Plan B

[bopll]

Good post Drox,thought provoking and well laid out. Excellent responses Legolas,I always look forward to your posts and reply's. Please don't stop posting, it's refreshing to find a few members who can actually see through the gurus and don't blindly believe thier proven nonsense.

[DgreenFSU66]

100% disagree. No where in ANY article have they educated the public and stated that they were going to release a 100,000 IQD note. That being said, they have stated the opposite and said that the are REMOVING or LIFTING zeros, not adding them. I disagree with your theory and i can only hope that this roller coaster comes to an end soon.

[MrFnHappy]

First, it should be noted that the dreaded re-denomination (lop) is not wanted by anyone in Dinar World. However, the word in this particular possible scenario has an entirely different meaning/purpose than has been seen in the cases of countries experiencing hyperinflation. This particular re-denomination would have an entirely different purpose and end result. A big complaint with the Iraqi currency has always been the difficulty in "counting" it, due to the huge numbers involved. Once they pass a figure of one million Dinars (even less for some of their people) or the equivalent of roughly $850 U.S. Dollars, counting becomes a nightmare. Large purchases are difficult, and business owners, banks, etc. have problems with accounting. Even average calculators are unwieldy after reaching one million.

They wanted to bring their currency more on a par with the U.S. Dollar, "without" a huge change in overall value, and this was easily accomplished by removal of the "three zeros."

Obviously, by removing the three zeros from a 25,000 Dinar note and increasing the value of the Dinar by less than 20%, they achieve instant parity with the Dollar, making it 1:1. The same is true of the 10,000 Dinar note. In the long run, they would have to issue a new currency with smaller denominations. Issuing the 100,000 note as described in Drox's "Plan B" solves the immediate problem of making large purchases until the major changes can be made. It's a logical "possibility." Nobody knows what the actual plan is, but this one does make sense.

The cost of the last redesign of the Iraqi Dinar was a mere 150 million Dollars, INCLUDING the incredible costs of transportation and security. Think for a minute about how miniscule that seeming large amount is in comparison to the cost of a straight up RV in view of the fact that they currently have more than 24-26 TRILLION Dinars in circulation. Even WITHOUT looking at the Billions upon Billions of Dinars held in the U.S., the numbers in Iraq itself are huge. I have to laugh every time I see people say that they can't possibly issue a new currency, because it would simply be WAY too expensive. Even those who have difficulty with simple math can see that 150 million is pennies in comparison to the 24 - 60 TRILLION Dollar cost of a straight revaluation of $1-$5 Dollars which we've seen described all over these forums.

I sincerely hope it doesn't happen this way, but a re-denomination, followed by a revaluation to $1 - $3.60 or so simply makes a lot more sense when viewed realistically. Their currency would immediately have a value comparable to that of the U.S. and/or Kuwait. We as investors would either come close to breaking even (if our cost was no more than $1,000 per million) or would triple our investment if the RV to over $3.00 - not what we had hoped for, but certainly an excellent return, and MUCH better than average. We can only wait to see the ultimate result, but in any case, it would seem that given the current circumstances in Iraq, they really aren't ready for a major change. BUT, as the infamous Ennorste is so fond of saying: "I could be wrong."

Good post.

[keepmwlknfny]

As always drox, love hearing your analysis on things and the thoughts going on in that head of yours.....always grounded, never hyped by any of the nonsense that alot of people ride on day in and day out......

The scenerio you posted does seem plausible....and of course Id much rather have that happen then any sort of straight up RD!!!

Thanks for the post brother!! +1

[automag]

drox...............This subject has darn near dredged up an old fashion discussion like we used to have on here instead of all the sniping and bashing,,,,,,,Gotta love it buddy !!!!!!!!

I keep reading Salegh's statement about issuing the 100k note. I keep asking myself why now? Then as I read everybodies responses about having gobs of cash to buy bread and beer and when I relate it back to Plan B it hits me that the 100k note has been missing the whole time.

After having the denominations they have had I just realized that all this time they never had the equivlent of a Ben Franklin in the mix and now instead of an increase in value they are looking at a plan to facilitate a gradual rise in the value and the 100k note will help facilitate removing liquidity by reducing the number of dinars/notes in circulation. Three zero's or not the Iraqi's use it everyday and with the 100k note they now have a C-note. 1 100k note is easier to carry than four 25k notes. If a guy buys a car for a 1000 dollars US then he is gonna need ten 100k notes and not forty 25k notes. Hard to get forty notes in his shoes.........."" All those notes make my shoes uncomfortable and my feet look fat!!!!!'" hee hee. Having travelled overseas it doesn't take long for this guy to learn the value of a Shilling while hanging out in Austria. Failure to understand the value of the money at hand will make you poor real quick and the Iraqi's can count like experts when it comes to their money regardless of the number of zero's on the note.

