Existing Smaller Notes without 3 0's

[andy3978]

It appears not all signs point to a LOP. So as we all know out 25,000 note will be equal to a 25 note etc..

It is my understanding that if a LOP were to occur it would affect each note the same, unless I am wrong.

So what happens to my 50, 250, & 500 IQD notes?

am I now sitting on a pile of nickel, quarter, & half dollar notes?

[The Machine]

Yeah thats correct ..... if they do LOP then it has the same affect on all notes .... no exceptions.

[speculatorsRIDE]

It appears not all signs point to a LOP. So as we all know out 25,000 note will be equal to a 25 note etc..

It is my understanding that if a LOP were to occur it would affect each note the same, unless I am wrong.

So what happens to my 50, 250, & 500 IQD notes?

am I now sitting on a pile of nickel, quarter, & half dollar notes?

In a lop scenario that would be correct. Next year when they redenominate at the time they issue the new currency notes with the 2 languages on it, our current notes will be lopped. Make sure you cash out when it revalues this year and you won't have to worry about it.

[andy3978]

In a lop scenario that would be correct. Next year when they redenominate at the time they issue the new currency notes with the 2 languages on it, our current notes will be lopped. Make sure you cash out when it revalues this year and you won't have to worry about it.

Ok thanks for the input. Now lemme ask...when will that RV occur so I can cash out! !!

[speculatorsRIDE]

That's the million dollar question.

[keepmwlknfny]

So your saying they are going to RV this year but then RD next year? Ok, explain that one to me......where is the funds that will back up the inflated money supply??

[speculatorsRIDE]

So your saying they are going to RV this year but then RD next year? Ok, explain that one to me......where is the funds that will back up the inflated money supply??

I am not sure of the rate at this point. What we do know is that the majority of IQD is in country and is lower denoms. In country, all Iraqi's will turn in the large 000 notes for the same value for value in lower denoms. Therefore the majority of the 000 notes in country will be in the hands of the CBI and the lower denoms will be distributed. These large notes held by the CBI will be destroyed at some point. The notes that are held by investors outside of Iraq will be funneled into the reserves and central banks. Keep in mind that the money we receive when we cash out will be supplied by our own reserves and central banks not Iraq. They will not immediately be turned into the CBI for cash but rather added to each countries foreign reserves and added as an asset to each country to back their own currency. We have been looking at this through the historical aspects and Basel III is a whole new ballgame. I am not worried about how they will back their currency. That is their job and their worry. Shabibi is brilliant and I am sure that however he does it, he will do it right. The articles keep saying that the redenomination will be later. Some articles even mention late 2012. There will be a redenomination but it will not effect us unless we get greedy and hold our notes to long.

[Darin]

You know..... I know I am comparing apples to oranges, but, I was looking into the Singapore currency last night and found that they held a 10,000 note.

Their exchange rate is roughly.... 1.27 or so... Basically 1 SGD = $0.78, so 10,000 SGD = $7,800.

Their lowest notes go all the way down to 1.

It would be as if the CBI removed only 25,000 notes.

Cash is popular there.. A lot of bartering.... Sound familiar??? (Points to Iraq..)

So your saying they are going to RV this year but then RD next year? Ok, explain that one to me......where is the funds that will back up the inflated money supply??

Hmm... I wonder if a backlog of foreign investors may play a part?

Hard to dump $ into an economy when your trying your best & its a process.. wait til the reform is complete..

[FlintNPebbles]

Thanks Ride....Your post makes perfect sense.

I have just enough pessimist in me to think that maybe my million IQD will only be worth $1000 USD (1 IQD= 1 USD scenerio).

Although with your post it gives my optimistic side hope!

[umbertino]

Ok thanks for the input. Now lemme ask...when will that RV occur so I can cash out! !!

You want to know too much... Bang Bang Bang.

[keepmwlknfny]

You know..... I know I am comparing apples to oranges, but, I was looking into the Singapore currency last night and found that they held a 10,000 note.

Their exchange rate is roughly.... 1.27 or so... Basically 1 SGD = $0.78, so 10,000 SGD = $7,800.

Their lowest notes go all the way down to 1.

It would be as if the CBI removed only 25,000 notes.

That is quite interesting.....I guess the next question would be what their money supply is when having the 3 zero notes.....

[HopefulTxn]

That is quite interesting.....I guess the next question would be what their money supply is when having the 3 zero notes.....

I took a quick look at the Singapore monetary aggregates, and as of March the currency in circulation was only 23 billion Singapore dollars. Each Singapore dollar is worth $0.814, so their physical currency supply in March was valued around $18.7 billion dollars.

In comparison, the CBI states 24.7 trillion dinar outside of the banks at that same time (March), which at a 1170:1 has a value of about $21.11 billion dollars.

