Mechics of a revaluation

[jmw]

thanks Darin...I look forward to seeing what you come up with....

[Darin]

thanks Darin...I look forward to seeing what you come up with....

Not sure if this violates posting of other sites, considering it is mostly a blog..

(if so, mods please remove)

http://***********.wordpress.com/2011/01/02/the-rollercoaster-ride-part-2/

And if the link is removed - if anyone is aware of Marcus' blogs - it is under roller coaster ride part 2...

He breaks down the M process...

And, he was the one that informed me that each central bank of a country does their monetary bases differently and how they value them.

...but.. I'm still researching...

[teedoffed]

jmw..... I read a great PDF that Dalite posted yesterday. Search his post to find it.

The way Valenzuela did it was list both currencies with all prices and used that until all of the old currency was gone.

Whats Fernando got to do with it? I think hes a pitching coach in the minors in Dominican Republic.

[jg167]

This is a bit old, so apologies if its been answered already

The benefits to the Iraqis is holding a numerical value of dinar at "X amount" and suddenly going to markets and seeing that goods cost 1,000 times less (In my scenario)

Imagine if we went to Wal-Mart and what we saw that was normally $100.00 suddenly became, $0.10..... Imagine the amount of goods you would be able to buy.

The value of the car you drive would drop

The amount you get paid by your employer would drop

But you would benefit by the amount you of items you could purchase

Yes this is true, an RV would greatly increase the buying power of anyone holding cash (in the mattress or in the bank). Anyone who just bought a high priced item prior to the RV will be most unhappy. But this also leads to inflation. Now everyone can afford to buy whatever they want, but supplies can not grow to match the 1000x the amount of buying power is chasing the them. If you are the car dealer who sold one luxury model a month before and now have a line going around the block wanting them, but your supply can only increase to 10 luxury cars per month are you going to sell them at the same price? No way. prices will rise very fast on any good whose demand outstrips supply, thus inflation. At 1:1 RV hyper-inflation.

Let's argue the idea of a re-denomination

We basically incur a revenue-neutral event

The Iraqis incur a revenue-neutral event

Iraqi's can't buy more or less than the day prior to a R/D or after a R/D - maintains value

Every dinar holder cashes out.....(Globally - except those that hold due to the idea of a slight increase of value...)

No one re-buys speculatively - demand for their currency drops

Foreign cash reserves takes a huge hit...

It potentially spurs away investors.... (Speculative)

They're concerned about national economy...

Lets really compare

RD (after the dinar exchange, which as said is value neutral). Suppose 20% of dinars come in for exchange at this point into USD. So that's 20% of $50B (60T dinars at 1170 per dollar = 60B dinar at 1.17 per dollar = $50B dollars). So that's a $10B dollar hit to their dollar supply. The CBI is holding $50B in dollars so they can easily cover it now, and get that replenished easily with oil sales.

RV (at $1 USD per dinar). If the same 20% of 60T comes in for exchange that's $12T USD. So clearly an RV is the huge hit to their foreign exchange account, a hit they can not possibly support. The money supply of the US is only $9T. Where is this $12T going to come from? The US can't just print them up as that would devalue the dollar by 50%. Even if we were insane enough to do that, how is Iraq going to get them? The value of all their oil in the ground is only about $15T, are they going to mortgage their future to give us this oil, only to have all that money immediately leave the country to go out to foreigners? All this would do is put Iraq in massive debt, the last thing they need. And that is all only with 20% of outstanding dinars coming in for exchange. If a 1:1 RV were to occur I'd guess this number would be much higher. If you are an Iraqi or a foreigner which currency do you think would be safer in the long term, dollars or dinars?

Countries that peg their currency revalue it from time to time to get back into sync with the reality of local/global wealth. An RV does not create real wealth.

[Darin]

This is a bit old, so apologies if its been answered already

Yes this is true, an RV would greatly increase the buying power of anyone holding cash (in the mattress or in the bank). Anyone who just bought a high priced item prior to the RV will be most unhappy. But this also leads to inflation. Now everyone can afford to buy whatever they want, but supplies can not grow to match the 1000x the amount of buying power is chasing the them. If you are the car dealer who sold one luxury model a month before and now have a line going around the block wanting them, but your supply can only increase to 10 luxury cars per month are you going to sell them at the same price? No way. prices will rise very fast on any good whose demand outstrips supply, thus inflation. At 1:1 RV hyper-inflation.

Lets really compare

RD (after the dinar exchange, which as said is value neutral). Suppose 20% of dinars come in for exchange at this point into USD. So that's 20% of $50B (60T dinars at 1170 per dollar = 60B dinar at 1.17 per dollar = $50B dollars). So that's a $10B dollar hit to their dollar supply. The CBI is holding $50B in dollars so they can easily cover it now, and get that replenished easily with oil sales.

