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." (article 8 page 3)


  1. So here is a fantastic post from our favorite ego driven guru:

    4-18-14 Kaperoni: Article: "Central Bank: 70 trillion dinar bank deposits" This is a huge article...think about it...if the CBI's plan was to reduce the money supply they are announcing today that 70 trillion dinar sits in banks. The choice will it out or reform the currency and raise the value of the dinar. Now is the time with all this dinar out of circulation.

    Here is my dilema. Kap, you argue and rant and rave and whine and cry and claim the M2 figures, POSTED ON THE CBI WEBSITE, aren't accurate or they, the CBI, doesn't report the true figures and so on. Yet here, because it fits your agenda, you now admit Iraq has AT LEAST 70 trillion in their money supply! You are such a fricking idiot and so are the bumbling idiots who hang on your every word and praise you and thank you for lying to them, ESPECIALLY after this.

  2. "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..."

    LOL. Reason #431 why "RV" Guru's are exactly like sleazy politicians ;-)

  3. Its time again for "Dontop's Creative Bookkeeping". This installment will be especially interesting to all those central bankers looking to increase their assets.

    "It is the policy of the cbi to sell gold to remove the dinar from circulation. The dinar goes to the asset column once it's removed
    With assets you can finance gold purchases. With gold purchases you can sell more gold and remove more dinar from circulation and into the assets column."

    Read more:

    Of course in the real world, at least among bankers that do not want to go to prison, unissued currency at a central bank is neither an asset nor a liability for the central bank. When the CBI buys IQD with reserves (gold or dollars or euros) it lowers their liabilities by lowering the size of the money supply concurrently lowering their reserves in proportion. They might sell gold at slightly more than its dollar value so maybe they get a slightly better deal in this case, but that is a small difference. Overall the person buying the gold just trades one asset (IQD) for another (gold) and the CBI cancels out a liability (IQD) with an asset (gold). The ratio of the money supply to reserves, which sets the limit on the exchange rate, does not change.

  4. I got lost with the selling gold to remove dinar from circulation, and then using that dinar to buy back the gold???????

  5. seems kraperoni was over at dinar corp updates and told the sheeple that tomorrow (Monday) their was supposed to be some big announcement in Iraq pertaining to dinar dealers (which seems odd), and that some will be happy and some will be upset. not sure what that was supposed to mean but I guess time will tell. also seems that guy chattels feathers were all ruffled yesterday because someone on dinar detectives forum called him out for calling an RV for last Tuesday then he claimed he never said that. (as they ALL say). I guess these idiots think that everyone is just so stupid. it would be really nice if more arrests were made and soon.

    1. Here is the post from Kap:

      4-20-14 Kaperoni: The other is something I heard about over the weekend. This is very important and all members should be aware. Apparently a big announcement is coming tomorrow Monday (I don’t know what time)

      This significant news will be announced regarding certain dinar dealers. It appears that significant change is coming. Many may welcome the news, others may be very saddened or upset. All I can say, is when I heard, I was very concerned. But it is important to let this play out and wait for the official information.

      This is not a rumor a joke or some bogus information. This is information that we all need to know tomorrow. I am sure it will spread to all sites and if not, I will come and post here for all of you. This pertains to dinar dealers. Nothing to do with Iraq.

      I don't want to tease people...I just thought it was important enough to give a heads up so tomorrow people pay attention.

      So Kap, being the idiot you are, how does it feel over the years to rip into all the other gurus when each one of them say "I have info but I can't tell you" only for yourself to do the exact same thing. You hypocrite! You really want people to think you are helping them. To those people who think Kap is helping you, count how many times he says "I" in that post. This man does not give two craps about helping anyone but himself. You think he spends all the time he does on keeping hopes alive in this investment for free? You think all those conference calls are done for free? You think all those websites he is a moderator on where he can censor any info contradictary to his position a fluke? A position which started out as an RV and now changed to a "float" both of which kept people thinking they will make money and both of which he completely denied Iraq ever having a money supply in the trillions until he couldn't deny it any longer when they published an article stating the fact. Any of the kap supporters going to ask him how they plan on removing 80+ trillion dinar in order for them to make money WITHOUT a lop?

      So anyway, after 20+ responses to the original post calling Kap out for being an idiot, he posts this brilliant response:

      There is no intent to create anxiety. No intention to tease or to mislead. It was posted because I believe in honesty and truth and factual information. In others words, transparency. I felt it was best to let people know that something significant is about to happen regarding dinar dealers. I did not feel comfortable waiting and saying nothing.

      Again, count how many times he says "I". HE did not feel comfortable, so he takes it upon himself to tell everyone a secret, but didn't tell it. So the ONLY intent there is, is for a later "I told you so. I was the first. Me, me, ME"  You want to continue to follow this douchebag? Keep praising him. Thanking him. Swelling his head and his pockets. Your choice, but when this investment comes to an end, ending in a redenomination, do not go looking for sympathy.

