more likely due to the large amount of hard currency Iraqi Dinar that is purported to be in circulation, but I thought I would call him out due to his notoriety (or fame, which isn't necessarily positive, BTW) relating to LOP-talk.

*/Disclaimer*

Now, with that having been said, I'd like to request an explanation.

YES, I have read and researched plenty on the whole straight-RV and LOP debate.

YES, I am familiar with the concepts of both.

YES, I know this has been asked a multitude of times in the past, and although I realize that linking to an old article would be prudent, I will refrain from doing so to keep this thread more exciting to read and seemingly unique, in its own right.

Keepm... wlkn... funny...

You seem like a cool, down-to-earth, logical-minded, hard-facts-driven dude. You probably drive an Acura TSX or TL, 2004 to 2007 year model, amIright?

Anywhen...

I would like you to explain, using your own opinion mixed with some creative usage of threat linking and outside source posting, the exact, and I mean exact procedure and start to end cycle for an Iraqi Dinar note (or whatever denomination of said currency would be easiest to use for calculation reasons, even if it doesn't currently exist in circulation) throughout the entire exchange process to a USD and back again, through the hands of the following entities: Iraqi citizen, United States citizen, big-time/large quantity investor, and foreign (meaning non-Iraqi) government or central bank.

Written another way, I want to know exactly how you would explain, upon revaluation of the Iraqi Dinar, or redenomination and subsequent revaluation, value for value with the USD an amount of IQD goes through the process and how it is verified and "backed-up" by reserves and banking procedures. I'm looking for specific, detailed, source-backed actual exchanges processes.

The reason I see this being impossible to do is that you may not have this knowledge, may not be willing to provide it, or it just plain isn't possible to do. I want to know it because I see a major flaw in thinking that the value of one currency in relation to another, which typically is based entirely upon the acting currency holder's definition of his own currency, cannot be supported for exchange if there is a larger amount in circulation upon revaluation than the entire money supply in the world. First, if there are 24 trillion IQD (hard-currency) in circulation, and those bills were all to be immediately brought to the CBI with the expectation of USD being plopped into duffel bags and carted out of the country, you would be looking at 75ish trillion USD if it were to revalue 3USD : 1IQD, correct? Now, you and I, and every other logical-minded person in the world realizes this will never happen. Iraqi citizens, for one, are not going to change out for USD if their IQD is worth more after a revaluation and all goods and services are going to be encouraged to be paid for with IQD. So count off the largest portion not needing to be available to be exchanged, some... 20 trillion? Which, after revaluation would be 60ish trillion USD worth of IQD? RIGHT?

So... 4 trillion... 12 after RV...

Do some magic for me, can they support an immediate cash-in of 12 trillion USD if everyone were to come-a-knockin'? They have, what... 50 billion USD reserves? Not including any liquidation of assets or DFI funds being returned?

I'm guessing, after fractional banking and including the DFI and liquidation of assets, I've seen the number of 430billion USD being thrown around, I believe...

I'm guessing that they would have more than enough to cash that out in steps. Or am I wrong? Please explain the exchange process/procedure from IQD in Iraq into the above-mentioned entities' hands and how it would return to Iraq and be expected to be accounted for and released as a USD note.

One, I don't see that ever happening. All of the investors that trade it back into banks in USA will be credited in fake, not-backed-up digital United States money in their bank accounts and bank will send the note to the Federal Reserve and expect the amount back. The FED will then take and do what with the note? Sell it back to Iraq for oil? For USD? For sexual favors? I kid, I kid...

But really, how does it get back to Iraq and why would it be expected to be able to be accounted for with hard currency in circulation or in reserves from the CBI? I just don't see that. It's all electronic funds. There's nothing to hand off and exchange. Maybe some, but not 12 trillion USD worth... no way, no how. I don't care what anyone says, that just won't happen, so they won't need to have that available to be withdrawn in paper money from their vaults. The US government isn't going to demand 300 tons of paper money flown back to the US in exchange. The whole exchange process is just digital/electronic/internet-al...

Can you also please draw me an exchange chart with bubbles and arrows showing the direction of the exchange flow and how it gets back. And please make it pretty and preferably interactive (I'd like to click on the bubble and see a pop-out window of text describing what is in the bubble). Yes, I'm insane to ask for this, and no, I don't expect you to provide anything close to it. But, well...

There it is.

Thanks Keepm, you're the best. Damn...

Why am I walkin' funny...

Hmmm... that's the last time I drink the bottle of tequila with the worm in it at a pre-RV celebration party at Okie's house...

Wow, what exactly are you asking?

If you are asking about the exchange after a straight up redenomination, just like has happened in over 50 countries in about the last 80 years, the answer is simple. There is no gain or loss of value anywhere. The old and new dinar would co-exist for a set amount of time, the old being removed after it is exchanged at a bank in Iraq. The CBI's reserves would remain at the exact percentage before and after the RD. If you have physical IQD outside of Iraq, you will need to find a bank or dealer willing to exchange it for your local currency. Be prepared to pay hefty fees. And if Iraq has any limits at all for carrying IQD into the country, you will probably not find a way to exchange it.

If you are asking about cashing in after an RV, well that becomes a little harder to explain. Let's use an RV @ $1.00. Even though the CBI's International Reserves do not back up the money supply 100%, we'll use that to make the math easier.

At the precise moment Iraq announces an RV @ $1.00 (more than a 1000 times rise), the CBI's reserves would only be able to cover less than one-tenth of one percent of the IQD.

Based on recent court documents, it seems Ali sold about 4 Billion IQD to the good people of Arkansas. Let's cut that in half, and forget about the IQD they bought elsewhere. So let's say 2 Billion, and each state in the U.S. has about the same. So that is 100 Billion. Oops! That's twice as much as Iraq has, and there is even more IQD around the world that people probably want to cash in. Now that Iraq has depleted their reserves, maybe we can get them to start pumping more oil so they can pay us off. But wait a minute, once they have zero reserves, is the IQD really worth a buck?

Boy, you are right. An RV is gonna be tricky. Let's tone it down a bit. How about if it RV's at a penny. No, that ain't going to work either because the CBI's reserves would immediately drop to less than 10%, and go down in percentage as people cash out.

OK, I give up. It seems to me that an RV transfers wealth out of Iraq and into our pockets, and I can't figure out why they would want to do that. Maybe you better tell us.

If you want to know how a redenomination works, just read up on Venezuela, Romania, or any of the 50 other countries that have managed to pull it off.

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Wow, what exactly are you asking?

If you are asking about the exchange after a straight up redenomination, just like has happened in over 50 countries in about the last 80 years, the answer is simple. There is no gain or loss of value anywhere. The old and new dinar would co-exist for a set amount of time, the old being removed after it is exchanged at a bank in Iraq. The CBI's reserves would remain at the exact percentage before and after the RD. If you have physical IQD outside of Iraq, you will need to find a bank or dealer willing to exchange it for your local currency. Be prepared to pay hefty fees. And if Iraq has any limits at all for carrying IQD into the country, you will probably not find a way to exchange it.