50 dinar note is a nickle.............250 note is a quarter.............1000 is a dollar...........5000 is 5 bucks..........10000 is ten dollars......25000 is 25 dead Washingtons and now the gang is all here with the 100k note that is equivelent to a 100 dollar bill. All the food groups we have here in our currency are now represented. Now I am just thinking outloud here cause how in the *ELL would I know whats gonna happen..........but drox's scenario has a little more than some meat to it and that's why we should all consider everything while we are cooking this to see if his scenario can fly...........So far it seems more plausible than $8.04 to the dinar next tuesday by the pumpers.

Having pointed out the obvious and reconciling the dinars to dollars equivelent it Does seem resonable to do this as drox laid out his thoughts on a slow motion plan that is on-going. Because the last thing I wanted to hear was they are rounding out their selection of denoms and that the 100k note will facilitate our needs and we will carry on according to plan, Why? Because we have all been looking at various dates and issues like the DFI or article 8 of chapter 7 or even a lifting of chapter 7 as our drop dead dates for an RV and here we have a scenario that could be plausible for these benchmarks to pass but no RV.....arrrggghhhh. But never the less here is a scenario that does just that and it makes to much sense to just say it's all BS or just smoke and mirrors. The S. Korean Won is in the same range as the Iraqi Dinar and S. Korea has a seriously great economy. They don't seem to have any trouble trading internationally do they? Nope. So why can't the Iraqi's do the same? Well actually since it's their country I guess they can.

As they grow their economy they can grow the value of the dinar as well. Not be on the hook to you and I for an instant RV. Plus they have been saying that both high and low denoms would co-exist together. We always thought it would be some type of transactional pull over a period of time to remove the higher denoms. But with drox's scenario it seems like as the notes in circulation began to dry up there could be a period when high and low could be used as the two denoms,(highers and lowers0, began to reach parity as the value increases over a period of time. In effect for lack of better understanding on my part...............a slow motion RV. Plus that RV will be grown as well. The intrensic value will grow with the economy hand in hand..........not all at once which,( as drox pointed out), would be an expensive proposition. It would seem the Iraqi's liked us around to buy dinars and now we are gonna have to be around for the reconstruction as well. We just ain't gonna cash out and go on vacation................That sucks.

Like I said.........I am thinking out loud here as we used to around here in the past. My ideas are just that.....Ideas and musings. Not the end all to be all answers because I don't have those.......Plus to be honest...drox's theory and the subsequent conversation on this thread is just like we used to have around not long ago and I like it. It's what made DV a great forum. A discussion without all the drama or disrespect and bashing...............All right I've been talking long enough........Who's next? Let's hear your constructive take on this theory of drox's....................He won't mind if you can shoot it down and find us our RV tommorrow instead of down the road and neither will I. Just be an adult about it and everything will be just Fine. ...............................NEXT !!!

Edited June 25, 2011 by automag

[keepmwlknfny]

As an addendum, a "gradual" revaluation works. As large notes are drawn in with the slightly higher value, the reduction of currency in circulation adds value to the remaining currency, allowing a "gradual" increase in the value by reducing currency in direct relation to M2. This also allows them to inject lower denoms and fils without increasing currency in circulation. CBI trading currency allows them to make a killing off of the spread, thereby increasing reserves. Not 8 dinars per 1170, but more like 2 cents on the dollar. This structure makes more sense than rd or big fat RV. Just an opinion.

Any time I post while discussing with lopsters and fence-riders I like to remind them to take into consideration the effect that the releasing of the DFI funds will have on reserves. Also the Asset Monetization stipulation concerning the IMF. Not profiling you, as you seem well read and very intelligent, open to all scenarios. Godspeed.

How do you suppose they draw them in? Its not like anyone is just going to give up a 25k note without getting the same in return?? If you give the bank 25k dinar you are going to want the same back regardless if its in lower denoms, your not reducing the money supply....just keeping it the same.....thats the whole idea behind a RD because it will take the inflated money supply down to 59 or so billion dinar....much more managable wouldnt you say??