Edited July 6, 2011 by HopefulTxn

[dinarck]

I am not sure of the rate at this point. What we do know is that the majority of IQD is in country and is lower denoms. In country, all Iraqi's will turn in the large 000 notes for the same value for value in lower denoms. Therefore the majority of the 000 notes in country will be in the hands of the CBI and the lower denoms will be distributed. These large notes held by the CBI will be destroyed at some point. The notes that are held by investors outside of Iraq will be funneled into the reserves and central banks. Keep in mind that the money we receive when we cash out will be supplied by our own reserves and central banks not Iraq. They will not immediately be turned into the CBI for cash but rather added to each countries foreign reserves and added as an asset to each country to back their own currency. We have been looking at this through the historical aspects and Basel III is a whole new ballgame. I am not worried about how they will back their currency. That is their job and their worry. Shabibi is brilliant and I am sure that however he does it, he will do it right. The articles keep saying that the redenomination will be later. Some articles even mention late 2012. There will be a redenomination but it will not effect us unless we get greedy and hold our notes to long.

You do realize that you are saying Iraq will increase it's cash block by over a 1000 times right? How will the Iraqis deal with that much cash without bank accounts or debit cards or electricity to run the swipe machines for that matter? Then there is the question of prices. Why would they change just because lower denoms were exchanged for the 000 notes? They wouldn't. So Joe Iraqi would be paying for a pack of smokes with 200 new 10 notes? Doesn't make sense but I have to admit it sounds good and all. They will exchange for lower denoms but they will get 1 new 25 note for their 25,000 note. Prices will be adjusted in this senerio.

[speculatorsRIDE]

Think about what happens if an RV happens before an RD. Say it RVs to 1 USD. All of a sudden, the median income in Iraq is about FOUR MILLION USD PER YEAR. Obviously that isn't sustainable, it doesn't matter how much oil they have, it isn't sustainable.

So, you say that's why they do the LOP. Lop off 3 zeros, and the average Iraqi income is right back to 4,000 USD.

The problem is, first of all, Iraqs economy can't even support all of its citizens making 4 million a day for even a week. Period. Look at their GDP, look at their population, look at what's backing their currency. It simply CANNOT happen. 10,000,000 people making 4,000,000 a year is 40,000,000,000,000 a year. That's trillion, with a T. Divide it by 52 weeks and you get 770 billion a week. At a hundred bucks a barrel, that's EIGHT YEARS worth of oil production (at the current rate) gone in A WEEK. Can't happen.

The other reason it can't happen is pretty obvious, and isn't debatable. RV happens, MILLIONS of people will be cashing in BILLIONS of dinar instantly. Millions of people will be millionaires (if not billionaires) overnight. Then they're going to do a LOP and put their own citizens right back into poverty? You think Iraq is going to make housewives in Ohio millionaires and then put their own citizens right back below the poverty line? The notion is completely insane. Every government and bank official in Iraq would immediately by lynched and the entire country would self destruct.

This notion that they're going to do an RV, thereby making all outside speculators wealthy beyond their wildest dreams, and THEN do an RD, thereby ensuring the continue poverty of their own people, is literally crazy. If there's going to be an RD and an RV it only makes sense if the RD happens first. Any other way and they're giving away all their money to foreign currency speculators.

Perhaps I am missing something here. I was under the impression that a revalue of the currency changed the value of the currency not the amount that workers would be paid. To assume that when they revalue their currency workers will magically be making 4 million a year is ludicrous. A significant change in value of the currency, 1/10th of a cent to $1.00, would mean that everything tied to the value of the IQD would have to be revalued as well. Salaries, prices, loans, mortgages, contracts, etc. If Iraq thought they had high unemployment now, could you imagine what it would be when business owners found out that they had to pay their employees 4 million a year? Common sense would tell us that this scenario would not work in this manner. Where the Iraqi would benefit by a revalue of the currency would be the purchasing power of their notes. It wouldn't mean a raise in their salary.

[Aqua Dude]

iraq specifically said both currencies NEW and OLD will reside together in circulation.....if the removal of three zeros passes as law, then those notes will be collected by banks and banks will give(for oil) them to cbi

the RV/RI will come first then a removal of large notes from circulation then and only then will the smaller denoms be in circulation alone....mark this post!

Edited July 7, 2011 by Aqua Dude

[speculatorsRIDE]

You do realize that you are saying Iraq will increase it's cash block by over a 1000 times right? How will the Iraqis deal with that much cash without bank accounts or debit cards or electricity to run the swipe machines for that matter? Then there is the question of prices. Why would they change just because lower denoms were exchanged for the 000 notes? They wouldn't. So Joe Iraqi would be paying for a pack of smokes with 200 new 10 notes? Doesn't make sense but I have to admit it sounds good and all. They will exchange for lower denoms but they will get 1 new 25 note for their 25,000 note. Prices will be adjusted in this senerio.

There is no increase in the cash block. The cash block now contains both the higher and lower denominations. Prices wouldn't have to change with the re-denomination as they would have changed with the revalue. Unless of course when they do the re-denomination, there is another major revalue of the rate.

