Federal Reserve Explains Devaluation & Revaluation”: Dinar Recaps 8/27/11

[Mazzz27]

I dont know if anyone posted this already.

here goes....

Federal Reserve Explains Devaluation & Revaluation

Paragraphs 4 & 5 of full article on NY feds website

(Begin) Under a fixed exchange rate system, only a decision by a country’s government or monetary authority can alter the official value of the currency. Governments do, occasionally, take such measures, often in response to unusual market pressures. Devaluation, the deliberate downward adjustment in the official exchange rate, reduces the currency’s value; in contrast, a revaluation is an upward change in the currency’s value.

For example, suppose a government has set 10 units of its currency equal to one dollar. To devalue, it might announce that from now on 20 of its currency units will be equal to one dollar. (this happened to the Iraqi Dinar in the early 90’s)This would make its currency half as expensive to Americans, and the U.S. dollar twice as expensive in the devaluing country. To revalue, the government might change the rate from 10 units to one dollar to five units to one dollar; this would make the currency twice as expensive to Americans, and the dollar half as costly at home. (end)

For the naysayers that believe a revaluation of the Iraqi Dinar (IQD) is not possible, this is the written evidence from the “Federal Reserve” that a revaluation is absolutely possible and not only possible but more than probable in the case of the IQD. The above scenario reflects exactly what has happened in Iraq (devaluation) and what remains to take place in Iraq (revaluation), which we all believe is very close and imminent for the country.

Notice the term above; “this would make the currency twice as expensive to Americans”. In this scenario whatever monies you held in your possession would be worth “Twice as Much” as before the revaluation! The difference here is that the IQD currently has a value of roughly 1/10th of a penny to the USD therefore what we hold in our hands would be worth far more than double.

Even if the IQD only revalued at .01 (one cent) to the USD, IQD investors would stand to make ten times their initial investment. If the IQD revalues at the rate (USD 3.30) as spelled out in the state department document “The Future of Iraq Project” (page 14), this will certainly be the investment of the century and become one of the greatest transfers of wealth that our world has ever seen!

God bless you, God bless this investment and GOD BLESS AMERICA!

Full Fed Article Here:

http://www.newyorkfed.org/aboutthefed/fedpoint/fed38.html

Edited September 1, 2011 by Mazzz27

[estewart]

Good post.

[chara55]

From your keyboard to GOD's Ears

Good post +1

God Bless

Gooo Rvvvvvvvvvv

[Mazzz27]

thank you guys...i accidentally stumbled upon it on google

[FrankenSLI]

I am happy with anything whatsoever at this point. Of course we all wish and hope for a 1to1 exchange.. GO RV!!

[Nadita]

Good post... I don't know you like to research too.. lol I thought you just like to chat.. lol

God bless you.

[Alex38]

1 to 1 or more!! Yes!!!

Edited September 1, 2011 by Alex38

[jg167_mkII]

I dont know if anyone posted this already.

here goes....

Federal Reserve Explains Devaluation & Revaluation

Paragraphs 4 & 5 of full article on NY feds website

(Begin) Under a fixed exchange rate system, only a decision by a country’s government or monetary authority can alter the official value of the currency. Governments do, occasionally, take such measures, often in response to unusual market pressures. Devaluation, the deliberate downward adjustment in the official exchange rate, reduces the currency’s value; in contrast, a revaluation is an upward change in the currency’s value.

For example, suppose a government has set 10 units of its currency equal to one dollar. To devalue, it might announce that from now on 20 of its currency units will be equal to one dollar. (this happened to the Iraqi Dinar in the early 90’s)This would make its currency half as expensive to Americans, and the U.S. dollar twice as expensive in the devaluing country. To revalue, the government might change the rate from 10 units to one dollar to five units to one dollar; this would make the currency twice as expensive to Americans, and the dollar half as costly at home. (end)

For the naysayers that believe a revaluation of the Iraqi Dinar (IQD) is not possible,

I don't think anyone says this. What many (me included) say is that a HUGE RV can not occur. Any country that pegs its currency will likely move the exchange rate around from time to time. Countries that float their currencies do so as well but by buying and selling bonds, making loans etc.

this is the written evidence from the “Federal Reserve” that a revaluation is absolutely possible and not only possible but more than probable in the case of the IQD. The above scenario reflects exactly what has happened in Iraq (devaluation) and what remains to take place in Iraq (revaluation), which we all believe is very close and imminent for the country.

