Just How Could an RV Work?

[Enorrste]

Just How Could an RV Work?

Tonight we had a spirited and challenging discussion that dealt with the question of how in fact an RV would work in the real world.

Arguments were placed on both sides showing that this is a difficult issue to tackle, and to grasp.

I thought that I would make this post so that everyone who cares can see where I am coming from on this tough problem.

In order for me to lay this out clearly and as concisely as possible (I know

[Enorrste]

Now we move to the American who is holding 1,000,000 dinars in 25,000 notes in the US.

On March 1 he hears that the IQD has revalued and has gained 1,000 times its value. He rushes to the news channel and sees that everything is proceeding smoothly in Iraq. He calls his local banker and asks if this is real and is told that it is and that he can come into the bank and exchange his dinars if he wants to.

He goes to his bank with his 1,000,000 dinars in 25,000 notes and exchanges them for $1,000,000 which he promptly deposits in the bank. He goes home a happy man.

The bank has a field day in taking in the dinars from its customers but is surprised that there are not as many as they thought there would be. At the end of the week all of the dinars are transferred to the region branch, which then transfers them to the Federal Reserve.

The Federal Reserve, over the next month or so, acquires 95% of all dinars in America, and all of them are in larger denominations with 3 zeros. The Federal Reserve holds those notes as support for the lagging US dollar, thereby securing its strength for the time being.

Meanwhile in Iraq an American businessman has been told of the coming RV in the country. He is informed that as long as his accounts are registered as foreign accounts he need not be concerned. For some time his employees have been paid in dinars, since October actually, so he decides to hold a meeting with them.

He informs the employees the same thing that the television is reporting, namely that the new currency will buy the same amount of goods and that the employee will not lose anything at all.

He also informs the employees that for the foreseeable future no dinars are to be shipped home to the USA. Any shipments to the USA must first be converted to dollars and then they can be shipped to the USA.

One of the employees, who was making 100,000 dinars per week as a clerk, finds out that his new salary is 1,000 dinars per week. He goes to the market and finds that everything is normal and that he can still buy what he needs as before. He finds a few items marked with 3 zeros but when he gets to the counter the clerk informs him that this is just “old money coding” and he pays the new lower price. He is happy.

However he used to be in the habit of sending about 25% of his salary home to his wife. This was about 25,000 dinars. But he always was able to convert that into dollars beforehand, and ended up wiring $25 per week to his wife. At the end of the week he goes to the bank to wire his wife some money and finds that he can send her $25 with only 25 dinars. He is happy.

The owner of the company that the American works for has another concern. He is concerned that his operating capital will lose value and he might be out of business unless he does something, and fast! So he runs to the local bank to check on his deposits. The banker informs him that he need not worry because his deposits have always been denominated in dollars and not dinars. The bank, he says, was told years ago to leave all foreign accounts in the currency of the home country. The man leaves the bank satisfied that he has not lost any money and that his business is secure.

As time goes on and the end of the year approaches the banks in Iraq are receiving fewer and fewer large notes. By the end of the year the large notes are no longer coming into the bank at all. Commerce continues to occur at the same pace and better and the bankers are noticing more and more local Iraqis coming in to open savings accounts. The economy is flourishing and the RV has worked

On the other side of the planet, in America, the economy is also booming. New entrepreneurs seem to have come out of the woodwork and new money is flowing into the economy at a breakneck speed. Real estate has finally started to rebound and even building startups are increasing. Many people attribute this boom to the great bailout from the Obama administration. Others just smile.

Steve

[dollarstx]

Very good. Thanks Steve!

[DmsC]

Thanks for taking the time to write that out.

[Linduh2]

sounds logical to me.....now we need the amount...the popular number seems to be .86 however my gut says higher on the first rv ...could be smoke and mirrors ...perhaps the 2.66 the gcc suggested....3 years as per imf guidelines or less above 3.00 my guesstimate

[krucialmix]

This was a great post! Thank you Steve!

[dinarded]

I guess you realized that you would need to stay up late and write out a long post in your attempt (or reattempt) to sell us all on your whacked out version of Iraq lopping their currency?

Thanks for the effort but I think MANY are beginning to realize the same thing here.

[gunz]

your argument can be understood to me ,thanks

[Uncle Mike]

Thanks, Enorrste You explain it so well and people understand. Could we please forward to MALIKI so he gets it also.....

[ajax]

The reasoning behind "Why Foreigners with OLD Dinar 25K, 10K notes would be entitled to MAINTAINING their 'face value' and could be traded in for $25,000.00 and $10,000.00 each respectively" is because???? (vs. the in-country/citizens OLD Dinar 25K, 10K notes only being worth an equivalent $25.00, $10.00 value)

If what you are stating is because OUR FEDERAL RESERVER, U.S. Govt, France, China, and even the United Nations have invested TIME, MONEY, EFFORT and have to pay for a costly, lengthy WAR as well as an assisted REBUILD of the IRAQI country/people.... THAT WE ARE ENTITLED TO THIS "000" pay-back remaining intact (which could be why IRAQ may get out from under their Chapter 7, etc) Then this MAKES SENSE TO ME!

It really comes down to WHO WE HAVE ON OUR SIDE in this investment...we are going to be able to 'cash in very well' MAINLY BECAUSE OF WHAT OUR GOVT (created by the Bush regime to pay for the war, etc) and the WORLD COMMUNITY has been working out with IRAQ..... Am I correct in this assumption ('cause otherwise, I do not see the logic in us benefitting from a separate 'trade in of OLD Dinar' vs. the in-country LOP for their own citizens)?????