If you are asking about cashing in after an RV, well that becomes a little harder to explain. Let's use an RV @ $1.00. Even though the CBI's International Reserves do not back up the money supply 100%, we'll use that to make the math easier.

At the precise moment Iraq announces an RV @ $1.00 (more than a 1000 times rise), the CBI's reserves would only be able to cover less than one-tenth of one percent of the IQD.

Based on recent court documents, it seems Ali sold about 4 Billion IQD to the good people of Arkansas. Let's cut that in half, and forget about the IQD they bought elsewhere. So let's say 2 Billion, and each state in the U.S. has about the same. So that is 100 Billion. Oops! That's twice as much as Iraq has, and there is even more IQD around the world that people probably want to cash in. Now that Iraq has depleted their reserves, maybe we can get them to start pumping more oil so they can pay us off. But wait a minute, once they have zero reserves, is the IQD really worth a buck?

Boy, you are right. An RV is gonna be tricky. Let's tone it down a bit. How about if it RV's at a penny. No, that ain't going to work either because the CBI's reserves would immediately drop to less than 10%, and go down in percentage as people cash out.

OK, I give up. It seems to me that an RV transfers wealth out of Iraq and into our pockets, and I can't figure out why they would want to do that. Maybe you better tell us.

If you want to know how a redenomination works, just read up on Venezuela, Romania, or any of the 50 other countries that have managed to pull it off.

But what you are not seeing is that Iraq is getting back something that is worth the same as what they are giving out. So you say they deplete their reserves to presumably be able to cash out for every dinar in circulation... C'mon, that's not gonna happen. So they do send some hard currency out the doors of the banks in-country. But they don't have to do that in the books. They can keep the reserves, which may or may not be giant pallets of physical currency or just electronic records, and not have them move an inch in regards to what is being traded in the market. If you cash-in your dinar to BoA in Albuquerque, NM and the branch sends the dinar to the FED and receives back US FED notes in exchange, the FED takes the IQD and burns it or keeps it for its reserves. Iraq has no knowledge of this other than whenever the FED decides to ask for oil or buy USD back from the CBI. Would they even do that? The money stays stagnant and doesn't go anywhere, so why do they need to represent 24 trillion USD worth of currency in physical form in their CBI vaults if they're never going to see a large exchange of physical notes? It's all computer-based and they don't have to change their reserves for that. That's what I've never understood why people say they can't support 70+ trillion USD worth if their currency suddenly grows 3,600 times more valuable overnight.

So explain this...

If all money were required to be 100% backed by production of goods and services or valuable assets that can be traded physically in this world, no country would have near as much value behind their currency as they currently say they do. So, with that said, all the money countries say they have in electronic records and even in reserves does not actually exist and therefore does not need to be changed around just because they suddenly say it's worth more overnight. So why then does it matter how much is in their reserves compared to the value based on what's in circulation? It doesn't! As far as I see it.

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But what you are not seeing is that Iraq is getting back something that is worth the same as what they are giving out. So you say they deplete their reserves to presumably be able to cash out for every dinar in circulation...

I did not say that they would deplete their reserves to cash out every dinar in circulation. I said the reserves would be depleted if they cashed out just one-tenth of one percent of the dinars. Iraq is not getting back something worth the same as what they are giving out, they would be getting back IQD that is worthless once their reserves start dwindling.

They can keep the reserves, which may or may not be giant pallets of physical currency or just electronic records, and not have them move an inch in regards to what is being traded in the market.

First, Official International Reserves are "real". And no, in everyday business, nobody is running around swapping reserves between countries. But in the case of an RV, it would pretty much be a one way street and Iraq would have to reduce their physical reserves. Have you ever seen "It's a Wonderful Life"? It is called a run on the bank. If I'm sitting here with a few million IQD "worth" a few million dollars, and I know that only one-tenth of one percent can possibly be redeemed, I'm cashing out. And so are you, and everybody who reads this, and everybody else who... Oops, the bank just collapsed! 99.9% of you suckers are left holding TP. I'm glad I was first in line.

If you cash-in your dinar to BoA in Albuquerque, NM and the branch sends the dinar to the FED and receives back US FED notes in exchange, the FED takes the IQD and burns it or keeps it for its reserves. Iraq has no knowledge of this other than whenever the FED decides to ask for oil or buy USD back from the CBI.

Now were back to oil. The scenario where the Treasury keeps the IQD and buys oil over time just elongates the time frame of the run on the bank. So now Iraq loses their reserves initially, and then they give out the proceeds from the sale of their oil for decades. I like your plan.

Would they even do that? The money stays stagnant and doesn't go anywhere, so why do they need to represent 24 trillion USD worth of currency in physical form in their CBI vaults if they're never going to see a large exchange of physical notes? It's all computer-based and they don't have to change their reserves for that. That's what I've never understood why people say they can't support 70+ trillion USD worth if their currency suddenly grows 3,600 times more valuable overnight.

You might want to study up on "reserve currencies". I doubt that the IQD will be one, but just for fun, if the U.S. Treasury wants IQD in its reserve, why would they wait to pay me $1-3 each for my IQD when they can get 1170 per buck now?

I don't have an argument for the "it's magical computer based, not really real" story. It's real.

If all money were required to be 100% backed by production of goods and services or valuable assets that can be traded physically in this world, no country would have near as much value behind their currency as they currently say they do. So, with that said, all the money countries say they have in electronic records and even in reserves does not actually exist and therefore does not need to be changed around just because they suddenly say it's worth more overnight. So why then does it matter how much is in their reserves compared to the value based on what's in circulation? It doesn't! As far as I see it.

All money is not required to be backed up. Not at 100%. The U.S. survives mostly on good faith and trust. Iraq not so much. Other countries more or less, it depends.

Your ideas about electronic, not real, don't need to be moved around are nuts. Reserves exist. Runs on banks can and do happen. Inflation happens when a country starts to produce currency without sufficient reserves to back it up. That's how you end up with a bunch of zeros on your currency.

That is why you actually do see redenominations, in which there is no change in total value. Funny how none of those countries understood your economics and just called a do-over, like you propose Iraq does.

Bottom line. An RV would be an actual transfer of wealth. It would not benefit Iraq in any way shape or form. Even if you drop your hopes from a dollar to a dime or to a penny, it is still a transfer of wealth from Iraq.

If you ask nice, I'll explain how Iraq can prosper as they drop the level of their reserves below 100%, and as their reserves grow larger in worth.

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Bottom line. An RV would be an actual transfer of wealth. It would not benefit Iraq in any way shape or form. Even if you drop your hopes from a dollar to a dime or to a penny, it is still a transfer of wealth from Iraq.

This is what I cannot get over. Why would they give up their wealth when they dont have to? A redenomination just seems to make sense for Iraq. I would rather see it go down another way but have yet to hear how it would benefit Iraq to go any other way. I guess the senerio where they RV low and then make profit on reselling IQD to new speculators could happen but it just seems like they are telling us RD is what they have decided.

