Finance Committee meets Iraqi Central Bank Governor

[Alexyn1006]

Breitlings Afternoon Report 8/22/2011

Breitling addresses the duality/conflicting info in the articles coming out pertaining to the topic of this particular thread.

http://breitlingcurrency.blogspot.com/

[Darin]

One thing I have on my mind Darin is the new currency. The way they have been talking it seems that the new currency has been printed and ready to roll out. What has me wondering is why they would print the new currency before the vote to approve the new currency? It has been made clear that the Kurdish language has to be on the currency and the articles we have seen make it seem like its a done deal. Why? Maybe I am just misreading them and the new currency in fact hasnt been printed. If that is the case I dont think we would even see the new currency until quite a while after it has been approved which I hope its not. Lets say its voted down. Then what? Do they then print new 000 notes with the new language? They would have to I would think. Even if they began to raise the exchange rate at what rate would they be able to get away with lower denoms? 500? 100? .01? .10? I suk at math so I cant really think how large or small of a bill would be needed at an exchange rate of 385 but really my whole point is that lower denoms are bad for us no matter how we look at it because we both agree they will not print 30 trillion of them and they cannot RV to 1.00 or any where near it so all that is left is RD as far as the lower denoms go. So hopefully they havent printed them or else that tells me that the RD is a go. Do you agree or do you see something I am missing.

It makes you wonder, right?? Why print new currency prior to an approval. Your throwing money away at something that may never work out. Now, printing T-shirts priot to the end of a Superbowl calling one of the two teams the Superbowl champs is at least a 50/50 & doesn't cost all that much. LOL - But, a new currency doesn't come cheap.

If they were to truly have the intention to R/D - you would think we would see some specimens online... If your doing an R/D, who cares - value neutral event, right?

So much seems to be hidden from public eye, makes you have to scratch your head and go.. "why??"

[Realdinar]

It makes you wonder, right?? Why print new currency prior to an approval. Your throwing money away at something that may never work out. Now, printing T-shirts priot to the end of a Superbowl calling one of the two teams the Superbowl champs is at least a 50/50 & doesn't cost all that much. LOL - But, a new currency doesn't come cheap.

If they were to truly have the intention to R/D - you would think we would see some specimens online... If your doing an R/D, who cares - value neutral event, right?

So much seems to be hidden from public eye, makes you have to scratch your head and go.. "why??"

I wonder if a certain t shirt company lands the contract to produce the shirt, but charges enough profit to cover the cost of the losing team shirt. In other words, charge a certain amount then just mark up the price to cover the amount lost. Also, these news articles coming out of iraq actually make me think nothing much is actually happening in iraq. The excitement and fireworks are just a scheme to excite investors for no appearent reason.

Edited August 22, 2011 by Realdinar

[MrFnHappy]

One thing I have on my mind Darin is the new currency. The way they have been talking it seems that the new currency has been printed and ready to roll out. What has me wondering is why they would print the new currency before the vote to approve the new currency? It has been made clear that the Kurdish language has to be on the currency and the articles we have seen make it seem like its a done deal. Why? Maybe I am just misreading them and the new currency in fact hasnt been printed. If that is the case I dont think we would even see the new currency until quite a while after it has been approved which I hope its not. Lets say its voted down. Then what? Do they then print new 000 notes with the new language? They would have to I would think. Even if they began to raise the exchange rate at what rate would they be able to get away with lower denoms? 500? 100? .01? .10? I suk at math so I cant really think how large or small of a bill would be needed at an exchange rate of 385 but really my whole point is that lower denoms are bad for us no matter how we look at it because we both agree they will not print 30 trillion of them and they cannot RV to 1.00 or any where near it so all that is left is RD as far as the lower denoms go. So hopefully they havent printed them or else that tells me that the RD is a go. Do you agree or do you see something I am missing.

FWIW.

I don't believe they have printed anything yet.....which is why more than a couple of articles make reference to the fact it will take time for the whole process to evolve. Further, I believe this is why the 100k note has been mentioned too. The 100k note will ease the large cash transaction issues until the new currency is rolled out...a "stop-gap" measure, if you will.

From all I have read, I believe that even if parliament approves the RD tomorrow, we won't see any action until next year sometime. It seems the majority of countries who have re-denominated announced their intentions via extensive media campaigns long before the exchange actually began.

Edited August 22, 2011 by MrFnHappy

[dinarck]

FWIW.

I don't believe they have printed anything yet.....which is why more than a couple of articles make reference to the fact it will take time for the whole process to evolve. Further, I believe this is why the 100k note has been mentioned too. The 100k note will ease the large cash transaction issues until the new currency is rolled out...a "stop-gap" measure, if you will.

