There was a post that was made by Kaperoni that I would like to address. I am not sure why he would post the things that he did here, as all of the reasons he posted just have no merit, and can easily be proved as false. I understand that it is important to keep site traffic in order to sell products to make money, but not at the expense of misinforming people about this investment, which can put a new investor that may not know better at financial risk.

I have posted a response for each of the reasons he provided. Please see my responses in Blue. I sincerely hope that I can clarify some of the misunderstandings that his post may have caused.

10 reasons why the IQD will not LOP

1. Monetary policy was a success talking inflation from 35% or higher to around 7% currently.

This is true, that the policies have in fact reduced inflation, so I will give Kap a nod on that one, but what is not true, is that this is a reason it will not redenominate. Let’s first make a distinction here, that there is no such thing as a “lop”, and it is just a made up word. The correct terminology is a redenomination, and a lop is NOT a devaluation, nor is a redenomination a devaluation.

That being said, historically, when a country redenominates, it is usually done as a sign that the inflationary period has ended, and why they usually will redenominate after hyper-inflation, not generally during that hyper inflationary period. In fact, it is more of a psychological thing than anything, as well as to ease the cash transactions with the smaller numbers. Now the important thing to keep in mind, is that this does not mean that high inflation cannot occur after a redenomination also, because it could, as it has happened in prior redenominations as well. A redenomination is not meant to resolve inflation, therefore this reason simply does not prove what he is trying to say.

2. Any type of currency devaluation (LOP) is considered a failure of monetary policy. Dr. Shabibi has not failed.

As stated in response to #1, a redenomination does not mean a devaluation. This is a statement that is simply NOT true. In fact, once a redenomination has occurred, the consolidated value of the Dinar could very well be just under, equal to, or over the dollar. For example, if a Dinar is currently .00086:1, then a 25K note is worth about 21.5 USD, and then in a case of a redenomination, if they were to move the decimal over 3 places, it would apply to all things the same, prices, rates, accounts, etc, therefore the new rate can potentially be .86, therefore after the decimal is moved over 3 places, 25 new dinars, would still be worth 21.5 USD. This shows NO devaluation has occurred, and the strength of the new currency has not changed once the zeros are deleted, just as they have stated in those articles we read.

In a redenomination, it would not mean Shabibi has failed, only succeeded in his plans that he has been saying he wanted to do all along. It is the govt right now that does not want him to follow through on his plans to redenominate at this point for reasons they gave of fears of corruption or counterfeiting in the process.

3. Lesser value notes in circulation such as 50, 250, 500. Devaluing the larger 3 zero notes would make them worth less than these lesser notes.

This is an interesting one, one that had me thinking when Kap started with this theory almost a year ago. Unfortunately, this holds no water, as in a redenomination, they do not just redenominate some notes, and not others. When they talk about the 3 zeros, what this actually means is the movement of the decimal point over 3 places. This would apply to all notes, accounts, prices alike. Please look up the terminology for a Homogenous function. You will see the definition of this there. You will also find that this is a term that is used in these 3 zero articles explaining the process as well. Please see the link below and you will see where it uses this term in the explanation of the process:

http://iraqdinar.us/forum/viewtopic.php?f=7&t=28096

Now, here is a definition of Homogenous:
 1: of the same or a similar kind or nature

2: of uniform structure or composition throughout homogeneous neighborhood>

3: having the property that if each variable is replaced by a constant times that variable the constant can be factored out : having each term of the same degree if all variables are considered homogeneous equation>

http://www.merriam-webster.com/dictionary/homogeneous

Here is another good explanation:

http://www.economics.utoronto.ca/osborne/MathTutorial/HOMF.HTM


4. Iraq wants the dinar to be an international reserve currency. Cannot devalue the notes in reserve (25,000), circulate them as payment, or traded amongst countries.

First, in this response, please see my response to #2. If the CBI were to redenominate, that does NOT mean a devaluation. That is 2 different things, but something those that want to distort the facts do not want you to realize.

2nd, the rate does not determine tradeability. Last I checked, the Vietnam Dong at 21,000:1 is as good as any other currency, just takes a whole lot more Dong to do business with it. So I have to say, this reason, holds as much value as the Dinar or the Dong does right now!

5. Iraq holds arguable the second largest oil reserves and is mineral rich. They are too wealthy to not honor the value stated on the notes.

