keepmwlknfny Posted June 6, 2011 Report Share Posted June 6, 2011 For the purpose of this discussion only let's assume they revalue to 1 IQD = $1.00 No RD: 25,000 IQD = $25,000 with purchasing power of $25,000 With RD: 25,000 IQD becomes 25 IQD = $25.00 with purchasing power of $25.00 Not sure how you can say a RD raises the value of the currency or the purchasing power. It looks like it lowers it to me. neutral change? Huh. Looks like a change of $24,975 to me. btw cash transactions will be much easier too. It is much easier to hand over a 25 IQD then to hand over a 25,000 IQD. A RD would raise the value compared to what it is right now.....would take it from 1170 to probly right around 1 dollar as stated...... A RD changes the purchasing power because afterwards, what used to cost 25k note to buy, would now only cost them 25 dinar...... A RD makes cash transactions easier because it reduces the money supply, prices are adjusted accordingly Your "change" or loss of 24,975 is only a monetary illusion because the numbers on the bills are reduced...your thinking, well I had 25k before and now your only giving me a single 25 dinar note? This is where the illusion comes in.....it seems they lost money, but in fact nothing was lost because of the change in purchasing power, the single 25 dinar note (that they recieved for the old 25k note) can now buy what the old 25k note used to be able to buy...... The 25k note as it stands right now is worth $21.50 If they RD and set the new rate at .86 cents then your 25k note that you now had to change for a 25 dinar note is now equal $21.50 You didnt lose anything....it was a neutral change.....what you originally bought was worth 21.50 and after a RD its still worth 21.50..... 2 1 Link to comment Share on other sites More sharing options...
coldwarvet Posted June 6, 2011 Report Share Posted June 6, 2011 If you follow Keepm's logic, then your ROI is zero. If that's what they do, then we just wasted our time, effort and money. Hope that's not the case. 1 Link to comment Share on other sites More sharing options...
cgbrown Posted June 6, 2011 Report Share Posted June 6, 2011 Thanks Keep , I do understand the frustration in trying to understand this process. When people think of 25000 IQD they really are thinking 25000 dollars. So to say we drop 3 zeroes means I lost money (in their way of thinking). Your explanation is simply and easy to understand. Hope many get a chance to read it. Link to comment Share on other sites More sharing options...
keepmwlknfny Posted June 6, 2011 Report Share Posted June 6, 2011 If you follow Keepm's logic, then your ROI is zero. If that's what they do, then we just wasted our time, effort and money. Hope that's not the case. I hope its not the case either!! CRAP!! Hahaha I used those numbers of rates just as examples but they could go higher then 1 dollar.....they have even mentioned 3.22 but I know that wouldnt be immediate.....I just hope when it goes to parliment, they reject the whole plan all together!!! Nothing to worry about yet....they still have to vote on it! Thanks Keep , I do understand the frustration in trying to understand this process. When people think of 25000 IQD they really are thinking 25000 dollars. So to say we drop 3 zeroes means I lost money (in their way of thinking). Your explanation is simply and easy to understand. Hope many get a chance to read it. I know it can be confusing because of the way we are used to thinking of money, which is why when some people hear about a RD, they think its impossible and stupid but its only because they dont understand fully what happens and what it does.....took me awhile to fully understand it, thats why I used to just blow off all the delete the zeros articles cause none of it made sense!! 1 Link to comment Share on other sites More sharing options...
cashman54 Posted June 6, 2011 Report Share Posted June 6, 2011 uh so basically RD is bad and RV is good? Link to comment Share on other sites More sharing options...
keepmwlknfny Posted June 6, 2011 Report Share Posted June 6, 2011 uh so basically RD is bad and RV is good? You got it!! RD=Redenomination=bad RV=Revalue=good!!! Link to comment Share on other sites More sharing options...