The only people they would be making money off a spread would be the speculators outside the country, which in the grand scheme of things, really doesnt amount to a whole lot when you look at the total numbers.....the only bills that could be drawn in without having to put anything back out would be the bills we hold as speculators.....not enough to make a dent in the money supply...

There is no guarantee that the DFI funds or monetizing assets will be dumped into the reserves......is it possible?? I would assume it COULD.....but its not a requirement.....there are many things that money could go towards and we wont know until it actually happens so thats why its a mute point at this moment in time......

[Legolas]

100% disagree. No where in ANY article have they educated the public and stated that they were going to release a 100,000 IQD note. That being said, they have stated the opposite and said that the are REMOVING or LIFTING zeros, not adding them. I disagree with your theory and i can only hope that this roller coaster comes to an end soon.

I'm not sure how you can say that nowhere has it been mentioned that they are considering releasing a 100K note. Several articles this week alone have mentioned it, and it has come out in others in the past. This week's article said specifically:

"Mudhhir Muhammad Salih, a member of the bank's advisory panel, told RFI on June 23 that in the short term, larger banknote denominations of the dinar will be issued to simplify major transactions. "

"He added that large denominations equivalent to around $100 will be issued to simplify major purchases, and new coins and lower denominations will be introduced for smaller transactions."

Obviously a note equivalent to around $100 would be a 100,000 dinar note. We don't know what they will or won't do, but it's clear that they are in fact talking about it.

Read more:

[Legolas]

Well done Automag. Nothing wrong with thinking out loud, and you explained your thought process in a way that anyone can understand. We don't yet know what the end result will be, but we know with certainty that for the past 5 years, the gurus and pumpers have been wrong 100% of the time. I for one am open to consideration of all possibilities. The latest by Drox is the best I've seen in a while. If the news of the past couple of weeks is accurate, would should know something "soon."

[Waco69]

First, it should be noted that the dreaded re-denomination (lop) is not wanted by anyone in Dinar World. However, the word in this particular possible scenario has an entirely different meaning/purpose than has been seen in the cases of countries experiencing hyperinflation. This particular re-denomination would have an entirely different purpose and end result. A big complaint with the Iraqi currency has always been the difficulty in "counting" it, due to the huge numbers involved. Once they pass a figure of one million Dinars (even less for some of their people) or the equivalent of roughly $850 U.S. Dollars, counting becomes a nightmare. Large purchases are difficult, and business owners, banks, etc. have problems with accounting. Even average calculators are unwieldy after reaching one million.

They wanted to bring their currency more on a par with the U.S. Dollar, "without" a huge change in overall value, and this was easily accomplished by removal of the "three zeros."

Obviously, by removing the three zeros from a 25,000 Dinar note and increasing the value of the Dinar by less than 20%, they achieve instant parity with the Dollar, making it 1:1. The same is true of the 10,000 Dinar note. In the long run, they would have to issue a new currency with smaller denominations. Issuing the 100,000 note as described in Drox's "Plan B" solves the immediate problem of making large purchases until the major changes can be made. It's a logical "possibility." Nobody knows what the actual plan is, but this one does make sense.

The cost of the last redesign of the Iraqi Dinar was a mere 150 million Dollars, INCLUDING the incredible costs of transportation and security. Think for a minute about how miniscule that seeming large amount is in comparison to the cost of a straight up RV in view of the fact that they currently have more than 24-26 TRILLION Dinars in circulation. Even WITHOUT looking at the Billions upon Billions of Dinars held in the U.S., the numbers in Iraq itself are huge. I have to laugh every time I see people say that they can't possibly issue a new currency, because it would simply be WAY too expensive. Even those who have difficulty with simple math can see that 150 million is pennies in comparison to the 24 - 60 TRILLION Dollar cost of a straight revaluation of $1-$5 Dollars which we've seen described all over these forums.

I sincerely hope it doesn't happen this way, but a re-denomination, followed by a revaluation to $1 - $3.60 or so simply makes a lot more sense when viewed realistically. Their currency would immediately have a value comparable to that of the U.S. and/or Kuwait. We as investors would either come close to breaking even (if our cost was no more than $1,000 per million) or would triple our investment if the RV to over $3.00 - not what we had hoped for, but certainly an excellent return, and MUCH better than average. We can only wait to see the ultimate result, but in any case, it would seem that given the current circumstances in Iraq, they really aren't ready for a major change. BUT, as the infamous Ennorste is so fond of saying: "I could be wrong."

