Understanding the LOP & the ZEROS

[RVDinar4MyFamily]

Hello peeps,

Yes, this is a repost. I was a little tired the night I wrote this, and my choice of titles, was misleading. That and I didn't proof read before I posted so some of what I posted was a little off. Thanks to Froto for correcting me on my math

I feel this is an explaination that will help others understand the lop better.

I am reposting this with some correction to help make it a little bit clearer, and should help those who don't understand what the LOP is, and it connection to the delete the zeros or remove the zeros articles.

Now, This is a tough subject to really get a grasp on, and it can stir up emotion because the wrong outcome from the removal of the zeros concept and it means lop, which is a Re-Denomination (RD) and we only get dollar for dollar if they were to also re-value the rate at 1 to 1 or we would get three times our investment if they re-value the rate at $3, but not the millions, or billions we had hoped for. Those who are heavily invested will still do well at 3 times investment, and those of us like me who have a measly 750k will get either $750 at 1 to 1 or $2250 at 3 to 1.

I will try to keep this as simple as possible and explain it to the best of my ability, but it does get complicated

There are 2 translations for the zeros articles that we see, one is deletion of the zeros and the other is removal of the zeros, I see these as 2 completely different things, I will explain below

OK, let’s look at what we have today, and understand the currency as it is used now

Let’s just say we have 1 Iraqi dinar

The current rate for the dinar is .00085 or 1,165 iqd per US Dollar, so if you have 1 usd, you can exchange that dollar for 1,165 iqd's

If we compare our 1 iqd to 1 usd, we don’t have diddly, we need another 1,164 of them just to get to the value of 1 measly us dollar. So, our 1 iqd is worth a whole .00085 of 1 usd, not even worth our lowest denomination of 1 penny

OK, back to our 1 iqd, let’s look at where is stands in relation to the current denominations I listed below, it does not exist! At least in physical form, the iqd does not have a 1 dinar denomination, for that matter the lowest denomination is 50, so think of that, a store owner cannot sell anything for less than 50 dinar, because he cannot make change for anything less and it also means that everything must be priced in increments of 50. This works now, because the current rate of the iqd means that bottle of soda costs 1,750 iqd which is equal to about $1.50 usd. The store owner just might let you lick the bottom of his shoes for your 1 dinar, if you had it that is, since it does not exist in a physical form.

Current denominations for the iqd

25,000

10,000

5,000

1,000

500

250

50

OK, for arguments sake, let’s present the first theory and explain why that missing 1 dinar note matters. This is not a remove the zeros, or delete the zeros scenario

We can be pretty sure this not going to happen, but would be perfect and we would all be rich happy, and could care less if we ever hear the words dinar, RV, Iraq etc. ever again

Strait Up RV ,why it won't work, and the reason lower denoms are needed

This is a strait up no strings attached RV, the exchange rate for the iqd RV's at 1 iqd to 1 usd

25,000 dinar note is worth 25,000 usd, 5,000 dinar note is worth 5,000 usd 1,000 dinar note is worth 1,000 usd and so on

Now, let’s look at this from the iqd side of things and get back to that lowest denomination again, now we have a 50 dinar note worth 50 usd, but the bottle of soda is still only worth $1.50 usd, but instead of 1,750 dinars, it only cost 1.50 dinar. But you can't buy it, your lowest bill is a 50 that is worth $50

You could only get one bottle of soda with 1,750 dinar the day before the RV and 1,165 sodas the day after.

The shop owner can't expect to get 50 dinar for one bottle of soda.

Now, we are talking about $1.50 here, what about an item worth 25 cents?

This just does not work; they need lower denominations if they are going to make their currency worth the same a 1 usd.

This is the reason why I said above that we can be pretty sure this will not happen and this is where the deletion of the zeros comes in.

What the CBI has to do...Change the rate from .00085 to 1.0 no new currency, no new lower denominations

DELETE the Zeros or LOP, and why the lower denoms may not be a good thing

Next, we are going to the stinking lop section, bad, evil, how dare I talk of such heresy HAHAHAHA

To better understand this one, we need to look at what Iraq would need to do in order to be able to pay for things like a bottle of soda with physical currency, the easiest and most effective way should be the dreaded lop, but Iraq has problems with this, and I will get to why later.

