Lop busted.... truth about dinar?

[Malcer]

This was posted on another site on Oct 12 2010. I found it interesting and maybe you will to. I'm no economist so please don't bash me as you may hurt my feelings

Also i checked on this forum and found no other posting of this,but if I made an error my apologies.

The Truth About The Iraqi Dinar And Zero LOP

Scooby Doo your in here to

by Marcus CurtisThe dinar chat boards are funny things. Every opinion is thrown out there. Nothing is vetted or verified in some chat rooms. There are two things I have learned from the chat rooms. 1. People will believe anything. 2. Everyone has an agenda. Yes even I have an agenda. My agenda is getting to the bottom of all the rumors and exposing them for what they are, no matter what the source. I want to expose lies that support a hidden agenda! If I am wrong on something I hope someone will correct me. In fact, I welcome correction or a true difference in opinion or belief. I like to consider every aspect. I also own dinar. So my agenda is to try to figure out how much money if any I will make. This is the most speculative investment I have ever seen.

In my last post I talked about skeptics who enter these chat rooms to try to discourage the people who purchased dinar. There are two main reasons for these people to do this. First, they represent other investments and they think by bursting someone’s bubble they may get a new client. Second, there are those who just do not believe the dinar will ever amount to anything. These people claim to have some kind of economics education and they try to confuse people with numbers and figures. They omit certain facts to bolster their case. This is much like the atheist who goes in to a Christian chat room for entertainment. Then they turn around and claim we are pushing our religion on them. GIVE ME A BREAK!!!

So now it is time to play another round of rebut the skeptic! My replies will be in red.

What you write makes wonderful sense. But it ignores a few economic and political realities. Like the Iraqis want to be part of this great mad world, with unimportant little things like International Trade, free trade agreements, etc. All of which are predicated on having a floating currency. Floating currencies find their own value. If Iraq floated its currency at NID1,170 per USD1.00 (i.e. the current rate) the market would take it up like a fountain, and probably go so far over the top in the process that it would hit ground on the way back down! This statement could be true PROVIDED it is allowed to enter at such a low rate!!!! It proves the point that the RV/RI MUST HAPPEN prior to entering the foreign currency market (FOREX)!!! If it enters at a realistic rate it will control the speculation of the currency!! Shabibi has held the artificially low rate as a requirement for consideration of removal from Chap 7, called the dirty float! Similar mechanisms will be used to reduce the volatility of the currency when it initially is introduced. Kind of like the circuit breaker we have in our stock market!

It makes sense to set a value that the market can live with. Whether that is USD0.10, US0, 0.86, or USD 3.19 is arguable. But the need for the float is not! FOREX will be the float LIKE IT OR NOT!!! That is why it needs to be introduced back at a realistic rate. Forex won’t set the rate, but they will trend it.

Back in ’03 a Harvard economist suggest a value based on USD0.33 plus Euro0.33 (Approx USD0.41) plus 1/100 of price of barrel of Iraqi Crude (say USD0.70) making a value of approx. USD1.44. And that was before reasonably normal democratic elections where even in sight! Those guys at Harvard have all the answers. LOL! Is that how they set the rate for the Kuwaiti dinar which is over $3.40? Kuwait has already gone through their revalue. Kuwait makes a great case study for the Iraqi dinar. More on this at a later time.

An equal value RV to the dollar is a mathematical and economic impossibility.

Too often it is portrayed that if you have 1,000,000 dinar, that suddenly you will be able to run down to the bank and cash it in for $1,000,000 US. Not true!!! Absolutely Not True!!! The US would have to devalue our dollar dramatically for this to even be remotely on the horizon. BULL!!! He neglects to say that the US dollar has been on a steady decline for a while now. That has never been considered in the artificial low rate of the dinar. The Iraqi dinar has held a steady value for the last 4 years while the dollar has been declining. During this time the dinar has not increased in value like it should have. This is more proof of a suppressed rate. The rate is suppressed on purpose because of US sanctions. The current rate of the dinar does not represent the wealth of that nation.

There are approximately $7 trillion US dollars in circulation. He is referring to “physical and electronic currency (M2)”, which represents a FRACTION of what is on the books. He is neglecting The Federal Reserve, and the document they produced called Modern Money Mechanics. In this document you will discover fractional reserve banking. Most of these skeptics have no clue how this works. The following short video breaks it down.

http://www.youtube.c...h?v=pC8I3J-1GSM

If the 30 trillion dinar were suddenly worth $30 trillion dollars, there is not only not enough US Dollars, there isn’t enough money in the entire world to buy or compensate for the new value of the dinar…Does that make sense? SIMPLE, can you say Foreign Reserves?? Keep in mind that 75 to 90% of the Dinar have already been removed from circulation!! Also note that there is not 30 trillion dinar in circulation! There is about 25 trillion dinar not all of that is in circulation. A country worth a few hundred billion can suddenly wake up one morning and be worth more than the rest of the combined planet. Except that Iraq is worth way more than a few hundred billion. There are 80 oil fields in Iraq out of that only 12 of them are being drilled. Iraq does not know how much oil it has. When Saddam was in power he did little oil exploration. The known oil supply is a little over 113 billion barrels. Times that by the price per barrel. This does not even include the wealth of natural gas. Their currency is a reflection of these commodities. It is suppressed because of sanctions imposed by the United Nations. Keep in mind that the currency that “WE” the investors hold represents only a FRACTION of the total Dinar (25 Trillion). Investor notes 1000, 5000, 10,000 and 25,000 notes have been recalled using several mechanisms. Note these mechanisms are not used or intended to remove “OUR” investor notes. It is estimated that between 75 and 90% of this 25 Trillion have been removed or have been set up as “Basket Currencies”. Basket currencies are holdings by foreign countries that is used to stabilize their own currency (originally the USD was backed by Gold now it is Fiat Currency (un-backed). There is currently a movement to return this backing using other currencies….. Could the Dinar be one of those currencies???