Good post Legolas. Thanks for being grounded and understanding the situation before us.

[automag]

Thanks Legolas....................I am glad to see you and others here for this discussion. I see Trimark too. Waitng on Lgrahm and Doc 31 to join in as well. You know ole drol: did pretty good didn't he...........Just like him to bring us some juicy stuff to think about. You are right as we can't even guess what the Iraqi mindset is and I agree we should know some thing..........."soon" I swear I hate that word lol ....... . Even Keepms here and we are getting some well rounded thoughts here................in a pleasent and respectful way and I applaud all who have allowed civility to................carry on.

Thanks again Legolas.

[Upgradable]

I'm throwing this out there as a back end perspective on this interpretation, and doing so as a VIP member who has also joined Adam in his post-RV plans.

I believe Adam has connections in this investment, including one insider at the CBI, and I am wonder why he would spend so many $$ and so incredibly much time getting together the post-RV investment advisors, lawyers, security teams, etc. if there were not a high liklihood of an imminent revaluation of the IQD? I realize that many of you may not see all of this since it is not in evidence here in the regular forum.

Please don't think me a Kool Aid drinker, or an Adam groupie. I have done my due diligence too, and have just made the decision that I believe Adam's plan is the most efficient way to manage my profit resulting from this "speculation." Now you may bash at your will.

[JOLLY ROGER]

Good Morning Upgradable.....Feel like coming over later for a drink

Nice work drox......I'm ready for more!!

[Legolas]

I'm throwing this out there as a back end perspective on this interpretation, and doing so as a VIP member who has also joined Adam in his post-RV plans.

I believe Adam has connections in this investment, including one insider at the CBI, and I am wonder why he would spend so many $$ and so incredibly much time getting together the post-RV investment advisors, lawyers, security teams, etc. if there were not a high liklihood of an imminent revaluation of the IQD? I realize that many of you may not see all of this since it is not in evidence here in the regular forum.

Please don't think me a Kool Aid drinker, or an Adam groupie. I have done my due diligence too, and have just made the decision that I believe Adam's plan is the most efficient way to manage my profit resulting from this "speculation." Now you may bash at your will.

No one can reasonably bash that perspective Upgradeable. If Adam's "plan" is to be well-prepared for ALL possible eventualities or potential outcomes, then the plan is a good one. Obviously he has been furthering his education and experience in the field of investments, so he will be ahead of the game to varying degrees regardless of what happens. Meanwhile he's making a decent income on this website, while the rest of us waste lots of time reading our own posts. The ultimate result will be whatever it will be with or without our relentless banter. Keep up the good work.

[drox]

Well Done Drox. I am glad you shared your thoughts and I agree with it 100%. Everyday I lean more towards the idea that nation building and the hammering out of the framework / infrastructure needed so one day the economy can prosper, for people to have more faith in their government, for businesses to run smoothly

There are a lot of moving pieces to this thing but I certainly have to agree with your assesment that if indeed they come out with a 100,000 bill that would stave off Redenomination.

Of course if I see a 100 denom instead then I will know its over...

But why say Redenomination is their long term plan? Like I've always asked, why not do it now if your serious? They could have Lop'd years ago. Maybe they like us buying their dinar?

Maybe they never had an intention to LOP?

Thanks for sharing Drox, you help me think things out. I appreciate that.

Excellent analysis Quad... As I see it, Unemployment is around 30%. They need to get that down significantly so the people can support an increased value of exchange. Privatization of government run industry will take some time to switch over. I think of the Iraqi government employing all the people as their "pretend dividend share" for the oil they have been using. Just using it to employ some of the people so that unemployment isn't 50%. They employ people in jobs with nothing to do all day. The oil industry makes up 90% of the GDP but only employs 2% of the work force. Crazy huh? If Iraq were to RV at a huge number ($1 and up) Iraq would benefit at first blush with the imports. It would be unbelievably cheap to import goods wouldn't it? The costs would be 1000times less then they are now essentially because the exchange rate was 1000times higher. Problem is... it wouldn't make any sense to create your own goods because it would be cheaper to import EVERYTHING except oil and gas of course. So Iraq would have no incentive to create new industries that would create new jobs. The cheap imports would bring in tons of foreign currency and the exchange rate would keep going higher. Sounds good to us but for Shabs he would have inflation concerns all over again. Iraq wants to diversify their GDP over multiple industry so that they are no longer at the mercy of oil price fluctuations like they have been. So this has to be a methodical RV in my opinion.

