Wednesday, April 4, 2012

John Jagerson Interview Follow Up

Back in January I was privileged to be granted an interview with currency/investment analyst John Jagerson.  He's the first and only person I've interviewed whose livelihood depends on knowing what he's talking about when it comes to investing.  That interview prompted a lot of discussion and I invited John back recently for a follow up discussion. 

Sam: Breitling’s crowd has made some comments about things like “I bet John owns dinar” and “John ignores the fact that the CBI says it wants the IQD valued at $1”. How do you respond?

John: First - I get people asking me if I really own a bunch of dinar but I am not sure why. I think they are just incapable of believing that anyone wouldn't be a believer in some kind of mythical RV. But really I have no idea why people ask me that so often. I can say that I don't own dinar, haven't owned any in the past, and don't plan to in the future.

I don't think I have much to say about the claim that the CBI wants the dinar to be equal to a dollar. I haven't seen any official statements from the CBI about that. There is no link provided or anything in that response to my interview with you so I couldn't give any comment about it but it sounds pretty fishy to me. I have seen stuff like that appear on message boards (usually sent to me as "proof" that the dinar is going to RV) but they are always quoting un-named sources at the CBI.

For instance I saw an article kind of like that recently in
almowatennews.com that quoted "a source" at the CBI saying that the goal is to get the dinar to a rate of 1-1 with the dollar after dropping 3 zeros from the currency. So what? Lets just assume that the source was real and that the CBI really does want to do that. It means they will redenominate the dinar (no gains for anyone there) to be worth 1.17 to the dollar or so and then try to push the currency another 14% against the dollar? Any currency could move that much against the dollar in 2012 and you wouldn't have to pay a 20% spread.

But - let me defer a little bit on this one and I will admit that just because I haven't seen an official statement from the CBI doesn't mean one doesn't exist. If such a statement exists on the CBI's website, lets take a look at it and discuss its implications. I would love to see a link to something that doesn't go to a rumors news site, YouTube, or a message board.



Sam: What's with the church connection - Babylon rising and all of that?

John: I get comments and letters quite a bit from people who got sucked into the dinar-vortex through their pastor or some other connection at church. First, I should mention that I am not picking on anyone’s religion. People can believe whatever their conscience dictates, but close-knit church organizations can also be a breeding ground for scams because members trust each other and don’t recognize the “wolf” in their midst.

The bible is full of references to a strong Babylon in the ‘last days’. You can find them in Isaiah, Jeremiah and Revelations. I will leave this to the religious to decide whether these references actually refer to a physical Babylon (Iraq) located in the same place or just general wickedness among modern nations. The idea promoted by the scammers is that if Babylon rises and the end is near (both very big assumptions) then why not profit by buying their currency (the dinar I guess).

This argument can be very persuasive because it builds on very strongly held religious beliefs. In other words the scammers are trying to make a logical connection between the truthfulness of biblical prophecy and the legitimacy of the dinar as an investment opportunity. However, this is actually a logical fallacy called a non-sequitur. In other words the argument’s conclusion does not follow from its premises.

Whether biblical prophecy is true (or even being interpreted correctly) is moot and is actually just a poorly disguised version of the “currencies = stocks” argument. Whether Iraq is the biblical Babylon or not doesn’t matter. The question investors should be asking themselves is whether a currency appreciates in value when an economy grows? If they will look at that argument objectively they will find that this does not follow. Most quickly growing economies have weakening currencies and those few that have had the opposite have tried to slow the growth as much as possible.

My assertion here should be easy to refute. Find an economy that is growing quickly with an appreciating currency over the last 30 years. There will be periodic spikes but even when it does happen we are talking about a few percentage points – nothing like what dinar investors are expecting and it almost never happens in the long term.


Sam: Why don't growing economies want an appreciating currency? Wouldn't that be a good thing? Why do so many of them avoid it?