What gets continuously overlooked though in these forums is that Iraq has 25,000 times more dinar in circulation than Kuwait. FALSE!! Which brings us back to the point I made in the above post….The greatest likelihood is that you will see the dinar depreciate some from current values and then something comparable to the triple zero LOP. This would be financial suicide for the country! More on this later in the post.

It’s amazing how many people involved in this thing don’t understand simple economics. Econ 101…Including this guy! supply and demand. It amazes me how these bashers don’t understand fractional reserve and FIAT CURRENCY!!!! The Dollar and the Euro get their value from the demand that is generated from the size of the economies. FALSE… They get their value based on FAITH of these systems! They are both FIAT CURRENCIES!!! The US has a $13 trillion-dollar GDP, The Euro countries have a $12 trillion GDP. That makes for a tremendous demand for those currencies. AGAIN FALSE!! Iraq on the other hand has a GDP of about $90 billion… and almost all of that is from oil sales (Tangible Assets) which are in dollars so it does nothing for the dinar. So a tangible asset does nothing for the dinar and lack of a tangible asset does what for the Dollar?? The Iraqi non oil economy is practically nothing. FALSE, they have huge natural resources including Sulfur, crops to name a couple!! There is virtually no demand for dinar except for speculators. TRUE because it has not been released from CH 7 and is not an Internationally recognized currency! Bush passed a law that allows citizens of the USA to own the currency… NOTE ONLY ONE OF FEW COUNTRIES WHERE IT IS LEGAL TO DO SO!!! With a money supply 3 times that of the Euro or Dollar. FALSE! Once again fractional reserve banking is omitted in this figure. Iraq would have to have their non oil economy grow to approx 3 times the size of the U.S. or Euro nations (that would be a non oil GDP of about $35 trillion) in order to have the dinar rise to 1:1. FALSE

Hopefully you see that is a total farce. I do!!! 100% of this guys comments are based on false data and I would consider all his comments a farce!!

If Iraq wants a rate of 1:1 or anything close, they will issue a new currency and re-denominate. FALSE In other words, lop 3 zeros from the currency. For every 1000 of this dinar you have, you will get 1 of the new currency. That is if they don’t somehow block money from reentering the country for an exchange. FALSE!

Ok what about a lop? A lop in the chat rooms is defined as a currency losing value, and reducing the value of a currency by removing zeros from the notes. In Iraq’s case three zeros would be removed. I believe a lop will not take place. I will now present a case why I believe it will not happen. Look at the following article.

Iraq-Business News Editorial: Redenomination an unlikely priority for the CBI; Claims only reason to raise three zeros is due to inflationary purposes or to reduce wealth

Earlier this month it was reported that the Central Bank of Iraq (CBI) might redenominate the Iraqi dinar after the new government is formed, exchanging one new dinar for 1,000 old. (For more on this story, see http://www.iraq-busi...rom-iraqi-dinar ) While such a redenomination would obviously help to simplify transactions and record keeping, it is not clear that these benefits would be sufficient to justify the costs, both to the government and the economy as a whole, of switching to a new currency.

It’s not even true that all transactions would be simplified. Consider the ISX, for example, where stocks have a ID 1 par value and most of the share prices tend to be in the ID 1 – 30 range. While the redenomination is usually presented as a matter of “knocking off three zeros,” in the case of a name like BCOI, which last traded at ID 1.38, you’d actually be “tacking on” three zeros as the price in the new currency would be 0.00138. Would the companies then have to consolidate their shares, replacing every 1,000 old shares with 1 new one?

In any event, it’s not really clear why the CBI would choose to redenominate the dinar at this time. Historically, redenomination has typically been done either as part of “heterodox” inflation-fighting programs or, more rarely, as a way of expropriating wealth. (Heterodox programs are designed to lower the public’s inflation expectations, mainly through administrative measures such as wage/price controls.) For example, episodes of hyperinflation led to the introduction of the Argentine peso, which replaced the austral at a rate of 1:10,000 in December, 1991 and the Brazilian real, which replaced the cruzeiro real at a rate of 1:2,750 in July, 1994. More recently, North Korea replaced existing won notes with new ones at a rate of 1:100 last November, capping exchanges at W 100,000 per family (about US$ 40 at black-market rates), with the evident intent of wiping out free-market traders.

With Iraqi inflation now in the low single digits and, as far as we know, the government not out to expropriate anyone’s cash holdings, it’s hard to see why redenomination would be a priority. And indeed the disadvantages of having three extra zeros to deal with aren’t all that clear either. Think of the South Korean won, which at 1,150 to one US dollar is worth about ID 1.03. Does anyone really think there would be big benefits to the Korean economy from “knocking off” three zeros from the currency?

http://www.iraq-busi...ty-for-the-cbi/

The first link in the article takes you to Iraq business news. The title of the article is Central Bank Wants to Drop Zeros from Iraqi Dinar?” The last line in this article says, IBN has so far been unable to verify these reports. even though they have not verified anything in that article they wrote it anyway!! What is even more interesting is the article I just posted calling redenomination an unlikely priority is also an IBN article. What a great way to sell news papers!