From all I have read, I believe that even if parliament approves the RD tomorrow, we won't see any action until next year sometime. It seems the majority of countries who have re-denominated announced their intentions via extensive media campaigns long before the exchange actually began.

Thanks FnHappy, now that I think about it that sounds about right. Lets hope they dont print those suckers and get us to a dime.

GO RVVVVV!!!! LOL

[Realdinar]

FWIW.

I don't believe they have printed anything yet.....which is why more than a couple of articles make reference to the fact it will take time for the whole process to evolve. Further, I believe this is why the 100k note has been mentioned too. The 100k note will ease the large cash transaction issues until the new currency is rolled out...a "stop-gap" measure, if you will.

From all I have read, I believe that even if parliament approves the RD tomorrow, we won't see any action until next year sometime. It seems the majority of countries who have re-denominated announced their intentions via extensive media campaigns long before the exchange actually began.

Interesting, the thing I dont understand is they wait 7 years to produce a 100,000 k note to easelarge transactions, which is a year away from an rd. If thats the case Im puzzled and am doubting the cbi's competence to make any sense.

[stonewall67]

What is good about dividing everything by 1000 to increase the local exchange rate?

The higher exchange rate wouldn't go live ( become tradable) until the RD was complete.

Shabibi can't retain control of the RD by creating a situation in which uninformed speculators tried to cash in old Dinar at he new Dinar rate...

I hate to be the one to break the news, but removing zeros is always a RD.

The LOP crapolla was created so you would be encouraged to view information outlining a planned RD as a RV.

This is a RD

Research Paper

Fundamental Aspects

Take a look at those two links, then go back and ask the Pumpers why they have been lying to you...

Personally, I view it as a bad practical joke, or just using a person's lack of interest in the facts to extort money from Dinar sales commissions...

Read the links, and decide for yourself...

And, the links are truth.

If telling the truth is being "negative", I would love to hear the proper terms for dishonesty and denial.

Please do not take a research paper and then apply it's thesis to this particular scenario and then call it fact without looking at the paper and comparing the situations cited in said paper to the situations that exist in Iraq. You don't even have to go any further than to look at the opening spreadsheet showing dates and inflation rates. All of the yearly inflation rates listed show a yearly inflation rate of the hundreds to the thousands. Iraq is not close to this. Inflation did rise this past month in Iraq but only by 3%.

[MrFnHappy]

Interesting, the thing I dont understand is they wait 7 years to produce a 100,000 k note to easelarge transactions, which is a year away from an rd. If thats the case Im puzzled and am doubting the cbi's competence to make any sense.

Believe it or not, I still believe that the early plan was to RV. Of course it never did, likely due to NOTHING going as quickly as the Bush administration anticipated.

By 2006, there was talk of re-denomination, so this is nothing new, but realize, the economy then wasn't where it needed to be in terms of inflation etc. Until recently, it wasn't economically feasible to RD. The general rule for a RD is that it happens AFTER periods of hyperinflation have been put in check, and the economy is stable.

Iraq plans to revalue currency

Iraq plans to revalue currency

Gulf Daily News - [7/7/2006]

Iraq is considering redenominating the dinar, printing new banknotes to remove inflation-generated zeros from its currency, the finance minister said yesterday.

Senior government and central bank officials have said the proposal has been under consideration for some time to make one new dinar equal to 1,000 current dinars, a move that would bring the currency closer to parity with the US dollar.

Asked about such a suggestion in an interview on Arabiya television, Finance Minister Bayan Jabor said: "This is the ministry's suggestion to the central bank. We think in the long term it will be for the benefit of Iraq."

Jabor said surveys indicated popular support for the move.

Read more:

Edited August 22, 2011 by MrFnHappy

[seus]

Does anyone know why they would even bother printing the current currency if their plan was to have a new currency with all 3 languages on it?

[Dalite]

Please do not take a research paper and then apply it's thesis to this particular scenario and then call it fact without looking at the paper and comparing the situations cited in said paper to the situations that exist in Iraq. You don't even have to go any further than to look at the opening spreadsheet showing dates and inflation rates. All of the yearly inflation rates listed show a yearly inflation rate of the hundreds to the thousands. Iraq is not close to this. Inflation did rise this past month in Iraq but only by 3%.

I think you need to look past the first spreadsheet.

Inflation must be lowered to managable levels and stability proven before any sucessful RD can be undertaken.

ReDenominations that have been attempted under conditions of hyperinflation are destined for failure.