John: Most economies want a stable currency not a growing one. In the case of oil economies they have to be very careful about a growing currency because their oil exports will exceed imports. Imagine that Country-X imports $10B (oil is priced in dollars mostly) of oil from Iraq in a given year. They pay for that oil in dollars that are then converted into dinar to pay the bill for the oil domestically. If the money supply in Iraq was kept stable and not increased this would mean demand for dinar would rise against a stable amount of dinar – which drives its value up. So then the next year, costs of production and such are still the same but the dinar has grown so much in value relative to the dollar that Country-X is going to buy cheaper oil from Saudi Arabia, Russia, the U.S. or Norway instead.

Oil exporting economies deal with this by sterilizing the money flow. If dinar is demanded for the oil transaction then the central bank will issue new currency (credited to the banks) to increase its supply in return for government debt. It doesn’t take that much debt to do this relative to the size of exports and has been shown to be quite effective with other exporters in the area. That way the dinar does not become anti-competitive with other oil exporters.

This is not a secret and is quite common among basic material exporters. For example, the Australians and Brazilians are two basic materials exporters who run into problems with appreciating currencies all the time but manage it (as loosely as they can) with the debt/money supply relationship I described. The issue everyone wants to avoid is a fast shift in the balance. If investors shift very quickly away from an economy and start pulling investment back out it can lead to a significant devaluation.


Sam: How do oil exporters freeze or peg their currency?

John: For a large economy it is impossible to completely freeze your currency but you can get very close. A central bank will lower the value of its currency if the ratio to the dollar is falling by buying foreign assets (government debt) with dinar. That increases the value of the other currency relative to the dinar. A depreciating currency can be managed by tightening monetary policy and setting higher interest rates, bank reserves, or by selling foreign assets. This is all done through open market activities by the central bank. Open market activities are almost always a loss but considered necessary by most modern economies. It is done on a day to day basis and can be quite predictable in normal market conditions.


Sam: Where do dealers get the dinar in the first place?
 
John: Same place everyone gets hard-currency – the banks. You can (please don’t) order bulk currency direct from several banks in Iraq. Shipping, registration and delivery is a little complicated but its certainly possible. In fact, some of the banks have teams in place to help dealers take delivery as easily as possible. My understanding is that this is a small business for most of them, but it can contribute to overall margin. This is not unique – you can order almost any other currency from banks around the globe. Again, there are some registration requirements to import hard currency in quantity but you can do it if you want.

I know the scammers have elaborate excuses for this but I have honestly never figured out why dinar investors don’t just open bank accounts in Iraq denominated in dinar. If an investor was convinced the dinar will appreciate why take the risk and costs of holding the physical currency? The scammers will say that deposits will be treated differently than hard currency in a future “RV” but doesn’t that sound self-serving? And of course you could look at other revaluations (discussed in the last interview) and redenominations to see if that ever actually happens that way and find out that it doesn’t.

My last comment is that some people are really keen on saying that my arguments are "full of holes" but they aren't very specific. My challenge to Tony Elder (AKA Brietling) or Dorman or any of these pumpers is to put up or shut up. Get very specific about what I am not correct about and let's pick a neutral third party to curate a debate. I am skeptical that they would do that for the same reasons they won't even use their real names but I would be willing to do it.


42 comments:

  1. I found this to be one of the most sane, intelligent interviews. Thanks for this one, Sam. John seems to be a realist! Refreshing....

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  2. Everything John has said, both in this interview and the last is easily verifiable as fact. It remains interesting and very telling that not one of the gurus or pumpers has accepted a challenge from "anyone," let alone this one presented TWICE now, to debate the issues or answer specific questions. All we ever hear is "it will RV soon" or "it will never lop."

    Incidentally, I still have plenty of Dinars for sale to any believer who still wants to buy at a big discount below what the dealers are selling. I can no longer post on DV, but I'd be happy to sell to anyone who understands and acknowledges my opinion. Why pay an extra 20% spread? :)

    Great post John and Sam!

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    1. You can't even post in the lop section?

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  3. Did they ban you again Legolas? I thought they let you back on.

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  4. Great interview Sam. I love this guy.

    Legolas you were banned again.....I guess you were making too much sense and you were scaring the dinar forum leader. It's a shame because you did and said nothing wrong.

    Sam I sent you an email of Adams drive by chat. You gotta check it out and his claims on why Iraqis currency is devalued. It was posted today but I sent you a copy in email.

