Sonny1 drive by :) 8/1/11 am

[Darin]

How exactly would speculation drive up the value of the dinar considering it is a fixed rate currency and not a market driven valued currency?

Ha - I didn't know I needed to be so detailed on my comments here.

"Speculative demand" would be a better choice of words.

If "Speculative demand" was the reasoning behind them going from 6 trillion to over 50 trillion... They should of been adjusting the rate against that demand.

Increase the value ....

Apparently they went printing crazy and had fun in the print room throwing dinar in the air going.. "let it rain let it rain.."

[HopefulTxn]

Speculation could of driven up the value. Everyone would of eventually folded at some point in time based upon the value. But they choose to not go that route, as they just printed more money instead of increased the value. I find that interesting....

Ha - I didn't know I needed to be so detailed on my comments here.

"Speculative demand" would be a better choice of words.

If "Speculative demand" was the reasoning behind them going from 6 trillion to over 50 trillion... They should of been adjusting the rate against that demand.

Increase the value ....

Apparently they went printing crazy and had fun in the print room throwing dinar in the air going.. "let it rain let it rain.."

You made the statement, so I just questioned the statement you made. I simply pointed out that speculation does not drive the value of a fixed rate currency.

No, it is not a case of them going 'printing crazy' by taking it from 6 trillion to the current levels. It has shown to be more of a concern of Shabibi to maintain a stable rate. With that in mind, Shabibi would have one option as their reserves increase, and that is simply to increase the volume to match those changes.

[bamjack75]

Huh? Are you saying you think there were only 27 billion Saddam era dinar in circulation when the new notes were issued?

Ok, once again, do you have a link for the right #'s. Lets start with that. I can tell you that those articles/references are hard to come by. A number of people on this forum have suggested that 27 billion was what Iraq's currencey used to be when it was worth more than 3+. I understand that Saddam got print happy with the dinars there at the end, but there is still quite a discrepancy in these numbers. What can you produce that shows the amount of currencey around October of 2003 before the exchange? Simple enough, right?

[HopefulTxn]

Ok, once again, do you have a link for the right #'s. Lets start with that. I can tell you that those articles/references are hard to come by. A number of people on this forum have suggested that 27 billion was what Iraq's currencey used to be when it was worth more than 3+. I understand that Saddam got print happy with the dinars there at the end, but there is still quite a discrepancy in these numbers. What can you produce that shows the amount of currencey around October of 2003 before the exchange? Simple enough, right?

If you are looking for the CBI quantities, they provide annual bulletins and reports that give that information. Here is the one for 2003 http://www.cbi.iq/documents/Annual_2003f.pdf

[bamjack75]

Thank you HopefulTxn. I simply didn't look past the financial statements section that references from 05' on.

Edited August 4, 2011 by bamjack75

[drox]

Apparently something got taken out of context. Look at the second quote.

My argument

Instead of stabilizing at 1170, why not stabilize at 1.17

Instead of printing notes w/ 000s, why not omit them?

And... if we were at where we are today, the #s would be appealing, right? Hence no reason to re-denominate

Which is why I found the statement funny.. - The people have began to treat the bills as if the 000s didn't exist. Imagine if that was a reality (omission of the 000s) We wouldn't be having a re-denomination argument here. They would simply look to raise the value more (if anything).

But, I'll give you a reason I believe they printed the 000s.

They wanted to match the current value of the old regime notes at a 1:1 trade.

The idea was to get rid of the old dictator from the notes. And for the people to have a new currency to value and become proud of.

That in itself was a psychological band-aid so to speak.

Now it appears they will be looking to re-denominate again. Re-denominate as in, adding new currency such as lower denominations..

I wasn't trying to be argumentative, just stirring the pot a little bit

Drox -

I am very familiar with the process of issuing the new currency, and the history you provided is correct. But, I think Darin has a good question. Why did they not remove the 000s during the new issue? You (and Keep) have correctly stated that it is done after a period of hyperinflation, like in Turkey, but Iraq was a little different. There were three options considered in 2003:

1st - Keep Saddam currency, which would not work because there were too many counterfeits and Saddam's ugly mug

2nd - Keep the economy flowing by using only USD, which would not work because then it would REALLY look like we were occupying

3rd - Issue new currency, which would not work because Iraqis had no faith

So they did a hybrid option, which was a mix of the 2nd and 3rd options. USD was used to pay government workers and keep economy going. New currency was issued to let them know we were taking over their economy.