RV (at $1 USD per dinar). If the same 20% of 60T comes in for exchange that's $12T USD. So clearly an RV is the huge hit to their foreign exchange account, a hit they can not possibly support. The money supply of the US is only $9T. Where is this $12T going to come from? The US can't just print them up as that would devalue the dollar by 50%. Even if we were insane enough to do that, how is Iraq going to get them? The value of all their oil in the ground is only about $15T, are they going to mortgage their future to give us this oil, only to have all that money immediately leave the country to go out to foreigners? All this would do is put Iraq in massive debt, the last thing they need. And that is all only with 20% of outstanding dinars coming in for exchange. If a 1:1 RV were to occur I'd guess this number would be much higher. If you are an Iraqi or a foreigner which currency do you think would be safer in the long term, dollars or dinars?

Countries that peg their currency revalue it from time to time to get back into sync with the reality of local/global wealth. An RV does not create real wealth.

Do you honestly think that the money supply is only $9T?

Let's go to the idea that money is debt and debt is money (speaking of the U.S. dollar)

The debt alone within the government is $14 T

Not speaking of commercial debt or consumer debt

Than, we also have to consider many central banks hold U.S. dollars in their reserves

nearly $3 trillion w/ China alone in their reserves (not to mention dollars that float around).

The amount of US dollars in circulation, or that the U.S. should account for is HUGE!

Most of it is likely electronic..

A good write-up on that, follow a link I previously posted which is a Marcus Curtis blog.

A good way he explains it..

If all consumer debt, commercial debt, and government debt was Paid off.. The US dollar so-to-speak would not exist.

[jg167]

Do you honestly think that the money supply is only $9T?

the US M2? Yes. I'm just using this as a comparison point to show how much 12T dollars really is.

Let's go to the idea that money is debt and debt is money (speaking of the U.S. dollar)

The debt alone within the government is $14 T

Not speaking of commercial debt or consumer debt

Than, we also have to consider many central banks hold U.S. dollars in their reserves

nearly $3 trillion w/ China alone in their reserves (not to mention dollars that float around).

The amount of US dollars in circulation, or that the U.S. should account for is HUGE!

Most of it is likely electronic..

A good write-up on that, follow a link I previously posted which is a Marcus Curtis blog.

A good way he explains it..

If all consumer debt, commercial debt, and government debt was Paid off.. The US dollar so-to-speak would not exist.

Sure there are many views, its a complex topic. But none of this answers the question of where Iraq would get the vast amount of dollars it would need to exchange for an RV at 1:1 that would not be to their extreme disadvantage. After all Iraq is not going to do anything with their currency unless it is to their advantage.

[jmw]

Not sure if this violates posting of other sites, considering it is mostly a blog..

(if so, mods please remove)

http://iraqcurrencyw...er-ride-part-2/

And if the link is removed - if anyone is aware of Marcus' blogs - it is under roller coaster ride part 2...

He breaks down the M process...

And, he was the one that informed me that each central bank of a country does their monetary bases differently and how they value them.

...but.. I'm still researching...

I know and like Marcus....but don't agree with all of his theories....more of a conspiracy than how the dynamics of a RV would work...I would really like to talk with him about it more...but his position on fractional reserve banking is extremely flawed.

the US M2? Yes. I'm just using this as a comparison point to show how much 12T dollars really is.

Sure there are many views, its a complex topic. But none of this answers the question of where Iraq would get the vast amount of dollars it would need to exchange for an RV at 1:1 that would not be to their extreme disadvantage. After all Iraq is not going to do anything with their currency unless it is to their advantage.

your right on track jg...some over complicate it to make it seem possible.

[Darin]

I know and like Marcus....but don't agree with all of his theories....more of a conspiracy than how the dynamics of a RV would work...I would really like to talk with him about it more...but his position on fractional reserve banking is extremely flawed.

your right on track jg...some over complicate it to make it seem possible.

In a sense, I was right, while in a sense I was also wrong.

Sources: (A+ is equal to

USES: (A=

If that makes any sense to you....

Whats interesting, is looking at financials from Jan. 2011

24T sat outside of the banks, while 27 was allocated for reserves.

Out of that 24T, I am sure a majority resides within Iraq as well (however, not sure of the exact #s)

So what are they realistically on the hook for?

And... if they were to pay that out, how-so?

Is it possible? Yea (depending on rate, along with incoming foreign investments upon a new rate).

looks like more digging for me...

Wonder how much of what is held outside of Iraq may make its way to central banks of foreign countries only to be held there.

I think Enoch8 did an explanation of that.