Are they wealthy with the Oil reserves, and mineral rich, sure, I will give him a nod on this one as well, but that does not mean that they would not redenominate. The determination to redenominate is not based on Oil reserves, and even if so, having the oil, and getting the oil out of the ground is 2 different things. In either case though, I disagree that there is so much Oil that they can just revalue 1000x the amount or more than they are at right now, not without reducing the money supply first, and this was even stated by the CBI themselves.

6. Iraq has stated..They want the “strongest currency in the Middle East” Any such type of LOP would be a devaluation and therefore not considered strong.

This again goes back to #2. A redenomination is NOT a devaluation. Prove that they are the same thing, and then this is something to consider, until then, I think that we should be a little more realistic.

7. US holds dinar as a result if funding the CBI initial reserves. This dinar will eventually payoff the war debt.

All I can say about this, is show the proof. I will be willing to entertain this idea, if someone, anyone can show any shred of evidence of this to be true.

Let me provide the link below:
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
This is from the US Treasury website showing the US Foreign Reserves. You will see that it does not indicate anywhere in here that is shows IQD holdings. There is a group called Oil Exporters. If you notice the 3/ next to the name that refers to the #3 at the bottom and it reads:
“3/ Oil exporters include Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar,
Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.”

This means that the amount shown in the row for Oil Exporter nations consist of the combined holdings of all of those nations currency. So unless proof can be given that we hold as much Dinar as some would like to say, this is speculation at the very best, and nothing more. Using this as a basis as to why they would not redenominate would simply be wrong, and I hardly think that a guess at something should ever be used as proof of something, especially when the proof itself is not verifiable. I challenge everyone to ask Kap this question, and I would be willing to bet you would get banned for even asking the question. I know, because I did.. lol!!

The other point I would like to make on this is that, even if we did hold Dinar, if they were to redenominate, as I stated in prior responses, this would not be a devaluation, therefore it would not mean any loss for the US reserves, but it would also mean that it would not be paying for any wars, and for those that may have heard of the wars will pay for themselves rumors, this is not true, and Bush never said those words. I would challenge anyone to provide proof of the quote if they do believe this. In fact, I can provide you with precisely where I believe that rumor came from. It was actually a statement made by Wolfowitz in 2003 talking about Iraq using Oil to pay for their own reconstruction, and I believe some guru out there twisted this quote to what the rumor has become today, like a tall tale over the years. Here is the quote:
Wolfowitz: "We're dealing with a country that could really finance its own reconstruction." As Think Progress noted, then-Deputy Defense Secretary Paul Wolfowitz testified before Congress on March 27, 2003, that "the oil revenues of that country [Iraq] could bring between 50 and 100 billion dollars over the course of the next two or three years. Now, there are a lot of claims on that money, but that's --- we're not dealing with Afghanistan that's a permanent ward of the international community. We are dealing with a country that can really finance its own reconstruction and relatively soon."


8. One of the authors of the currency exchange plan - Assistant Professor Dr. Fadel states in his documentation, “We must emphasize the extremely important issue is that if you remove three zeroes from the currency should not affect the actual value thereof to be trading in the old currency…

Yes this was said, but please note what I stated in response to #2, in a redenomination, there is no affect on the purchase power, so I believe this to be accurate. In other words a 25K note worth .00086, and a 25 dinar note worth .86, they BOTH equal 21.5 USD, so a redenomination does NOT affect the actual value of their wealth, so this is no proof at all that they will not redenominate.

I would also like to mention a point about this author and what was said in this plan that Kap posted and spoke about:
2 - experiences of other countries: Moved from other countries suffered hyperinflation a similar course, particularly in Russia in the nineties of the last century. Turkey has also withdrawn (6) zeros from its currency without prejudice to the true value. Providing Treasury Secretary Turkish then Ali Babacan, Minister of Foreign Affairs the current bill to get rid of zeros six in the Turkish lira and by 2005, and resulted in inflation witnessed in Turkey that the price of one euro to one million and 7,820,333 Turkish liras,and Turkey has witnessed discussions on the adoption of such a wage-earners in the removal of six zeroes from the currency. And seem to rein in high inflation in Turkey is not only through the removal of zeros six of the Turkish currency for the first time succeeded the Turkish government in reducing the rate of inflation to the target set for the current year and of 19.3% and although this rate is high compared to other countries and the bill was introduced to the Prime Minister's Office to the application and began the application where it began trading currencies for a specified period after which the old currency was withdrawn and replaced the new currency.

http://dinaralert.webs.com/apps/forums/topics/show/6612064-assistant-professor-dr-fadel-punitive-a-special-article-economic-forum-uae-

So as you can see, even in this plan that Kap talked about, he failed to mention this part where they even talk about a redenomination, and mention Turkey and what they did.

