GREAT DEBATE

[keepmwlknfny]

by: Brian

July 01, 2011 18:34 "70% have been removed-reducing the M2."

Hi Gary. The above is not true. That claim comes from someone confusing M0/M1 figures (only banknotes in circulation) with M3 (total Dinar in circulation). That claim is openly debunked in paragraph 7 of this article we're commenting on itself : "Saleh said there are currently some 29 trillion dinars in circulation in Iraq, represented by some 6 trillion banknotes of various denominations." That 29t in circulation figure is just one week old. It hasn't gone down at all - someone just compared "total money" to "banknotes" and got confused.

It also says "most of them [banknotes] are quite small" which means removing 25,000 won't make any difference because they make up less than 1% of the 6tn Dinar in circulation.

Read more: http://dinarvets.com.../#ixzz1bNxO7kO5

This is what gets me in having read all the posted pages....PDF's aside. Brian is saying the 25k's make up less than 1%...the rest have to be ALOT of bills in circulation if a 25k is only 1% of total in circulation...or is my math off? But...

Back to my initial head scratching...why continue to print the lows if they no longer factor into the economy because wheel barrels are in short supply for transporting them? It costs the U.S. about 4cents every print reguardless of denom. That already buys a few dinar. Anyway...I'm saying some of the numbers used in your five pages are not adding up. Of that 25k 1%...how much of that is being held by foreign dinar investors (not companies but actual individuals) whose bulk of dinar will likely consist of the 25k's? If you redenominate instead of reevaluate...for the sake of making incountry transactions easier...it doen't make sense to LoP then reprint...that only adds to confusion of the value of the smaller bills ANYway, at least to Iraqi purchasers. IMO

In fact...would it NOT make MORE sense to PRINT the new money then EXCHANGE at once? I mean, why confuse your citizens with the zeroLOPexchange rate if the new currency exchange is a no brainer? I'm sorry, but if they infact DO intend to print the new currency...there ARE already banking institutions available to make the exchange instant...acurate...counterfiet free...with the citizen totally confident they got a fair math problem in the exchange. This would apply to people OUTside the country investing as well.

Maybe, what I'm saying is that, even though my point might suggest the essence of a LoP..the way I keep hearing the "unfolding predictions" from the LoP side isn't rational. If they intend to print new money...and let it RV as a normal increase...why even bother LoP'n in the current bills anyway? That's as confusing as arguing "facts". Aaaaany way, I just think that there's some odd juju with all the LoP then reprint stuff and makes me question by Shabs would propose such a confusing route with him being...actually a very sly guy...

By the way, Keep...what made you think I even wanted to sell

I think the reason they are going to let this be a longer process then it was in 2004, is so that there is no mad rush to the banks created when you post such a small timeline to exchange. It will be easier on the people of Iraq to continue going about business without such a fast and furious transition. Should go over more smoothly for them this way as well. Im sure it wouldnt take long period for the people to want to trade in for the new bills. Usually in a process with a RD a country can or will set a longer timeline for the exchange process like around a year or even two as Iraq is saying now. Not saying all have followed this cause some just shut their borders and gave people three months.

I like the fact of them at least saying if they do follow through with this process,that it would be over a time of a couple of years because that tells me we would have a better chance of them not closing the borders and giving everyone plenty of time to exchange old bills for new. In the first exchange from saddam money they closed the borders and we dont want that to happen here should the worst case scenerio unfold.

The reason for lopping the current bills is because of the inflation they carry with them. Thats usually always the reason for lopping a currency....erasing the after affects of periods of hyperinflation and having an inflated money supply. By RD like they have been saying, it reduces the liability of the CBI to back their currency and they can set the value alot higher. Having over 25 trillion dinar in circulation is excessive for a country of 30 million people. Its a large cash block to try and manage which is a benefit of lopping.