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  5. Sam I absolutely LOVE it when you have John Jagerson on. He brings a very level headed synopsis of the Dinar and whats going on with the "A" level pumpers ( Brietling, Montana..etc). Not one of them will debate John Jagerson because they know he is for real and probably beyond their mental and educational abilities.

    Jagerson is legitimate he has a publicly disclosed his education (Harvard Business School in 2006 PLD), work history, published books, featured trader in BusinessWeek’s Stock Trader newsletter, and the list goes on.....And yes John Jagerson is his REAL name.

    Brietling, Montana, Med, Bondlady, Dinar Daddy.....and the list goes on. These pumpers hide behind fictitious names they don't publicly disclose their educations, work histories, any "hands on" experience concerning currency/investment expertise or where you can directly contact them or their office.. These guys just basically post on websites and do online radio shows designed for the sole purpose of getting innocent investors excited about a possible "RV" on the horizon. Which brings me to the same question over and over again that no pumper will answer...Why are you hiding this information to your buying public?????

    Adam Montana you are my suspect number 1.

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    1. I thought I was Adam?. Lol

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    2. Distiction without a difference

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  6. No, as far as I know, I can still post from the Lop Prison. I've just grown tired of doing it there, because for the most part, only those already enlightened, or at least sufficiently open-minded to acknowledge the possibility of a re-denomination appear to be going there to read what's posted. It's the opinion section where all of those issues need to be debated, but they're not going to allow that to occur. But the other forums, including the "Buy/Sell" forum are blocked, so I can't post my Dinars for sale.

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  7. That interview is like asking a baseball player about football. Sure they are both athletes, but he has spent little to no time on the dinar subject either researching it, studying it, or learning the events that have occurred. Therefore, his view is just that without substance. You should be able to find better experts than this guy if you want to debunk the RV.

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    1. Lol are you serious!!!!!!! But I guess you'll believe fictitious screen name forum leaders on the research of dinar. It's quite clear JJ knows the history of the dinar. This has for to be by far one of the most ignorant responses I've read from someone.

      Let's see who's right in the end......dinar gurus with fictitious screen names who have no clue or JJ

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    2. "but he has spent little to no time on the dinar subject either researching it, studying it, or learning the events that have occurred"
      He is a "currency/investment analyst" unlike most pushers of the RV who won't divulge there expertise and only talk about their "contacts" in three letter organisations (like McD?) who have been telling anyone who will listen that the RV will happen real soon - that's "real soon" since at least mid 2006.
      I can only read this as a refusal to take up his challenge and go for the ad hominem attack instead.

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    3. LOL. Are you kidding me? John's credentials are undeniably impeccable in terms of qualifications to give opinions regarding the Dinar RV controversy, but that fact withstanding, evidence clearly demonstrates that he has in fact spent "countless" hours patiently responding to literally hundreds of questions presented by readers, and virtually every one of those answers is easily verifiable as valid from outside sources. Please show me evidence of even ONE Dinar guru even remotely as well qualified. In fact show me one who has even been "identified," let alone vetted.

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    4. Hey Legolas! I've been reading your thread at DV. Looks like you've gone and done it now. Adam wants you to go away. LOL!

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    5. I've read that thread too and Adam is way off his rocker.....he is threatened. What a joke but what I love most is Adams disclaimers on all of his posts saying everything is for entertainment only and not intended for legal or financial advice yet that's what he sells.....? I guess people ignore his disclaimers and believe he is god

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    6. Yeah, asking a currency expert about a currency investment is exactly like asking a baseball player about football. Great analogy, LOL

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    7. And now he locked the thread and legolas can't respond and wants him to email instead. That way the sheep can't see Adam is wrong. You lined up that douchie yet for Adam lol

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    8. Adam promised to post your reply in its entirety. I think you should post "I'll be at Dinar Douchebags".

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    9. Let's see if he'll post it. Adam has a history of saying things them not following up on them. Will be interesting to see what happens.

      Sam that would be the perfect response

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    10. LOL, Sam. See post below. Yep, he made sure that I'll go away this time. Issued a challenge and then banned me before I could post the reply. He's a real piece of work.