The lop is a pretty simple concept, you remove three zeros from ALL of the current denominations and also from the exchange rate. You do this by introducing lower denominations equal to the current denominations. This is just changing the denominations and the rate, and does not change the value of the iqd yet.

In this case, the currency is re-denominated, a 25,000 dinar note = 25 dinar note, they are worth the same amount and even in the event of a Re-value of the rate, they will still only be worth 25 dinar. They will be used together till all the large notes are removed or destroyed. Eventually, the new lower denominations will completely replace the larger ones

So, we need to look at the currency and the exchange rate to understand what happens to it

The rate stays .00085 or 1165 for large denominations and changes to .85 or 1.165 for lower denominations.

25,000 dinar note is now = to a 25 dinar note ($21.46 usd at the current rates)

10,000 dinar note is now = to a 10 dinar note ($8.58)

5,000 dinar note is now = to a 5 dinar note ($4.29)

1,000 dinar note is now = to a 1 dinar note ($0.85)

500 dinar note is now either a 1/2 dinar note or a .50 dinar coin (a fifty cent piece basically) ($0.42)

250 dinar note is now either a 1/4 dinar note or a .25 dinar coin (quarter) ($0.21)

50 dinar note is now either a 1/20 dinar note or a .05 dinar coin (nickel) ($0.04)

Now instead of price being based on 50 dinar increments, prices can’t be set at .05 increments

So, if they lop, what happens to the current lower denominations? They are still worth the same as they are now, and you still lop the zeros, 500 is now .500 and the 250 is now .250 and the 50 is now .050 these new lower denominations would have to be introduce as either coins, or paper in denominations of 1/2, 1/4, and 1/20 That seems silly to me and does not make a lot of sense so personally I believe it would have to be coin to do this. However, the usage together during the removal process means that with coin, you would also carry the paper equivalent until all the bills are removed.

The shop owner who is selling the bottle of soda for 1,750 dinar, can now sell it for 1.75 dinar (remember 1.75 x .85 is about $1.50 usd) So, this corrects the problem we had above, in the case of a revalue, so let’s look at that next before we discuss the issues this theory has.

So, they RD'd the currency and now they are going to re-value the exchange rate, we will stick with the simple 1 to 1 math for now, so now 1 Iraqi dinar is worth 1 usd, an increase of simply $0.15 US cents

Now the shop owner simply sells the bottle of soda for 1.50 dinar, pretty easy, and the lower denominations make transactions easier all the way around not to mention the ease of pricing throughout the country. There is whole lesson on the micro economic impact this has on the country, but we are not going to go there.

However, what we do need to look at an issue this theory has and this has a whole slew of issues that I am not going to get into, but I am going to touch on just one that I think matters and is often over looked to understand what else the CBI would have to do in order for the lop to be possible.

First, let’s just go to the opposite end of the currency we were talking about on the low side, because now, after the RD, Iraq’s largest denomination is only 25 dinar.

So, if you want to buy a bigger ticket item, let’s use 1000 dinar, you have to use forty 25 dinar notes to pay for that item.

Without a larger denomination to use, you have to carry a good size bundle of cash to pay for your purchase.

Now, before you start thinking that they have the existing 50, 250 and 500, so why not use them, remember that those have to be lopped too, if a 50, a 250 or a 500 that are all worth less than a 25,000 dinar note were to be used as the larger denominations along with the new lower notes, then they would take on a value much higher than the large denominations, and the numbers are mind boggling to try and post, so I will just say that this is not a possibility in this situation.

HOWEVER, some of you will remember the articles about the introduction by the CBI of a 100,000 dinar note that we had a while back. This would have solved this issue because the 100,000 dinar note would become a 100 dinar note and now your currency is pretty well set from top to bottom

SO, for the lop to happen the CBI has to...

Introduce 4 new lower denomination notes (25, 10, 5, 1) and make the 3 zero notes worth the same as the lower equivalent

Introduce 3 new coins (0, 50, 0.25, and 0.05) or 3 new notes (1/2, 1/4, 1/20) and make the 500, 250 and 50 worth the same as their equivalent

Introduce a new 100 dinar note

Change the exchange rate from .85 to 1.0

Destroy 23 trillion high tech top notch dinars that are less than 10 years old and replace it with 23 billion in new lower denomination dinar, (that just does not make logical sense.)

