Tuesday, April 22, 2014

Iraqi Election

Nouri al-Maliki
For the past four years we've been hearing from the gurus that Maliki is history.  He's going to be run out of office, arrested, assassinated, tortured, or run out of the country.  Supposedly the powers that be (PTB) were tired of him holding up the RV or the GCR or whatever.  In 2010 the election was essentially a tie and the stalemate lasted for eight months.  Almost all of the gurus said that Allawi would prevail.  They were wrong.  Time after time those same gurus told us that Maliki was a crook and wouldn't finish out the year.  They said that in 2011, 2012, and again in 2013.  Wrong, wrong, and wrong.  Now the gurus are telling us that Maliki is seeking a third term in violation of the Iraqi constitution.  I don't know about that since I'm no expert on their constitution or political process, but according to this article the Iraqi supreme court overturned a law limiting the prime minister to two terms.  Regardless, I don't think it really matters where the dinar is concerned.  Maliki or no Maliki this millionaire-creating RV isn't going to happen.

Anyway, we're hearing almost unanimous declarations that Maliki won't win another term in the upcoming election.  He's "in a world of hurt" or he's "toast" or he's "finished" or he's "fighting for his life".  All rubbish.  But the gurus have to have somebody to blame for the fact that this RV hasn't materialized, don't they?  I wrote about this nearly two years ago in "Maliki and the RV".  You see, these guys have made Maliki the scapegoat for years, saying that he is holding up the RV or the GCR or whatever.  So they have to tell their listeners that Maliki won't win another term because if he does we're looking at another four years of Maliki holding up the RV or the GCR or whatever, and who wants to hang around another four years waiting for this thing to pop? 

Let me go on record as being neither pro-Maliki or anti-Maliki.  My position is that the guy is probably no better or worse than any other leader would be, but he's obviously a better politician.  He knows how to work the system, and despite all of the problems in Iraq he has managed to keep the country from self-destructing.  So far, anyway.  While I won't make any predictions about the election I will say this .... based on Maliki's track record and the track record of the gurus I wouldn't be the least bit surprised to see Maliki win and serve a third term as prime minister of Iraq.

If that occurs be prepared to hear more cries of Maliki holding up the RV or the GCR or whatever.  If Maliki doesn't win then be prepared for new non-Maliki-based excuses as to what's holding everything up now.  It's how the gurus roll.

Friday, April 18, 2014

Deleting the Zeros II

June 24, 2011

BAGHDAD -- A senior Iraqi Central Bank adviser says the government has adopted a two-pronged plan to restructure the national currency in order to facilitate large transactions and make government accounts more efficient, RFE/RL's Radio Free Iraq reports. 

Mudhhir Muhammad Salih, a member of the bank's advisory panel, told RFE/RL on June 23 that in the short term, larger banknote denominations of the dinar would be issued to simplify major transactions.

He said that because so many Iraqis still dealt mainly in cash, it was cumbersome to carry bags full of money to pay for expensive items like cars. The inconvenience leads people making such purchases -- as well as many entrepreneurs -- to use dollars for those kinds of transactions instead of dinars, something the government wants to end.

He added that large denominations equivalent to around $100 would be issued to simplify major purchases, and new coins and lower denominations would be introduced for smaller transactions.

In the longer term, Saleh said a redenomination was needed wherein three zeros will be dropped so that the 25,000-dinar banknote -- currently the largest denomination -- becomes a 25-dinar note.


The other day I was watching a certain guru attempting to answer an email about deleting the zeros.  Essentially the question was "what is meant by deleting the zeros?"  The guru proceeded to babble on for more than ten minutes about economic growth, the wealth of the Iraqis being restored, the money supply figures aren't accurate ... etc.  As far as I could tell he never really answered the question but he clearly suggested that it means revaluation rather than a lop.  I felt that it was a good question and it deserved a good answer. 