They waited on the LOP decision or RV plan for a few reasons. 1. They needed to make sure the hyperinflation had indeed ceased and that stability was present. 2. The ding dong politicians never ending procrastinating drama forced them to wait. 3. They like us buying up their Dinar. They make money on us, our purchasing takes money out of their supply (not sure if that shows on M2 though), and they build up their reserve at the same time. So... maybe they don't intend to LOP. If a large portion of their money supply is in the hands of foreign investors it could stay there and spread out even further across many international hands as they the IQD becomes internationally recognized. Think about the US DOLLAR. It is used globally. The US counts on that. If it all came home in one fell swoop we would be in trouble. Same concept. I believe this is one method of reducing Iraq's money supply. It will be spread out across the globe in many peoples hands forever. Only Shabs knows what that percent of the money supply that is. I would venture a guess of 15%-20%. It would be interesting to do some research on Foreign Currency Holdings and their inclusion/exclusion in regards to M2. I know bank reserves are not part of M2, nor are the DFI Funds. That could reduce the money supply number alone by 20%. 28 Trillion becomes 22 Trillion instead. Could that be part of Shabs strategy of selling off Dinar?

[pops]

This was a great post Drox and several good threads and thoughts came from it. I'm pretty sure most would admit that during this investment (if you have been in it as long as I have been) our hopes have soared like an eagle and fallen like a brick many times. I am convinced that most of the Central Banks are controlled by a group of people with key players placed in them that do what is best to achieve their goals. I think my investment will pay off but I don't know when or how. IMO Dr. Shabs is the key player in Iraq and will do things according to the grand plan. The plan "B" you presented may very well fit into this grand plan. Call me a conspiracy loon if you want but I have read a great deal along these lines and am convinced. I just grabed on to their coat tails and want to benifit from their profits.

[Legolas]

Could that be part of Shabs strategy of selling off Dinar?

It definitely makes you wonder Drox. There is no doubt that Iraq has drastically increased its reserves thru the sale of many billions of Dinars to U.S. investors (and others). Shabibi knows that a majority of those investors will never exchange their Dinars prior to a long-awaited RV. Some will grow tired and sell at a loss, but the pumpers will see to it that new investors buy those up. Our purchases are essentially extremely long-term interest free "loans" to Iraq. Meanwhile they are able to use that money for whatever purpose they see fit with little or no concern. Iraq makes millions of Dollars, the dealers make millions more, and investors sit with billions of Dollars worth of currency which they won't use.

Would Iraq have allowed these many billions of Dinars to leave their country virtually unregulated if they had any intention of revaluing them to make millionaires of countless and ever-increasing numbers of infidel American investors? Obviously they couldn't have stopped "all" of it, but it certainly would have been easy enough to prevent these huge, never-ending shipments from the TBI to the dealers. Just another of many issues that make you go "hmmmmmm."

[drox]

As they grow their economy they can grow the value of the dinar as well. Not be on the hook to you and I for an instant RV. Plus they have been saying that both high and low denoms would co-exist together. We always thought it would be some type of transactional pull over a period of time to remove the higher denoms. But with drox's scenario it seems like as the notes in circulation began to dry up there could be a period when high and low could be used as the two denoms,(highers and lowers0, began to reach parity as the value increases over a period of time. In effect for lack of better understanding on my part...............a slow motion RV. Plus that RV will be grown as well. The intrensic value will grow with the economy hand in hand..........not all at once which,( as drox pointed out), would be an expensive proposition. It would seem the Iraqi's liked us around to buy dinars and now we are gonna have to be around for the reconstruction as well. We just ain't gonna cash out and go on vacation................That sucks.

Awesome Automag as usual, thanks. I think I addressed some of this in my response to Quad. I miss the days when everyone had such great discussion and made each other think and expand. We do that nowadays but there is more tension to prove the other wrong. I am guilty of that too. I have taken a couple snips at some self appointed gurus to keep them accountable. Doesn't mean I was right to do so. I just get tired of so much dis-information I feel bad for folks that are in it for short term only. Know what I mean Vern?