Drox, I am sure that you already know this. My reasoning for Darin having a good point about removing the 000s then is based on the fact that their economy continued to function based on USD, which they want to eliminate. If for a period of time they were using USD in the economy and making strides in reducing inflation, it would seem that they could have just eliminated the 000s then. Its not like they had any faith in the IQD.

I am not saying anyone is totally correct; rather, I am considering Darin's comment interesting.

Maybe you can help me out. Did Turkey have a USD problem? i.e. did they have to eliminate the over use of USD? If not, I would concede to many on DV that Turkey and Iraq are truly different scenarios. I have heard the argument from RD side that Turkey had pre- and post-RD bills in circulation for up to 10 years. That would not suggest that Turkey was trying to eliminate the use of USD.

I always consider all options, and I hope you are not cussing at your monitor for my perspective here. I guess I could believe that, because of the choice made by the CBI when implementing the new currency, that Iraq had the opportunity in 2003 to RD, even with the inflation rate at the time due to the common use of USD.

*Disclaimer* - I am assuming that USD was used more than IQD in 2003. I am assuming that Turkey did not have a USD problem (if you could call it that). The IQD will RD if the M1/M2 figures are correct. Finally, I apologize for grammar or spelling. I should be working, so I am typing fast.

Hey guys and thanks for the questions. I want to attempt to address your questions through proof and not just my opinion. I am going to put something together and create a topic in the opinion section based on reduced statements of articles from General Tant from 2003/ 2004. I went through 2 of the very lengthy articles and reduced them to the specific point that you address. So watch for that post.

Your question: Why didn't they just drop the 3 zeros in the first place? Well, because the currency was still unbelievably erratic. They had 2 currencies in use Saddam and Swiss at totally different values. The Saddam Dinar had 2 notes in use: 250 note (worth 12 cents usd) and 10,000 note (worth $5 at that time). If people began to view the currency as if the 3 zeros didn't exist as you suggest...it would make total sense to me. 250 minus 3 zeros is .25 and 10,000 would have been like $10. It aligns somewhat with the numbers listed above. They had to remove 3 zeros in figuring out making change in their head. Reducing it to more basic math for all transactions. For the price of the good and then to figure out how to make that change for it.

Saddam ran up those currency totals for decades by printing money at his leisure. 90% of the banks were owned by the GOI so they did exactly what the crazy jackass told them to. By the the time the Coalition Provisional Authority took over it was $1 for 2300 Dinar. Of course... in a perfect world they could have re-denominated then but they had way too much going on. Blending the 2 currencies and fighting for stability was hard itself. It was confusing and scary enough for the Iraqis. Going with the smaller denomination notes would have just forced them to RD again soon and I think they were truly hoping they wouldn't have too. Going with 3 note currencies they were already familiar with it and those numbers gave them the latitude to go really high should hyperinflation continue until stabilization could occur. They were aware that Turkey had to lop a whopping 6 zeros! It was a currency structure built to sustain the rampant inflation.

The Coalition Provision Authority estimated they would take in 3000 tons of the 2 former currencies. They actually took in 13,000 tons!!! More than 4 times what they were expecting! They had no idea that much was out there. They only made 2300 tons to replace it. I would think a lot of it was counterfeit but who knows. They printed at will and it destroyed the value.

Remember... every time a central bank prints a currency it creates a new debt. Money = debt and debt = money. If you destroy a note without creating a new one to replace it then you are basically destroying wealth. So to just destroy the 3 zero notes today outright to reduce money supply you would destroy tremendous amounts of wealth. Hope that helps.

[Carrello]

Easy... I think is a much fitting song !!!!!!

Boy, if you two weren't meant for each other!

[speculatorsRIDE]

The ten trillion dinar are real, that doesn't mean they can be worth 10 trillion USD. It's only worth 10 trillion USD if someone is willing to pay that much for it. Iraq can't. Who else is going to want it? We're going to use it for oil, you say? So Iraq just gave away the next 54 years worth of oil production in order to make US citizens rich (we'll be generous and say they'll average 5 mbpd, that's 500 million USD per day at 100 a barrel, times 365 days a year (no break for Ramadan, slackers!) is 183 billion USD per year, 10t/183b = 54 years. That sounds real plausible. Rofl.