I hear that the lifespan of those bills over there are anywhere from 3 months to a year so of course they are gonna have to keep printing to replace bills, but not only that, even though we hear that the USD is the preferred currency still in the streets, the govt and its people get paid in dinar...they run off of dinar that they get from exchanging the USD from oil revenues. The majority of the money they bring in is USD so they have to find a way to exchange all that for dinar to run the country, so you can safely assume there is a higher need to print more and more bills just from that alone.

BTW, I never thought you wanted to sell

Edited October 21, 2011 by keepmwlknfny

[The Jonald]

think about this. this whole back and forth with lop no lop. if adam is right and it does rv at 10cents, these are very workable numbers. the 29trillion becomes basically 2.9 trillion. this whole argument was based on a 1 to 1 exchange. lot of info brian talks about makes sense, and so does a low rv rate, even more now....

[keepmwlknfny]

think about this. this whole back and forth with lop no lop. if adam is right and it does rv at 10cents, these are very workable numbers. the 29trillion becomes basically 2.9 trillion. this whole argument was based on a 1 to 1 exchange. lot of info brian talks about makes sense, and so does a low rv rate, even more now....

You could be right that 2.9 trillion would be more manageable at a RV of 10cents but there still lies the issue of the credibility and confidence/faith in the dinar at such a rate without being backed 100% as it is now...

[pudge]

You could be right that 2.9 trillion would be more manageable at a RV of 10cents but there still lies the issue of the credibility and confidence/faith in the dinar at such a rate without being backed 100% as it is now...

What do you mean backed 100%? It is a fiat currency backed by nothing. No currency is. Do you mean 100% reserve requirement? I believe the currency requirement right now for fractional banking is 15%.

[keepmwlknfny]

What do you mean backed 100%? It is a fiat currency backed by nothing. No currency is. Do you mean 100% reserve requirement? I believe the currency requirement right now for fractional banking is 15%.

The dinars value is backed by its foriegn reserves 100% through the CBI

Not to be confused with the reserve requirement set by the CBI for its banks under it....

Two different things....Central banks dont use fractional banking to back the value of the currency....(at least I dont know of any that do)

Yes the dinar is a fiat currency, which alot of fiat currencies value is based off the faith of that countries currency but being pegged to the USD, I believe its almost a requirement to back its currency 100% by the value of its foreign currency reserves. I think this has been brought up before in other threads as well and a few members who researched this topic came forward with this information. But as it stands, the dinars value has been backed 100% by its reserves for quite some time now....total foreign currency reserves for Iraq is now at 58 billion (USD value) and if you multiply that by 1170, you will get a bit over 60 trillion (which is their total money supply)....hence the backing of the dinar value by more then 100% at this moment.....so technically like Dalite has brought up, they could raise the value of the dinar by about 10% right now and still have that value backed completely....

[pudge]

The dinars value is backed by its foriegn reserves 100% through the CBI

Not to be confused with the reserve requirement set by the CBI for its banks under it....

Two different things....Central banks dont use fractional banking to back the value of the currency....(at least I dont know of any that do)

Yes the dinar is a fiat currency, which alot of fiat currencies value is based off the faith of that countries currency but being pegged to the USD, I believe its almost a requirement to back its currency 100% by the value of its foreign currency reserves. I think this has been brought up before in other threads as well and a few members who researched this topic came forward with this information. But as it stands, the dinars value has been backed 100% by its reserves for quite some time now....total foreign currency reserves for Iraq is now at 58 billion (USD value) and if you multiply that by 1170, you will get a bit over 60 trillion (which is their total money supply)....hence the backing of the dinar value by more then 100% at this moment.....so technically like Dalite has brought up, they could raise the value of the dinar by about 10% right now and still have that value backed completely....