One day there is an article that says there will be a lop. The next day there is an article that says there will not be a lop. This is like the articles that say one day Maliki is the prime minister and the next day Alawai is the prime minister. Who do you believe?

As this article goes on to point out there are only 2 reasons to lop off zeros. First, to fight inflation. Second to reduce wealth. Iraq does not have an inflation issue, and it does not have a problem with too much currency in circulation in it’s country. So that takes care of the first reason.

Why would Iraq want to reduce wealth? Keep in mind that Iraq exchanged debt for dinar. China forgave Iraq 80 billion in debt. They received dinar in exchange for the debt. The US gave Iraq 89 billion in 2004. They received dinar in exchange. There are currently 24 countries that hold dinar. Some of these countries exchange Iraqi debt for dinar. Most of the currency held by nations will probably be held in currency baskets to strengthen their own currency. There are companies that have also built infrastructure in Iraq, and they also hold dinar as well.

If Iraq does lop, they will reduce the wealth of these nations. They will reduce the wealth of the corporations that have invested in Iraq. This will bring investment in Iraq to a stand still. It will further devastate the Iraqi people. Unemployment will skyrocket as investors pull out. This is why a lop would be devastating to their economy.

Some of the skeptics have said, there is too much dinar in circulation. A 1:1 revalue would be more than the total US money supply. This would demand a lop just to keep the value of the dinar high. Currently there is 25 trillion dinar. (physical money supply) two thirds are held by foreign governments and investors. 10 percent is held by private investors, and 90 percent held by governments. Skeptics have said, There is 1.13 trillion Us dollars in circulation. some skeptics have said, There is 7 trillion dinar in circulation. Some skeptics are referring to physical money, other skeptics are referring to total money. Physical, and electronic.

Here are the true numbers. M1 money supply refers to the physical money supply. The supply is about 1.5 trillion. M2 money supply refers to all money physical and electronic. The current totals are 8.5 trillion. Now add to that fractional reserve banking. We have a total US money supply of 85 to 90 trillion dollars. Most of this is electronic. In fact, about 3 percent of our money supply is physical currency. Add to this a falling dollar and the fact that the dollar is a fiat currency. The Iraqi dinar is backed by oil. They are allowed to monetize the oil in the ground. (Saudi Arabia does this too) most of their currency is physical. Now you can see that due to the price of oil and our currency supply that we can easily handle an RV on a 1:1 basis without a lop. You would need to take into account the value of all currency in the world before considering a lop not just the US currency! The truth is Iraq can easily handle a revalue above 3.00 without doing a lop. This does not mean that Iraq will revalue at this rate. It just means the currency could handle that rate without a lop.

Some Skeptics have said, when Iraq revalues their currency they will introduce new lower denominations. The new lower denominations will be higher in value. There will be pre and post dinar. A post RV 25 dinar note will be worth the same as a pre RV 25,000 dinar note. This in reality is a Lop theory. Remember this will reduce the wealth of the nations that have invested in the dinar. There are a few problems with this theory so let’s break it down.

Currently there are 50, 250, 500, 1,000, 5,000, 10,000, and 25,000 dinar notes in circulation. Iraq plans to take the 25,000, 10,000, and 5,000 notes out of circulation. They will then put into circulation lower denominations. They could be 1, 5, 10, 25, notes. I don’t know what the exact notes will be this is just an example. If they say that a 10,000 dinar note pre RV is now worth as much as a 10 dinar note post RV. Then that will cause a problem for all the currency they plan to keep in circulation. All of a sudden a 50 dinar note pre RV will be worth more than 10,000 dinar note pre RV. This is why Iraq says that a lop will create confusion. In order to do a lop like this Iraq will need to replace all of the currency. They only intend to remove the higher notes from circulation. I have read articles and have seen press releases in which Iraq has denied time and again that it will do a lop. In the same press release they have said that the reason to release the lower denominations is so people can make change. They also state that they want to release lower denominations so people will carry less money.

Both of these statements are anti-lop statements. Think about it… Why would it be hard to make change it there was a lop? If the lowest denomination is all of a sudden worth 100.00 how could they change for smaller purchases. If the 5,000 note was all of a sudden worth 5.00 it would make it a little easier. But now you are trading 10 5,000 notes (pre RV) for one 50 note. (Pre RV) If there was a lop how would they carry less money? A 25,000 note is now worth 25 dinars. They would be carrying the same amount of money, if not more!

Some people can not grasp how an RV will actually benefit Iraq and how Iraq will make money. This adds fuel to the lop theory. So let me describe the process with this example. I will use a revalue rate of 1 dollar to keep the numbers simple.

The first thing to consider is the spread. The CBI has a spread. They have a buy rate, and a sell rate. Let us say that the RV happened and the buy rate is $1.00 and the sell rate is $1.10. Our rate for trading in the dinar would be the buy rate of the Iraqi central bank. (CBI) So now people who hold dinar begin to trade in their big 25,000 notes. CBI gives them a dollar for each dinar. CBI then sells the dinar traded in at 1.10 and instead of releasing 25,000 notes they release lower denominations. They are now making money on the spread. 10 cents per dinar. (if they do a lop they cut their wealth potential)

At this point sanctions are lifted, the dinar is traded globally, and demand for the dinar begins to rise. All of a sudden investors that have not seen a reason to buy dinar begin to invest. More people have turned in dinar and even more people are buying dinar. Forex determines a floating rate that rises and falls based on demand.