Buckeye Pilot Posted June 6, 2011 Report Share Posted June 6, 2011 Nope....a RD raises the value of the currency and the purchasing power ......if they remove the zeros on the currency, they will do the same on the exchange rate......its a neutral change... OMG YOUR A MUTANT!!!! EveryOne who reads this please copy and paste to your browser. Not Gunna happen. 4 6 Link to comment Share on other sites More sharing options...
cashman54 Posted June 6, 2011 Report Share Posted June 6, 2011 So since I am not on to this as much as others, is there a better chance it RVs or RDs? Lord I pray it RVs LOL! Link to comment Share on other sites More sharing options...
keepmwlknfny Posted June 6, 2011 Report Share Posted June 6, 2011 So since I am not on to this as much as others, is there a better chance it RVs or RDs? Lord I pray it RVs LOL! To be honest it can go either way....we cant really be sure that they for certain will do one more then the other......The value of the dinar will go up.....no doubt about that, but its just a matter of how they do it.....could be a slow and gradual straight up RV or they could RD and set the value higher afterwards.....Hoping for a straight up RV of course!!! 1 1 Link to comment Share on other sites More sharing options...
rjboots1 Posted June 6, 2011 Report Share Posted June 6, 2011 (edited) The LOP theory still makes absolutely no sense to me under any scenario. It does noone any good. It doesn't help the Iraqi's, which is what this "plan" was supposed to do in the first place. It certainly doesn't help all of the countries that had billions and in some cases trillions of dinar in their national currency reserves. The global economy is ready to slip-slide right down the toilet between developed nations with soveriegn debt loads, like the US and most of Europe, and the developing nations that have suppressed the value of their currency, like China, and now are fighting inflation and potential trade tariffs. The LOP addresses nothing of value and everybody gets screwed. There's no precedent for it apart from a hyperinflation situation which is obviously not involved here. I just don't buy it. I think we're looking at an RV. Not a $5 fiasco like the pathological liars talk about, but a reasonable RV. JMO! Edited June 6, 2011 by rjboots1 1 Link to comment Share on other sites More sharing options...
smee2 Posted June 6, 2011 Report Share Posted June 6, 2011 because this issue affects all citizens must therefore be carefully studied before approval Translation, in my opinion anyway ... More Waiting I have felt for a couple of years now that no matter what we think they are saying or doing, they are just stalling big time. I don't know why though at one point I thought I did. But at this point ... God only knows and He isn't telling! So, grab a good book and relax, it is going to be a while yet smee2 Link to comment Share on other sites More sharing options...
ammo2001 Posted June 6, 2011 Report Share Posted June 6, 2011 I understand what is being said here...Finally! But ever since I joined back in November I read that we should take everything Saleh says with a grain of salt. As usual I will stand back and let you "professional guessers" hash this out. Ammo out Link to comment Share on other sites More sharing options...
keepmwlknfny Posted June 6, 2011 Report Share Posted June 6, 2011 I understand what is being said here...Finally! But ever since I joined back in November I read that we should take everything Saleh says with a grain of salt. As usual I will stand back and let you "professional guessers" hash this out. Ammo out Well everyone says that because people get so worked up over these articles since it could dash everyones dreams.....although he is not the final decision maker, he is part of the process.....but this plan has to be sent to parliment and they have the final say on whether they will move forward or not with this....so dont sweat it right now.... Link to comment Share on other sites More sharing options...
ammo2001 Posted June 6, 2011 Report Share Posted June 6, 2011 so dont sweat it right now.... I have the Taliban to keep me busy with their indiscriminate rocket fire.....lucky me Ammo out Link to comment Share on other sites More sharing options...
keepmwlknfny Posted June 6, 2011 Report Share Posted June 6, 2011 I have the Taliban to keep me busy with their indiscriminate rocket fire.....lucky me Ammo out Well keep your head down bro!! Stay safe....if you get the chance, shove your foot up ones ass for me!! Thanks for what you do!! Link to comment Share on other sites More sharing options...