Interesting, but a little confusing to me. Not sure what u mean by 'backed'? You mean this 'backing' gives the Dinar its value or stability? It's hopelessly hyper-inflated which is why it is so devalued. And now a 10% increase in the Dinars' value against the Dollar. How do 'they' arbitrarily say it's worth 10% more? This would just add to the inflationary pressure. A higher value of the Dinar would just hurt exports and impede the funding of its govenment. I don't believe a stronger currency is in its best interest right now. As for foregn currency do you mean its Dinar overseas or its ownereship of foreign currency?

I don't believe a country's foreign reserves as anything to do with the backing of its currency. 60t in Dinar? I thought it was more like 29t. But still at 60 trillion Dinar against only 10 trillion US dollars in circulation how does the Dinar raise in value at all?

Maybe one of Brians responses will help here:

Thanks very much for your kind comments. Really, Forex is a "zero sum game" - when you buy currency at a rate, someone else has to sell it at same rate - and vice versa : when you sell currency, someone else has to buy it at same rate. All this talk of "everyone's a winner from an RV" really is uneducated nonsense. If the Dinar "RV'd" without any RD / lop, then Iraq would have to monetize $25bn (29 Trillion Dinar at 1170) into $25tn (29 Trillion Dinar at 1.170) worth of overprinted currency - or in other words, it would have magically create $24.975tn overnight from nothing causing massive hyperinflation. Contrary to popular belief, oil reserves don't massively affect currency values at all - it's only oil production sold in native currency that does that. Oil is only worth something on a currency level when you sell it as you can't sell the same oil twice - (once when you find it and once when you actually sell it) any more than other countries can sell the same oil, food, electronics, etc, twice.

My above question has gone not only unanswered here but everywhere else even on the most educated pro-RV Dinar forums : If there are only $10tn US Dollars in circulation and if everyone bought Dinar and magically became 1,000x richer, then where does the other $990tn come from to give them "their" $10qdrn back? Even if as little as $2bn were gambled on the Dinar, a 1,000x increase in value means that even if 309.9m Americans gave the other 100,000 Dinar holding Americans every $ banknote in circulation - there still wouldn't be enough (total USA M1 figure (banknotes in circulation) from March 2011 is only $1.9tn)! This is why the whole "RV" thing the way some use it is mathematically impossible. A true "revaluation" is simply moving a currency peg. China "RV'd" a while ago. That's what a real "RV" is.

Almost every serious site out there is saying the same thing about Iraq will RD / lop. The Iraq Central Bank said it 5 times over (including in Washington). Serious Forex sites are saying it:-

"In 2010, the Central Bank of Iraq announced their plans to redenominate the Iraqi Dinar to ease cash transactions. The intention would be to drop three zeros from the nominal value of bank notes; but the actual value of the dinar would remain unchanged. That would mean that 1,000 IQD (pre-redenomination) and 1 dinar (post-redenomination) would both be worth the same amount in US Dollars. Although the announcement stated that the change would take place by the end of 2010, there has been no redenomination as of January 2011 and no further announcements have been made."

http://www.xe.com/currency/iqd-iraqi-dinar

And serious Iraq investment boards (those looking to long-term invest in Iraqi companies rather than Dinar gambling) are saying it too:-

"At the end of last month, a spokesman for the Central Bank of Iraq (CBI) told reporters that a plan to redenominate the Iraqi dinar will be presented to the Council of Ministers in the near future. The Council is then expected to submit the relevant legislation to Parliament for a vote. If the lawmakers approve the project, all existing banknotes will be replaced with new currency at the rate of 1,000 old dinar for one new over some unspecified period of time."

http://www.iraq-businessnews.com/2011/07/05/new-dinars-for-old/

I can only end my post by saying : To the "RV" crowd, the Dinar is more an emotional investment (like "Tulip Mania") than an economic one. People aren't buying because they've sat down and done the impossible maths - they're buying because others encourage them to "not miss out", who in turn are encouraged by others who say the same thing, all in a chain leading back to the pumpers who make their money not holding Dinar - but from getting rid of them!

Have a great day all!

[coleman619]

This makes more sense than anything I have read here.

