Just How Could an RV Work?

[Short6]

God ! I hope you are right Ajax!!!!! That is the first post that actually made some sense. Other wise were LOPPed!!! and that is not acceptable to me!!!!

[noizmkr13]

Wow. I`m not the only one thinking on this level. love it

[jawdove]

in the words of al michaels 'DO YOU BELIEVE IN MIRACLES" oh ya baby come on R .V. DINAR

[Enorrste]

I am surprised that my most recent post has drawn so much interest. It is not practical for me to address each concern individually with separate posts so I will do so here, once and for all.

Dinarded: You wrote “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.”

With all due respect the proportion of those who appreciated what I wrote is about 9 to 1 in favor. Secondly, none other than you has stooped to using words such as “whacked out version”. Do I detect some sour grapes?

Ajax: there is an element of correctness in what you wrote. This will definitely benefit the world governments who hold dinars. However, I would not go so far as to say that this is the ONLY reason that the RV is taking place. The real reason for the RV has more to do with internal Iraqi matters. We just reap the benefits from their actions.

Earlygaudy: You wrote: “Why would we not lose the three 0's off ours just like they did?” The answer to your question is simple. The CBI has stated that all Iraqi currency, both large and small denom notes, will remain legal tender. Within the country they will require the people to exchange so that the new small notes have the same buying value as the one larger note. Within Iraq the larger notes will become superfluous (not useable) rather than worthless. Outside Iraq, where we have no need for the small notes or, for that matter for the large ones, the investor will exchange for dollars at the new RV rate, whatever it is. The fact that the foreigner benefits is not an issue for the GOI or CBI; people make money on currencies all the time. This just happens to be a big RV because the UN artificially reduced the dinar to next to nothing. In restoring it to its rightful place some will profit handily. This is simple economics.

Tabi: You asked several questions. First I quoted the hypothetical TV personality in the analogy. Next you rightly state that the buying power remains the same; this comes from the CBI itself. All transactions within Iraq will see 3 zeros removed and the new lower denom notes will buy the same goods as the larger ones did before. Within Iraq nothing has changed except that the dinar has gained in value by 1000 times and the large denoms are removed over time. Initially no change other than the paper in the pocket occurs for the local Iraqis. Their gain will be realized over time as imports become amazingly cheap (1000 times cheaper!). No one is “out” as you say. They just are going to realize their benefits over time, big time. The Iraqi government will see gains as it buys goods from outside its borders, just as the locals will see those gains. Finally, the removal of the 3 zeros WILL HAPPEN because the CBI said so.

Taxguy: your question regarding the savings of the local Iraqis is still open to debate, in my opinion. Last week on chat I had posed a theory that they would gain along with everyone else within their savings, making many millionaires (although it is my understanding that few Iraqis trust the banks, so the number of persons who benefit may be small). Last night I posed another option as a theory, namely that the funds within banks for locals would be reduced as well. Now that you have questioned this again it seems to me that my first view on this from last week’s chat it the more likely, and here is why: the CBI is “removing the large denom notes” when it talks of the “3 zeros”. Since a savings account is just an electronic record there are no “large denom notes” within a typical savings account. So it now seems reasonable that those who have savings accounts in Iraq will realize the 1000 times gain within them. This would also make it possible for ALL savings account holders, both foreign and domestic, to be treated the same (this came up later from someone else; I will refer that person back to this admission of a change of opinion – give me a break I did this at 3 a.m. last night!)

Bokinegro: You questioned two Iraqis each having 1000 dinars in their pockets, one in a single note and the other in small denominated notes and wondered how this could work. Here is the answer in two parts: first, according to the CBI the small denom notes will come out AFTER the RV occurs, so it is not likely that the second Iraqi will have them in his pocket at all. However, let’s assume that there are some small denom notes floating around and let’s assume that this guy has a wad of them totaling 1000 dinars. After the RV the value of that wad of notes is $1. How many folks do you think would have more than, say, $10 worth of small notes lying around? I doubt there would be many, and the loss is insignificant to the overall gain to be realized by the people from the RV. It is sort of like losing a $5 bill from your wallet. Are you going to stress over it for the rest of your life? I don’t think so.

Robinsnest: First of all to say that the Iraqis will not benefit is a mistake. They will benefit greatly over time. Secondly, when you start using terms like “they deserve more” or “this is wrong” you enter into emotion rather than logic. In any event of this magnitude there are going to be people who benefit more than others. That is just life. As I stated above regarding savings accounts and my change of opinion back to my original view, it may happen that some Iraqis who have savings will benefit immediately greater than the average Iraqi. This is life. To apply some “moral standard” to an event this large only confuses the issue. It solves nothing. Finally, no Iraqi will lose, period. Just because someone else gains more does not mean that someone else loses. Zoomzoom made that point as well, I see.

Newbie: your concern is that you will not reap the 1000 times benefit and will only reap the later 3 times benefit. However you have forgotten one thing: the large denominated notes remain legal tender. Therefore when you exchange them for dollars you are exchanging a large note, say 25,000 dinars, at the new rate of $1.00 per dinar. So you will get $25,000 for the note, not $25.