REMOVE the Zeros, and the lower denoms we want to see

So what is the answer, how does Iraq introduce lower denominations, change the exchange rate, and make us all rich

Well, there is a middle point between the 2 above theories that makes the most sense to me, and I hope is the plan when it comes to the removal of the zeros

This is what the CBI does

Introduce new lower denomination notes and coins as above in addition to the existing notes

RV the exchange rate from .00085 to 1.0

Remove the larger notes from circulation for use in bank to bank and other large transactions leaving the 50, 250, and possibly the 500 as the largest denominations in circulation.

So, the currency will look like this

25,000 dinar note (current in use, removed and destroyed over time, or used for bank to bank and large transaction, but still worth 25,000 dinar)

10,000 dinar note (current in use, removed and destroyed over time, or used for bank to bank and large transaction, but still worth 10,000 dinar)

5,000 dinar note (current in use, removed and destroyed over time, or used for bank to bank and large transaction, but still worth 5,000 dinar)

1,000 dinar note (current in use, removed and destroyed over time, or used for bank to bank and large transaction, but still worth 1,000 dinar)

500 dinar note (could be removed or left in circulation)

250 dinar note (remains in circulation)

50 dinar note (remains in circulation)

25 dinar note (new lower denomination)

10 dinar note (new lower denomination)

5 dinar note (new lower denomination)

1 dinar note (new lower denomination)

0.50 (Coins just make sense to me, if they are going to RV and introduce new lower denominations, they will need lower than the 1 dinar note)

0.25

0.05

*I used 25, 10, 5, 1, .50, .25, .05 but the denominations that are introduced could be in any denomination they choose unlike the lop where they must stick with a match to the existing currency.

Notice that this covers all the issues I pointed out above with both the Strait up RV and the LOP since you have the lower coinage and smaller bills along with using the current 50, 250, and possibly the 500 as the larger denominations.

They would have to RV in this scenario, with the 50 dinar not already only worth 4 cents, anything introduced lower would not even be worth toilet paper

Now, this is what we hope to see, it would mean a big return for us and has none of the issues I had pointed out above with the lop and the strait up RV.

I Hope this helps some people better understand the concept of the lop and the zeros.

[AoK]

Thanks RVD4MF!!! I read this when you first posted and it's been REAL helpful for a "noob" like me!! =)

[Froto]

Your post is silly.

In your explanation of the redenomination, you sorta muddy up the concept of how it happens, Then you added in a part that has never happened in the real world during an RD. You cap it off with your conclusion that what dozens of other countries (whose currencies have suffered inflation exactly as Iraq's has) have done does not make sense.

Then you give us a scenario (RV from 0.00085 to 1.0) which would instantly drop the CBI's international reserves from close to 100% to a level of less than one-tenth of one percent.

I love it when people explain to me how something that has happened dozens and dozens of times in the world of global economics does not make sense, and then offer up something that has NEVER happened as the logical alternative.

[AudiS4]

Froto, you are one annoying little troll. Why do you stick around? Are you going to be here to say "I told you so!" and we're all going to bow down to your almighty reasoning? Don't count on it. Life is short, go do something.

[Bumper64]

Let's Play Nice!!!

[mrref]

[[b]size="5"]~~~WOW~~~ [/size]NOT AGAIN I AM SO TIRED OF READING ABOUT THE LOP AND ZEROS, I KNOW IF YOU DON'T LIKE DONT READ IT, BUT JUST THE TITLE MAKES ME SICK... I GUESS I'VE BEEN IN THIS THING TO LONG I NEED TO TAKE A BREAK.............. [/b]

[The Machine]

Your post is silly.

In your explanation of the redenomination, you sorta muddy up the concept of how it happens, Then you added in a part that has never happened in the real world during an RD. You cap it off with your conclusion that what dozens of other countries (whose currencies have suffered inflation exactly as Iraq's has) have done does not make sense.

Then you give us a scenario (RV from 0.00085 to 1.0) which would instantly drop the CBI's international reserves from close to 100% to a level of less than one-tenth of one percent.

I love it when people explain to me how something that has happened dozens and dozens of times in the world of global economics does not make sense, and then offer up something that has NEVER happened as the logical alternative.