Legolas... you are spot on in your analysis each time. Thanks! I am not saying this will happen but just about the only one I have been able to envision that does not include the dreaded re-denomination. I fully admit some of my scenario is even wishful thinking and that anything is possible. However, when one does the actual math and breaks down the effect on the Iraqi citizen, businessman, international contractor, and Iraqi figurehead... post $1 + RV, that scenario doesn't seem plausible to me. Everyone tries to create this huge RV but selectively removes certain pieces to fit the mold. I believe the values across the board will remain relative. You can't pick and choose what zeros will stay and which ones will go. For instance... I have posed this scenario and haven't seen a rebuttal as of yet that truly refutes it:

If an Iraqi janitor working for the GOI makes $300 a month. That is 351000 dinar. If it RV's at $1 that means that same Iraqi makes $351,000 a month overnight. He makes over a million dollars in one year. Your bread at the corner store just went from $2 or 2340 iqd... to $2340. For a loaf of bread??? Some gurus and like minded opinions... seem to suggest that they remove the higher denominations like 25000 for some reason. So in effect, the prices go way way up but they make it harder to facilitate the transaction because they remove all of the large denominations. Hence, the consumer will have to carry around satchels full of Dinar. Yet the CBI says they want to ease monetary transactions and this would make it near impossible. What if the consumer needs more than bread? Now before you say prices and income won't go up... How will Iraq benefit from a $1 RV then if the GOI can't tax on the new increased value of these things? Do peoples savings increase but nothing else? My point is, All numbers across the board will be relative in value. You cannot pick and choose certain things that will or won't change. Yes...imports will be much cheaper but that doesn't mean the merchant won't raise his prices to cater to the mega rich new Iraqi. How about the 30% of the population that don't have a job? How will they benefit? How about the other 30% on top of that that have no savings? Are you suggesting that 2/3rds of the country will get nothing so that the 1/3rd will live like kings? You think Iraqi has security problems now you wait for that scenario to unfold. Please... think about that.

Think of the foreign contractor company in iraq. There staff consists of 1/2 Americans making $100,000 a year and 1/2 Iraqis they pay $20,000 a year to (23,400,000iqd). Upon an RV... do they keep paying the Iraqis $20,000 or do they now pay them $23.4 MILLION a year? Do they fire them all and bring in an all American workforce? How does that help unemployment in Iraq?

[drox]

I'm throwing this out there as a back end perspective on this interpretation, and doing so as a VIP member who has also joined Adam in his post-RV plans.

I believe Adam has connections in this investment, including one insider at the CBI, and I am wonder why he would spend so many $ and so incredibly much time getting together the post-RV investment advisors, lawyers, security teams, etc. if there were not a high liklihood of an imminent revaluation of the IQD? I realize that many of you may not see all of this since it is not in evidence here in the regular forum.

Please don't think me a Kool Aid drinker, or an Adam groupie. I have done my due diligence too, and have just made the decision that I believe Adam's plan is the most efficient way to manage my profit resulting from this "speculation." Now you may bash at your will.

Great question!!! Trust me Upgradable... I think about that quite a bit and it provides me hope. I believe his contact knows things but perhaps not the whole picture. I say this because I know he leans on Sonny a lot for his thoughts too. Adam doesn't really state rates. He said maybe 10 cents maybe a lot more. He said it could LOP but that was less likely. Adam is a smart cookie. I personally think it is a can't lose scenario for him. If it Lops and we are all bummed... what will happen?

Adam has 30,000 Dinar contacts that are not sure what to do with this paper. That is a lot of people that could work together as one that could invest in businesses in the growth of Iraq. Perhaps we could all become shareholders in such an endeavor? I would invest with Adam in a heartbeat.

[tjmunson]

Great question!!! Trust me Upgradable... I think about that quite a bit and it provides me hope. I believe his contact knows things but perhaps not the whole picture. I say this because I know he leans on Sonny a lot for his thoughts too. Adam doesn't really state rates. He said maybe 10 cents maybe a lot more. He said it could LOP but that was less likely. Adam is a smart cookie. I personally think it is a can't lose scenario for him. If it Lops and we are all bummed... what will happen?

Adam has 30,000 Dinar contacts that are not sure what to do with this paper. That is a lot of people that could work together as one that could invest in businesses in the growth of Iraq. Perhaps we could all become shareholders in such an endeavor? I would invest with Adam in a heartbeat.

Drox. everytime I read one of your posts, it opens a new door in my brain. Love the info and shared thoughts on this thread. That is what it is truly all about. So much propaganda and, as you said, gossip being thrown about right now it makes ones head spin.