I asked this question myself a few years ago.  It drove me to study the subjects of redenomination and revaluation.  In my studies I came across numerous news articles about other currencies that lost value after periods of hyperinflation, and were now being replaced with a new currency.  I noticed a pattern.  They all seemed to include references to removing zeros from the nation's currency.  Sometimes they used the word "cut".  Other times they said "chop".  Some of the articles used "lop", "slice", "lift", or "drop".  No matter what word was used, they were all clearly describing the same process.  I wrote about this a while back in "Deleting the Zeros".

When a country removes zeros from its currency it is a process that includes several components.  First they have to announce it.  A currency reform of this nature must be explained to people in order to proceed smoothly with no misunderstandings or complications, otherwise people might get the idea that the government is stealing from them.  That is especially true in a country like Iraq where they had a ruthless dictator for decades who did exactly that.  For the past few years the central bank of Iraq has been educating Iraqis about the coming monetary change.  They've been telling them that the dinar that they're using now will be replaced by a new currency at a ratio of 1000 old for 1 new dinar.  This will be accompanied by a new exchange rate where the decimal will move three spaces to the left (from 1166:1 to 1.16:1) and the new value will see the decimal move three spaces to the right (from $.00086 to $.86), thereby removing three zeros.  The new notes will have three less zeros.  The 25,000 dinar note worth about $21.50 will be replaced by a 25 dinar note worth about $21.50.  The 10,000 dinar note worth about $8.60 becomes a 10 dinar note worth about $8.60.  The 5,000 dinar note worth about $4.30 would become a 5 dinar note worth the same ...... etc. 

After the announcement is made and the education process has begun, the new currency is designed and printed.  There have been numerous articles about the designs being approved in Iraq but to my knowledge the printing process has never been approved because of the concerns among some in parliament that Iraq needs more stability before they can carry out this project.  There have also been articles such as the one I recently wrote about stating that the current denominations are being printed with new paper, designs, and sercurity features.  These would replace the worn out bills presently in use.  If they go to the trouble and expense of printing new notes in the current dinar series one would assume that printing up notes to replace the IQD would still be a ways off.

Once the new bills are approved and printed they would be introduced into circulation.  For a certain time frame (most articles about the dinar state two years) both currencies would be valid for in country purchases.  In Iraq's case an item that cost 86 cents could be purchased with either a 1,000 old dinar note or a new 1 dinar note.  When the time frame expires only the new currency would be considered legal tender.  Some articles have referred to a ten year period where the old currency will be redeemable at banks, but to my knowledge none have stated that it could be used for purchases beyond 2 years. 

When the process is complete the people have a new currency without the all the zeros that were added because of hyperinflation.  Transactions are simpler.  Accounting is simpler.  And the people feel better about using a currency that has greater value.  But there is no net change in the purchasing power.  If a person had 10 million of the old currency worth $10,000 they would now have 10 thousand of the new currency worth $10,000.  No increase or decrease. 

This process has been carried out dozens of times over the past 50 years in large countries like Russia and Brazil and small countries like Iceland and Turkmenistan.  It's been done in countries with great natural resources and countries without great natural resources.  It's occurred in countries with growing economies and countries where the economy wasn't growing so well.  The purpose is simplification of the monetary system, not to increase or decrease the wealth of the citizens.    

I've discussed this process with a friend of mine who lives in a country where a redenomination occurred.  I asked him if there was any change to his net worth when it happened and he said there wasn't.  "As long as you exchange for the new currency in time" he told me. 

Shabibi in Washington D. C. - April 2011
Now that we've discussed what "deleting the zeros" means, let's talk about what it doesn't mean.  It doesn't mean removing three zeros from the value so that they can revalue 100,000% from $.00086 to $.86 and turn a $1,000 investment into $1 million.  Revaluations don't work that way.  The largest revaluation in history was only 35% (China's renminbi) and it took over eight years to move that much.  It doesn't mean removing the three zero notes from circulation, either.  As I mentioned earlier they're apparently planning on printing more three zero notes which they wouldn't be doing if they were interested in removing them from circulation.  The gurus insist that in Arabic the CBI is saying that they will remove the 000 notes from circulation, but it loses that meaning when translated into English.  But the fact is Shabibi spoke about this in English when he visited Washington D.C. in 2011 and he clearly stated that deleting the zeros means redenomination.  He said nothing about removing the 000 notes.  I wrote about this in Shabibi Videos.