I hear you .... i was getting pretty pissed off reading that....

[RVDinar4MyFamily]

Your post is silly.

In your explanation of the redenomination, you sorta muddy up the concept of how it happens, Then you added in a part that has never happened in the real world during an RD. You cap it off with your conclusion that what dozens of other countries (whose currencies have suffered inflation exactly as Iraq's has) have done does not make sense.

Then you give us a scenario (RV from 0.00085 to 1.0) which would instantly drop the CBI's international reserves from close to 100% to a level of less than one-tenth of one percent.

I love it when people explain to me how something that has happened dozens and dozens of times in the world of global economics does not make sense, and then offer up something that has NEVER happened as the logical alternative.

I hear you .... i was getting pretty pissed off reading that....

Neither of you fully read my post and yet you feel as if you read enough to comment?

Read again....learn something...then come back when you are worthy.

[jmw]

Okay...i have read your post a couple of times...sorry but Froto is correct....when you address revaluing the currency you need to keep in mind that it has no immediate impact in Iraq...it is purely an exchange rate...all it does is give Iraqis the opportunity to import stuff at a much lower...which in time should lower the price of imported items...but does nothing for things already on the shelves...also...think about this..if Iraq does RV at $1 or more...they have trillions of dinar which would then be worth trillions of dollars...which they could then come here and pretty much buy our country...they can't just arbitrarily change the value of their currency...it is based on GDP and their M2...changes to either of these will affect the value...the best you can hope for is a re-denomination and/or gradual increase in the value based on an improvement in their GDP...which is their oil production.

[keepmwlknfny]

Okay...i have read your post a couple of times...sorry but Froto is correct....when you address revaluing the currency you need to keep in mind that it has no immediate impact in Iraq...it is purely an exchange rate...all it does is give Iraqis the opportunity to import stuff at a much lower...which in time should lower the price of imported items...but does nothing for things already on the shelves...also...think about this..if Iraq does RV at $1 or more...they have trillions of dinar which would then be worth trillions of dollars...which they could then come here and pretty much buy our country...they can't just arbitrarily change the value of their currency...it is based on GDP and their M2...changes to either of these will affect the value...the best you can hope for is a re-denomination and/or gradual increase in the value based on an improvement in their GDP...which is their oil production.

Hey bro, where ya been?? Havent seen you in awhile....good to see your still alive!

[jmw]

Hey bro, where ya been?? Havent seen you in awhile....good to see your still alive!

Hey Keep!...good to see you are still string the pot!...i took a break for a while and focused on other things...funny, after being away a while...you come back and it's still going to RV this weekend...wonder how many of those i missed. Good to see you keeping everyone grounded!

[keepmwlknfny]

Hey Keep!...good to see you are still string the pot!...i took a break for a while and focused on other things...funny, after being away a while...you come back and it's still going to RV this weekend...wonder how many of those i missed. Good to see you keeping everyone grounded!

LOL you know me too well!! Never the people pleaser here.....I call it as I see it!! Oh yea my dude, its RVd like 100 times already.....so many of us are rich now, Im just waiting on my turn to cash in

[RVDinar4MyFamily]

Okay...i have read your post a couple of times...sorry but Froto is correct....when you address revaluing the currency you need to keep in mind that it has no immediate impact in Iraq...it is purely an exchange rate...all it does is give Iraqis the opportunity to import stuff at a much lower...which in time should lower the price of imported items...but does nothing for things already on the shelves...also...think about this..if Iraq does RV at $1 or more...they have trillions of dinar which would then be worth trillions of dollars...which they could then come here and pretty much buy our country...they can't just arbitrarily change the value of their currency...it is based on GDP and their M2...changes to either of these will affect the value...the best you can hope for is a re-denomination and/or gradual increase in the value based on an improvement in their GDP...which is their oil production.

I agree, but I never really tried to go that deep into this post, the point was to show how the denominations work, and the issues with the high and low denominations if a lop were to happen.

I could add to this post all day and still not cover all the bases which is why I tried to keep it simple for the sake of understanding the issues I posted about.

At no time did I claim this is how any of the scenarios WOULD play out. Nor did I ever say it can't happen in the real world as froto says I did.