Column1: you wrote the following: “Question... How does an RV higher than a dollar help the people of Iraq? Does an RV at $2 to $3 help the people's buying power with imported goods?” It is clear to me that the first RV will be followed by a managed float of the RV to over $3.00 within 2 to 4 years. When this occurs the local Iraqis will realize the same benefit as a foreigner would, up to 300% or more gain on his money. However, as in the US, a dinar is a dinar, so they won’t “see” the gain except in as much as it allows them to buy more with the same dinar. In America when the dollar is strong then our jeans at Walmart get cheaper. What occurs is that the dollar is being RV’d to a higher rate through the international markets. But we don’t see the RV in our pockets because a dollar is a dollar to us. The same thing occurs in Iraq.

Ronscarpa: I have addressed your concerns above with the statement that Iraqis who hold dinars in savings will realize the same benefit as foreigners will. However I also stated that it is my understanding (the CBI has stated this, incidentally) that it is very difficult for them to get Iraqis to deposit funds into banks. Therefore I suspect that the “windfall” will not apply to too many Iraqis.

Lady Liberty: I have already addressed your question above. Placing emotional tags on this will not solve the issue. You must realize that NO ONE LOSES. However the gains, which will actually be the same in time for all, are realized within the country over time rather than all at once at the bank. It is just that simple. Here, try this: pretend you are an Iraqi who has 10,000,000 dinars in the bank. On RV day you will benefit just as an American will, with $10,000,000 in value in your account. The problem is that there will not be a lot of Iraqis who have that much in the bank. However, to the extent that some do, just as here with the speculators in the US, the impact of that new wealth will be spread quickly into the market. Cars, homes, businesses will all be bought and the “wealth value” will be disseminated throughout the country quickly bringing a revitalizaion to the economy of Iraq just as our “cashing in” will do the same in the US. The question is: just how many Iraqis have savings accounts? The answer, according to the CBI, is not too many. Regarding “the Plan” look to my previous posts where it is explained.

[Enorrste]

Karen: you, along with 2 others now, have corrected me as I have shown above. I’m back to my original opinion on the savings accounts. It is now consistent (all treated the same) but won’t affect many people since few have savings accounts.

Fiery Phoenix: you are the 4th now who has corrected my position. See, I can admit when I’ve made an error. Who’d have thought? OH, I also intended to respond to you analysis in our last thread and things just went haywire (I’m getting about 50 emails a day and like to respond to each with more than a single line). So I forgot. I will get to it after this.

Quadraphonic: Many have now asked the question as to “how can Iraq afford to do this?” They have used numbers showing that it is impossible. However, the premise is wrong, in my opinion. No where does it state that a country has to have a certain amount of reserves to RV its currency, as far as I know. While .26% of reserves is a tiny number, it may not even apply. Here is my suggestion: how about one of us go find out what the reserves were for other countries that RVd and see if some sort of relationship can be determined and/or made relevant? This way we aren’t just spouting numbers. My position, as stated earlier in my book, is that there are at least 3 ways to estimate whether a country can “afford” and RV. I compared numbers in the US to numbers in Iraq that have been published. This was for 2 methods. The third stands on its own merit, in my view, and that is that the underlying wealth of Iraq is enormous and that means they can afford the RV. Incidentally, this last method is the one that the IMF uses when it decides to RV a currency, so I think I am on safe ground here.

Kaperoni: you bring up a valid point about smuggling dinars out of the country. It is for this reason that the CBI has already been educating the people of Iraq. Since most Iraqis live “hand to mouth” the problem will largely disappear in short order. The locals will go to the bank and turn in their large notes so that they can go to the store and buy food. For the few who “figure this out”, and they will be few, some will get out of the country with large notes. But think about it: isn’t that just what we have done (except for the leaving Iraq part?). The CBI sees us as a gnat on a camel. The same will apply to those few who manage to escape with a few large denom notes. Oh, you can also rest assured that they will be at the borders looking for people with suitcases full of the large denom notes; and they will exchange them on the spot, I suspect.

Wayne & Leah High: your dinars are in large denom notes and will remain legal tender. When the RV occurs at, say $1 per dinar, your notes will be worth $25,000 or whatever you have. Go to the bank and exchange them. You are NOT in Iraq! No one is forcing you to exchange for small denom notes.

Steve

[ladonna]

Thank you Steve for the very informative senario you posed. I like it and hope it is true. I say go B. but O will take credit.

[ronscarpa]

Thank you Steve - I appreciate all you do for all of us - Be Blessed Brotrher...! I suspected you meant to say what I thought was corerect,

but it was very late and you typed 500m instead of 500,000. That would be in keeping with everything else you said.

RON

[Lady Liberty]

Thank you Steve ~ I really appreciate you answering my question. God Bless!

[Bruce]

So, should i send all of my dinars home now? I can have my wife cash them in and then wire me back 1,000X what i sent her. Hey,wait a minute. All Iraqi citizens can do that too. Should i tell anyone here about this?

[jam_az]

Love reading your posts. They are understandable to the small investor.