That applies to commercial banks, not to the fed. The 10t has to come from the fed, they can't give 1t of it to commercial banks and then borrow back the other 9t in order to give it back to the commercial banks. That's insane. I'm really surprised I needed to explain that. Especially since I believe someone already explained it to you in this very thread.

Ok, let's simplify this. Let's say I have 50 million IQD. The CBI revalues to 1 IQD : $1. Now my 50 million IQD is worth 50 million dollars. I decide to cash out. I take my 50 million IQD to my bank and cash out for 50 million dollars which is added to my account electronically. The bank then sends the 50 million IQD to the Reserve and the Reserve then credits the bank with 50 million dollars electronically. The Federal Reserve adds the 50 million IQD to their foreign reserve currency. This increase in foreign reserve currency is used to strengthen the US Dollar.

I now have 50 million dollars to spend which improves the economy.

My bank now has 50 million dollars to loan out to others using fractional banking which improves economy.

The Federal Reserve now has 50 million IQD worth 50 million dollars backing the dollar which strengthens the dollar and improves the economy.

Whether or not the US uses the IQD to buy oil is irrelevant. IMO they would be happy to hold my IQD in foreign reserves currencies. They might use my IQD to purchase some oil or they might not. People are focused to much on the oil and are missing the bigger picture.

IQD can be worth only what someone is willing to pay for it. You saying that Iraq can't afford to pay for my IQD is correct. My position is that they don't have to because the Federal Reserve is willing to buy my IQD.

btw the commercial banks using fractional banking is what I have been referring to. Not the Federal Reserve. Hope we have cleared that up.

[Darin]

If they are they're morons and we should all move to Canada. As you said, it's only worth something if someone is willing to pay for it. Who'd be willing to pay 1 USD for 1 IQD knowing that Iraq has an M2 of 59 trillion?

Answer: no one. Maybe morons. That's it.

I like the idea he has, but I think he got it wrong.

When we hear that the IQD may never return to the country again, this could be reasonably true based upon this ideal theory:

All notes outside of the country will be retried into the treasury, central bank etc.

A deal will be brokered that these countries hold onto these notes as they receive interest for holding them.

The idea is that eventually Iraq will be a full-running economy within 10-20 years and could buy them back.

But... The countries will profit by taking in interest on these notes.

So to simply the process more, a 3rd party audit group will come in, calculate the holdings and than either destroy the bills and make it electronic or issue governmental notes (like a 100,000 note that we once read about in an article).

This would prevent major disruptions at the CBI as they would not have to account for those notes.

The Foreign Government insitutions gain by collecting interest.

The GOI/CBI gain by deferring the debts

Foreign Government instituions also benefit from taxes paid from speculative holders

Speculative holders also prop up the economy in their respective regions

A propped up economy increases demand for crude

Crude value goes up, oil producing nations also profit.

The people of Iraq profit from a huge increase in purchasing power.

Foreign companies look to also invest (likely at the new rate) to setup businesses

This allows their country to grow, create jobs, and make the quality of life better.

As time goes on, oil production will increase probably at 10 times or higher.

Buying those notes (100k notes) would likely come with ease as oil-production is high

Their country becomes more of a free-market country which is not dependent upon crude.

Let's face it, we won't be dependent upon crude forever... So oil producing nations have to take that into consideration and plan ahead..

[Darin]

6 trillion in dinar at 1:1 RV @ 3% interest = 180 billion a year. Near twice Iraqs total GDP. Try again. Iraqs 2011 governmental budget is about what their GDP is, where are they getting the extra money? They going to pay the interest on the worthless dinar with more worthless dinar? Don't think so.

Wow..........

I never supplied a rate in my theory, just the process of the theory

Maybe they do 50 cents than that figure drops to 90 billion

This gives them a straight up R/V potential.

[speculatorsRIDE]

If they are they're morons and we should all move to Canada. As you said, it's only worth something if someone is willing to pay for it. Who'd be willing to pay 1 USD for 1 IQD knowing that Iraq has an M2 of 59 trillion?

Answer: no one. Maybe morons. That's it.