CBI begins to raise the rate to keep up with the global demand on Forex and even more people turn in dinar and more people buy dinar. If CBI raises the buy rate to two dollars and the sell rate two 2.20, that means the dinar they paid 1.00 for will give them back 1.20. They make money on the float!! 1 dollar for the float and 20 cents for the spread. If millions of dinar change hands then the CBI will make a huge prophet and at the same time remove all the higher notes out of circulation. If they lop then they will reduce their wealth, and the wealth of all dinar holders. This is a lose-lose situation. The dinar holders will also pull their investment capital, cut their losses, and go somewhere else to invest.

Now ask yourself this question. You probably already asked this question before. What will be the new buy rate after the RV? Or What will be the RV rate? If it is too low then people will hold on to their dinar and they will not trade it in. If it is too high then everyone will trade in and there will not be enough people buying dinar so CBI will not make a prophet. So there has got to be a balance. Not to low, and not to high. Mr. rich on DV conducted a poll. The question was,

“At what rate would you cash in all your dinar”? Here are the results

$.10 (14 votes [3.74%]

Percentage of vote: 3.74%

$.50 (25 votes [6.68%]

Percentage of vote: 6.68%

$1.00 (84 votes [22.46%]

Percentage of vote: 22.46%

$1.50 (52 votes [13.90%]

Percentage of vote: 13.90%

$2.00 (67 votes [17.91%]

Percentage of vote: 17.91%

$2.50 (40 votes [10.70%]

Percentage of vote: 10.70%

$3.00 (92 votes [24.60%]

Percentage of vote: 24.60%

According to this almost half of dinar holders would turn in all their dinar at $1.50. I think the new rate would be at least this amount, but not sure. (no one knows what the rate will be). One thing is certain according to this. At 3.00 everyone turns in the dinar and CBI makes no money off the float. So for this reason I don’t think the rate will be 3.00. About 1.20 to 2.00 would be my guess. But then what do I know? I am just a novice at this stuff.

Edited August 16, 2011 by Malcer

[sams401k]

Nice perspective!

I like it, alot

I have always thought the lop would destroy the chances of Iraq rebulding the country any time soon.

All the articles about dropping the zeroes are confusing, and I cant figure out why they say so plainly what they intend to do, just to do

something else. Seems like there will be an aweful lot of pissed off Iraqis who sold off thier Dinar based on these press releases just to

find out they got jacked.

Things that make you go Hmmmmmm

[Jack Dinauer]

Yeah they will drop the zeros alright, right off the current rate and in the end we will look at .86 as an exchange with the ability to float, though I would still like to believe it returns close to where it was originally so the citizens had close to what they had before it all turned into ****.

[PD46]

Thanks for the post Malcer. Great read!

It's late, and I need to read again in depth when I can focus.

Nonethless, great and positive article.

[DinarDana]

Thanks, I like it when someone can articulate what I think. Right on. Great work, thanks for sharing your opinion and research. I like Marcus Curtis, he has done a great deal of research on this speculative investment.

[capt.cliff]

Newbi , yes on posts , actually well thought out and covers many of the aspects--I am going to give you a plus---the effort is well worth that read and very believeable to be true--you actually convinced me, I liked the % of each revalue---middle of the road wins most of the time--Good Work , lot's of effort spent but I have one little factor which much be taken in the situation---that is the ME mind set--- there is nothing that can be counted on when it comes to ME countries---your post is straight logic and in anywhere else in the world chances are valid but in the ME this valid western perspective just don't apply ----the shortest distance is a straight line just doesn't work while much is used , more is regulated by alliances whether religous, politically , the neighbor next door then good old western thinking!

Trust in the Shab Man to make the path smooth for Iraq to transition into the 21st century-----I don't envey his job at all!

capt cliff

[fishing]

Good stuff !!!

[streakinblue2]

Sorry, I am a newbie also, but I could NOT OPEN ANY LINKS

Please, Please RV soon B)B)B)B)

[Malcer]

Thanks, I like it when someone can articulate what I think. Right on. Great work, thanks for sharing your opinion and research. I like Marcus Curtis, he has done a great deal of research on this speculative investment.

Yes even though this is from 2010 it really made sense. Some of the other news or articles I've read seem to do more to confuse than inform.

[rnldtippitt]

It's like you climbed into my head. Thanx for articulating it.

[joekooltrips]

Great post thanks for sharing.

[Malcer]

Thanks for the post Malcer. Great read!

It's late, and I need to read again in depth when I can focus.

Nonethless, great and positive article.

Your very welcome and rest well.

Newbi , yes on posts , actually well thought out and covers many of the aspects--I am going to give you a plus---the effort is well worth that read and very believeable to be true--you actually convinced me, I liked the % of each revalue---middle of the road wins most of the time--Good Work , lot's of effort spent but I have one little factor which much be taken in the situation---that is the ME mind set--- there is nothing that can be counted on when it comes to ME countries---your post is straight logic and in anywhere else in the world chances are valid but in the ME this valid western perspective just don't apply ----the shortest distance is a straight line just doesn't work while much is used , more is regulated by alliances whether religous, politically , the neighbor next door then good old western thinking!

Trust in the Shab Man to make the path smooth for Iraq to transition into the 21st century-----I don't envey his job at all!

capt cliff

Your right things in the ME don't always add up from a Western perspective.Thank you for pointing that out.