I will also add from this post:
3 - the possible effects of this procedure The phenomenon of rising prices in the world is caused mainly by the decline in currency values ​​and thus lower the purchasing value. And your conception that the best remedy for these reflections on the psychology of the Iraqi individual and the market is in the drafting of a new Iraqi currency prices are back with the logical relationship between the cost of the real item and the selling price based on the market. The write-off three zeros from the Iraqi currency is tantamount to re-price their nature and reduce the size of the introduction of inflation growing, and perhaps the best example of the Turkish experience.The written off after six zeros to become with him a million pounds and the only one and the same purchasing power for the previous million, it became possible to purchase Blairh one was in the past one million pounds.
The abolition of the zeros from the currency, which inevitably suffer from inflation will limit the negative effects of the current world of hyperbole in the prices of goods and services and will return for the currency balance and weight.
That such a decision, if adopted by the Iraqi government, he would not return to the Iraqi currency value based upon, but will reflect as well as the flexibility of the economy and his movement in the right direction for that from our analysts economists to look seriously for this phenomenon by holding seminars and conferences to form through which the views of access to rein in inflation and a rise in prices and the return of the Iraqi currency to the value of real and normal.

Please read this for yourselves, and you will see what this plan is really sayng.
The omission of three zeroes of the Iraqi currency to achieve the following objectives: 1 - to fight inflation, 2 - support the banking system
3 - help to know the size of the wealth distribution and how 4 - banking system's ability to control liquidity, 5 - create financial surpluses are used in financing 6 - to increase awareness of the banking system.

Unfortunately, this contradicts Kaps own theory.


”9. In 2003 when the NID was introduced at it’s initial rate, the previous currency was in essence devalued taking all wealth from the country to prevent funding of terrorism. Raising the currencies value will in essence, return that wealth now that the GOI is stable and economic conditions have improved.

I am sorry, but this one really is laughable. The fact of the matter, is that this one, is absolutely untrue and inaccurate. In fact, let me provide some proof that I have that proves this one to be untrue. Please see the below link:

http://treasury.un.org/operationalrates/Details.aspx?code=IQD&currency=Iraqi+Dinar&country=Iraq

This goes back to Dec 2001. Please see the rate as of Dec 2001: 2023:1 .. yep, that is Dec 2001, well before the NID was introduced, or before we even ever invaded Iraq. The fact and reality is that the currency was being devalued years prior to the NID. In fact, the rate right now is almost twice as high as it was back then PRIOR to the new notes being changed. This was due to inflation, and why the amount of dinars that were being printed were printed. So it would be very wrong to use this as any proof that they would not redenominate, and in fact, only further provide proof that they need to reduce the money supply by redenominating.

10. The CBI has stated “both currencies will co-exist” and the process will not change the “monetary value” of the dinar.

This is entirely possible depending on the exchange process. Romania for example did the same thing, and Iraq even used Romania as one of the examples or models to their plans. There was a time, for about 18 months, where during the exchange period people would be able to use either the old or the new currency for a period of time, and prices were adjusted based on if they paid with the old or new currency, moving the decimal over on the price. Please see the link below that shows an example of a price tag in Romania based on the ROL (old currency) or the RON (new currency).
http://en.wikipedia.org/wiki/File:Romania_revalue_tag.jpg

The CBI themselves used Romania as an example of what they intend to do.

If the intent here is to prove that a redenomination cannot happen, then unfortunately, I think that there will need to be a better attempt at it than this, and a bit more solid proof than this that is for sure.

I do believe that maybe they can just revalue without needing to redenominate, and that is what I hope for in this as everyone else, I am in this to gain just like everyone. While I do hope for the very best though, I also need to be honest with myself, and everyone else. I think giving hope is a wonderful thing, but distorting the facts, or the truths to give hope is not the way to go about it though.

Kap's intentions may be sincere, and I truly hope that is the case, but I think that in order to be fair, and to be honest with his members, he should either show some real proof that a redenomination cannot happen, proof much stronger than this, or openly admit that it really is a very strong possibility that we all should keep under consideration, and think about.