One more time :-) (ok likely N more times but here goes the next one..)

* When the IQD was worth ~$3 there were only a few 10s of billions of them in Iraq's money supply. Saddam fixed that by printing 10s of trillions of dinars (which were replaced, 1:1 with the currency we have now).

* The value dropped as it isn't just what you SAY its worth, but what it will really buy, what the country (if they peg) will exchange it for and with a GDP that was at best staying the same (and with war in fact dropping like a stone) the value of the dinar dropped as well. No one, including Iraq, would at this point give $3 per dinar, only (eventually) $0.00086 .

* So it can't just be revalued back to $3, because it was not just devalued with no other changes, it was devalued as a result of a 1000x or 100,000% increase in the number of dinars.

Even if the IQD only revalued at .01 (one cent) to the USD, IQD investors would stand to make ten times their initial investment.

Indeed I think that is all we can hope for, and I hope for it! Ten cents would be great and more wildly so, but I think we will be very lucky to see a penny per dinar. And a lose due to the dealer spread is still possible if they only RV by say 20% to just bring the dinar to around $1 wiith a 1000:1 RD. Oh well.

If the IQD revalues at the rate (USD 3.30) as spelled out in the state department document “The Future of Iraq Project” (page 14), this will certainly be the investment of the century and become one of the greatest transfers of wealth that our world has ever seen!

Where would this transfer be from? Iraq presumably. They are a pretty poor country and whatever they do have, why would they agree to a process that ended up with them giving up the largest chunk of wealth, ever transferred in history?

[Sirius]

I don't think anyone says this. What many (me included) say is that a HUGE RV can not occur. Any country that pegs its currency will likely move the exchange rate around from time to time. Countries that float their currencies do so as well but by buying and selling bonds, making loans etc.

One more time :-) (ok likely N more times but here goes the next one..)

* When the IQD was worth ~$3 there were only a few 10s of billions of them in Iraq's money supply. Saddam fixed that by printing 10s of trillions of dinars (which were replaced, 1:1 with the currency we have now).

* The value dropped as it isn't just what you SAY its worth, but what it will really buy, what the country (if they peg) will exchange it for and with a GDP that was at best staying the same (and with war in fact dropping like a stone) the value of the dinar dropped as well. No one, including Iraq, would at this point give $3 per dinar, only (eventually) $0.00086 .

* So it can't just be revalued back to $3, because it was not just devalued with no other changes, it was devalued as a result of a 1000x or 100,000% increase in the number of dinars.

Indeed I think that is all we can hope for, and I hope for it! Ten cents would be great and more wildly so, but I think we will be very lucky to see a penny per dinar. And a lose due to the dealer spread is still possible if they only RV by say 20% to just bring the dinar to around $1 wiith a 1000:1 RD. Oh well.

Where would this transfer be from? Iraq presumably. They are a pretty poor country and whatever they do have, why would they agree to a process that ended up with them giving up the largest chunk of wealth, ever transferred in history?

Yeah ok Newbie...go read the 4200 pages of discussion on the subject before you jump in the discussion,

start with the LOP section, that will "keep" you busy for a month or so.

[srdedeaux]

Super Dupper Post, Time to rev up the RV

[despain]

Where would this transfer be from? Iraq presumably. They are a pretty poor country and whatever they do have, why would they agree to a process that ended up with them giving up the largest chunk of wealth, ever transferred in history?

end quote-

Where do you think it comes from? Answer...FROM THIN AIR! Where do you think our money comes from? Nothing backs up the U.S. dollar. Oh yes, the good credit and faith of the U.S.? Serioulsy? It is all monopoly money.