You seem to be missing the point. The Federal Reserves and Central Banks around the globe will be willing to purchase the IQD once it is a globally recognized currency with value.

[Darin]

Nooooo, not unless their entire GDP is going to go to interest payments. 6 trillion dinar is probably also on the light side. 3% is probably also on the light side. Let's face it, Iraq isn't a Fed guaranteed savings account, more like a Payday loan to an unemployed crackhead, at this time. Plus you still have to convince foreign governments that a country with a GDP of 100 billion can support an M2 of 30 trillion. Not very likely. Not to mention they'd really need to be paying some principal as well. 3 trillion in principal (probably still a low #). That's 30 billion barrels of oil at 100 a barrel. That's over 1/5th their reserves, if I'm not mistaken, so they'd have to pay it off pretty darn quick. Let's say 30 years? That's a total of about 4.5 trillion. 45 billion barrels. About 1/3rd of their oil supply. I'm not going to even bother doing the math, but I really doubt they can even get it out of the ground that fast. Not to mention that's just to cover their debt to US currency speculators. Probably other currency speculators as well. Plus they've got to keep their government running, etc.

So at the end of 30 years, what really happened? They got their hyperinflated currency back, which no one outside the country will want, because it's still hyperinflated. A bunch of US currency speculators got rich. Iraq gave away 1/3 of their oil.

Seems like there might be a few holes in your economic theory.

No holes - they'll apply #s that will work.

It may not be $1

Maybe it is $0.25

Maybe they even get the ability to defer interest payments for a period of time.

Maybe the interest rate is even lower because the idea is

the value of their $ is a certain amount and in 20-30 years it will be worth even more.

So governments hold it as a long-term investment

So if they collect on it within 30 years, and it now has a value 3 times what it was originally. I would say that is a pretty good return.

Now, who benefits in the meantime? A lot of people.

The citizens get more purchasing power and a fast-paced growing economy

Foreign investors flood the market investing into them as well.

We see Wal-Marts & MacDonald's go up so to speak haha

In 10 years, I would imagine their oil output would be rather high

They may be pumping 10-15 million barrels a aday

10 million barrels per day at $100 (conservative #)

That is 1 Billion a day

365 billion a year (even more at 15 million bbl per day & higher market value for oil)

Just on crude alone w/ conservative #s

Lets add sulfur crops

Lets add natural gas

And other exports

Private sectors grow....

Need to import so much decreases

Hey - long story short:

None of us here are smart enough to understand the whole scenario.

[speculatorsRIDE]

Dow down just over 512 points today. That means it has lost 4% of it's value today alone.

[Darin]

1170 works.

Still too high.

Yeah, because so many countries right now have a few trillion laying around that they don't have any better uses for.

Yeah, I'm sure it'll be worth more when 1/2 their oil is gone.

I think it's more likely the USG would invest a few trillion in the US, rather than Iraq.

If you only make 200% on the stock market in 30 years you're terrible at the stock market.

In your pie in the sky, best case scenario, Iraq has a GDP in 10 years of, what, 700 billion? (and saying they'll get that much GDP from sources other than oil is a big stretch).

That's about what Saudis GDP is right now ($593B PPP). What did I say Saudis M2 was? 700 billion?

So at your .25 RV, you're saying Iraqs currency can be worth about TWENTY times what it's GDP MIGHT be TEN years from now. All the while, Saudi (who has their s* together, and more oil than Iraq) is shlumping along with an M2 thats barely any more than their GDP is RIGHT NOW.

Why doesn't Saudi RV? They're obviously in a lot better position to do it than Iraq is.

Your numbers simply don't work. Not possible. No country would recognize their currency at even a .10 RV, because no country on the planet is STUPID enough to think that Iraq is worth 10 times what Saudi is.

Saudi is a different economy

Their a welfare style economy

They also have a monarchy

I believe Iraq is looking to move towards becoming a free-market

They have a democracy

Hey, we can all sit back and speculate.. Argue back and forth on our speculations alone..

But, when it happens, we will realize who was right.

Obviously the LOP is the conservative guess...

[flatdawg]

[sonny1] a new exchange rate is coming, they cant have a 25 and 100 dinar coin at 1170

Yes they can, and it would make perfect sense. They already had a 50 dinar coin.

.