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Why would they not wish to be a reserve currency? If the IQD enters the international market (flexible exchange rate system) it would drive demand for foreign governments to buy up their currency to put into their own foreign reserves. The current holdings by the US, if they were to exist, would be transferred to the foreign reserves and removed from the exotic currency holdings. This would help back the US dollar which would likely help bring back the value up (and we all know that the dollar has been dropping in recent months).

Also, the CBI would likely not have to cash-out those funds... Governments may even acquire the IQD from speculative investors and build up their foreign reserves as well. What does this mean? Even upon all of us going & cashing out, the CBI may not have to pay out a majority of those funds. All other foreign currencies will be backed by another legit foreign currency.

They would than enter the international market, and currency traders will also buy in at a new set rate. The spread would maybe increase and the frequency of transactions would go up. This would create revenue for the CBI which they could add into their reserves.

Also, how important are the foreign reserves, and do they need to stay at 100%? Well, it appears the CBI advises with the IMF and may look to comply with Article 8, which would monetize all non-liquid assets. We can only begin to imagine the "value" of those non-liquid assets as it currently excludes crude oil, oil reserves, and much more.

Another thing to consider is replenishment of the foreign reserves. If the foreign reserves is paying external debts for the GOI, much is does the GOI in helping replenish those reserves? Therefore, showing that the actual reserve level is not a true value. They likely hit the 100% requirement and anything above & beyond that is used to pay foreign debts. The GOI is likely replenishing it, but, not to the degree at the rate they are spending it. This stunts the growth of the reserves.

So many "factors" to consider. From my understanding, to qualify as a reserve currency, all they need to do is join the international market. Which is something we all want to see as investors because the market sets the rate & we can basically go to any bank & cash-out.

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Why would they not wish to be a reserve currency? If the IQD enters the international market (flexible exchange rate system) it would drive demand for foreign governments to buy up their currency to put into their own foreign reserves. The current holdings by the US, if they were to exist, would be transferred to the foreign reserves and removed from the exotic currency holdings. This would help back the US dollar which would likely help bring back the value up (and we all know that the dollar has been dropping in recent months).

Also, the CBI would likely not have to cash-out those funds... Governments may even acquire the IQD from speculative investors and build up their foreign reserves as well. What does this mean? Even upon all of us going & cashing out, the CBI may not have to pay out a majority of those funds. All other foreign currencies will be backed by another legit foreign currency.

They would than enter the international market, and currency traders will also buy in at a new set rate. The spread would maybe increase and the frequency of transactions would go up. This would create revenue for the CBI which they could add into their reserves.

Also, how important are the foreign reserves, and do they need to stay at 100%? Well, it appears the CBI advises with the IMF and may look to comply with Article 8, which would monetize all non-liquid assets. We can only begin to imagine the "value" of those non-liquid assets as it currently excludes crude oil, oil reserves, and much more.

Another thing to consider is replenishment of the foreign reserves. If the foreign reserves is paying external debts for the GOI, much is does the GOI in helping replenish those reserves? Therefore, showing that the actual reserve level is not a true value. They likely hit the 100% requirement and anything above & beyond that is used to pay foreign debts. The GOI is likely replenishing it, but, not to the degree at the rate they are spending it. This stunts the growth of the reserves.

So many "factors" to consider. From my understanding, to qualify as a reserve currency, all they need to do is join the international market. Which is something we all want to see as investors because the market sets the rate & we can basically go to any bank & cash-out.

This is pretty much pointless. You are basing your scenarios on unfounded, out of this world economic principles that don't even exist.

The IQD going on the free market would be suicide for a country in as much turmoil as Iraq. There is a very good reason Iraq will in all probability manage its exchange rate the same as it does now, the same as all of its neighbors, and the same as most countries in the world. Stability. My guess is that the IQD will always be lumped in the minute, "All Other" category of reserve currencies.

The U.S. nor anybody else will not bolster its reserves buying up foreign currency at exaggerated prices when they can get it now cheap. In your story, it sounds like a giant Ponzi scheme, and I assure you that at some point somebody will be stuck holding the bag. The reality is that a country's currency is the obligation of that country, and that country alone.

I am pretty sure that you are not going to see the 300,000% gains you mentioned earlier. Doubling your money would require a disastrously stupid move on Iraq's part.

You said "It's all computer-based and they don't have to change their reserves for that. That's what I've never understood why people say they can't support 70+ trillion USD worth if their currency suddenly grows 3,600 times more valuable overnight." Using that same logic, instead of increasing the value of the IQD 3600 times, we can achieve the exact same reserve percentage by leaving the value of the IQD unchanged, and multiplying the amount of IQD in circulation. Using your numbers, do you think that Iraq can support a circulation of 72 Quadrillion dinars?

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This is pretty much pointless. You are basing your scenarios on unfounded, out of this world economic principles that don't even exist.

The IQD going on the free market would be suicide for a country in as much turmoil as Iraq. There is a very good reason Iraq will in all probability manage its exchange rate the same as it does now, the same as all of its neighbors, and the same as most countries in the world. Stability. My guess is that the IQD will always be lumped in the minute, "All Other" category of reserve currencies.

The U.S. nor anybody else will not bolster its reserves buying up foreign currency at exaggerated prices when they can get it now cheap. In your story, it sounds like a giant Ponzi scheme, and I assure you that at some point somebody will be stuck holding the bag. The reality is that a country's currency is the obligation of that country, and that country alone.

I am pretty sure that you are not going to see the 300,000% gains you mentioned earlier. Doubling your money would require a disastrously stupid move on Iraq's part.

You said "It's all computer-based and they don't have to change their reserves for that. That's what I've never understood why people say they can't support 70+ trillion USD worth if their currency suddenly grows 3,600 times more valuable overnight." Using that same logic, instead of increasing the value of the IQD 3600 times, we can achieve the exact same reserve percentage by leaving the value of the IQD unchanged, and multiplying the amount of IQD in circulation. Using your numbers, do you think that Iraq can support a circulation of 72 Quadrillion dinars?

Calling someone's contribution and opinion pointless is immature and inconsiderate. Yes, it is more likely Iraq will side with stability and not let its currency be traded on the foreign exchange markets for the public. The thing is that this is all new and past economic principles are less likely to hold as much weight in this situation as people are calling for a change and governments are having to step in and clean up the mess going on in the middle east. Old practices are just not working anymore, so why not change it up? I think they will. For fear of losing faith in their stability and confidence, I don't think Iraq will suddenly appreciate the value of their currency overnight compared to all the other world's currencies, and certainly not at a rate of 4, 5, or 6 times the value of the most commonly used and compared currency, the USD (i.e. 4usd:1iqd).

Iraq is highly aware of the private investors, governments, banks, and traders that are selling their currency on the market to citizens of countries all over the world because of this supposed hope they're going to revalue it. That's probably in part why they are taking so long to actually do anything about it. They are going to make sure they do what is best to stabilize their economy and appease their citizens and in-country participants in monetary dealings.