Iraq is the only place I have seen in years that has, and is willing, to produce something that the world actually needs. The IQD, most likely, will be backed by their willingness to use their natural resources to increase the value of their livelihood and their currency.

Think about it...in a logical way. Look at the nations in this world. Which ones are willing to go all in? This seems to be the only one. If I am wrong, then please correct me. I would enjoy the education. JMHO...

[jg167_mkII]

Yeah ok Newbie...go read the 4200 pages of discussion on the subject before you jump in the discussion,

start with the LOP section, that will "keep" you busy for a month or so.

Actually I've been here for a couple of months as jg167, and think I understand it pretty well. If you can refute what I said then do so.

Do you deny that the IQD was not devalued by Iraq while all else remained the same, but was devalued very much against the wishes of Saddam as a result of his printing of a 1000x as many dinars while the economy went into the toilet? That can not be undone over night by a few keystrokes at the CBI since the key cause (the massive amount of dinars) are still out there.

[MITCH10]

Where would this transfer be from? Iraq presumably. They are a pretty poor country and whatever they do have, why would they agree to a process that ended up with them giving up the largest chunk of wealth, ever transferred in history?

Poor country....... have you bought any oil lately? This country has enough oil and gas to be one of the richest countries in the world. Kuwait is 3+, I don't see why Iraq can't be equal to or better.

[jg167_mkII]

Where would this transfer be from? Iraq presumably. They are a pretty poor country and whatever they do have, why would they agree to a process that ended up with them giving up the largest chunk of wealth, ever transferred in history?

end quote-

Where do you think it comes from? Answer...FROM THIN AIR! Where do you think our money comes from? Nothing backs up the U.S. dollar. Oh yes, the good credit and faith of the U.S.? Serioulsy? It is all monopoly money.

Sure, but what sets the value is not what someone types into the central banks computer, but what other nations and the CBI will exchange (in other currencies or goods and services) for it. Each country is the only one that prints its monopoly money. So Iraq can not print (with a press or a computer) dollars, only dinars.

Further the value of they money supply that is actually involved in GDP (whatever that is, m0 , m1, m?) has to stay roughly in sync. If the value goes way up, the economy overheats and prices go through the roof, then wages have to follow and its sort of like inflation but worse. If the value goes way down there isn't enough money to make GDP work and the economy grinds to a halt (as we say with the start of the financial melt down). So if the Iraq economy is at least sort of working now, then the value of the money supply can not be suddenly adjusted by (I'd guess) even 10x relative to GDP let alone 100x or 1000x .

Iraq is the only place I have seen in years that has, and is willing, to produce something that the world actually needs. The IQD, most likely, will be backed by their willingness to use their natural resources to increase the value of their livelihood and their currency.

But again the IQD is backed by what the central bank will exchange for it, and that is backed by the Iraqi economy and its relationship to the world. Sure Iraq has lots of oil, maybe next year they will get to $100B of revenue from it and that will boost GDP and perhaps justify a higher exchange rate all else being equal (which it never is of course). But that will not support a 1:1 exchange rate with the dollar as long as there are so many dinars in the money supply.

Think about it...in a logical way. Look at the nations in this world. Which ones are willing to go all in? This seems to be the only one. If I am wrong, then please correct me. I would enjoy the education. JMHO...

I understand the poker reference but what has this to do with Iraq's economy and monetary system?

[tilak]

Go RV

[jg167_mkII]

Poor country....... have you bought any oil lately? This country has enough oil and gas to be one of the richest countries in the world. Kuwait is 3+, I don't see why Iraq can't be equal to or better.

Yep they have a lot of oil. Their current goal is to pump 5Mbpd. Lets say they actually make $100 profit on each barrel, so that would be $180B dollars worth to their GDP (2+x its current level). How would that support a money supply with a value of $60T dollars, (or $24T if you like that number better), no way.

So what makes the KWD supportable at $3+? Kuwait's GDP is only around $150B USD but their M2 is only 27B KWD. In contrast Iraq's GDP is maybe $85B USD and they have 60T dinars in their M2. Do the math as they say!