Darin Posted June 6, 2011 Report Share Posted June 6, 2011 Interesting thing about a R/D It would bring their pegged currency rather close to the dollar. 1:1 ration post-R/D But, they would basically have to print an entirely new currency. Once again replacing old notes for new notes. (It's 2003-2004-ish all over again, way to attempt to gain faith in the dinar!) I also think I read somewhere some time ago, that they were basically contracted to "have to" use the current currency until about 2012/2013.. I am pretty sure I read about that, and was even provided a link. This thought just dawned me as of recently, and ideally, if this is true - how would they entirely replace the currency again? Well - the only way I think they could go forward with that process is if the lower denoms were already printed & held back for the idea of a R/D. With the consideration of the present value of money - no citizen of Iraq or technically foreign holder of IQD "loses." Opportunities, potential, and a stimulation of a quicker & better overall economy are stripped from the people. So in a sense, the people of Iraq lose... (Hypothetically speaking). 1 1 Link to comment Share on other sites More sharing options...
zul Posted June 6, 2011 Report Share Posted June 6, 2011 Some food for thought: During Saddam's era ~ total Dinar in circulation were 25 Billion, and at the then rate of 3.22, the net worth of dinar in total were 81 Billion USD. Currently, there are about 30 Trillion dinar in circulation, and if they LOP today, that total would be brought down to 30Billion dinar. Let say they RV at par ( 1: 1 ), so total IQD would now be 30 Billion USD ~ much less than what it was before. Even at rate 1 IQD : 3.00 USD, it will only take them to where they we before during the early 90s. Link to comment Share on other sites More sharing options...
quadraph0nic Posted June 6, 2011 Report Share Posted June 6, 2011 This article doesn't say anything new in my opinion. A lot of song and dance. Some bits here and there that confirm what I believe but nothing shocking. Plus you need to put things in perspective because it's coming out of Saleh's mouth. I've always believed if we see a law passed on RD by the government then and only then is the LOP a done deal. And if they really did a LOP but later they wanted to increase the value they would have to change their monetary policy and move away from the standard Islamic Banking Practice you will find in most ME nations. They can also continue to strengthen their reserves and reduce the M2 but I wouldn't expect sweeping changes overnight from doing this. Consider it took them a long time to acquire those reserves, it just didn't happen over night...kinda like the RV we all believe in :lol: . Just kidding Just kidding! Anyway, I hope they hold off from Lopping. If the investors needed to help develop a private sector would take the risk and invest in Iraq we could see real changes develop in the Nation. It made me feel good to hear Hillarious talk about this and the fact that the IMF feels Iraq will grow faster than China in the next two years. I don't think the currency is going anywhere anytime soon and since a LOP is a final decisive action but considering the potential they have, they may go ahead and just wait and see. No harm in that and no their backs are not against a wall. I hope that's their choice because once they make a decision and put that into law, for many of us the investment will be over. take care. Link to comment Share on other sites More sharing options...
speculatorsRIDE Posted June 6, 2011 Report Share Posted June 6, 2011 Some food for thought: During Saddam's era ~ total Dinar in circulation were 25 Billion, and at the then rate of 3.22, the net worth of dinar in total were 81 Billion USD. Currently, there are about 30 Trillion dinar in circulation, and if they LOP today, that total would be brought down to 30Billion dinar. Let say they RV at par ( 1: 1 ), so total IQD would now be 30 Billion USD ~ much less than what it was before. Even at rate 1 IQD : 3.00 USD, it will only take them to where they we before during the early 90s. Don't they also have a 90 billion dollar budget for this year? How's that gonna work? 1 Link to comment Share on other sites More sharing options...