From Page 2 of 29

Currency redenomination also can be a means by which governments attempt to reassert monetary sovereignty. If citizens lose confidence in the national currency, they may begin to use foreign currencies, particularly those with greater prestige. This may be both a psychological and an economic blow to the government: with widespread foreign currency substitution (or, more extremely, full dollarization), the central bank no longer controls the money supply, rendering it unable to provide lender of last resort functions (Cohen 2004). Economic policy is influenced not only by international capital markets (e.g. Mosley 2003), but also by foreign central banks. Currency redenomination, then, is a means by which governments can attempt to reverse this currency substituting behavior: if citizens are confident that the new Turkish lira will hold its value, they may be willing to shift from using euros and dollars to using lira. While the act of dividing a currency.s value by a factor of ten is somewhat symbolic, it also can help to convince citizens of a currency.s worth. As a result, redenominations often occur after economic crises, as governments attempt to convince citizens and markets that hyperinflation is a thing of the past. In some cases, the timing is correct, in that redenomination caps off high levels of inflation. In other cases, governments are not able to reign in inflation immediately after redenomination, and they may make multiple efforts at currency reform. Argentina and Brazil during the 1980s and early 1990s exemplify this pattern

From the same page

Yet not every country with high levels of inflation, or with a low local currency/dollar exchange rate (so that thousands of local currency units are required for everyday transactions), chooses to redenominate its currency. Some governments are content for citizens to spend two thousand lira or manta for a cup of coffee, even if this leads citizens to question the legitimacy of the local currency. In other cases, governments do choose to redenominate, but only after a sustained period during which inflation has been reigned in; the time between hyperinflation and redenomination, then, may stretch to over a decade. Were redenomination a purely technocratic exercise, this pattern would be surprising: redenomination seems to have few real costs, beyond the short-run expense of printing new notes and advertising the change to citizens and financial markets.

From Page 7:

In countries where hyperinflation has occurred, governments face an uphill struggle when it comes to regaining the confidence of international markets and domestic constituents. The most direct means is through a stabilization program, which generally involves using either exchange rate-based or monetary-oriented targeting; increasing the operational independence of the central bank; and removing distortionary economic policies. In many cases, such stabilization occurs the aegis of an IMF standby agreement. Redenomination can play into this process, in two ways: first, it can be used at the end of a stabilization, to signify to citizens and private markets that the days of high inflation are over. Used in this way, redenomination is largely symbolic: inflation has been tamed via other means, and the removal of zeros simply serves to remind citizens and investors of the success in fighting inflation . or to remove a very visible reminder of an inflationary past. A new currency is largely the result of, not the cause of, stabilization (Bernholz 1995). When this mechanism holds, we should expect that redenomination will occur after a period of high inflation, but also after that inflation has been removed from the system; a dramatic downward change in inflation should increase the chances for redenomination. Pressures from international capital markets, from the IMF, and from politically independent central banks can help motivate anti-inflationary measures (e.g. Simmons 1994, Stone 2002), as well as subsequent redenomination.

Some of this should sound very familar...

The rationale for using redenomination in this way is that the physical act of using large-denomination notes has an impact on agents. expectations. When a newspaper costs 10,000 lira, consumers and firms are constantly reminded that prices increased dramatically in the past, and they continue to expect such increases in the future. When the highest banknote in circulation is the 100 lira, on the other hand, citizens may grow more confident that a return to high inflation is unlikely. A sort of money illusion is assumed to operate in this case: zeros matter, and they drive inflationary expectations. Governments, then, could argue that redenomination is part of the stabilization package itself. Of course, the problem with this logic is that it may assign too great a role for the physical currency in the reduction of inflationary pressures; redenomination absent economic stabilization may well result in a new currency, but continued hyperinflation. Table 1 suggests that this has occurred on several occasions, including Azerbaijan (redenomination in 1992, but with hyperinflation in subsequent years) as well as some .repeat redenominators,. in which initial efforts at removing zeros failed to stem the inflationary tide

I could go on and on, but I think the pattern is well developed as to why I chose this link to help others understand what Iraq is facing.

It may not be approved in parliament; the CBI may have to choose another path.

But the rational is solid, and the situation in Iraq is a textbook example.

It would seem that it is very clearly pointed out in this paper; all reasons and examples.

And, I would like to point out that I didn't make the decision to ReDenominate the Dinar; the CBI did....

I happen to believe Shabibi is looking out for Iraq's best interest, but in light of the fledgling government, the history of corruption, and tribal powerplays, the CBI may be forced to take other measures to try to achieve the same goal.

It's not over, until it's over.

[Paitin]

Of course it would, a LOP and rd would bring the dinar to about 1:1 ratio with the USD

Not good news

I'll take 1:1 ratio! If you mean 1 dinar to 1 usd. How could that be bad?