Explaining LOP in plain language

[Kittykins]

This is my first time trying to add a link for you all to use so you can listen to his commentary. Please apardon me if it does not work for I am NOT computer savy & never claim to be.

I do however think you can simply cut & paste the below info to bring it up in your search engine. UG ! I am so stupid with this thing I hope that makes sense as well.

I so appreciate Breitlings easy manner in which he explains things. In this particular instance he explains WHY the LOP probably won't happen due the introduction of the new notes, etc... You can fast forward to that particular comment by going to the 11 minute mark.

Sorry in advance if I messed it up & you all have no clue to what I am talking about.

http://breitlingcurrency.blogspot.com/2011/08/breitlings-morning-review-8172011.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+IraqInvestments+%28Iraq+Investments%29

Come on RV !!

[jg167]

From the recording:

B: They are not going to LOP the three zeroes off and how do we know that for 100% sure? Because they are talking about the new currency that is going to replace it and what are they saying, that its going to be written in three languages, its going to be printed in three languages so that'l stop the guessing on their taking three zeros off the note.

Really? Doesn't sound like much of an explanation to me. I don't see how the number of languages the new notes are printed in has any relationship to the exchange rate to the current IQD. But thanks for posting the link (which does work! )

Edited August 17, 2011 by jg167

[Kittykins]

From the recording:

B: They are not going to LOP the three zeroes off and how do we know that for 100% sure? Because they are talking about the new currency that is going to replace it and what are they saying, that its going to be written in three languages, its going to be printed in three languages so that'l stop the guessing on their taking three zeros off the note.

Really? Doesn't sound like much of an explanation to me. I don't see how the number of languages the new notes are printed in has any relationship to the exchange rate to the current IQD. But thanks for posting the link (which does work! )

Thanks for letting me know it worked. AND thanks for you opinion, I value any & all comments in this investment.

[Tahoe]

Thanks for letting me know it worked. AND thanks for you opinion, I value any & all comments in this investment.

I totally agree...... very lame response to the LOP question....

[Dalite]

Kittykins,

I started to comment on Breitling's take on the current situation, but cancelled my comment.

This is what I understand, and it is only my opinion, based on the facts I can gather from (mostly) verifiable sources.

Shabibi took over a very poor economy, around 2007, the exchange rate was very low (big numbers) against the dollar; somewhere between 4000: and 3000:1.

The economy was like a snowball rolling down hill. To make transactions easier, zeros had been added to the notes, as the snowball was inflation, and it was picking up speed. We would call that hyperinflation.

Through a very well planned and controlled process, he gradually reduced inflation to manageable numbers, and kept it there.

But, the currency still represented a time when it was so weak that it was 1000 times larger than where it should be to establish a strong economy that had room to grow.

The currency needed to be unwound, to get the leftover traces of inflation removed so it would reflect it's true value.

A RV would make the exchange rate better, but not address the remnants of past inflation. All it would do is put Iraq in peril of economic collapse, since they had printed so much money to keep up with inflation, they couldn't possibly pay over a few cents per dinar with the reserves they have available.

RD, or ReDenomination is a process that meets all of his goals. It reduces the amount of dinar that Iraq is responsible for by a factor of 1000. It does this by dividing the currency, contracts, loans, accounts, paychecks, prices...everything to do with the economy by 1000.

Since that gives a 25 dinar note of the new currency the same value of a 25000 dinar note of the old (current) currency, and because part of the constitutional requirements call for Kurdish language on the notes, a complete new set of notes and some coin will be introduced.

In terms of dollars, the current ratio of 1170:1 means a dinar is currently worth $.00086. That is almost a tenth of a penny.

25000 dinar is currently worth around $21.50 . If you divide the currency by 1000, and strengthen the exchange rate by the same amount of decimal places, a new 1 dinar note would be worth $.86; it would buy what a 10,000 dinar note buys now.

This makes the amount of currency printed (Iraq's Liability) 1000 times smaller, but the new notes 1000 times more valuable, and allows the money system there return to a structure very similar to the US; especially if they add a 50 and 1000 dinar note to the new lineup.

This isn't what I was looking for when I first bought dinar. I don't really want this to happen, but I do understand the logic, and it would be the best first choice for Iraq's future.

It hasn't been approved, or voted on yet, so anything is possible at this point.

We have been promised a 3:1 RV by the folks that profit from selling us dinar.

Iraq has a liability for 59 trillion dinar. If you multiply that by 3 dollars, it is 177 trillion do Lars in reserves Iraq would need to back a RV of 3:1. All of the money in circulation from the top twenty economies of the world won't barely cover a third of that liability.

If they do a 3 zero RD, that 59 trillion dinar liability becomes a 59 billion dinar liability, which can be covered by their reserves at current production.

When other countries look at investing in Iraq, they look for stability; especially monetary stability.

There is just a stigma about notes with 3 or more zeros on them that says third world. The new currency would have exactly the same purchasing power as the old. The world and Iraq will see confidence in the restructuring, and the value will grow.

So, that is what I have been able to determine from looking at the RD plans of other countries, comparing production with other economies, comparing money supply and population with other economies, and studying on ways to combat inflation, and remove traces when stabilized.

As of now, the CBI says this is what they want to do, but we won't know which way they go until a restructuring plan is voted on and passes.

So, we are all here in this boat together, waiting for certainty.

I hope some of this made sense...

[dinarck]

Agreed unfortunately Dalite. Too bad Breitling doesnt have 1/8th of the common sense that you just portrayed in my opinion. Sad to think of how many he misinforms. Still hoping we are wrong but one thing I am pretty sure of is he isn't right.