Edited July 7, 2011 by speculatorsRIDE

[speculatorsRIDE]

iraq specifically said both currencies NEW and OLD will reside together in circulation.....if the removal of three zeros passes as law, then those notes will be collected by banks and banks will give(for oil) them to cbi

the RV/RI will come first then a removal of large notes from circulation then and only then will the smaller denoms be in circulation alone....mark this post!

Yes for a period of time both old and new will be in circulation together until all 000 notes are removed or until such time as the remaining 000 notes that weren't exchanged get demonetized. As for your next statement about banks trading IQD for oil.....What are the banks going to do with oil? If you meant that outside of Iraq, all IQD cashed out at the banks will be turned over to their central banks and federal reserves and that each countries central banks and our federal reserve then use the IQD as petro dollars for the purchase of oil from Iraq, then I agree.

[keepmwlknfny]

If they RD, there wont be a change in the value of the currency until the process is complete.....and at that point, unless (for example) we exchange our 25k note for a single new 25 dinar note, what we held will be deemed worthless and not tradeable.....

In either scenerio the prices will have to change.....its just that with one, it will happen quicker.....if it RD, more then likely they would have two prices....one for the old currency, and another for the new....unless they believe the citizens are capable of understanding just one single new price (which will be that of the newer bills)...

In a straight up RV, there wouldnt be such a drastic and quick change in prices....not until a larger influx of imported goods starts making its way onto the streets....which would definately take some time....alot more then a RD would....

Look at it this way.....if the USD went up in value lets just say 30 cents, our prices are not going to change across the board....at least not immediately.....over time maybe......but I think you understand what Im getting at....

[dinarck]

There is no increase in the cash block. The cash block now contains both the higher and lower denominations. Prices wouldn't have to change with the re-denomination as they would have changed with the revalue. Unless of course when they do the re-denomination, there is another major revalue of the rate.

If prices don't change with the introduction of the lower denoms then the lower denoms are worthless. Only one way prices change with the lower denoms introduction. RD

[MrFnHappy]

So as not to offend anyone, let me put it this way.

IF they rd, everything will adjust in time.

Scenario;

Today in Iraq a Coke costs 1000 iqd. Tonight they rd. Tomorrow, that Coke will cost 1 iqd. BUT, for a time, both old and new denominations will be accepted. Therefor you would (for a time to be specified by the CBI), be able to buy that Coke with 1 NEW dinar, or 1000 old dinar. As the old notes are turned in, they would be destroyed.

[speculatorsRIDE]

If prices don't change with the introduction of the lower denoms then the lower denoms are worthless. Only one way prices change with the lower denoms introduction. RD

So it is your contention that if the rate revalues with no re-denomination tonight to $3.22 the prices wouldn't change? That can of coke with a price tag of 1000 dinar will now cost $3220. Umm No.

Edited July 7, 2011 by speculatorsRIDE

[keepmwlknfny]

So it is your contention that if the rate revalues with no re-denomination tonight to $3.22 the prices wouldn't change? That can of coke with a price tag of 1000 dinar will now cost $3220. Umm No.

Your mixing the exchange rate into street prices which wont have that kind of affect.....but which also makes the likely hood of such a jump overnight not feasible....the change in exchange rate wont affect directly buying services and goods in country until much time lapses and the imported goods increase dramatically....

[speculatorsRIDE]

Your mixing the exchange rate into street prices which wont have that kind of affect.....but which also makes the likely hood of such a jump overnight not feasible....the change in exchange rate wont affect directly buying services and goods in country until much time lapses and the imported goods increase dramatically....

ok your right the rate does make a great deal of difference. Instead of it RVing at $3.22 lets say it RV's at $.10 That can of coke that now cost 1000 dinar today will only cost $10.00 tomorrow without an immediate price change. Again I say Uumm No.

[dinarck]

ok your right the rate does make a great deal of difference. Instead of it RVing at $3.22 lets say it RV's at $.10 That can of coke that now cost 1000 dinar today will only cost $10.00 tomorrow without an immediate price change. Again I say Uumm No.

So you are saying that all prices will be adjusted with a overnight RV? What about salaries. Will Iraqis go from making 20 million dinar to 20 thousand dinar? Well I guess the ones with jobs will no longer need them since they are now multimillionares overnight so they can just retire. They can go ahead and bring in the homeless who live in ultra poverty to do those jobs that require experience and training that the homeless don't have. O well as long as Breitling or Oakie says so then it must be true.

[keepmwlknfny]

ok your right the rate does make a great deal of difference. Instead of it RVing at $3.22 lets say it RV's at $.10 That can of coke that now cost 1000 dinar today will only cost $10.00 tomorrow without an immediate price change. Again I say Uumm No.

What Im getting at is that you will not see an immediate change in prices with a RV......but you would with a RD......take the exchange rate out of the picture....