This is a pretty basic way of explaining the various outcomes, so those who understand better are surely going to see more then others who don't. But this post was meant for those who don't and I think the concept is still pretty clear.

[Froto]

Froto, you are one annoying little troll. Why do you stick around? Are you going to be here to say "I told you so!" and we're all going to bow down to your almighty reasoning? Don't count on it. Life is short, go do something.

Why you ask? If you read my posts at all, you will find I pretty much stick to correcting totally erroneous information when I see it. I will admit that in this particular post, I merely pointed out that the original poster didn't seem to have an understanding of the topic he was trying to "clear up" for people. I assure you I have posted factual information about redenominations in reply to many threads, maybe today I was feeling that it was hopeless to try and explain it again. If you do not care to hear when somebody is making a point based on pure fiction, please feel free to ignore it, or just as freely, reply to me again. Thank you for your concern.

[Froto]

Neither of you fully read my post and yet you feel as if you read enough to comment?

Read again....learn something...then come back when you are worthy.

Gee, I hope you deem me worthy some day.

Here is a less winded way to describe a redenomination, I apologize for not correcting your misconceptions in my first reply. In a redenomination, the entire series of currency is replaced over a given amount of time with an entirely new series of currency at a given ratio (1000:1 is discussed here often). The new currency can be of whatever denominations, both paper and coin, as desired.

Done. Do not say that the new 25 note is the highest, and they would need forty of them to buy something for 1000 dinar. The new series of currency could very well include a 500 or 1000 note. Also, you might want to consider that in the 50+ countries that have done it, a change in total value of your old series of currency has never happened. As an example, your 1,237 new dinar is worth the same as your 1,237,000 old dinar, no more, no less.

Keep it simple, but most important, keep it accurate.

I agree, but I never really tried to go that deep into this post, the point was to show how the denominations work, and the issues with the high and low denominations if a lop were to happen.

And I guess the point I was making was that the issues you brought up are not really the way a redenomination happens, so no issues.

[Straightshot]

Sorry my friend... but your understanding of the "lop", as compared to my understanding of it, is grossly different... and the information you are giving is misleading at best. I agree with you on the point that the on-going process toward redenomination will facilitate the dinars rise in value... though not immediately, in the form of an RV perhaps. But you try (futile effort) to explain a "lop" when apparently you missed that lesson in "dinar 1.01"... Since you never used the correct, economics term for what would be a "lop"... I doubt you even know it. The correct term for a would-be "lop" is "demonetization". Your post (above) suggests that you think a demonetization(devaluation/DV)/"lop" and a redenomination/RD are somehow relative to each other. If anything, a redenomination says "we are not going to be demonetizing (lopping) our money. And while your math is probably correct (with your denominations break-down, above) you application of the math is skewed to try to make a "lop" somehow co-existent with a redenomination. There are three ways to manipulate the zeros in respect to the dinar. a) demonetization (removal of zeros from the nominal value of a note/currency) redenomination (removal of zeros from the face of the note without changing it's nominal value of the currency) c) Re-valuation/ RV/RI (removal of zeros from the rate of exchange so as to increase the value of the notes/currency. These are three completely separate affectations. What we are hoping for is a scenario that includes b and c... redenomination (underway) and then an RV/RI. Also, the IQD is guaranteed for twenty years... will not be scrapped. So called "lop" (demonetization) happened already in the case of the IQD... in 2003 it was demonetized ("lopped") by 3,000 percent... that is why we can buy 1000 of them for a dollar in the first place... FYI/IMO/peace.

[HopefulTxn]