[Alex38]

Great read!

[Malcer]

This was posted on another site on Oct 12 2010. I found it interesting and maybe you will to. I'm no economist so please don't bash me as you may hurt my feelings

Also i checked on this forum and found no other posting of this,but if I made an error my apologies.

The Truth About The Iraqi Dinar And Zero LOP

Scooby Doo your in here to

by Marcus CurtisThe dinar chat boards are funny things. Every opinion is thrown out there. Nothing is vetted or verified in some chat rooms. There are two things I have learned from the chat rooms. 1. People will believe anything. 2. Everyone has an agenda. Yes even I have an agenda. My agenda is getting to the bottom of all the rumors and exposing them for what they are, no matter what the source. I want to expose lies that support a hidden agenda! If I am wrong on something I hope someone will correct me. In fact, I welcome correction or a true difference in opinion or belief. I like to consider every aspect. I also own dinar. So my agenda is to try to figure out how much money if any I will make. This is the most speculative investment I have ever seen.

In my last post I talked about skeptics who enter these chat rooms to try to discourage the people who purchased dinar. There are two main reasons for these people to do this. First, they represent other investments and they think by bursting someone’s bubble they may get a new client. Second, there are those who just do not believe the dinar will ever amount to anything. These people claim to have some kind of economics education and they try to confuse people with numbers and figures. They omit certain facts to bolster their case. This is much like the atheist who goes in to a Christian chat room for entertainment. Then they turn around and claim we are pushing our religion on them. GIVE ME A BREAK!!!

So now it is time to play another round of rebut the skeptic! My replies will be in red.

What you write makes wonderful sense. But it ignores a few economic and political realities. Like the Iraqis want to be part of this great mad world, with unimportant little things like International Trade, free trade agreements, etc. All of which are predicated on having a floating currency. Floating currencies find their own value. If Iraq floated its currency at NID1,170 per USD1.00 (i.e. the current rate) the market would take it up like a fountain, and probably go so far over the top in the process that it would hit ground on the way back down! This statement could be true PROVIDED it is allowed to enter at such a low rate!!!! It proves the point that the RV/RI MUST HAPPEN prior to entering the foreign currency market (FOREX)!!! If it enters at a realistic rate it will control the speculation of the currency!! Shabibi has held the artificially low rate as a requirement for consideration of removal from Chap 7, called the dirty float! Similar mechanisms will be used to reduce the volatility of the currency when it initially is introduced. Kind of like the circuit breaker we have in our stock market!

It makes sense to set a value that the market can live with. Whether that is USD0.10, US0, 0.86, or USD 3.19 is arguable. But the need for the float is not! FOREX will be the float LIKE IT OR NOT!!! That is why it needs to be introduced back at a realistic rate. Forex won’t set the rate, but they will trend it.

Back in ’03 a Harvard economist suggest a value based on USD0.33 plus Euro0.33 (Approx USD0.41) plus 1/100 of price of barrel of Iraqi Crude (say USD0.70) making a value of approx. USD1.44. And that was before reasonably normal democratic elections where even in sight! Those guys at Harvard have all the answers. LOL! Is that how they set the rate for the Kuwaiti dinar which is over $3.40? Kuwait has already gone through their revalue. Kuwait makes a great case study for the Iraqi dinar. More on this at a later time.

An equal value RV to the dollar is a mathematical and economic impossibility.

Too often it is portrayed that if you have 1,000,000 dinar, that suddenly you will be able to run down to the bank and cash it in for $1,000,000 US. Not true!!! Absolutely Not True!!! The US would have to devalue our dollar dramatically for this to even be remotely on the horizon. BULL!!! He neglects to say that the US dollar has been on a steady decline for a while now. That has never been considered in the artificial low rate of the dinar. The Iraqi dinar has held a steady value for the last 4 years while the dollar has been declining. During this time the dinar has not increased in value like it should have. This is more proof of a suppressed rate. The rate is suppressed on purpose because of US sanctions. The current rate of the dinar does not represent the wealth of that nation.

There are approximately $7 trillion US dollars in circulation. He is referring to “physical and electronic currency (M2)”, which represents a FRACTION of what is on the books. He is neglecting The Federal Reserve, and the document they produced called Modern Money Mechanics. In this document you will discover fractional reserve banking. Most of these skeptics have no clue how this works. The following short video breaks it down.

http://www.youtube.c...h?v=pC8I3J-1GSM

If the 30 trillion dinar were suddenly worth $30 trillion dollars, there is not only not enough US Dollars, there isn’t enough money in the entire world to buy or compensate for the new value of the dinar…Does that make sense? SIMPLE, can you say Foreign Reserves?? Keep in mind that 75 to 90% of the Dinar have already been removed from circulation!! Also note that there is not 30 trillion dinar in circulation! There is about 25 trillion dinar not all of that is in circulation. A country worth a few hundred billion can suddenly wake up one morning and be worth more than the rest of the combined planet. Except that Iraq is worth way more than a few hundred billion. There are 80 oil fields in Iraq out of that only 12 of them are being drilled. Iraq does not know how much oil it has. When Saddam was in power he did little oil exploration. The known oil supply is a little over 113 billion barrels. Times that by the price per barrel. This does not even include the wealth of natural gas. Their currency is a reflection of these commodities. It is suppressed because of sanctions imposed by the United Nations. Keep in mind that the currency that “WE” the investors hold represents only a FRACTION of the total Dinar (25 Trillion). Investor notes 1000, 5000, 10,000 and 25,000 notes have been recalled using several mechanisms. Note these mechanisms are not used or intended to remove “OUR” investor notes. It is estimated that between 75 and 90% of this 25 Trillion have been removed or have been set up as “Basket Currencies”. Basket currencies are holdings by foreign countries that is used to stabilize their own currency (originally the USD was backed by Gold now it is Fiat Currency (un-backed). There is currently a movement to return this backing using other currencies….. Could the Dinar be one of those currencies???