I'm sure it will be frowned upon, or just plain ignored by the majority.

[caughtinthecrossfire]

Newp, not ignoring it....AT ALL. Definately gives alot to consider. I'm still hung up on the order in which it's been speculated they'll follow...but then....that's just me, I guess. Anyway, I do feel like...at it's current "rate" the dinar is backed by ICB. They have more than once slapped hands that would attempt to touch their reserves (and yes, it is all in international currencies...wonder if majority is USD).

Anyway, I still think there's more to this than what any of us have brought out in discussion, but that's because, again...I don't get the order in which they are expected to follow. I suppose...time will tell. No telling how many servings of coffee down the road this will be, but with all the chatter in the press about Iraq this week...maybe not nearly as many as I have in my pantry? HA HA HA, maybe yall, we'll know very soon.

Keep, great to hear you and the smoother flow in this topic...but, I'm stickin with the low RV myself until more comes to the table. Still, this has been a great read.

I'm officially DUN till cash in. Yall have a great one!

[ssmith]

Great read, makes tons of sense... I'm sticking with low rv .10 or better & wait till christmas .. Nothing happens I'm selling this pretty wall paper..great read this pudge..

[Scrumdiddles]

Great read, makes tons of sense... I'm sticking with low rv .10 or better & wait till christmas .. Nothing happens I'm selling this pretty wall paper..great read this pudge..

I will never sell, i am not a quitter.

[zigmeister]

That plan...still confuses me if indeed they planned a LoP all along. Why print soooo much and allow it to circulate out of country? If they plan to destroy it anyway after a LoP, why not print the money to begin with as the dollar model. I do understand...if I followed Iraq-business News close enough, that the majority of dinar circulating is in lower denoms and...um...didn't Brian even comment (or someone above in post) it was only 1% of total dinar being the 25k notes? I dunno. Just scratching my head thinking that if they had a plan laid out for a lowering of the inflation just to LoP...then have to turn around and reclaim larger notes for newer ones at a cost....

Anyway, Keep, do you see the side of this debate that is either missing...or that maybe I am missing...hep meh!!

It does make you wonder. And sometimes I wonder why in the world Iraq would want to do anything like Turkey.

[keepmwlknfny]

It does make you wonder. And sometimes I wonder why in the world Iraq would want to do anything like Turkey.

Having a country RD isent as bad as what everyone thinks....the gurus have put such a bad spin on what a RD does, that no one understands the positive aspects of it.

Its actually a sign of stability and economic growth for a country to be able to pull it off and erase all the after effects of hyperinflation. Its almost like a do-over after making such a mess of themselves....

[Scrumdiddles]

Yes you say that is RD shows signs of stability and economic growth, well after reseting the 000 that they put on. So that means that a RV shows a better sign of growth by not removing the 000 and making it all up without pressing the RD button. So in short which shows the investors more positive growth, an RV. RD seems like a easy way out. I do not even remotely see how deleting the 000 off of the currency can even remotely add value to the currency. Yes adds value after removing something of substance from the currency, the 000 which is part of the currency. It is like a oxymoronic statement.

[keepmwlknfny]

Yes you say that is RD shows signs of stability and economic growth, well after reseting the 000 that they put on. So that means that a RV shows a better sign of growth by not removing the 000 and making it all up without pressing the RD button. So in short which shows the investors more positive growth, an RV. RD seems like a easy way out. I do not even remotely see how deleting the 000 off of the currency can even remotely add value to the currency. Yes adds value after removing something of substance from the currency, the 000 which is part of the currency. It is like a oxymoronic statement.

Your right....either way is a showing of improvement, but just a straight up RV doesnt improve the inflated money supply which is one of the biggest problems.....

Normally you dont ever see large revaluations....just very small percentages of growth little by little, a RD in Iraqs case would push the value of the dinar drastically high in a short amount of time. Which would be better as seen by investors? Who knows? But I dont think thats a determining factor in whether someone wants to invest in a country.....stability is more important, and what they have to offer....look at places like Vietnam which have in the past few years posted some of the largest growth rates in the world from foriegn investors having faith in their growing economy.....and the dong is much worse of then the dinar.....