Sorry my friend... but your understanding of the "lop", as compared to my understanding of it, is grossly different... and the information you are giving is misleading at best. I agree with you on the point that the on-going process toward redenomination will facilitate the dinars rise in value... though not immediately, in the form of an RV perhaps. But you try (futile effort) to explain a "lop" when apparently you missed that lesson in "dinar 1.01"... Since you never used the correct, economics term for what would be a "lop"... I doubt you even know it. The correct term for a would-be "lop" is "demonetization". Your post (above) suggests that you think a demonetization(devaluation/DV)/"lop" and a redenomination/RD are somehow relative to each other. If anything, a redenomination says "we are not going to be demonetizing (lopping) our money. And while your math is probably correct (with your denominations break-down, above) you application of the math is skewed to try to make a "lop" somehow co-existent with a redenomination. There are three ways to manipulate the zeros in respect to the dinar. a) demonetization (removal of zeros from the nominal value of a note/currency) redenomination (removal of zeros from the face of the note without changing it's nominal value of the currency) c) Re-valuation/ RV/RI (removal of zeros from the rate of exchange so as to increase the value of the notes/currency. These are three completely separate affectations. What we are hoping for is a scenario that includes b and c... redenomination (underway) and then an RV/RI. Also, the IQD is guaranteed for twenty years... will not be scrapped. So called "lop" (demonetization) happened already in the case of the IQD... in 2003 it was demonetized ("lopped") by 3,000 percent... that is why we can buy 1000 of them for a dollar in the first place... FYI/IMO/peace.

Where is this 20 year guarantee you speak of? Lop is not simply 'demonetizing' a currency. Lop is simply a slang term that has been used to describe the action of a country/central bank removing the zeros from it's currency/monetary system.

What is it that you are thinking happened in 2003? Their currency was already worth less than a ply of toilet paper. There was no lop that happened in 2003, it was a 1:1 exchange, except for the Swiss dinars which were worth 150 new Iraqi dinar.

[steveo]

bottom line we aint going to be rich from this investment i can assure you of that...................................................................youve misread or listening to the pumpers too much

[MrFnHappy]

Okay...i have read your post a couple of times...sorry but Froto is correct....when you address revaluing the currency you need to keep in mind that it has no immediate impact in Iraq...it is purely an exchange rate...all it does is give Iraqis the opportunity to import stuff at a much lower...which in time should lower the price of imported items...but does nothing for things already on the shelves...also...think about this..if Iraq does RV at $1 or more...they have trillions of dinar which would then be worth trillions of dollars...which they could then come here and pretty much buy our country...they can't just arbitrarily change the value of their currency...it is based on GDP and their M2...changes to either of these will affect the value...the best you can hope for is a re-denomination and/or gradual increase in the value based on an improvement in their GDP...which is their oil production.

Good post, as always....

[bamjack75]

bottom line we aint going to be rich from this investment i can assure you of that...................................................................youve misread or listening to the pumpers too much

That depends on your definition of what rich is. No facts, just your view, How funny? Do you you you're getting any bonus points for your insight to this investment?

[marknet73]

Good info guys. There are so many factors to take into consideration like Keep has pointed out and obviously no way that we're gonna see some huge RV in the near future. I'd like that more than anything but just can't make the math work. Hopefully we'll see some incremental, realistic increases in the future that could maybe take it up to 1 or 200 instead of 1170 where its been at forever (atleast it seems like it). A redomination followed by an RV is always a possibility but hopefully they'll go the other route which would restrict the currencies potential growth alot less and also bring a reasonable profit to us investors - but not the multi millions that some ppl are still predicting. That's just wishful thinking!

[Chilliherb]

G'day Guys

So JMW do you have any believe in where the dinar may be heading, IF it simply RI's which IMO is probably what it may do which to me spells at least a 5 to 10 year wait where is may well reach equalisation of its exchange rate to it's neighboring countries eg Kuwait, Iran,ect or is that also being to optomistic.

Cheers Chilli B)

Edited July 12, 2011 by Chilliherb

[hoopdog]

However if your money is in a bank account, the lop would not affect you, correct? In this case, it's just a total and not bills. They aren't going to take your bank account of, lets say, 100,000K and make it 100.

[Dalite]

However if your money is in a bank account, the lop would not affect you, correct? In this case, it's just a total and not bills. They aren't going to take your bank account of, lets say, 100,000K and make it 100.

All bank accounts, contracts, salaries, loans.... All financial transactions and holdings wIll be treated equally.

If you have a Warka account, or own Iraqi securities, you won't be troubled with having to exchange for the new currency, but you will not be immune to a RD,

I can't address what would happen if they LOP, as that is a pumper term that was thrown out there to keep you from learning about the possibility of RD, which the CBI has been telegraphing for years.

You will have to ask the Pumpers what a LOP would entail...

[Yabadabado]

Remove the zero's... go ahead... now let's play ball... batter up!