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  8. RB-AP - I just wanted to mention that I am a former futures broker/manager that operated as a CTA that only traded currencies. You can look that up on the NFA's website to see that I was in good standing the whole time. I have three books on currency trading (if you count gold as a currency, which I do) published by McGraw Hill, all of which are reasonably highly rated on Amazon and regularly provide research and analysis to some of the largest forex dealers in the U.S. and U.K.

    Does that experience make me an expert on everything? No, but my point is that I am not shooting from the hip on this stuff. I have seen all this before and it is sad that the only arguments I ever get back are an attack on my expertise not on the facts. List a fact you disagree with in this interview and lets discuss it openly.

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  9. Breitling’s latest line of horse poop has him claiming that for the people of Iraq this will be a simple currency swap. While the foreign “investors” will be cashing in and it’s a totally different situation.
    He won’t use the term redenomination or lop, because he’s claimed that won’t happen for years now, but he seems to be saying there will be a lop in Iraq but foreigners holding dinar will be treated to a big RV.
    Now just how stupid does a person have to be to believe that?
    He also hasn’t explained how Iraqis will simply swap currency (lop) but yet Warka account holders will make a bundle. Apparently Iraqis with cash will see no RV but Iraqis with a bank account will get a big RV. Or will Breitling claim only foreign account holders will get rich and Iraqi account holders will get lopped?

    He is right about one thing… it will be a different situation for Iraqis than it will be for people with dinar in a shoebox in their closet halfway around the world from Iraq.
    Iraqis will exchange their dinar for new dinar with very little inconvenience. “Foreign investors” are looking at nightmare in an attempt not to lose 100%. At best they will have to pay the same douchebag dealers who scammed them into the investment a large fee to get them out of the investment.

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  10. John. A question for you.
    If you go to E-bay and type in “dinar option”, there are 180 listings for people selling options for the dinar.
    How are dealers getting away with that? Doesn’t selling options require a securities license?

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    1. Holy snot! I had never seen that. Wow - that is really tempting fate. Yes, except in very special circumstances (transfer of real estate and some personal property) selling an option on an asset must be done by a licensed broker/dealer or FCM or similar to sell or "write" options on a currency.

      However, you gotta admire their scam. There is no way they will ever be 'called out' on those options. Free money. Yikes.

      I doubt they will be getting away with that for long.

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    2. Well, here it is over a year later, and the "dinar options" on eBay are still rampant. If the SEC had a problem with it, don't you think eBay would have by now had a conniption and set up an automatic ban of such auctions? Moreover, where are the all the amateur spies who regularly report policy infractions at eBay? I mean, a sincere militaria dealer cannot list a genuine German item depicting a swastika at eBay for longer than an hour, but these alleged tempters of fate can sell "options" with impunity? It makes no sense.

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  11. LOL....... ADAM MONTANA STRIKES AGAIN:

    http://dinarvets.com/forums/index.php?/topic/112655-wealth-cant disappear/page__view__getnewpost?s=e97d9d0034c275be29bb4f09c5e77f88

    He writes:

    "Oh, Legolas. How silly of you....

    You tell anyone that will listen that you've been "banned" from DV, even though you know you were not banned - we both know you responded to me about this exact issue, but it's obvious you care more about ATTENTION than FACTS.


    And even though you're supposedly "banned" from DV, you somehow hacked into the site (no, I'm kidding... you're a lopster, not a hacker. Right? ....)


    I'm going to give you one opportunity to respond, then I'm locking the thread so no more responses will come through.


    This is fair because everyone gets to weigh their own decisions based on the merits of what they read.... and I'm giving you a platform to speak on.



    Cheers bud. Make it good. And then once you've made your point... please go away. Start your own site, or go protest, or just do ANYTHING other than bug us here at DV. Thanks."
    ____________________________________________________________________
    He writes that challenging reply to my post, asking me to respond, and then bans me from posting that response, or even signing on to his site. It absolutely amazes me that more people haven't caught on to his BS and begun filing complaints.

