tag:blogger.com,1999:blog-5596379580203915255.post922142224842338780..comments2023-05-16T02:24:23.898-07:00Comments on Dinar Douchebags: A Few Questions for John JagersonUnknownnoreply@blogger.comBlogger35125tag:blogger.com,1999:blog-5596379580203915255.post-38427370188648967332014-05-18T18:13:46.018-07:002014-05-18T18:13:46.018-07:00Slingshot Fuel - It has been a long time since I h...Slingshot Fuel - It has been a long time since I have read so much and understood so little. My Macroeconomics course was almost 20 years ago and I just don't remember that much of it. Thanks for the link though. Nice reminder of how much I still have to learn. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-6825951747619355452014-05-18T09:32:58.571-07:002014-05-18T09:32:58.571-07:00For anyone interested, this is a great read: http...For anyone interested, this is a great read: http://lib-sca.hkbu.edu.hk/trsimage/hp/08050597.pdfSlingshot_Fuelhttps://www.blogger.com/profile/07776080350153131284noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-60129296121295043002014-05-18T07:33:01.472-07:002014-05-18T07:33:01.472-07:00Please, for the love of god, don't post things...Please, for the love of god, don't post things like above without providing a link...Slingshot_Fuelhttps://www.blogger.com/profile/07776080350153131284noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-35087191921915230902014-05-17T12:58:07.148-07:002014-05-17T12:58:07.148-07:00Thanks to both of you. I tried to research this s...Thanks to both of you. I tried to research this stuff before I got in but fell victim to ignorance and wishful thinking - never a good combination. Now I read Roger for amusement and Sam for illumination. As I have said, it was Sam's blogs and comments from folks like you that quickly led me to "get out while the getting was good." Much appreciation to all of you.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-79349686486157261492014-05-17T10:47:27.616-07:002014-05-17T10:47:27.616-07:00dwm009 - "BTW, if some of the other posts I m...<b>dwm009 -</b> <i>"BTW, if some of the other posts I made seem to make it look as if I am still confused it's because I somehow managed to miss yours and DaveD's replies until I had already posted."</i><br /><br />No problem dwm, I thought that might have been the case.Anonymoushttps://www.blogger.com/profile/02729824382467700841noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-7013125878798356642014-05-17T10:44:38.544-07:002014-05-17T10:44:38.544-07:00jrg - "So I think IQD holders will be able to...<b>jrg -</b> <i>"So I think IQD holders will be able to exchange once the RD commences, but just for significantly less then they can now."</i><br /><br />Diane, I have to agree with jrg above. Even if Iraq doesn't do an in-country only exchange, there's still zero obligation for Western banks to trade the Dinar post redenomination at the USA end. And even if they do, they'll be trading only the new redenominated banknotes (just as you couldn't buy Old Turkish Lira after Turkey's 6-zero redenomination started) and will have zero obligation to exchange current NID's for US Dollars. Which means the only place in the West to change them is the same cowboy-outfit MSB rip-off merchants they bought them off. Since an RD will "shatter the RV the hard way" for many, there'll suddenly be a flood of people all wanting to dump the Dinar, which in turn translates to a depression of the "buy-back" price even further.<br /><br />Throw in competition from Ebay (already 7,000 auctions per week and guaranteed to soar into tens potentially hundreds of thousands post-redenomination), and you may be looking at $400-600 per million or even less, since the entire business model of MSB's is to get rid of as many IQD as possible solely on the back of manufactured "RV" hype and acquire as many USD's as possible in the process. The last thing they want is a surplus of Dinar banknotes (old or new) since demand for Iraqi Dinar in general will collapse by 90% or so as the "RV" illusion will have finally burst, ie, it will return to normal of being a currency that gets bought only by people actually intending to travel to Iraq. So you can bet your life at best they'll take another massive 20-30% "buyback cut" (on top of the 20% they already took selling them) to go through the hassle (on their end) of exchanging them. A lot of people are going to be lucky to get half their money back. And that's assuming at worst, the MSB's simply don't close their doors due to both wanting to avoid the hassle / backlash of "you promised an RV" from amgry / irate customers and a collapse in demand for new customers.<br /><br />And that's assuming that even with an "open-border" exchange, willing MSB's can simply exchange billions of Dinar across the border easily, as since the 2004 Anti Money Laundering Law, Iraq has some pretty tight money laundering laws with transaction limits (a completely separate issue to the redenomination). Already every Iraqi bank is required to file a report for transactions over 15m Dinar ($15k):-<br /><br /><a href="http://www.cbi.iq/documents/Moneylaundringinstructionlaw-En_f.pdf" rel="nofollow">http://www.cbi.iq/documents/Moneylaundringinstructionlaw-En_f.pdf</a><br /><br />If they restrict what MSB's can bring into Iraq as suspicious due to attempting to move a sheer volume of old Dinar within a certain period, then MSB's will in turn restrict the amount of Dinar they "buy back". So even with an official "open-border" policy, there's no guarantee MSB's will be able to exchange them all back. Think of how many Dinar have passed through MSB's collectively over the past 10 years. Now imagine all that lot suddenly attempting to be exchanged in a few months, ie, thousands of suspicious looking suitcases of Dinar passing through Iraqi customs via MSB's exchanging them "on behalf of someone else"... That's precisely the <i>"suspicious as hell looks like money laundering"</i> stuff (from Iraq's perspective) they clamp down on that funds terrorist attacks...Anonymoushttps://www.blogger.com/profile/02729824382467700841noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-10475479342512923192014-05-17T10:17:53.495-07:002014-05-17T10:17:53.495-07:00Hi jrg