The "Delete the Zeros" project has been totally misrepresented by gurus.  They want to convince dinar speculators that they will somehow benefit from this process.  That's simply not true.  It's a neutral event, and in fact there's a better than even chance that holding IQD when they delete the zeros will end up costing you.  That's why this blog and others have been trying to warn people about the risk incurred in dinar speculation.  The potential for profit is minimal and the potential for loss is enormous. 

I will conclude with a quote from the September 2012 indictment of Brad Huebner and Rudolph Coenen for dinar fraud.

"A "redenomination" of the dinar refers to an actual proposal by the Central Bank of Iraq, announced as recently as June 21, 2011, to re-print the currency to remove three zeroes from the physical dinar banknotes as a matter of convenience.  A redenomination of the Iraqi currency would not lead to a revaluation by the same amount, and may have no effect on the currency's value.  Under a redenomination, a new currency replaces an old currency, but the value remains the same."

http://www.realscam.com/attachments/f12/1576d1348185792-bayshore-capital-investments-bh-group-bhgroup_indictment.pdf (article 8 page 3)

Sunday, April 13, 2014

The New Dinar Notes

Well I just got a glimpse of the new dinar notes.  They should be in circulation any day now, and I must say they turned out rather well.

All kidding aside, a recent article from Iraq reports that they're printing new banknotes in Iraq, only they're not the new "lower denoms" that the gurus have been telling us about for years now .... you know, the ones that would reflect a 100,000% increase in the IQD's value.  No, these are new 250, 500,  1,000,  5,000,  10,000, and 25,000 dinar notes which are already in circulation.  They're being given a facelift with new designs and security measures as well as features for the blind. 

Okay, the gurus have been telling us for years that Iraq is pulling the three zero notes out of circulation.  They claim that this is what the CBI means by "deleting three zeros".  Now correct me if I'm wrong, but don't the 1,000,  5,000,  10,000, and 25,000 notes all have three zeros?  And they're printing more?  Supposedly they're reducing the money supply in preparation for an RV, but they're printing more??  All of the three zero notes have been sucked in, but they're printing more???  Does any of this make sense?  Or could this just be further evidence that increasing the value of the dinar is the last thing on their minds, and that these gurus are just as clueless as I've been saying they are for 2.5 years now?

A week ago they were talking about the articles that told the Iraqis to take care of those dinar notes. 

4-6-2014 BGGif the CBI truly intended to keep the value at 1166 – would it not be a reasonable conclusion they would regularly replace the worn and damaged currency? This has been a source of major complaint for some time now…any normal economy has a plan in place for removal and replacement of worn and damaged currency. The US replaces significant amounts of our currency on a regular basis. This is a common practice. Not in Iraq (currently) – Why?

Obviously BGG was suggesting that the RV is imminent.  So a few days later we read that they are going to replace those worn and damaged notes and BGG's sidekick Poppy says:


So you see, whether their worn out currency is or isn't being replaced ... IT'S ALL GOOD NEWS!  Amazing, huh?  It was amusing to hear these nimrods stumble around as they tried to explain how "this is good for our investment".  Most suggested that the larger three zero notes would be used for bank to bank transfers, even though those transfers are done electronically in the 21st century.  And even if they did need three zero notes for those transactions, why do they need to add features for the blind?  Is blindness rampant with Iraqi bankers?  Do bankers really need more vibrant colors and a picture of a tractor "plowing a new earth"?  Unfortunately most of the sheeple seemed to accept this as good news and fell in line with the mantra "GO RV!". 

I think it's safe to say that if this article is accurate, the currency reform is still a long ways off, and the CBI plans on keeping the value about where it is for quite some time.  Good news for the scammers, but bad news for everybody else concerned as this charade continues into what seems like perpetuity.