Of course the US government and other investors are not going to bolster or buy up the currency if it becomes exaggerated, as you say, or what I like to think of as hyper-appreciated. You're right, they're more likely to buy it at the lower value like they are now currently doing. Problem is, there's a cash shortage, right? Is that even proven? I mean, look at the currency auctions the past two days, they're still pumping USD out to upwards of 10 banks and getting that much back in Dinar, which in the conversion, is over 100 billion dinar. That's a lot... But the point is, it doesn't require investors to continue to buy the currency after any kind of RV. There are other ways to support and invest in the Iraqi economy, namely in Oil companies, which trade in USD anyway, so if Iraq revalues their currency and governments and investors continue to participate in Iraq, it would be through avenues that would not lose them money by relying on currency exchange. No one outside of Iraq is going to use IQD, therefore an RV would benefit those who use the currency and those of us that have invested are simply just taking advantage of knowledge of an investment. Why does it always have to seem so cryptic to people that are negative about the possibilities?

Doubling investor and citizen money wouldn't be disastrous... listen to what you're saying. They want people to be able to live comfortably and afford the higher demand for products and services and likely the expected hike in prices for those goods and services upon an RV.

Finally, you're saying that they can achieve the same reserve percentages by printing 1000 times more dinar than they already purportedly have in circulation? How is that anything like increasing the inherent value of the currency and then building up their reserves through trading, monetizing of non-liquid assets, releasing of controlled funds and assets due to the country, and other means to increase currency reserves? It's not the same at all. If you do your scenario, then inflation would rise so high that they would HAVE to redenominate / cut the value of everyone's holdings to reduce how much money is expected to be in circulation. That's not going to happen. There would be legal claims locally and internationally against the CBI, the GOI, and anyone else that could be sued for getting their money back.

Let's face it, if the same thing were happening in the United States, there's no possible way we'd stand for the government cutting all of our money by 10, 100, or 1000 times what we have because they say "oops, we printed too much currency relative to the market and economy and we don't need large bills anymore. But we're not going to increase the relative value to other currencies, we're just going to keep it the same" There would be riots and the United States would fall, surely. And that's a sophisticated, developed nation. If it were to happen in Iraq or any other developing country? Yeah... scary.

People are comfortable with being told they won't lose any value on purchasing power, but will receive new denominations of money, which is what we're heard in the articles, if they're not just speculation in and of themselves. People would not stand for a LOP or redenomination that would destroy large amounts of recorded money value. They would surely welcome an increase in the value though... so, with that said, which is more likely, given the situation and the possibilities and what Iraq can back up with industry and commodities productions, etc.? I say that a slow increase in value, stabilized against an already stable currency (most likely just the USD), is more likely. When will this happen, if at all? When they get their heads out of their rears and complete their government security and start working more consistently and effectively, and once they've removed all doubt that they're a capable enough democratic developing country that can start profiting and improving quality of living. Is this close to happening? I say not at all, but it doesn't mean it can't happen if they're diligent and honest. Is that likely to happen? Lol... not gonna even comment on that one.

One thing is that I don't see the IQD falling down to 3000iqd to 1 usd again anytime in the future. If anything, once things are more stable and problems have been resolved with politics and banking and international relations, I think that the exchange rate will rise in a stable fashion based on the improvement and progression in the economy of Iraq. I know a lot of other people have said what I'm saying, but I got into this investment some 8 or 9 months back with the expectation of becoming an overnight millionaire and have learned a lot since then. I'm still waiting on that interactive chart from Keepm that shows the exchange process of IQD to USD and back again. *Taps foot*

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Froto,

Have you ever heard of this phrase? "Don't put all your eggs into one basket." Your basically saying Governments would prefer to not have a wide-range of reserve currencies. The global economy can have unstable moments where some people may prefer the use of one currency over another. You mention that the US would not buy foreign currencies at exaggerated prices to bolster their reserves, but I question you this.. Why does the US Govt. hold roughly 3 trillion in exotic currencies? We are unaware of how much of each currency is held, but we speculate a large sum may be IQD. Not sure if that figure is based upon USD value or the value of the exotic currencies. I will make the assumption the value is based upon the sum of all exotic currencies (Numerical value). You mention that going on the free-market would be a danger idea for the CBI. There are different types of systems that they may consider. For example, from my understanding, a managed float would only allow for a 2%+/- change during a 90-day period. This would prevent an extreme rise in value and/or decrease in value. I am not advocating that the value will jump up in huge %s, but basically explaining from my understanding some options that may be potential solution. The CBI has roughly $50B in their foreign reserves and I can make the assumption that the value is based in dollars, but the entire holdings is not USD-based. We have to include SDRs, gold, Euros, and so forth add into that mix. As for stability? We have to remember that an improved economy within a nation will likely help create stability. You really can't have one with out the other. So, ideally, we can't have the RV without stability as we can't have stability without the RV. They would support each other. Upon implementation of a RV - this could create jobs, lower costs of imports, reduce poverty, and so on. If we were to wait for stability, it may take longer period of time as the process would eventually get there but at a much slower rate.

It appears you seem to think the current value works and will be maintained at that value. Do you seem to believe they have no desire to increase the value?

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Calling someone's contribution and opinion pointless is immature and inconsiderate. Yes, it is more likely Iraq will side with stability and not let its currency be traded on the foreign exchange markets for the public. The thing is that this is all new and past economic principles are less likely to hold as much weight in this situation as people are calling for a change and governments are having to step in and clean up the mess going on in the middle east. Old practices are just not working anymore, so why not change it up? I think they will. For fear of losing faith in their stability and confidence, I don't think Iraq will suddenly appreciate the value of their currency overnight compared to all the other world's currencies, and certainly not at a rate of 4, 5, or 6 times the value of the most commonly used and compared currency, the USD (i.e. 4usd:1iqd).

Iraq is highly aware of the private investors, governments, banks, and traders that are selling their currency on the market to citizens of countries all over the world because of this supposed hope they're going to revalue it. That's probably in part why they are taking so long to actually do anything about it. They are going to make sure they do what is best to stabilize their economy and appease their citizens and in-country participants in monetary dealings.

Of course the US government and other investors are not going to bolster or buy up the currency if it becomes exaggerated, as you say, or what I like to think of as hyper-appreciated. You're right, they're more likely to buy it at the lower value like they are now currently doing. Problem is, there's a cash shortage, right? Is that even proven? I mean, look at the currency auctions the past two days, they're still pumping USD out to upwards of 10 banks and getting that much back in Dinar, which in the conversion, is over 100 billion dinar. That's a lot... But the point is, it doesn't require investors to continue to buy the currency after any kind of RV. There are other ways to support and invest in the Iraqi economy, namely in Oil companies, which trade in USD anyway, so if Iraq revalues their currency and governments and investors continue to participate in Iraq, it would be through avenues that would not lose them money by relying on currency exchange. No one outside of Iraq is going to use IQD, therefore an RV would benefit those who use the currency and those of us that have invested are simply just taking advantage of knowledge of an investment. Why does it always have to seem so cryptic to people that are negative about the possibilities?

Doubling investor and citizen money wouldn't be disastrous... listen to what you're saying. They want people to be able to live comfortably and afford the higher demand for products and services and likely the expected hike in prices for those goods and services upon an RV.