[taxguy]

Steve,

Thank you for your response. I very much appreciate your hard work and analysis.

Charlie

[super]

Same here Steve, thanks for all of your hard work, patients and understanding!

[Enorrste]

Bruce, you are missing a big point. The answer to your question is that obviously all Iraqis could do this too. But the point is, will they? And the answer is definitely that they will NOT for the most part, either because they don't even know anyone outside their country, or they don't have the $17.00 extra for the FEDEX fees to send the dinars out. For the few who do have that ability I would suggest that they have already done so a long time ago.

It must be fun to make light of this sort of thing. I trust that you enjoy it. I'm sure others here see it for what it is, however. If you ever want to have a real discussion, let me know.

Steve

[hiloeven]

My kudos for the call for some business maturity, since this is a serious investment for most of us, not a comedy club routine--there's a time and place for everything--let's save the foolhearty for after the RV.

[tuxunder]

Why do you people pay attention to this guy, he is crazy. What have we been hearing all along as the reason for an RV?

Answer: The Iraqi people are in financial ruin and need the RV to get out of it. How does this version of an RV help the Iraqi's, it doesn't, their money doesn't have anymore buying power than it did b4 it RVed. They would be furious once they found out the rest of the world gained from the increase in their currency while they didn't.

[Enorrste]

taxunder: I welcome you telling us all how you would interpret what will happen. Then we will have a discussion.

Steve

[tuxunder]

I have no clue, but I do know that IF there is an RV, and the more you talk about its certainty the more skeptical I become, the Iraqi people will benefit from it. In your version they do not and that just isn't going to happen.

[NotReallyTex]

Some of you that think Iraqi's can just send their own money out really don't know what it's like over there. Yes they might be unhappy if they learned we made a lot of money because of the occupation but I doubt many of them will find out or really care.

The majority of them can't go to the corner post office and ship out Dinars to ? I mean think about it. Who would they send it to?

Watch Mosiac News sometime. See what the average Iraqi on the streets think about.

I almost feel sorry for them, actually I do. Just like here, you have the haves and the have nots. WE are very lucky to have this chance to make our lives better.

Edited February 23, 2010 by NoOneReally
Spelling

[DINARMONSTER]

Enorrste, why bother ansering people like tuxunder its evident he has no respect for you nor you knowledge and insite on this subject!! Theres alot of good people out there that like you and dont desrespect you!!

[Enorrste]

taxunder:

I really want to ask you a serious question: If you admit to not knowing what will happen, how can you in the next sentence insist that you DO know what will NOT happen. I respectfully submit to you that you know neither, and that is OK with me.

Incidentally, you might want to re-read my scenario. The Iraqi people WIN as well as those outside the country. No one loses in the long run on an RV, period.

Steve

[tabi]

Okay, wow, a lot of posts in here since 7am.

Well, I didn't feel like reading all of them but feel like I got the jist of what's being said....

current value of the IQD is .00086 making 1mil worth about $860.usd If they remove three zeros from the (we'll say) 25,000IQD note it will be a 25.iqd note. Well, that has now changed the rate to .00000086 making 1mil worth .86cents usd!!!!! Okay, now they have to RV the LOPed currency. We'll say they rv 1000 times it's value. It is now back to .00086 making 1million worth $860.usd AGAIN!!! Let's say they rv it 1million times it's post lop value (.00000086) now it's at .86cents to the usd. Does anyone realize this???

Removing zeros from money and products don't make you break even. Iraq will have to have a currency equal to those whom they purchase product from to break even. That is with a RV. If they RV then they will adjust the price (lower) of products.

[summer]

Enorrste,I just read a post "The Plan" by John 1025 Feb.19th.(PACSTER EMAIL TO another site) What is your opinion on this email?Could all this dinar hype be a lie?Are we just being suckered for nothing?

[ronscarpa]

Okay, wow, a lot of posts in here since 7am.

Well, I didn't feel like reading all of them but feel like I got the jist of what's being said....

current value of the IQD is .00086 making 1mil worth about $860.usd If they remove three zeros from the (we'll say) 25,000IQD note it will be a 25.iqd note. Well, that has now changed the rate to .00000086 making 1mil worth .86cents usd!!!!! Okay, now they have to RV the LOPed currency. We'll say they rv 1000 times it's value. It is now back to .00086 making 1million worth $860.usd AGAIN!!! Let's say they rv it 1million times it's post lop value (.00000086) now it's at .86cents to the usd. Does anyone realize this???

Removing zeros from money and products don't make you break even. Iraq will have to have a currency equal to those whom they purchase product from to break even. That is with a RV. If they RV then they will adjust the price (lower) of products.

Tabi,

I think you totally misunderstood all that been said, and explained. Just relax, sit back, and coast - and wait to see what happens...! You'll come out of this happy.

[summer]

"The Plan" was posted today.

[tabi]

Tabi,

I think you totally misunderstood all that been said, and explained. Just relax, sit back, and coast - and wait to see what happens...! You'll come out of this happy.

please explain what I have misunderstood? Because I feel I understand it exactly