Been thinking alot lately about the Kuwaiti RV and how the government stated openly the day before the RV that, "THERE WILL BE NO RV OF THE KUWAITI DINAR".

Yup, my heads spinning alright!

Peace to you my friend!

[dman13]

Drox,

Thanks for the post- definitely makes a person take another look at this roller-coaster ride. However, I thought an article came out years ago that stated Iraq had already printed 14 different notes- am I wrong or do you simply not give that article any creedence. Next, and I have to ask this: what about the members who are stating that they experienced first hand encounters with bankers who said/implied that something was definitely happening to the dinar- are they all simply making those stories up? I don't know but even after reading your post and conceeding that it might be valid, I'm still in the camp that it will RV.

Thanks again- I like posts which make me examine my reasons for believing. Keep up the good work.

[JOLLY ROGER]

Drox. everytime I read one of your posts, it opens a new door in my brain. Love the info and shared thoughts on this thread. That is what it is truly all about. So much propaganda and, as you said, gossip being thrown about right now it makes ones head spin.

Been thinking alot lately about the Kuwaiti RV and how the government stated openly the day before the RV that, "THERE WILL BE NO RV OF THE KUWAITI DINAR".

Yup, my heads spinning alright!

Peace to you my friend!

TJ, well said. That Drox definitely has the ability to open doors and I also, enjoy reading his material.

Head spinning....we can all relate to that!!!! I try to avoid the Spin Doctors and realize that we really want know until the Fat Lady sings! In the mean time, it's going to be a lot of Smoke & Mirrors & misinterpretation.

[fnbplanet]

I respectfully disagree with the premise that there will be a 100K dinar note. I read that as Saleh describing the lower denoms, that would COMPARE with the USD notes, specifically, the 1,5,10,20 and 100 dollars bills. An RV of around a dollar ( who knows? $.86 to $1.17?) , and they compare - a lot. I think it's a HUGE stretch to think he meant a 100,000 dinar note by what he said.

[wishwell11]

Well, I had decided that I wasn't going to post again,

:oWishwell>>plugging ears and squinting eyes. Legolas you are one of my favorite posters. I Love your grounded posts and spunk. Don't ever say that again. I would be sad if you refrained from posting. You often articulate what is in my head but can't seem to organize in the written word.

Wishwell11

[429]

Wow. This has been a very interesting and thought provoking thread. Obviously, drox, you've put a lot of though into this as have those responding. Respectfully, I'd like to disagree.

Here are my thoughts on this issue. The IQD and the USD are inexorably linked. That is because the Iraqi reserves are being held in USD in US banks. But in "lifting the 3 zeroes" from the exchange rate, the dinar changes just in it's appearance against the USD. We view the current exchange rate as 1170 IQD:1 USD. But do the Iraqis view that same exchange rate as .00086 USD:1 IQD? This would then mean that in "lifting the 3 zeroes" the exchange rate would be .86 USD:1 IQD. Serveral studies and quasi-official statements made by Iraq in the last serval weeks have indicated that they feel the IQD should be worth somewhere between the value of the USD and the Euro. The CBI would then be able to start drawing in the 1K, 5K, 10K and 25K notes for destruction. I don't know that these notes would necessarily have a "bounty" on them like others have suggested, but I won't discount that, either.

The IQD would now be powerful on the global currency stage. This becomes important as companies move on contracts to do business in Iraq. Rebuilding the infrastructure will require a lot of input and expertise from US, European and some Asian countries. The foreign companies have to be able to see a reason to invest in Iraq. It has to be tangible. They have to be able to convince their stock holders that investing in Iraq is going to bring them returns. Most of the labor, we hope, will be accomplished by the local workforce putting the Iraqis back to work.

It's already been stated that 90% of Iraq's GDP comes from oil. Let's say, for example, that oil right now is $100/barrel (because oil is traded in USD). That means that each one of those barrels is worth 117,000 IQD. But after the "lifting of the 3 zeroes," that same barrel is still worth $100, but now worth 117 IQD.

At this point, we can't compare the wages paid to an Iraqi to the wages paid to an American. The Iraqi people would be taught, rightfully so, that their currency is 1000 times more powerful. For the Iraqi janitor who earns 351,000 IQD per month, after the RV he would be paid 351 IQD/mo. The employee who had earned 23.4 mil IQD annually would be paid 23.4K IQD. Their pay is all in IQD. The on-site contractor who is being paid $100,000 annually, will probably continue to be paid $100K by his company because that's in USD.