[Alex38]

heeeeeeeeeeeeeeeeeeeeeeeeeeeere's johnny!!!!!! hahahahaha.... ugh....

[Elixirbaby]

I dont know if anyone posted this already.

here goes....

Federal Reserve Explains Devaluation & Revaluation

Paragraphs 4 & 5 of full article on NY feds website

“The Future of Iraq Project” (page 14), this will certainly be the investment of the century and become one of the greatest transfers of wealth that our world has ever seen!

God bless you, God bless this investment and GOD BLESS AMERICA!

Full Fed Article Here:

http://www.newyorkfed.org/aboutthefed/fedpoint/fed38.html

Is there a link to the "the future of Iraq project" page 14?

Thanks go RV

[JWJW11]

Yep they have a lot of oil. Their current goal is to pump 5Mbpd. Lets say they actually make $100 profit on each barrel, so that would be $180B dollars worth to their GDP (2+x its current level). How would that support a money supply with a value of $60T dollars, (or $24T if you like that number better), no way.

So what makes the KWD supportable at $3+? Kuwait's GDP is only around $150B USD but their M2 is only 27B KWD. In contrast Iraq's GDP is maybe $85B USD and they have 60T dinars in their M2. Do the math as they say!

Oh my!!!! NOT a new lopster!

[FishmanTx]

Sure, but what sets the value is not what someone types into the central banks computer, but what other nations and the CBI will exchange (in other currencies or goods and services) for it. Each country is the only one that prints its monopoly money. So Iraq can not print (with a press or a computer) dollars, only dinars.

The exchange rate set by the governing body of that specific country is what determines the value. Whether it's realistic or not is irrelevant to the act.

Further the value of they money supply that is actually involved in GDP (whatever that is, m0 , m1, m?) has to stay roughly in sync. If the value goes way up, the economy overheats and prices go through the roof, then wages have to follow and its sort of like inflation but worse. If the value goes way down there isn't enough money to make GDP work and the economy grinds to a halt (as we say with the start of the financial melt down). So if the Iraq economy is at least sort of working now, then the value of the money supply can not be suddenly adjusted by (I'd guess) even 10x relative to GDP let alone 100x or 1000x .

Yes, it should (re:GDP). Doesn't mean it will be. Kuwait is way overvalued and has been for years, but it didn't stop them from pegging at 3.xx. With the HCL law and the oil monetized, GDP will not be an issue for a 1:1 reval.

But again the IQD is backed by what the central bank will exchange for it, and that is backed by the Iraqi economy and its relationship to the world. Sure Iraq has lots of oil, maybe next year they will get to $100B of revenue from it and that will boost GDP and perhaps justify a higher exchange rate all else being equal (which it never is of course). But that will not support a 1:1 exchange rate with the dollar as long as there are so many dinars in the money supply.

After the revalue and once all their debt is paid, a large chunk of that money will be gone. Once the "3 zero notes" are removed from circulation, the stock will be depleted that much more. No one said they would print the same amount in new currency as they have in old and THAT is the key! The overstock of cash will be dealt with in this fashion so the old "they have too much currency to RV" diatribe won't wash. They could RV at any number they wish. Doesn't mean it'll work for them, but they can dictate any number they want. The CBI has already stated they will not float the IQD, it will remain in a fixed or limited float (narrow trade range) format so that it can remain under their control and not the market. Just like Kuwait.

Fish

[FishmanTx]

Is there a link to the "the future of Iraq project" page 14?

Thanks go RV

General info

General info

The actual PDF

THE TRANSITION TO DEMOCRACY IN IRAQ

More...

Sourcewatch

Sorry the PDF I ref'd is the report, here's the actual doc...

Future of Iraq Project

[MovieMaker]

Thanks for sharing!

[Elixirbaby]

The actual PDF

THE TRANSITION TO DEMOCRACY IN IRAQ

More...

Sourcewatch

Sorry the PDF I ref'd is the report, here's the actual doc...

Future of Iraq Project

Great thanks.

Go RV