Its just simply the process of reducing how much money you have that adds value to it....being over inflated its not very valuable, cut it down by more then half and it becomes more valuable with the same things backing it. Look at it like this.....Iraq has 60 trillion dinar as their total money supply, they just raised the foreign currency reserves to 58 billion (USD), if they RD that 60 trillion becomes 60 billion and the 58 billion in reserves would practically support a 1 to 1 exchange rate with the USD and would still be backing their currencies value 100%.....

I dont want it to go down like that, but that seems to be their so called "plan"....and unfortunately it does make sense....

[Conotacarius]

Lets put it this way. I just scanned this entire mess by pulling the brower down as fast as i could. Guess what i saw flash past my eyes? OKIES name! Nuff Said. More BS!!!!

Edited October 22, 2011 by Conotacarius

[pudge]

Lets put it this way. I just scanned this entire mess by pulling the brower down as fast as i could. Guess what i saw flash past my eyes? OKIES name! Nuff Said. More BS!!!!

Uh... look a little closer. Brian was pointing out all the missed predictions by Okie to show what is typical in the Dinar pumping world

[Dalite]

Newp, not ignoring it....AT ALL. Definately gives alot to consider. I'm still hung up on the order in which it's been speculated they'll follow...but then....that's just me, I guess. Anyway, I do feel like...at it's current "rate" the dinar is backed by ICB. They have more than once slapped hands that would attempt to touch their reserves (and yes, it is all in international currencies...wonder if majority is USD).

It is reported by the CBI to be 45% Dollars, 45% Euro and the remaining 10% is a combo of British Pounds and Gold.

[Conotacarius]

Not going to bother to look again thanks. Any thread debating the LOP, for or against, is of no worth. You can't LOP a worthless currency, Ageed?

[Dalite]

Not going to bother to look again thanks. Any thread debating the LOP, for or against, is of no worth. You can't LOP a worthless currency, Ageed?

Since there is no such economic tool as a LOP, I would agree.

However, redenomination is what is done to give worthless currency strength and room for growth.

You opinion flies in the face of historical data.

Either you or history are incorrect.

[Conotacarius]

Since there is no such economic tool as a LOP, I would agree.

However, redenomination is what is done to give worthless currency strength and room for growth.

You opinion flies in the face of historical data.

Either you or history are incorrect.

I think everyone needs to watch 'THE GREAT PUMPKIN - CHARLIE BROWN'. Don't be the one left in the pumkin patch all night!

Edited October 22, 2011 by Conotacarius

[MovieMaker]

I have REALY enjoyed this thread. So many ways of looking at things without the name calling too! Thanks everyone! Very informative.

Edited October 22, 2011 by MovieMaker

[keepmwlknfny]

You can't LOP a worthless currency, Ageed?

Not agreed......

Those are the ones more likely in the situations to "lop"......

[Conotacarius]

Not agreed......

Those are the ones more likely in the situations to "lop"......

I will agree to respectfully disagree my good friend.

[keepmwlknfny]

I will agree to respectfully disagree my good friend.

http://youtu.be/gV9A2IGShuk

Im not sure Im following you here....what exactly are you trying to say??

If you look at the countries who have "lopped" in the past, you will see that the value of their currency was not exactly a winner

I dont know of many strong valued currencies that RD....only the weak ones!

[Conotacarius]

Im not sure Im following you here....what exactly are you trying to say??

If you look at the countries who have "lopped" in the past, you will see that the value of their currency was not exactly a winner

I dont know of many strong valued currencies that RD....only the weak ones!

Mark 2:17

On hearing this, Jesus said to them, “It is not the healthy who need a doctor, but the sick. I have not come to call the righteous, but sinners.”