What about cheap imports flooding the market? As of July 1st, Iraq's import laws change. The MOP has stated that the 1st of July is when all foreign goods entering the country must be examined. Is this really getting them set up for tarrifs on imported goods? Here's the link:

Remember how it was announced recently that the Iraqis wanted foreign automakers to open facilities inside Iraq? Iraq is looking for other companies to open failities "in-country?" Could this play in as well? I really think that Iraq is going to start applying tarrifs to foreign goods.

Once the Iraqi people have adjusted to having a more powerful currency (my words) I think that we will begin to see a gradual rise in the value of the IQD as compared to the USD and other currencies, we'll see the Dinar gain in value up to the value of the Kuwaiti Dinar or up to the value of the IQD of the 1980s as compared to the rest of the world. Foreign companies will flock to Iraq to get in on the rising wave.

Coming out with a value less than basically a 1 to 1 parity between the IQD and the USD or Euro will not bring in the foreign contractors needed to rebuild the infrastructure. Coming out too much higher than that will lead to runaway inflation within the country.

As for the more powerful note that's on a scale of $100? How about a 100 Dinar note?

Anyway, these are my thoughts. Man, am I glad to see a civil discussion.

[Trimark]

How do you suppose they draw them in? Its not like anyone is just going to give up a 25k note without getting the same in return?? If you give the bank 25k dinar you are going to want the same back regardless if its in lower denoms, your not reducing the money supply....just keeping it the same.....thats the whole idea behind a RD because it will take the inflated money supply down to 59 or so billion dinar....much more managable wouldnt you say??

Keep - the way I see it - which could be completely wrong - I'm still trying to wrap my head around this - is that if the 100,000 dinar note is put into place then that allows for the gradual rise of the currency which would draw the larger notes back in.

For example, how this would work (I think) for investors would be: let's say that the 100,000 dinar note is currently worth $100. If the exchange rate rises so that the $100 is now worth $300 - not sure of the numbers (maybe 390 dinars per dollar?) - then that would effectively triple our investment. Some investors looking for a quick buck might think, well, that's good enough and cash in. Their 25k notes would go through to the Fed Reserve like has been discussed or back to the CBI but either way those 25k dinar notes would never be seen again. People would receive the amount that their 25k dinar note is worth at the time of cash in.

Those 25k notes would be taken out of circulation making the rest of the currency still left remaining more valuable. As the value of the dinar continues to rise more and more investors would cash out along the way. It could take several years for the value of the dinar to rise this way but there would be no big rush to cash in all at once so there would be people cashing out gradually. This would also help Iraq increase their money supply as they go along by making money on the spread.

Now, how would this work inside Iraq? The PR folks of Iraq have always stated that their goal is to increase the purchasing power of the dinar and to reduce the amount of cash their citizens need to carry. If the 100,000 dinar note is introduced and the exchange rate is allowed to rise gradually then over time the 100,000 dinar note will not be carried because people won't want to carry such a huge amount of cash for security reasons.

For example, let's say that the 100,000 dinar note gradually attains a worth of $1000, a lot of people won't want to carry that much cash around and will opt to carry the 25,000 notes or 10,000 notes instead. This will reduce the number of 100,000 dinar notes in circulation. Gradually, the same thing will happen with the 25,000 notes, 10,000 notes, etc. until they are left with just the lower denomination notes in circulation. Again, people will continue to receive the same amount of value their dinars are worth.

IF they do it this way there is a real beauty in the way this plan will unfold. It will prevent the sudden increase in value that would accompany a huge rate increase, it will prevent outside investors from getting more value than in-country dinar holders and it will prevent a huge cash in which could leave Iraq's money supply vulnerable.

The one issue I'm still grappling with is the same one I mentioned earlier - how will they allow for an orderly rise in the exchange rate and not a free-for-all mad rush by forex investors which will increase it's value? I think they have a plan for it and that plan will entail a significant orderly march upward in the exchange rate but I'm not sure how that will actually work. It would need to allow for the increase while still not being 'too fast' for the Iraqi on the street.

I do find it very interesting that between now and the end of the year Bank of America is going to double its number of financial advisors that help customers with assets between $50,000 and $250,000.

I have no idea if I'm right in my interpretation of this but I do think drox's Plan B is a very good one.