Finally, you're saying that they can achieve the same reserve percentages by printing 1000 times more dinar than they already purportedly have in circulation? How is that anything like increasing the inherent value of the currency and then building up their reserves through trading, monetizing of non-liquid assets, releasing of controlled funds and assets due to the country, and other means to increase currency reserves? It's not the same at all. If you do your scenario, then inflation would rise so high that they would HAVE to redenominate / cut the value of everyone's holdings to reduce how much money is expected to be in circulation. That's not going to happen. There would be legal claims locally and internationally against the CBI, the GOI, and anyone else that could be sued for getting their money back.

Let's face it, if the same thing were happening in the United States, there's no possible way we'd stand for the government cutting all of our money by 10, 100, or 1000 times what we have because they say "oops, we printed too much currency relative to the market and economy and we don't need large bills anymore. But we're not going to increase the relative value to other currencies, we're just going to keep it the same" There would be riots and the United States would fall, surely. And that's a sophisticated, developed nation. If it were to happen in Iraq or any other developing country? Yeah... scary.

People are comfortable with being told they won't lose any value on purchasing power, but will receive new denominations of money, which is what we're heard in the articles, if they're not just speculation in and of themselves. People would not stand for a LOP or redenomination that would destroy large amounts of recorded money value. They would surely welcome an increase in the value though... so, with that said, which is more likely, given the situation and the possibilities and what Iraq can back up with industry and commodities productions, etc.? I say that a slow increase in value, stabilized against an already stable currency (most likely just the USD), is more likely. When will this happen, if at all? When they get their heads out of their rears and complete their government security and start working more consistently and effectively, and once they've removed all doubt that they're a capable enough democratic developing country that can start profiting and improving quality of living. Is this close to happening? I say not at all, but it doesn't mean it can't happen if they're diligent and honest. Is that likely to happen? Lol... not gonna even comment on that one.

One thing is that I don't see the IQD falling down to 3000iqd to 1 usd again anytime in the future. If anything, once things are more stable and problems have been resolved with politics and banking and international relations, I think that the exchange rate will rise in a stable fashion based on the improvement and progression in the economy of Iraq. I know a lot of other people have said what I'm saying, but I got into this investment some 8 or 9 months back with the expectation of becoming an overnight millionaire and have learned a lot since then. I'm still waiting on that interactive chart from Keepm that shows the exchange process of IQD to USD and back again. *Taps foot*

A redenomination will not destroy money value. A redenomination is an even exchange.A 25k dinar note would be worth 25 dinar and the exchange rate will be .86 instead of .00086.So Mohammed can go to purchase a loaf of bread for 25 Dinar instead of the former 25,000 dinar that it would have cost.Everything will be adjusted from a numbers standpoint.It is basically an illusion that the value has actually gained,done for psychological purposes as well as others.It also creates credibility in the currency.

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*Disclaimer*

I know Keepm isn't the only person that believes a LOP is more likely due to the large amount of hard currency Iraqi Dinar that is purported to be in circulation, but I thought I would call him out due to his notoriety (or fame, which isn't necessarily positive, BTW) relating to LOP-talk.

*/Disclaimer*

Now, with that having been said, I'd like to request an explanation.

YES, I have read and researched plenty on the whole straight-RV and LOP debate.

YES, I am familiar with the concepts of both.

YES, I know this has been asked a multitude of times in the past, and although I realize that linking to an old article would be prudent, I will refrain from doing so to keep this thread more exciting to read and seemingly unique, in its own right.

Keepm... wlkn... funny...

You seem like a cool, down-to-earth, logical-minded, hard-facts-driven dude. You probably drive an Acura TSX or TL, 2004 to 2007 year model, amIright?

Anywhen...

I would like you to explain, using your own opinion mixed with some creative usage of threat linking and outside source posting, the exact, and I mean exact procedure and start to end cycle for an Iraqi Dinar note (or whatever denomination of said currency would be easiest to use for calculation reasons, even if it doesn't currently exist in circulation) throughout the entire exchange process to a USD and back again, through the hands of the following entities: Iraqi citizen, United States citizen, big-time/large quantity investor, and foreign (meaning non-Iraqi) government or central bank.

Written another way, I want to know exactly how you would explain, upon revaluation of the Iraqi Dinar, or redenomination and subsequent revaluation, value for value with the USD an amount of IQD goes through the process and how it is verified and "backed-up" by reserves and banking procedures. I'm looking for specific, detailed, source-backed actual exchanges processes.

The reason I see this being impossible to do is that you may not have this knowledge, may not be willing to provide it, or it just plain isn't possible to do. I want to know it because I see a major flaw in thinking that the value of one currency in relation to another, which typically is based entirely upon the acting currency holder's definition of his own currency, cannot be supported for exchange if there is a larger amount in circulation upon revaluation than the entire money supply in the world. First, if there are 24 trillion IQD (hard-currency) in circulation, and those bills were all to be immediately brought to the CBI with the expectation of USD being plopped into duffel bags and carted out of the country, you would be looking at 75ish trillion USD if it were to revalue 3USD : 1IQD, correct? Now, you and I, and every other logical-minded person in the world realizes this will never happen. Iraqi citizens, for one, are not going to change out for USD if their IQD is worth more after a revaluation and all goods and services are going to be encouraged to be paid for with IQD. So count off the largest portion not needing to be available to be exchanged, some... 20 trillion? Which, after revaluation would be 60ish trillion USD worth of IQD? RIGHT?

So... 4 trillion... 12 after RV...

Do some magic for me, can they support an immediate cash-in of 12 trillion USD if everyone were to come-a-knockin'? They have, what... 50 billion USD reserves? Not including any liquidation of assets or DFI funds being returned?

I'm guessing, after fractional banking and including the DFI and liquidation of assets, I've seen the number of 430billion USD being thrown around, I believe...

I'm guessing that they would have more than enough to cash that out in steps. Or am I wrong? Please explain the exchange process/procedure from IQD in Iraq into the above-mentioned entities' hands and how it would return to Iraq and be expected to be accounted for and released as a USD note.

One, I don't see that ever happening. All of the investors that trade it back into banks in USA will be credited in fake, not-backed-up digital United States money in their bank accounts and bank will send the note to the Federal Reserve and expect the amount back. The FED will then take and do what with the note? Sell it back to Iraq for oil? For USD? For sexual favors? I kid, I kid...

But really, how does it get back to Iraq and why would it be expected to be able to be accounted for with hard currency in circulation or in reserves from the CBI? I just don't see that. It's all electronic funds. There's nothing to hand off and exchange. Maybe some, but not 12 trillion USD worth... no way, no how. I don't care what anyone says, that just won't happen, so they won't need to have that available to be withdrawn in paper money from their vaults. The US government isn't going to demand 300 tons of paper money flown back to the US in exchange. The whole exchange process is just digital/electronic/internet-al...