[earlygaudy]

The problem I'm having with this theory is this (He goes to his bank with his 1,000,000 dinars in 25,000 notes and exchanges them for $1,000,000 which he promptly deposits in the bank. He goes home a happy man.) Why would we not lose the three 0's off ours just like they did? Thanks

[dwayne919]

Your one of the only guys that make sense on here and put allot of reaserch in your attempts to educate, great job! I just hope your close to correct... Great post...

[ajax]

EXACTLY my point too, 'earlygaudy'; I am guessing this '000' trade in for US, is because of what our Govt, China, UN, etc have worked out with IRAQ to allow it to? (get out of Chapt 7, have massive debt repayments forgiven, etc.) We have a huge WAR bill to pay for, and for our costly assistance of their rebuild, etc.... I am guessing that the OLD Dinar we possess on this side of the pond, gets the million dollar add-on remaining intact for this reasoning??? That's the ONLY reason I can see for why we (much hated by those people over there) would get this MAJOR benefit when their own people (who lost major wealth and everything after the toppling of Suddam Hussein) would only get an RV amount less the '000'???????

[GODSENT]

Now that makes a whole lot of sence, thanks for taking the time to write this see thru intel.

[GODSENT]

EXACTLY my point too, 'earlygaudy'; I am guessing this '000' trade in for US, is because of what our Govt, China, UN, etc have worked out with IRAQ to allow it to? (get out of Chapt 7, have massive debt repayments forgiven, etc.) We have a huge WAR bill to pay for, and for our costly assistance of their rebuild, etc.... I am guessing that the OLD Dinar we possess on this side of the pond, gets the million dollar add-on remaining intact for this reasoning??? That's the ONLY reason I can see for why we (much hated by those people over there) would get this MAJOR benefit when their own people (who lost major wealth and everything after the toppling of Suddam Hussein) would only get an RV amount less the '000'???????

Their three 000 had to come off of their money because there are three 000 added to everything they are buying, example ( a loaf of bread may be 4000 dinar and after the looping off of 000 then the same bread will be only 4 dinar) also there are as many people that may hate us over there as there are that hate us over here!!!!!!!!!!!!!!!

[jody2010]

exceptionally done Steve... as usual!

[Barbann]

Steve,

I have to hand it to you..right or wrong you sure know how to stir the pot!! LOL We appreciate your input. Thank you.

[chuksan]

Great explanation Prf. Enorrste! Only question is, when it rv's for more is that in both concepts? Thanks for a great post!!!

[braywilkins]

E......Again excellent work. If they still don't understand they CAN NOT be helped.

[tabi]

One, about half-way down you started to quote...who do you quote??

Second, from what you just described you are saying, in MANY words, that Iraq is going to LOP and revalue ($1 for simplicity) at the same time????

What you say is the buying power will remain the same even though they will LOP three zeros off---SALARY---BANK ACCOUNTS---LARGE DENOM NOTES---

O.K. then what has changed? Nothing except no more 3 zeros!

If this happens as you say it "might" then everyone is out except the IRAQI GOVERNMENT!

As far as Iraq dropping the zeros off 1000 thru 250000 notes....IT WILL NEVER HAPPEN!!!! Can the US say O.K. fellas your $100 and $50 is is only gonna be worth $10 and $5 next week but, the $1 thru $20 is still cool.

What if I went to the bank last month and deposited all 20 dollar bills? am I exempt?

I know they have to price adjust salary and products....but, once again, they can not pick and choose what notes to devalue!

[tabi]

AS far as people ouside Iraq...what you're saying is they are gonna cash in for 1000X??

I don't think so. If Irq drops three zeros the money is worth absolutely nothing, so, they RV at the same time. Now it's worth the same as before, That maybe 1000X for someon who buys dinar between the time they lop and rv, but, not for anyone else

[taxguy]

Steve, thank you for your post. I don't see how there can be one rule for Iraqis with respect to existing savings and large denoms and one for the rest of the world. In your example, Iraqis existing currency and savings accounts would seem to be lopped, although they would not lose purchasing power because prices would also be lopped. Meanwhile, foreigners' high demoms become 1000 times more valuable. I think that in your your example, if this is a true RV and not a LOP, the Iraqis would maintain the balances in their savings accounts and currency holdings, which would become more valuable along with the holdings of foreigners. Otherwise, why would they deposit high denoms in a bank and not sell them to currency trades who would smuggle them out of the county where they would be worht 1000 times as much?

This is just my opinion and I am not an expert. If I am missing something, I would very much appreciate being set straight.

Take care,

Charlie

[DINARMONSTER]

OK Enorrste ,Never seen anyone that can get the nay sayers going like you can.Sure dont see anyone gaveing there well thought out plan for a rv,but they can give up there one liners all day long.To many bashers and not enuf people giveing you the credit you deserve for all the time and hard work you put into this.Sometimes I want to lash out at these people in chat that think they are so smart ,but i just keep quite for the wellbeing of Dinar Vets site. thanks again Enorrste!! Toledo!

[BOKINEGRO]

OK here is my doubt about this "lop" or whatever,the "0" r going out of the big denom.(1000 and up)not smaller denom,right?then if 2 iraqis have 1000iqd but one holds 1000 in small denom. the other a 1000iqd bill when this happens the one with the smaller denom will still have 1000 the other will have 1 nid.If that is true we sure the heck should start changing uor denom.anyone ,please.

[Robinsnest]

Enorrste, now you lost me. This does not make much sense to me. Why would the Iraqis get screwed out of an RV. Different rules for in country than out of country? Its got to be one way or the other. I personnally think that it will RV and all should benefit. Im not an economic major, but not allowing the Iraqi to benefit "immediately" from this is wrong.

So what your saying is the Iraq citizen needs to find out how to send there current dinars to a friend or family member outside of the country so they can cash in? Or they take a trip and somehow open a bank account in Kuwait or Dubai to get there money back?

Call me sensitive, but the Iraqi people deserve more than this.