What gets continuously overlooked though in these forums is that Iraq has 25,000 times more dinar in circulation than Kuwait. FALSE!! Which brings us back to the point I made in the above post….The greatest likelihood is that you will see the dinar depreciate some from current values and then something comparable to the triple zero LOP. This would be financial suicide for the country! More on this later in the post.

It’s amazing how many people involved in this thing don’t understand simple economics. Econ 101…Including this guy! supply and demand. It amazes me how these bashers don’t understand fractional reserve and FIAT CURRENCY!!!! The Dollar and the Euro get their value from the demand that is generated from the size of the economies. FALSE… They get their value based on FAITH of these systems! They are both FIAT CURRENCIES!!! The US has a $13 trillion-dollar GDP, The Euro countries have a $12 trillion GDP. That makes for a tremendous demand for those currencies. AGAIN FALSE!! Iraq on the other hand has a GDP of about $90 billion… and almost all of that is from oil sales (Tangible Assets) which are in dollars so it does nothing for the dinar. So a tangible asset does nothing for the dinar and lack of a tangible asset does what for the Dollar?? The Iraqi non oil economy is practically nothing. FALSE, they have huge natural resources including Sulfur, crops to name a couple!! There is virtually no demand for dinar except for speculators. TRUE because it has not been released from CH 7 and is not an Internationally recognized currency! Bush passed a law that allows citizens of the USA to own the currency… NOTE ONLY ONE OF FEW COUNTRIES WHERE IT IS LEGAL TO DO SO!!! With a money supply 3 times that of the Euro or Dollar. FALSE! Once again fractional reserve banking is omitted in this figure. Iraq would have to have their non oil economy grow to approx 3 times the size of the U.S. or Euro nations (that would be a non oil GDP of about $35 trillion) in order to have the dinar rise to 1:1. FALSE

Hopefully you see that is a total farce. I do!!! 100% of this guys comments are based on false data and I would consider all his comments a farce!!

If Iraq wants a rate of 1:1 or anything close, they will issue a new currency and re-denominate. FALSE In other words, lop 3 zeros from the currency. For every 1000 of this dinar you have, you will get 1 of the new currency. That is if they don’t somehow block money from reentering the country for an exchange. FALSE!

Ok what about a lop? A lop in the chat rooms is defined as a currency losing value, and reducing the value of a currency by removing zeros from the notes. In Iraq’s case three zeros would be removed. I believe a lop will not take place. I will now present a case why I believe it will not happen. Look at the following article.

Iraq-Business News Editorial: Redenomination an unlikely priority for the CBI; Claims only reason to raise three zeros is due to inflationary purposes or to reduce wealth

Earlier this month it was reported that the Central Bank of Iraq (CBI) might redenominate the Iraqi dinar after the new government is formed, exchanging one new dinar for 1,000 old. (For more on this story, see http://www.iraq-busi...rom-iraqi-dinar ) While such a redenomination would obviously help to simplify transactions and record keeping, it is not clear that these benefits would be sufficient to justify the costs, both to the government and the economy as a whole, of switching to a new currency.

It’s not even true that all transactions would be simplified. Consider the ISX, for example, where stocks have a ID 1 par value and most of the share prices tend to be in the ID 1 – 30 range. While the redenomination is usually presented as a matter of “knocking off three zeros,” in the case of a name like BCOI, which last traded at ID 1.38, you’d actually be “tacking on” three zeros as the price in the new currency would be 0.00138. Would the companies then have to consolidate their shares, replacing every 1,000 old shares with 1 new one?

In any event, it’s not really clear why the CBI would choose to redenominate the dinar at this time. Historically, redenomination has typically been done either as part of “heterodox” inflation-fighting programs or, more rarely, as a way of expropriating wealth. (Heterodox programs are designed to lower the public’s inflation expectations, mainly through administrative measures such as wage/price controls.) For example, episodes of hyperinflation led to the introduction of the Argentine peso, which replaced the austral at a rate of 1:10,000 in December, 1991 and the Brazilian real, which replaced the cruzeiro real at a rate of 1:2,750 in July, 1994. More recently, North Korea replaced existing won notes with new ones at a rate of 1:100 last November, capping exchanges at W 100,000 per family (about US$ 40 at black-market rates), with the evident intent of wiping out free-market traders.

With Iraqi inflation now in the low single digits and, as far as we know, the government not out to expropriate anyone’s cash holdings, it’s hard to see why redenomination would be a priority. And indeed the disadvantages of having three extra zeros to deal with aren’t all that clear either. Think of the South Korean won, which at 1,150 to one US dollar is worth about ID 1.03. Does anyone really think there would be big benefits to the Korean economy from “knocking off” three zeros from the currency?

http://www.iraq-busi...ty-for-the-cbi/

The first link in the article takes you to Iraq business news. The title of the article is Central Bank Wants to Drop Zeros from Iraqi Dinar?” The last line in this article says, IBN has so far been unable to verify these reports. even though they have not verified anything in that article they wrote it anyway!! What is even more interesting is the article I just posted calling redenomination an unlikely priority is also an IBN article. What a great way to sell news papers!