[Dalite]

Correction on my previous post.

1 new dinar would purchase what 1000 old dinar sis; not 1o,ooo (too many zeros on my mind).

And Dinarck, I too am hoping for another outcome, or a swift increase in the form of a RV After RD, if RD is what passes parliament.

I never though I would get this involved in Iraqi politics and foreign currency, but it has been very educational.

Thanks for your kind words...

Also, your approach has been much smoother lately.

It's not my place to tell folks how to approach things, but your change has definately been a real plus for the DV community.

I have tried to tone down my comments also.

Keep on Keepin' On

[dinarck]

Correction on my previous post.

1 new dinar would purchase what 1000 old dinar sis; not 1o,ooo (too many zeros on my mind).

And Dinarck, I too am hoping for another outcome, or a swift increase in the form of a RV After RD, if RD is what passes parliament.

I never though I would get this involved in Iraqi politics and foreign currency, but it has been very educational.

Thanks for your kind words...

Also, your approach has been much smoother lately.

It's not my place to tell folks how to approach things, but your change has definately been a real plus for the DV community.

I have tried to tone down my comments also.

Keep on Keepin' On

Yeah in the past I was constantly on the defensive and admittedly handled it all wrong. Now I have seen the error in my ways and just challenge bashers to show where I am wrong with a civil discussion. That usually tones things down quite a bit. I have lost it a few times on certain individuals but they really boiled my blood and I couldnt help it. Its people like yourself and Jim and Drox that have made me see that respectful debate is the way to go. MOD warning helped a little too. LOL

[txcountryman]

So would that make the current 50 dinar notes that you can get be worth actually.05?

[jg167]

So would that make the current 50 dinar notes that you can get be worth actually.05?

Correct. Todays 50 IQD note worth $0.043 USD would exchange for a new dinar nickel worth $0.043 USD, assuming the exchange rate remains were it is.

[52%sure]

Kittykins,

I started to comment on Breitling's take on the current situation, but cancelled my comment.

This is what I understand, and it is only my opinion, based on the facts I can gather from (mostly) verifiable sources.

Shabibi took over a very poor economy, around 2007, the exchange rate was very low (big numbers) against the dollar; somewhere between 4000: and 3000:1.

The economy was like a snowball rolling down hill. To make transactions easier, zeros had been added to the notes, as the snowball was inflation, and it was picking up speed. We would call that hyperinflation.

Through a very well planned and controlled process, he gradually reduced inflation to manageable numbers, and kept it there.

But, the currency still represented a time when it was so weak that it was 1000 times larger than where it should be to establish a strong economy that had room to grow.

The currency needed to be unwound, to get the leftover traces of inflation removed so it would reflect it's true value.

A RV would make the exchange rate better, but not address the remnants of past inflation. All it would do is put Iraq in peril of economic collapse, since they had printed so much money to keep up with inflation, they couldn't possibly pay over a few cents per dinar with the reserves they have available.

RD, or ReDenomination is a process that meets all of his goals. It reduces the amount of dinar that Iraq is responsible for by a factor of 1000. It does this by dividing the currency, contracts, loans, accounts, paychecks, prices...everything to do with the economy by 1000.

Since that gives a 25 dinar note of the new currency the same value of a 25000 dinar note of the old (current) currency, and because part of the constitutional requirements call for Kurdish language on the notes, a complete new set of notes and some coin will be introduced.

In terms of dollars, the current ratio of 1170:1 means a dinar is currently worth $.00086. That is almost a tenth of a penny.

25000 dinar is currently worth around $21.50 . If you divide the currency by 1000, and strengthen the exchange rate by the same amount of decimal places, a new 1 dinar note would be worth $.86; it would buy what a 10,000 dinar note buys now.

This makes the amount of currency printed (Iraq's Liability) 1000 times smaller, but the new notes 1000 times more valuable, and allows the money system there return to a structure very similar to the US; especially if they add a 50 and 1000 dinar note to the new lineup.

This isn't what I was looking for when I first bought dinar. I don't really want this to happen, but I do understand the logic, and it would be the best first choice for Iraq's future.

It hasn't been approved, or voted on yet, so anything is possible at this point.

We have been promised a 3:1 RV by the folks that profit from selling us dinar.

Iraq has a liability for 59 trillion dinar. If you multiply that by 3 dollars, it is 177 trillion do Lars in reserves Iraq would need to back a RV of 3:1. All of the money in circulation from the top twenty economies of the world won't barely cover a third of that liability.

If they do a 3 zero RD, that 59 trillion dinar liability becomes a 59 billion dinar liability, which can be covered by their reserves at current production.

When other countries look at investing in Iraq, they look for stability; especially monetary stability.

There is just a stigma about notes with 3 or more zeros on them that says third world. The new currency would have exactly the same purchasing power as the old. The world and Iraq will see confidence in the restructuring, and the value will grow.

So, that is what I have been able to determine from looking at the RD plans of other countries, comparing production with other economies, comparing money supply and population with other economies, and studying on ways to combat inflation, and remove traces when stabilized.

As of now, the CBI says this is what they want to do, but we won't know which way they go until a restructuring plan is voted on and passes.

So, we are all here in this boat together, waiting for certainty.

I hope some of this made sense...

They are going to be mad at you. This is what I understand also. Everytime Its said people get nasty. The only way they will vote this down will be mass corruption. If they RV at $3 on all these big notes the Iraqi economy will be looted into oblivian. It simply cannot happen. If they were getting ready to do this big RV why would they stll be holding dinar sales several times a week.

I feel like jack that traded his cow for magic beans.

[Raleighwood]

And this is exactly why I think Breitling is a ding a ling lol.......