"redenomination" clarified

[Charlie339]

I am not making any predictions regarding whether a redenomination will actually occur or not, nor am I attempting to persuade anyone in any direction regarding their dinar investment. I simply want to share my thoughts on an apparently confusing topic.

By itself, a redenomination is nothing to fear. We redenominated our currency when we introduced the $2 bill. Nothing changed, except we put another unit of currency in the market. A dollar was still worth a dollar.

However, in every sense of the word, a redenomination that is based on a

[jackdavis1364]

May be true but I don't have to like it. It would stink.

[hoping...]

I am not making any predictions regarding whether a redenomination will actually occur or not, nor am I attempting to persuade anyone in any direction regarding their dinar investment. I simply want to share my thoughts on an apparently confusing topic.

By itself, a redenomination is nothing to fear. We redenominated our currency when we introduced the $2 bill. Nothing changed, except we put another unit of currency in the market. A dollar was still worth a dollar.

However, in every sense of the word, a redenomination that is based on a “lop” is an RV. Here’s a scenario that illustrates how that works, using the dinar as an example:

Today, one dinar is worth $.00117. By simple multiplication, we can determine that a 25,000 dinar note is worth 25,000 x $.00117 = $29.25

If tomorrow, Iraq decided to lop 3 zeroes from their dinar, then our 25,000 dinar would suddenly become 25 dinar, but our 25 dinar would still worth the same total of $29.25. What has changed is the value of a dinar relative to our currency: one dinar would now be worth $1.17, which is a dramatic (1,000-fold) ReValuation from today’s $.00117 that would be a direct product of the redenomination itself.

If this happens, then …

The consequence to Iraq is obviously beneficial. Every dinar they have would buy 1,000 times more goods on the world market as soon as the dinar becomes eligible for foreign exchange.

The consequence to foreign nations that hold dinar is negligible. The quantity of dinar they hold would be reduced by 1,000 times, but the total worth of their dinar in American dollars would remain unchanged. An $80 barrel of oil would cost 68.38 dinar tomorrow, instead of the 68,380 dinar it costs today, but it would still be an $80 barrel of oil.

The consequence to us (as speculators) is catastrophic. Our potential to make an enormous return on our investment would be eliminated. Over a long period of time, as Iraq’s economy prospers, the dinar could go further up in value. Those of us who managed to hold our dinar until this happens could realize a nice profit, but nothing like the 1,000% return we have anticipated until now.

For what it’s worth, I am keeping my dinar – hoping this scenario does not come true.

That's very likely the upcoming scenario ... as predicted by so many for so long.

[erhouse]

Charlie, your post is very logical, unlike the rest.

[kamm]

Boy I wish I didn't read this. This is depressing.

[ronin12]

What are You talking about?!? You got it backwards!

"Today, one dinar is worth $.00117. By simple multiplication, we can determine that a 25,000 dinar note is worth 25,000 x $.00117 = $29.25"

Because 1 dinar is worth .000856 !!!!

Cheers

[rupus77]

no matter whether his math is a little off...his thinking is the most likely scenario...even if it isnt what you want to hear

[IraqofLamb]

I personally think if they do the lop it will come months after the RV, so you have plenty of time

to cash in your big bills (25,000, 10,000, 5000, and 1000's bills)...

Hoping this RV happens soon.

[captaint]

Lets at least hope for a dime!!! or something realistic. Just lopping off the zero's does nothing but keep the citizens in poverty. They need a recognized value on a par with the rest of the region, more or less. Hopefully this doesn't end up that way.. I still can't imagind Ali opening satalite offices to break even. No one will be lining up to cash in for what it is now. blah blah blah

Best to all. FT

[hunter1]

I agree with captaint! All this hype and trade centers for nothing to happen for us "the investors of the new iraq" and nothing to happen for the iraqi citizens?

Why would the Iraqi govt be bringing in so much gold and money to back their currency? At the current time the iraqi govt is backing a much higher percentage than even the United States does! The U.S. only holds in reserves enough to back 10 percent of the dollars in circulation.

[hoping...]

Ali is, and always will be about nothing but SELLING dinar. Simple.

[Scooter39]

1.00 IQD = 0.000857927 USD

http://www.xe.com/ucc/convert.cgi?Amount=1&From=IQD&To=USD&image.x=37&image.y=19

[Muhammad]

Just fancy that one corrupted parliamentarian who has an authority over CBI has already pocketed 1,000,000,000 IQD and he has hidden them all somewhere, safely. To lop 3 zeros off from 1,000,000,000 IQD means he may left 1,000,000 IQD only. Would such a corrupted parliamentarian allow all his subordinates of CBI to lop according to his subordinates' plan or not allow them to do the lop to exploit him as well? IMO and LOL!

A link for newbies:

www.internetslang.com

[Fi3ry_Ph03n1x]

Just fancy that one corrupted parliamentarian who has an authority over CBI has already pocketed 1,000,000,000 IQD and he has hidden them all somewhere, safely. To lop 3 zeros off from 1,000,000,000 IQD means he may left 1,000,000 IQD only. Would such a corrupted parliamentarian allow all his subordinates of CBI to lop according to his subordinates' plan or not allow them to do the lop to exploit him as well? IMO and LOL!

Do you really believe that one, two, a handful, or even a Ministry full of corrupt politicians have sway over the enormous power the IMF (through which governments such as the US, Russia, China, et. al.) are subservient to? One person's desire for personal wealth can stand against the enormity of the financial flash flood that just washed through Iraq? Well, let's hope so because we'll all get rich in the process.

FP

[LittleMissGrits]

While I have not seen Adam specifically say that he has talked about THIS issue with his CBI contact, it is hard for me to believe that the excitement and imminent news that they share via e-mail and phone contact would play out as this post suggests. Well, it would cause a stir... no doubt about that!!! One I don't want to think about!!!

[hoping...]

Many of the IQD supporters speak of this magical “revaluation” that will happen some time in the near future that will skyrocket the value of the Dinar. This revaluation will be nothing more than like a reverse stock split of the currency. It will probably be a repeat of Mexico’s own “revaluation” of the Peso back in 1993.

At the time, 2,894 Mexican pesos was about $1USD. The revaluation took place and 1000 pesos became N$1 nuevo or “new” Peso. So 2,840 pesos was now N$2.84 nuevo Pesos. In 1996, nuevo was dropped from the name and reverted back to Peso. Today’s current exchange rate is $1 USD = 10.97 MXN Peso

In 1990, if you bought (exchanged) 2,894,000 Pesos for $1000USD, today after the revaluation, you would have 2,894 “new” Pesos / 10.97 = $263USD. And this is with a country that is much more stable than Iraq or Vietnam with lots of oil. After about 15 years, you would have lost over 2/3 of your money.

Investors in the Iraqi Dinar are in for a long and unpredictable wait. Hopefully, the money invested will not be missed for a while.

[pyramid]

Why the RV hate?

[Arelys Dominguez]

Why would they make this new bills if they are planning on elimating them?

[egbert]

Not hate, but some wonder why the blind belief. I'm ever hopeful, but not sure why everyone believes it is a given. Really curios to see what Iran has up their sleeve. I'm just hoping our President does not get weak kneed.