One day there is an article that says there will be a lop. The next day there is an article that says there will not be a lop. This is like the articles that say one day Maliki is the prime minister and the next day Alawai is the prime minister. Who do you believe?

As this article goes on to point out there are only 2 reasons to lop off zeros. First, to fight inflation. Second to reduce wealth. Iraq does not have an inflation issue, and it does not have a problem with too much currency in circulation in it’s country. So that takes care of the first reason.

Why would Iraq want to reduce wealth? Keep in mind that Iraq exchanged debt for dinar. China forgave Iraq 80 billion in debt. They received dinar in exchange for the debt. The US gave Iraq 89 billion in 2004. They received dinar in exchange. There are currently 24 countries that hold dinar. Some of these countries exchange Iraqi debt for dinar. Most of the currency held by nations will probably be held in currency baskets to strengthen their own currency. There are companies that have also built infrastructure in Iraq, and they also hold dinar as well.

If Iraq does lop, they will reduce the wealth of these nations. They will reduce the wealth of the corporations that have invested in Iraq. This will bring investment in Iraq to a stand still. It will further devastate the Iraqi people. Unemployment will skyrocket as investors pull out. This is why a lop would be devastating to their economy.

Some of the skeptics have said, there is too much dinar in circulation. A 1:1 revalue would be more than the total US money supply. This would demand a lop just to keep the value of the dinar high. Currently there is 25 trillion dinar. (physical money supply) two thirds are held by foreign governments and investors. 10 percent is held by private investors, and 90 percent held by governments. Skeptics have said, There is 1.13 trillion Us dollars in circulation. some skeptics have said, There is 7 trillion dinar in circulation. Some skeptics are referring to physical money, other skeptics are referring to total money. Physical, and electronic.

Here are the true numbers. M1 money supply refers to the physical money supply. The supply is about 1.5 trillion. M2 money supply refers to all money physical and electronic. The current totals are 8.5 trillion. Now add to that fractional reserve banking. We have a total US money supply of 85 to 90 trillion dollars. Most of this is electronic. In fact, about 3 percent of our money supply is physical currency. Add to this a falling dollar and the fact that the dollar is a fiat currency. The Iraqi dinar is backed by oil. They are allowed to monetize the oil in the ground. (Saudi Arabia does this too) most of their currency is physical. Now you can see that due to the price of oil and our currency supply that we can easily handle an RV on a 1:1 basis without a lop. You would need to take into account the value of all currency in the world before considering a lop not just the US currency! The truth is Iraq can easily handle a revalue above 3.00 without doing a lop. This does not mean that Iraq will revalue at this rate. It just means the currency could handle that rate without a lop.

Some Skeptics have said, when Iraq revalues their currency they will introduce new lower denominations. The new lower denominations will be higher in value. There will be pre and post dinar. A post RV 25 dinar note will be worth the same as a pre RV 25,000 dinar note. This in reality is a Lop theory. Remember this will reduce the wealth of the nations that have invested in the dinar. There are a few problems with this theory so let’s break it down.

Currently there are 50, 250, 500, 1,000, 5,000, 10,000, and 25,000 dinar notes in circulation. Iraq plans to take the 25,000, 10,000, and 5,000 notes out of circulation. They will then put into circulation lower denominations. They could be 1, 5, 10, 25, notes. I don’t know what the exact notes will be this is just an example. If they say that a 10,000 dinar note pre RV is now worth as much as a 10 dinar note post RV. Then that will cause a problem for all the currency they plan to keep in circulation. All of a sudden a 50 dinar note pre RV will be worth more than 10,000 dinar note pre RV. This is why Iraq says that a lop will create confusion. In order to do a lop like this Iraq will need to replace all of the currency. They only intend to remove the higher notes from circulation. I have read articles and have seen press releases in which Iraq has denied time and again that it will do a lop. In the same press release they have said that the reason to release the lower denominations is so people can make change. They also state that they want to release lower denominations so people will carry less money.

Both of these statements are anti-lop statements. Think about it… Why would it be hard to make change it there was a lop? If the lowest denomination is all of a sudden worth 100.00 how could they change for smaller purchases. If the 5,000 note was all of a sudden worth 5.00 it would make it a little easier. But now you are trading 10 5,000 notes (pre RV) for one 50 note. (Pre RV) If there was a lop how would they carry less money? A 25,000 note is now worth 25 dinars. They would be carrying the same amount of money, if not more!

Some people can not grasp how an RV will actually benefit Iraq and how Iraq will make money. This adds fuel to the lop theory. So let me describe the process with this example. I will use a revalue rate of 1 dollar to keep the numbers simple.

The first thing to consider is the spread. The CBI has a spread. They have a buy rate, and a sell rate. Let us say that the RV happened and the buy rate is $1.00 and the sell rate is $1.10. Our rate for trading in the dinar would be the buy rate of the Iraqi central bank. (CBI) So now people who hold dinar begin to trade in their big 25,000 notes. CBI gives them a dollar for each dinar. CBI then sells the dinar traded in at 1.10 and instead of releasing 25,000 notes they release lower denominations. They are now making money on the spread. 10 cents per dinar. (if they do a lop they cut their wealth potential)

At this point sanctions are lifted, the dinar is traded globally, and demand for the dinar begins to rise. All of a sudden investors that have not seen a reason to buy dinar begin to invest. More people have turned in dinar and even more people are buying dinar. Forex determines a floating rate that rises and falls based on demand.