Can you also please draw me an exchange chart with bubbles and arrows showing the direction of the exchange flow and how it gets back. And please make it pretty and preferably interactive (I'd like to click on the bubble and see a pop-out window of text describing what is in the bubble). Yes, I'm insane to ask for this, and no, I don't expect you to provide anything close to it. But, well...

There it is.

Thanks Keepm, you're the best. Damn...

Why am I walkin' funny...

Hmmm... that's the last time I drink the bottle of tequila with the worm in it at a pre-RV celebration party at Okie's house...

911............What's your emergency?

TQueezy: I'm hooked on KeepmLOP and I just drank a bottle of.....ah....ah Tequila.... while partying with Okie

what do I do?

911 operator: Sir do you have a cell phone?

TQueezy: Yes why?

911 operator: I'm sending you instructions on what to do.......OK?

TQueezy: OK thanks.............................................

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911............What's your emergency?

TQueezy: I'm hooked on KeepmLOP and I just drank a bottle of.....ah....ah Tequila.... while partying with Okie

what do I do?

911 operator: Sir do you have a cell phone?

TQueezy: Yes why?

911 operator: I'm sending you instructions on what to do.......OK?

TQueezy: OK thanks.............................................

LMAO, I love it Mongo!

A redenomination will not destroy money value. A redenomination is an even exchange.A 25k dinar note would be worth 25 dinar and the exchange rate will be .86 instead of .00086.So Mohammed can go to purchase a loaf of bread for 25 Dinar instead of the former 25,000 dinar that it would have cost.Everything will be adjusted from a numbers standpoint.It is basically an illusion that the value has actually gained,done for psychological purposes as well as others.It also creates credibility in the currency.

Okay. That's all fine and dandy for Iraqis, but will that be honored as an acceptable exchange rate change in the good ol' USA? I mean to say, if they redenominate at the currency and thereby remove the zeros from the nominal value (0.00085 becomes 0.85) then are we as investors going to be able to bring or now "old" Iraqi currency into a bank and receive 1000 times the value as USD into our banks accounts or duffel bags/briefcases? It still seems like it would be a problem for Iraq to handle that kind of exchange of wealth, to speak like Froto.

The most recent article I saw (whether or not it can be believed for accuracy, who knows...) stated that they decided against redenominating something along the lines of 500 dinar to 1 us dollar to give Iraqi citizens more purchasing power and more credibility to their currency. They decided against that because they said they can't currently support it economically with their reserves (is that without taking into account monetization of non-liquid assets?).

It seems to me that if they were considering a 500dinar to 1usd change, why not bump it up 10 fold or 100 fold to 5 dinar to 1 usd, or 0.5 dinar to 1usd? Just wishful thinking? Or is there anything to that hope and whether it can be done anytime soon?

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A redenomination will not destroy money value. A redenomination is an even exchange.A 25k dinar note would be worth 25 dinar and the exchange rate will be .86 instead of .00086.So Mohammed can go to purchase a loaf of bread for 25 Dinar instead of the former 25,000 dinar that it would have cost.Everything will be adjusted from a numbers standpoint.It is basically an illusion that the value has actually gained,done for psychological purposes as well as others.It also creates credibility in the currency.

Sure a lot of effort & money spent to appear better pscyhologically.

This also would not reduce dollarization per say...

1000:1 re-denomination would make 1 IQD = $0.86 (The $1 USD still buys more, and may be the preferred currency to use)

Also, psychologically, how to you get your citizens to have faith in a currency, when you introduced a new currency in 2003 and decide 8 years later to introduce another currency again. Therefore, making it that within a decade, an average citizen will have likely had to use Swiss, Old dinar, New dinar, Newly Re-denominated Dinar, and USD. That is up to 5 different currencies within a decade they may have frequently used.

How do you get the people to have faith in a curency that is now changing for the third time?

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Sure a lot of effort & money spent to appear better pscyhologically.

This also would not reduce dollarization per say...

1000:1 re-denomination would make 1 IQD = $0.86 (The $1 USD still buys more, and may be the preferred currency to use)

Also, psychologically, how to you get your citizens to have faith in a currency, when you introduced a new currency in 2003 and decide 8 years later to introduce another currency again. Therefore, making it that within a decade, an average citizen will have likely had to use Swiss, Old dinar, New dinar, Newly Re-denominated Dinar, and USD. That is up to 5 different currencies within a decade they may have frequently used.

How do you get the people to have faith in a curency that is now changing for the third time?

Yes,I agree.But that is one of the factors in redenomination(Psycological).It would no doubt take time for the people to become comfortable,as is the case with any RD.They obviously can't support a straight rv,so take redenomination away then what are you suggesting that they do?

LMAO, I love it Mongo!

Okay. That's all fine and dandy for Iraqis, but will that be honored as an acceptable exchange rate change in the good ol' USA? I mean to say, if they redenominate at the currency and thereby remove the zeros from the nominal value (0.00085 becomes 0.85) then are we as investors going to be able to bring or now "old" Iraqi currency into a bank and receive 1000 times the value as USD into our banks accounts or duffel bags/briefcases? It still seems like it would be a problem for Iraq to handle that kind of exchange of wealth, to speak like Froto.

The most recent article I saw (whether or not it can be believed for accuracy, who knows...) stated that they decided against redenominating something along the lines of 500 dinar to 1 us dollar to give Iraqi citizens more purchasing power and more credibility to their currency. They decided against that because they said they can't currently support it economically with their reserves (is that without taking into account monetization of non-liquid assets?).

It seems to me that if they were considering a 500dinar to 1usd change, why not bump it up 10 fold or 100 fold to 5 dinar to 1 usd, or 0.5 dinar to 1usd? Just wishful thinking? Or is there anything to that hope and whether it can be done anytime soon?

More than likely won't be able to exchange them.. Could be a reason that even more banks have stopped dealing(Allegedly) and Ali got out.Think of the pandemonium if they RD and we are left holding "old" notes.Not sure where the 1000 times that you speak of is coming into play.Our notes will be worth the same as theirs.Using examples of RDs from the past,the notes will be used side by side at the same value until all larger notes are collected.

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Yes,I agree.But that is one of the factors in redenomination(Psycological).It would no doubt take time for the people to become comfortable,as is the case with any RD.They obviously can't support a straight rv,so take redenomination away then what are you suggesting that they do?

More than likely won't be able to exchange them.. Could be a reason that even more banks have stopped dealing(Allegedly) and Ali got out.Think of the pandemonium if they RD and we are left holding "old" notes.Not sure where the 1000 times that you speak of is coming into play.Our notes will be worth the same as theirs.Using examples of RDs from the past,the notes will be used side by side at the same value until all larger notes are collected.