    2. kraperoni is a moron just like EVERY other guru in dinarville. how can one be transparent when one has no clue what they are talking about in the 1st place?! between him and those idiots at dinar corp updates, who is the bigger buffoons? I mean poopy is continually calling an RV or saying any time etc.....and calling people rich friends. this guy is placing his theory on an rv on the bible.....good luck with all that poopy! then we have something called millionday who posts a variety of bogus or misconstrued/poorly translated news stories on their chat room and so does that chattels person. that guy posts like 500 articles a day. I noticed he had a back and forth with someone over on dinar detectives forum. I guess the other person ruffled chattels feathers since I guess chattels jumped on the bandwagon and said a reliable source told him no later than last Tuesday. well, no cigar....AS ALWAYS! then the gurus get all bent out of shape when they get called out. its just hilarious the ignorance of sheeple who believe all this mumbo jumbo. I mean its really a group effort over there with the pumping. their sheeple seem brainless and ask every day where their rv is. HAHAHA....then of course they are all convinced its all Maliki's fault they are not rich! what greedy idiots. if all rv predictions fail, blame Maliki! what's funny is none of them will talk about the money supply or real time economics that will prevent any crazy rv etc.....and they think by auctions will reduce that money supply so they can have their elusive RV......I would hate to be a guru when it about civil unrest. no, wait, the sheeple will be snow jobbed into thinking tony caused the rv to fail etc.....HAHAHA

    3. Not a big kap fan either...but he was right about an announcement of iqd-usd via western union...also dinar trade changed names and opened up several shops around us....

    4. Thanks, benny. I obviously don't agree with Kap on the potential of the dinar, but I have to give him credit for a few things. He contacted me late last year with the news that charges had been dropped against Brad Huebner. The next day the news came out confirming what he told me. Of course new charges were filed shortly thereafter, but Kap's information was correct. Last week when BGG tried to spin the news about the CBI printing new 000 notes to mean that they would use them for bank to bank transfers, Kap admitted that those transfers are done electronically these days. And now the dealer news which I will address further very soon. I realize some of you don't care for Kap, but compared to most of these guys he's an altar boy IMO.

    5. That's exactly the problem Sam. We are at the point in this investment where the great majority of dinar holders know Okie, Frank, Tony, Adam, Bear, BGG, Delta, and the list goes on, are nothing more than liars. So those who are too lazy to do their own work turn to those whome seem more credible, enter Kap. People are realizing the grand rv will never happen but yet here is someone who is now against an rv but still makes it sound like they can make lots of money with a ridiculous float theory. I guess some need to hang onto anything. Concerning information, what benefit is it to know 24 hours ahead? I mean seriously. Are people really impressed by that?

    6. What Kap said is that it has nothing to do with Iraq, but it has to do with dinar dealers and it concerns dinar investors. Then yesterday the announcement was made that Dinar Trade's business would be handled by Xchange of America (Dinar Inc.), and there was an announcement about money transfer businesses being allowed to open accounts at the central bank. I don't know that there's a direct connection between the two, but this is certainly relevant news to anybody investing in the dinar so I'll give Kap credit for that much. I agree that the float won't happen. I'm just trying to be fair here. Kap's intel was right on this one.

    7. kaperoni 15 hours ago

      Square, they are saying on Iraqi TV almost daily they will discuss the currency after the elections. Sign up for ITTS, its the best $9.95 a month you can spend for the dinar investment.

  6. Blood Moons. A bunch of the dinar faithful are talking about the connection between Jewish Holy days and upcoming lunar or solar eclipses and speculating that the RV could be in this mix somehow ( Great significance is given to this matching of lunar eclipses and Jewish Holy days. I do not wish to engage in a religious debate, but just wanted to point out two things that are rarely mentioned in such threads and indeed appear to have been missed in this one as well. First is that many religious holy days occur on or begin on the first night of a full moon, and lunar eclipses can only occur during a full moon, so the two overlapping is fully expected. Second, of the 4 blood moons (one of which we just had) in 2014/2015 only the Sept 2015 eclipse will be visible from Israel. So one might want to be cautions about claiming great significance of celestial events for Judaism when these events will not be noticed from Jerusalem.

  7. 'ol pumper koonce is at it again! of course he has dinar corp as his advertiser as does Stryker, BGG and dinar detectives. if you look at each site, they have very similar formats. (except koonces site, but he still has dinar corp as his sponsor etc....of course they ALL say they have nothing to do with any dealers..........LOL

    4-21-14 Randy Koonce: All banks that deal with foreign currency will be doing the exchange. You will have all kinds of time. (Does the budget have to be done before the RV?) No. There is nothing that has to be done before the RV. (Do I believe this is going past he elections?) No. We are in a really good position to RV. Everything right now is lineup. The U.S., Iraq and the IMF all need to be in agreement and right now they seemed to be. We are in a very good position for before the elections.

    If it goes past the election and Maliki continues to be the Prime Minister then I am not sure how long, but it could go another 2 years because that means the President and Maliki have figured out how Iraq can survive without it. Obama doesn't want this to happen but he doesn't have the money to keep Iraq going. From now until the election the window is extremely hot. Everything I have seen in the last 24 hours says we are done. The LD's are in the banks in Iraq and are not on the streets. You will not have to sign and NDA. They have dropped the amount that it will come out at, I think between $2 and $3. It will eventually go higher.


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