CBI begins to raise the rate to keep up with the global demand on Forex and even more people turn in dinar and more people buy dinar. If CBI raises the buy rate to two dollars and the sell rate two 2.20, that means the dinar they paid 1.00 for will give them back 1.20. They make money on the float!! 1 dollar for the float and 20 cents for the spread. If millions of dinar change hands then the CBI will make a huge prophet and at the same time remove all the higher notes out of circulation. If they lop then they will reduce their wealth, and the wealth of all dinar holders. This is a lose-lose situation. The dinar holders will also pull their investment capital, cut their losses, and go somewhere else to invest.

Now ask yourself this question. You probably already asked this question before. What will be the new buy rate after the RV? Or What will be the RV rate? If it is too low then people will hold on to their dinar and they will not trade it in. If it is too high then everyone will trade in and there will not be enough people buying dinar so CBI will not make a prophet. So there has got to be a balance. Not to low, and not to high. Mr. rich on DV conducted a poll. The question was,

“At what rate would you cash in all your dinar”? Here are the results

$.10 (14 votes [3.74%]

Percentage of vote: 3.74%

$.50 (25 votes [6.68%]

Percentage of vote: 6.68%

$1.00 (84 votes [22.46%]

Percentage of vote: 22.46%

$1.50 (52 votes [13.90%]

Percentage of vote: 13.90%

$2.00 (67 votes [17.91%]

Percentage of vote: 17.91%

$2.50 (40 votes [10.70%]

Percentage of vote: 10.70%

$3.00 (92 votes [24.60%]

Percentage of vote: 24.60%

According to this almost half of dinar holders would turn in all their dinar at $1.50. I think the new rate would be at least this amount, but not sure. (no one knows what the rate will be). One thing is certain according to this. At 3.00 everyone turns in the dinar and CBI makes no money off the float. So for this reason I don’t think the rate will be 3.00. About 1.20 to 2.00 would be my guess. But then what do I know? I am just a novice at this stuff.

[BETTYBOOP]

This was a lot of reading .....but Great post ! It made sense to me ....but that is just my two pennies worth. I also have never thought it would LOP. From what I had read that didn't make sense to me. I am hopping for around the $2.00 -$2.50 range. This would be good for me considering I need to work in pounds. But if it doesn't come in at that I plan to cash in enough to clear my immediate debt and then wait to see it go a bit higher if I can. Thanks for all the work you put into this post Good luck to us all. Go R.V. Soon please !! Have a good day. BB. X

[The Machine]

Great post .... well written and informed, this has been the highlight of my morning reading this thank you so much ...... we now have a great post to refer all the Lopsters to lol

Malcer --- why would you quote the whole first post and say nothing ??? really annoys me when people do that.

[The Jonald]

Yeah they will drop the zeros alright, right off the current rate and in the end we will look at .86 as an exchange with the ability to float, though I would still like to believe it returns close to where it was originally so the citizens had close to what they had before it all turned into ****.

you really think they are talking about the exchange rate. they havent talked at all about an exchange rate. we have a lot. when they are talking about deleting the zeros they are talking about the currency. this they have talked about specifically. the writing is on the wall, looks like lop, but i dont know how it all shakes out. could still work for us, who knows.

[Malcer]

Great post .... well written and informed, this has been the highlight of my morning reading this thank you so much ...... we now have a great post to refer all the Lopsters to lol

Malcer --- why would you quote the whole first post and say nothing ??? really annoys me when people do that.

Thanks for you comment. The reason I posted with no comment is so the post would not be posted over and never read by some.

[mws]

Good read, but still can't open links??

[Malcer]

Good read, but still can't open links??

My apologies for that. Here is the original site link.

http://dinaroutcast.forumotion.com/t6989-lop-bustedtruth-about-dinar

[Deltori]

I gotta hand it to you..I was impressed with your ability to lay it out so elequantly. Togh topic but I was glued to the screen the whole time.

Thanks very much for this!

[zigmeister]

If you are novice then you are quick study. Very well laid out post. Be ready for the debate, it should be interesting.

[Malcer]

If you are novice then you are quick study. Very well laid out post. Be ready for the debate, it should be interesting.

Thanks, but this is not my work or research.I found this on another site. I don't think Marcus Curtis would be happy if he thought I was trying to steal his hard work. No doubt that he did put a tremendous amount of thought and time into this article. The reason I posted this is because most who talk about the possibility of a Lop never really give a reason why they believe in it, Just the standard quote of "it's in this article or that". Now that being said, There are a large amount of articles talking about a raising of Three zeros,but honestly who knows what they mean?Answer: The ones in charge of the Dinar. Not me,you or anyone else on this forum can say for a fact that it will happen one way or another. As was stated in a previous post and pointed out by Capt.Cliff ,the majority of people on this forum tend to look at things from Western perspective the ME doesn't. My final thoughts to all the Lopsters is a poem from W.B. Yeats named, He wishes for the Cloths of Heaven.

Had I the heaven's embroidered cloths,

Enwrought with golden and silver light,

The blue and the dim and the dark cloths

Of night and light and the half-light,

I would spread the cloths under your feet:

But I, being poor, have only my dreams;

I have spread my dreams under your feet;

Tread softly because you tread on my dreams.

William Butler Yeats