Yes, the notes would be worth the same based on face value, but let's then say I have 1,000,000 dinar in 25k dinar notes. If they become worth the same as 25 dinar notes, I still have 1,000,000 worth, not 1,000 if you divide my 1million value by 1000 if the 3 zeros are removed from the face value. You're telling me my money that I own just got reduced by 1000 times what it was worth? I don't think so. Not gonna fly. So you remove the 3 zeros and introduce new currency or at least just new denominations alongside the old ones, so that eventually the 25k notes are all gone and just now 25 notes remain. So, my million dinar's worth is still worth a million dinar, but the currency exchange rate is now 0.86 to the USD based on the nominal value changing as well. So my 40 25k dinar notes turned into 40 of the 25 dinar notes worth the same amount at 0.86 exchange rate instead of 0.00086? So, that basically means nothing changed, I still have ~1000USD worth of dinar, whether it is 1,000,000 dinar in 40 25k dinar notes, or 1,000 dinar in 20 of the 25 dinar notes? How did I not just lose out on 1000 times the value of what it was supposed to be? I guess I am failing to see why this is considered an investment if they RD/RV or whatever the removing of the 3 zeros is. We basically don't make any money that way. However, if they just remove the large denoms from circulation by trade practices and current CBI monetary policy, such as the auctions, then can't they RV at 3.22 or higher exchange rate and we make some money on this? It might not be 1000 times our investment, but I guess maybe it's something. Will that happen though?

Sorry to rehash the same concept, but the way Keepm was talking about it before I got confused on why he thought it was impossible to RV straight up with how much is supposedly in circulation, given the logic that we are discussing here. I see now that the redenomination would be the most likely scenario based on the articles and whatnot, but even recent articles have said they are now thinking it would hurt the Iraqi economy and not be the best thing to do to keep stability. So what is the best thing to do? Keep everything status quo? Everyone says that will incite riots and whatnot, because nothing will have changed.

Tearing out of hair commencing...

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I don't know why people think money can't fall or rise sharply in value.

Canada's dollar use to be worth only .65 - .70 and now it is closer to .95

If you owned a million Canadian dollars bought at the .65 range and held onto it until now

wouldn't you have made $300,000 dollars?

My numbers might be a bit off, but you know what I mean I'm sure.

buds

PS: TQueezy..... You will never have a 25K note being the same as a $25 note.

BOTH notes will be changed when it changes. People with $25 notes will exchange for a coin probably.

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Yes, the notes would be worth the same based on face value, but let's then say I have 1,000,000 dinar in 25k dinar notes. If they become worth the same as 25 dinar notes, I still have 1,000,000 worth, not 1,000 if you divide my 1million value by 1000 if the 3 zeros are removed from the face value. You're telling me my money that I own just got reduced by 1000 times what it was worth? I don't think so. Not gonna fly. So you remove the 3 zeros and introduce new currency or at least just new denominations alongside the old ones, so that eventually the 25k notes are all gone and just now 25 notes remain. So, my million dinar's worth is still worth a million dinar, but the currency exchange rate is now 0.86 to the USD based on the nominal value changing as well. So my 40 25k dinar notes turned into 40 of the 25 dinar notes worth the same amount at 0.86 exchange rate instead of 0.00086? So, that basically means nothing changed, I still have ~1000USD worth of dinar, whether it is 1,000,000 dinar in 40 25k dinar notes, or 1,000 dinar in 20 of the 25 dinar notes? How did I not just lose out on 1000 times the value of what it was supposed to be? I guess I am failing to see why this is considered an investment if they RD/RV or whatever the removing of the 3 zeros is. We basically don't make any money that way. However, if they just remove the large denoms from circulation by trade practices and current CBI monetary policy, such as the auctions, then can't they RV at 3.22 or higher exchange rate and we make some money on this? It might not be 1000 times our investment, but I guess maybe it's something. Will that happen though?

Sorry to rehash the same concept, but the way Keepm was talking about it before I got confused on why he thought it was impossible to RV straight up with how much is supposedly in circulation, given the logic that we are discussing here. I see now that the redenomination would be the most likely scenario based on the articles and whatnot, but even recent articles have said they are now thinking it would hurt the Iraqi economy and not be the best thing to do to keep stability. So what is the best thing to do? Keep everything status quo? Everyone says that will incite riots and whatnot, because nothing will have changed.

Tearing out of hair commencing...

You may want to read the post I left for you on redenomination my friend to grasp a better understanding. Yes your Million dinar would be worth 1,000 dinar at the new exchange rate.The zeros are adjusted from the notes and the rate.So yes it does fly and it has flown over history of redenoms.

You may want to read the post I left for you on redenomination my friend to grasp a better understanding. Yes your Million dinar would be worth 1,000 dinar at the new exchange rate.The zeros are adjusted from the notes and the rate.So yes it does fly and it has flown over history of redenoms.

READ THIS TQUEEZY.....It will help you understand what they are talking about...

April 28, 2011

BAGHDAD, — The Iraqi government plans to chop three zeroes off the national currency. It should make transactions easier and enhance the exchange rate. But local economists are not sure the country is ready.

Recently the Iraqi government announced that they were close to completing plans for re-denomination. Three zeroes will be removed from Iraq’s currency, the Iraqi dinar or IQD, and old banknotes will gradually be phased out. For example, this would make an IQD 1,000 note into an IQD 1 note. Currently IQD 1,000 is worth around €0.60 and US$0.85.

Logically speaking, re-denomination does not change the value of a currency nor should it cause inflation. It should make currency easier to use and increase its credibility. Re-denomination may also be a matter of political expedience.

For example, when Turkey announced a re-denomination in 2005, the country’s central bank explained that extra zeroes on their

Three zeroes will be removed from Iraq’s currency.

banknotes meant “problems in accounting and statistical records, data processing software and payment systems”, adding that the move to cut them was “psychologically and technically essential”.

Re-denomination can usually only be undertaken once inflation is under control and over the last few years, inflation in Iraq has dropped from over 30 percent to single digits. Nonetheless Iraqi opinions about the planned change remain divided.

Qasim Jabbar, an economic researcher, is concerned about the psychological impact the removal of three zeroes will have on locals. Additionally Jabbar does not think the time is right. “We must create a stable environment in political, economic and legal terms, in order to control the conditions during the transition period to a new currency,” he explained. “This is necessary in order to ensure that the transition is not manipulated by government departments and in society in general, where there is rampant corruption.”

Jabbar was also worried about the absence of a central authority that was truly capable of controlling the Iraqi currency market. He believed that the psychological problem will be people “focusing on the change in numbers, rather than in real value”. By rights,www.ekurd.netre-denomination should not impact the actual value of a currency; it should still buy the same goods as it did before for the same prices. “But a person with IQD 10 million will feel they have lost a fortune when the zeros are removed,” he noted.

Re-denomination is nothing new. “Many countries, such as Turkey and Germany, have also taken this step,” another Iraqi economist Kareem al-Halfi said. “But this doesn’t mean that the Iraqi experience will be like that, of those nations. Iraq has serious structural problems and high rates of unemployment. These problems cannot be solved in the short term and we need to create the economic conditions necessary to allow re-denomination.”

According to Mothahhar Mohammed Saleh, an advisor to the Central Bank of Iraq, which was established in 2004 to administer monetary policy in Iraq, the impact of re-denomination could have both positive and negative effects.

Firstly, a reduction in the large amount of currency in circulation – there is an estimated IQD 27 trillion in circulation – could have a negative impact on everyday transactions, he said. For example, one previously recorded impact in other countries has included the rounding up (or down) of prices due to re-denomination.