[Prophecy]

The 10 trillion dinar added to our foreign reserve currency becomes assets and backs the 10 trillion US Dollars that will be added to our bank accounts electronically. Once the 10 trillion dinar are cashed out and are added to the foreign reserve currencies they will be added to the balance sheet. it doesn't come out of thin air. The 10 trillion dinar worth 10 trillion dollars are real. You hold some in your hands now I assume. I know I hold mine they are real.

Fractional banking applies because that 10 trillion dollars that gets added to our bank accounts doesn't just sit there. The bank takes that money and loans it out charging interest to the borrower. That's how fractional banking works. I am really surprised I needed to explain that.

Now could you go back to my original post and answer the questions I posed to you? Answering a question with a question doesn't really answer the original question.

I don't pretend to know everything that is going on but IMHO the entire banking system is a fraud. You ask where is the money coming from. IT IS coming from thin air. Did you notice what was discovered from the recent partial audit of our Federal Reserve? 16 TRILLION, yes with a T, that our Federal Reserve handed out to banks and foreign banks, governments, etc. Tell me where did that come from? THIN AIR! You can use all kinds of logical arguments about why Iraq can or can't do something, but when you are dealing with a rigged system, you must accept that anything is possible. Again JMHO Take it for what it's worth. and you know what they say about opinions.........

[Darin]

Yes they can, and it would make perfect sense. They already had a 50 dinar coin.

.

They dont have a 50 coin. They have a 50 dinar note. Oh, and just because a U.S. Quarter says 25, doesnt mean it is worth $25. It is worth $0.25... Just something to chew on.

[zigmeister]

They dont have a 50 coin. They have a 50 dinar note. Oh, and just because a U.S. Quarter says 25, doesnt mean it is worth $25. It is worth $0.25... Just something to chew on.

It would be nice though I have alot of quarters.

[HopefulTxn]

They dont have a 50 coin. They have a 50 dinar note. Oh, and just because a U.S. Quarter says 25, doesnt mean it is worth $25. It is worth $0.25... Just something to chew on.

Sorry, but they did issue a 50 dinar coin, along with the 25 and 100 dinar coins, they simply don't have it listed on the CBI site for whatever reason. It probably doesn't really matter since there was an article last June (2010) that stated all the coins were sold for $250,000 scrap metal pricing.

The US quarter is probably a bad example to use for your statement, as they do not state 25 on them, they state 'Quarter Dollar'.

[drlewis]

GT, if I was you I would move on... This investment is for believers. Why do you have so much passion about proving everyone wrong... If you havent noticed, your type around here is a minority... Just stating the facts nothing more... Just to let you know, I feel you are very intelligent, but you are to predictable...

[drlewis]

For the record, if The rv doesnt happen in the next week I will be with you on the lop side. Or I will for sure have a very good understanding of the fact that no body knows.. Delta bet his life on it and frank and others are so positive that its going to happen this next week, that if it dont, it will tell me that they have no good intel at all... In fact I think I will have my own 10 Day count down and report back to this post in 10 days to see everyones attitudes about this hype.. At that point I will make my choice to stay a go rv guy or become cindy lop..

Edited August 7, 2011 by drlewis

[umbertino]

Quote

Delta bet his life on it

End Quote

Not an intelligent thing to do... Quite the opposite infact.

Delta is killing himself if it doesn't RV next week? Now it's getting interesting!

Right....He will do that just like Okie stated he wasn't going to post anymore about 5-6 months ago... ..Nothing to worry about ( Delta).. He'll spit out his fabulous intel as usual past his harakiri deadline.

Edited August 7, 2011 by umbertino

[Darin]

Sorry, but they did issue a 50 dinar coin, along with the 25 and 100 dinar coins, they simply don't have it listed on the CBI site for whatever reason. It probably doesn't really matter since there was an article last June (2010) that stated all the coins were sold for $250,000 scrap metal pricing.

The US quarter is probably a bad example to use for your statement, as they do not state 25 on them, they state 'Quarter Dollar'.

I was referencing what is "shown" on the CBI website.

Since the coins show "not in circulation"

Apparently the CBI does leave out details.

[RonSkilbeck]

I check in every three or four weeks anymore - and I have to say - SSDD. (Same Stuff Different Day) - the rumors and things I read could have all been here (and were) six months ago.