Fed111 Posted June 6, 2011 Report Share Posted June 6, 2011 Folks an RD will not work. The numbers do not lend any support to an RD or LOP. Scooter has illustrated this with factual information. Iraq can not meet current and projected financial obligations with an RD. Prior to the completion of the 2011 budget, a LOP or RD would have been implemented in November/December 2010 if that was the intention. Everything we see coming out from Iraq indicating an RD or LOP is part of the smoke and mirrors used to keep the outside world in the dark. Link to comment Share on other sites More sharing options...
Networth Posted June 6, 2011 Report Share Posted June 6, 2011 So there's a big clue. Reads exactly like a LOP to me. If there is no change in purchasing power, it is a break even deal (less any fees associated with converting the currency). It makes perfect sense this is what they would do. Link to comment Share on other sites More sharing options...
LaGrange Posted June 6, 2011 Report Share Posted June 6, 2011 (edited) So there's a big clue. Reads exactly like a LOP to me. If there is no change in purchasing power, it is a break even deal (less any fees associated with converting the currency). It makes perfect sense this is what they would do. Why would they bother if it is of no substantial benefit to the Iraqi people? Why not keep the program rate forever? Not meaning to start another lop thread, there are a lot of those already. Saleh will raise zeros for the citizens......I raise zeros everyday.......they're called cheerios. lol Edited June 6, 2011 by LaGrange Link to comment Share on other sites More sharing options...
LaGrange Posted June 6, 2011 Report Share Posted June 6, 2011 Oh i dont know how about de dollarizing the country the IQD is allmost never used for large purchases here they use the dollar becouse you would have to bring a box of dinar with you to buy a car or a piece of equipment how about stocking your shop? try that with the dinar they are saying its a lop to make it easier to do buisness in the market place the iraqi gov doesnt care about this investment LOP LOP LOP plain and simple LOP LOP LOP LOP They have been dedollarizing for a long time, or at least they announced this several years and another forum ago. It all goes hand in hand and one could argue that they don't need small denoms ready to go because of all the dollars floating around. It's a dual currency society and the Iraq gov is trying to fix it. LOP or no LOP. lol Link to comment Share on other sites More sharing options...
leola Posted June 6, 2011 Report Share Posted June 6, 2011 No progess in this proposal,,they will spend more money in a month than they have,,,,considering the infrastructure they want to undertake,,,,and what benefit do the iraqi people get,,,they will have less money, but, it will be worth the same as before,,,there was a guy named P.T. Barnum,who said there is a sucker born every minute........................ Link to comment Share on other sites More sharing options...
SushiLovr2 Posted June 6, 2011 Report Share Posted June 6, 2011 Some food for thought: During Saddam's era ~ total Dinar in circulation were 25 Billion, and at the then rate of 3.22, the net worth of dinar in total were 81 Billion USD. Currently, there are about 30 Trillion dinar in circulation, and if they LOP today, that total would be brought down to 30Billion dinar. Let say they RV at par ( 1: 1 ), so total IQD would now be 30 Billion USD ~ much less than what it was before. Even at rate 1 IQD : 3.00 USD, it will only take them to where they we before during the early 90s. You're exactly right. And this is the big question that no one seems to be able to answer. If they LOP.... (and I'm not saying they won't) .... This means they'll have less than a third of the currency in circulation than their budget calls for the government spending. In fact, if they originally had about 27 trillion dinar in circ, considering how much is being held by people like us...they likely have only around 20 trillion in reserve. If they LOP and revalue at $1.00, that means they only have about $20 billion dollars/dinars in circulation, with a need for around $100 + billion in circulation. It would seem to me that if they do LOP, they'll have to revalue pretty high, AND add to the currency supply to be able to make it work. So, I am thinking it's either 1. LOP and revalue over $5.00... or 2. No LOP and revalue fairly low...then just start pulling in the big bills and putting the smaller ones out. No matter which way they go, they HAVE to put smaller bills into circulation, AND maintain an adequate supply of currency for the banks and the market. 2 Link to comment Share on other sites More sharing options...
Recommended Posts