    His response was "partially" accurate, in that I wasn't (previously) banned from "signing on" to his DV site. I was merely unable to "post" anywhere but in his LOP section, and even there, the posts never appeared, due to the fact that he had me on "mod review" and every post was blocked by a moderator. It wasn't until Sonny1 intervened a few weeks ago that this mod review was removed and my posts began appearing again - in the LOP section only. NOW he issues a challenge replete with half truths, giving the appearance that he wants a reply, and simultaneously blocks my IP address, prohibiting me from giving that response. Unbelievable! (or is it?)

    To Sonny's credit, at least he has the integrity, and the courage to respond and subject himself to question and criticism. For that, he has my respect and gratitude. Montana on the other hand is unquestionably undeserving. Hopefully a revolt will soom begin at DV and people will begin to become aware.

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    1. Well...I ended up getting sent to the LOP section on MOD review right behind you being ousted...looks like with constant information coming out about a redenomination they can no longer allow people to point out that that is exactly what is going to happen...the end is near for their run so they seem to be clamping down on opposing views.

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  12. Excellent point about currencies depreciating even when GDP is growing. That's something that pumpers use a lot, promoting currency as stock when they're completely different.

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  13. How do the pumpers/gurus explain the current dinar market rate of 1265?
    Supposedly Iraq and the CBI are announcing it will soon RV the currency 100,000%... yet the street rate of the currency is falling. How could that be possible? If they were truly announcing that the street rate would have skyrocketed. You would already be able to sell for at least 50 cents per dinar.
    I know I would happily pay 50 cents for something that will be worth 85 cents in 5 to 8 months.

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    1. The 1265 is the street vendors rate they are charging. It has nothing to do with the official exchange rate of 1166. When the CBI auctions they add a 13 dinar spread to the auction taking the rate to 1179.00. Then the banks add another 10 dinar spread to that which takes the rate to 1189. Then the street vendors and money exchangers add the other 76 dinar to that which gets you to the 1265 dinar. If the citizens would just go to the bank and stop using these guys in the back alleys they would only be paying 1189 to the dollar.


      Bank spreads exist in every country on every currency and is nothing new, not even in Iraq. In fact these bank spreads will be a helpful little tool for Iraq when they are ready to dedollarize their economy.

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    2. Then why was the market rate down at 1178 to 1184 for longest of times?
      The market rate is driven by supply and demand. The demand is for dollars, not dinar. that's why the market rate has sunk to 1265.
      My point is if this silly RV was in any way true... the market rate would be moving the other way. People would be demanding dinars, not dollars. Obviously the people of Iraq know there is no RV coming.

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    3. Highlander is correct in the respect that it is all about the spreads, but the street vendors and money exchangers are basing that needs on the demand as you stated, so technically you are both correct here.

      To support Daved's point further though, if you remember back to Dec/Jan, when the CBI found themselves in a position where they were pumping dollars in to the markets, because of the increasing demand on the dollar due to the spill over issues in Syria and Iran. This increased demand put on the dollar because of the smuggling of the dollar into those countries so they can do business was causing the market rates of the dollar to increase against the Dinar, to combat this, the CBI began using the auctions to pump the dollar into the markets. This does go to show though how the market rate is in fact affected by that supply/demand, and if there was so much confidence in the Dinar that it was certainly going to RV 100,000%, or even 1,000%, no doubt there would be much more demand for the dinar, and the market rates would skyrocket based on that demand just as the Dollar was doing.

      Of course though, the "gurus" on these Dinar sites were trying to tell everyone how these higher auctions were just to draw in notes for the "pending RV" as they would call it. I said then, that this was either a complete distortion of facts, or a lot of gurus being completely ignorant...

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    4. JayP The reason the demand for the dollar went up is neither Syria, Iran or Iraq have a freely moving international currency of their own right now. Iran has even had their swift codes yanked out from underneath them. Iraq did not increase the auctions, the money launderers increased them to sell the dollar across the boarders at a premium. The CBI made moves with the approval of the government to restrict the auctions. The banks are now required to justify the demand at the auctions with very strict paperwork and the legitimate businesses have to have proper paperwork to convert to the dollar for their imports now as well.