On the other hand, the currency will become far easier to use. “In the wholesale sector, goods are being traded using US dollars.” This process is known as “dollarization” and occurs when a country uses a foreign currency, in parallel to or instead of, its own currency because it is seen as more stable and subject to fiscal disciplined.

Anyway, according to Saleh, “this change will not be introduced hastily. It will only be introduced when inflation is under control - and after parliament and the Iraqi cabinet has gone through legislation thoroughly. They will then decide how the [re-denomination] law will be implemented.”

As Saleh said, “the Central Bank is proceeding cautiously in this matter because it realizes re-denomination could cause economic problems if implemented in haste.”

The IQD was first introduced in the early 1930s and was pegged first to the British pound, then the US dollar. After Iraq’s invasion of Kuwait, under the leadership of Saddam Hussein, strict economic sanctions saw the value of the IQD drop. By the mid-1990s, IQD 3,000 was worth around one US dollar.

In order to make purchases in Iraq, huge amounts of cash were needed. An IQD 25 note was the highest denomination available so to make life easier, the government introduced an IQD 250 note. After the American-led invasion in 2003, the Iraqi government issued even more notes with higher values. IQD 25,000 notes were now the highest value.

The average person on the Iraqi street said they would be happy to see the IQD stabilize further. But they are also afraid that the lopping off of zeroes will have a negative impact.

Baghdad merchant Abdul Amir trades in food products and when he deals with wholesalers he prefers to use US dollars because then he doesn’t have to carry as much paper around. “Large transactions require millions of Iraqi dinar. If I use foreign currency, I don’t need as much,” he explained. “But when it comes to daily transactions, I don’t mind using the dinar.”

As to his thoughts on the planned re-denomination, Amir had only questions: “Would there be a loss expected? Would the market be controlled to guarantee its stability?” he asked.

Government employee Sabah Daoud raised further questions: “Would the Iraqi dinar rise against the dollar? Would my salary be worth the same, with and without the zeroes?” He wanted to see more research on the impact of such a step on the average Iraqi citizen.

Currently the Iraqi government seems set on losing the extra zeroes, those digits that have become such a burden on the dinar. But the road toward this goal is a difficult one. And it is just one stop along an even longer road, the one leading toward prosperity and steady, stable economic growth for Iraq.

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Okay. I read it. Still nothing changes the fact that, well... nothing changes! It won't make anything easier for Iraqis, investors, banks, no one!

So what if they take off the three zeros and make less amount of money worth the same as the larger amount used to be. It doesn't make their currency actually worth more, just reduces the ratio of how much is needed for any one action, such as a purchase or exchange. What we as investors are looking for is something to change the inherent value in the currency, which can only be done by the Central bank changing the perceived exchange rate between currencies around the world, and like I said in a previous post, will likely just be pegged still to the USD which is falling, so in order for them to justify a stable rate and base it on the USD, they HAVE to increase the perceived value of their currency, even if they redenominate. That's the only way any amount of purchasing power will increase for Iraqis and we as investors will make money. That is what we want to see happen. We could care less about the actual numbers on the face value of the currency. We care about its perceived, or inherent value. Which is still going to be worth nothing compared to the USD after they RD. IMO, no RD, just slow increase of value in IQD over a short to medium time period, less than 2 to 3 years, preferably. I can see them jumping from 1170:1 to 500:1 and then to 250:1 and then 100:1, and then eventually up to the same amount as their neighboring middle eastern countries, somewhere in the ~3usd: 1iqd. It must happen for them to reflect the true value of their countries assets, including oil, natural gas, and others.

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Okay. I read it. Still nothing changes the fact that, well... nothing changes! It won't make anything easier for Iraqis, investors, banks, no one!

So what if they take off the three zeros and make less amount of money worth the same as the larger amount used to be. It doesn't make their currency actually worth more, just reduces the ratio of how much is needed for any one action, such as a purchase or exchange. What we as investors are looking for is something to change the inherent value in the currency, which can only be done by the Central bank changing the perceived exchange rate between currencies around the world, and like I said in a previous post, will likely just be pegged still to the USD which is falling, so in order for them to justify a stable rate and base it on the USD, they HAVE to increase the perceived value of their currency, even if they redenominate. That's the only way any amount of purchasing power will increase for Iraqis and we as investors will make money. That is what we want to see happen. We could care less about the actual numbers on the face value of the currency. We care about its perceived, or inherent value. Which is still going to be worth nothing compared to the USD after they RD. IMO, no RD, just slow increase of value in IQD over a short to medium time period, less than 2 to 3 years, preferably. I can see them jumping from 1170:1 to 500:1 and then to 250:1 and then 100:1, and then eventually up to the same amount as their neighboring middle eastern countries, somewhere in the ~3usd: 1iqd. It must happen for them to reflect the true value of their countries assets, including oil, natural gas, and others.

The best way to view a straight-up re-denomination is to understand that the numerical value on all notes changes, while the exchange rate & value of the note remain the same. Psychologically, upon a re-denomination, a newly re-denominated currency would have to be introduced and released into circulation. Now the citizens have 3 different types of currencies to use such as: IQD, newly re-denominated IQD, and USD. From my understanding, they already view the notes as if the 3 zeros were not present. But, this won't solve the dollarization problem. The dollar holds more value and is more stable. Citizens may become weary of using the newly re-denominated IQD as well, considering they had just went through the whole exchange process 8 years prior. Now, how do you get people to remain faithful to the currency if you keep introducing a complete replacement?

Imagine if 8 years ago, we all had to start using a new currency (Lets call it the green-back). The exchange was done in a time-frame leaving all previous dollars worthless. If you missed your window, you lost out on wealth. So many of us acquire the green-back and some are cautious about the currency itself. Many of us decide to rely on the more stable Euro due to its higher value & stability. As we finally start getting comfortable using the green-back, the US decides they're going to introduce another currency to replace the existing one (Lets call this the Amero). This was purely done to remove 000s that existed on the Green-back. A 1,000 green-back note & 1 amero note equal in value, however, both are valued under the Euro. With the feeling of uncertaintity of the new Amero, you go back to relying on the stability of the Euro. You feel that the Amero will take time to adjust into the market and people may not be so accepting. Dollarization still exists, some people feel as if they lost wealth (In reality the didn't), others complain about the exchange process, and many people are uncertain to put their faith into the amero.

How could we make the Amero more tempting? Well if 1 amero is worth more than 1 euro, I think that is a great start.

But it may not be that easy, instead, it appears that the governments may make it hard to use the Euro by putting higher restrictions of trade. So your beloved Euro is being basically hated upon & now your being forced to use something else.

What if, the Amero never existed but instead the green-back started having lower denominations and the value was increasing? Faith would be restored into the green-back in a much similar fashion of the faith that was once installed into the USD. As native holders see the rise, they feel proud to know the green-back has a future. The use of the Euro drops (which removes the idea of dollarizaton being present).

But this is only an opinion. There may be no right answer. But discussing it gives us the ability to see it from different perspectives.

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