      My point goes to this statement: "This does go to show though how the market rate is in fact affected by that supply/demand, and if there was so much confidence in the Dinar that it was certainly going to RV 100,000%, or even 1,000%, no doubt there would be much more demand for the dinar, and the market rates would skyrocket based on that demand just as the Dollar was doing."


      If Iraq had an internationally tradeable currency they would be having the fend off the demand on their own currency. If Iran had an freely moving international currency and still had a swift code they wouldn't need a hard currency(US Dollar) to import and the same goes for Syria. The demand on the dollar has nothing to do with a lack of confidence in the dinar. It has everything to do with business needs. People need to stop associating the exchange rate of a currency with the strength of the currency or whether the people will have confidence in their currency. However your statement about supply and demand is a huge one. Just being a floating currency and removing their restrictions would create a huge demand on the dinar, especially regionally, and that would allow Iraq to keep a higher monetary base. A higher monetary base gives the opportunity for them to do a ratio on the notes other than 1000:1.

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    5. I hear you, and agree with what you are saying, but it does not change the fact that there was an increased demand on the dollar, which was driving down the market rates of the dinar against the dollar. That is why I mentioned in my response about them smuggling the dollars to do business, and there need to do so because of the situations in those 2 countries. I agree though, that if Iran did have a freely moving currency and swift, then there would not be that need, but they do not, hence the the increased demand for the dollar in those countries. When I speak of the confidence, I apologize, as I may have not made myself clear. What I was speaking of, was that there would be so much confidence in the dinar in terms of the rate, and what direction is would be heading, and and heading fast if it was about to increase 1000% or more as many on these sites say. I do believe that the street vendors, and dealers absolutely would take advantage of this situation, especially outside of the country, creating a higher demand, and with it a higher cost for purchasing the dinar.

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    6. What would create this demand for the dinar you speak of? Why would anyone want dinar? Iraq’s oil is sold for dollars or euros. That will not change anytime soon. Other than Oil, Iraq has practically no economy. So where will this big demand for dinar come from?
      The dinar will not float on the forex. Iraq has even stated this in the past. They specifically said they would set up a forward market to trade the dinar in the future.
      I’m no expert on “forward markets”. Maybe John Jagerson could expound on them a bit.
      I do know that creating a “forward market” means that your currency will not be traded on the forex.

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    7. And that is my point DaveD. If the CBI was letting on that they were going to RV like these gurus say they are, then there would no doubt be a demand for it, but the fact is, this is not what the CBI is saying, therefore there is no demand, and there definitely will not be any demand for it internationally for business since their economy is mainly based on Oil, which as you stated is dealt with in USD, but the vendors and dealers would still take advantage of the demand for the dinar by the speculators, thinking that there would be a drastic decline of the dollar against the dinar if there was really a "pending rv" about to occur.

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    8. Jay… that’s exactly right. The article that got posted last week where the finance minister came out and said they would move the rate to 1000:1 and then lop. (It was an old article and how the all knowing gurus didn’t realize that is a joke in itself.) I remember when that article came out. Due to the finance minister making that statement the demand for dinar increased and the street rate moved close to 1000:1 because of the rumor. The CBI had to quickly come out and publicly deny any plans to move the rate to 1000:1 and then redenominated.
      Of course the brilliant gurus jumped on that and said… see, they are not going to redenominate.

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  14. In the news today… Financial markets world wide were rocked when renowned economist and currency expert Adam Montana declared inflation does not exist and is in fact impossible.
    No comment yet from his associate Sonny1.

    Maybe not douchebag worthy… but certainly should get him a moron award.

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  15. John thank you for taking the time to share your thoughts on this subject. I do have to say you asking the gurus to debate you on this subject is a little like inviting and unarmed man to a gun fight. There are several of us who have been very dedicated to research that have a call on Wednesday nights and right now Friday nights (this one is an basic educational series). Maybe you could set aside some Wednesday night and come on the call with us for that open discussion? SamIAm knows how to reach me if you are interested.

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    1. Highlander - that is a very gracious invitation. Thanks. Most weeks I am pretty booked but that might be nice sometime. Feel free to send me a note at questionsatlearningmarketsdot-com with more info. Best wishes.

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