Thank you...I agree certainly, I just used...Hi jrg<br /><br />Thank you...I agree certainly, I just used the round figure, but you are correct with .86 AFTER RD. Thanks for pointing that out, 15% is not going to happen maybe for years if ever. It benefits them to manage it tightly as they have been doing, and current rate with reserves is proper support as it should be. Even with their insane supply figures, they have done a good job at maintaining proper backing, and contrary to popular dinar culture, their currency is not "under valued' at all considering the amount in circulation, but try and get that one message across to some, let alone all the other factors that remove even the remote chance of large profits coming from this cleverly created hype and scam. Amazing it has ever reached this level, but when I first bought into this, it did not take long to learn there is always something wrong when the whole scene is only supported by liars and thieves and dinar dealers. I hope for the sake of the people, this gets over with as quick as possible, because each day that goes on is another day for the liars to capture another person who really does not understand the process, and this makes them easy targets unfortunately.<br /><br />Thanks again jrg for your thoughts. I certainly agree. :)leastofall51https://www.blogger.com/profile/13263795859602874769noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-71548375758246392412014-05-17T09:50:27.591-07:002014-05-17T09:50:27.591-07:00Thanks everyone for the replies, I wish there was ...Thanks everyone for the replies, I wish there was some way I could remove that last post (5/1614 7:02 AM) since I had already received two very clear and easy to understand answers to my question but I somehow managed to miss both of them until I had posted again. <br /><br />Thanks everyone, I do appreciate the time and effort put into those very clear replies! Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-91639157891649187462014-05-17T09:45:46.387-07:002014-05-17T09:45:46.387-07:00leastofall51, I wasn't sure if you were just r...leastofall51, I wasn't sure if you were just rounding wrt your comment "They could easily have a 1$ per dinar rate...after the RD" or if you were implying they would really increase the rate to an even $1 after an RD. Initially the rate after an RD would be 1 IQI (if that is what the new dinar is called) to $0.86 USD (exactly 1000x greater than the IQD rate). I think (just my opinion of course) that it is very unlikely they will use up their reserve headroom to raise the rate by 15% or so to get to an even dollar, quickly or over time. They likely will want to keep their powder dry so to speak in case they need to slightly raise the rate in future years if inflation becomes a problem.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-7610199870582534252014-05-17T08:59:32.623-07:002014-05-17T08:59:32.623-07:00Hi dwm
They could easily have a 1$ per dinar rate....Hi dwm<br />They could easily have a 1$ per dinar rate...after the RD, a neutral event currency wise. The likely scenario is an improvement in the current rate to 1000:1, this is the best in my opinion the paper holders will as far as rate, then the RD, 000's gone and a new currency issued reflecting the currency reform. Money supply would be 1000X lower and after RD on par perhaps at 1$ if I am understanding the process correctly.<br /><br />Great to hear you do not resort to school yard bullying tactics as one often sees on dinar boards. It is all they have to protect their illusion, and fortify their greed I suppose. It is a hostile environment for anyone dealing with truth, truth is not welcomed on dinar boards. Although it is great to see more folks begin to understand the lies and it is sites such as this that is helping to clear the fog! Thanks Sam :)leastofall51https://www.blogger.com/profile/13263795859602874769noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-45432957148817263682014-05-17T07:52:53.782-07:002014-05-17T07:52:53.782-07:00Not the "john" you were addressing, but ...Not the "john" you were addressing, but I'll but in anyway :-). No one knows what Iraq will do exactly wrt an RD. The articles have suggested a 1-2 year period where both currencies are useable in the market and perhaps a much longer period before IQD are demonitized, so you could turn them in at a bank for perhaps another ten years even though merchants would not be required to accept them.<br /><br />It is possible that Iraq could do what they did in 2003/2004 and do the RD only over just a few months and attempt to stop IQD coming in over the border, and then demonitize the IQD immediately afterwards, but I think that is very unlikely as I do not see the justification for it. For the Bremer exchange they wanted to get the Saddam dinars out of the economy as they were very easy to counterfeit, but the notes folks hold now are pretty modern so I don't think that is too much of a worry. <br /><br />Some have suggested that Iraq will use this to simply chop off all IQD outside the country to shrink the money supply, but again I think this is very unlikely. A 1000:1 RD shrinks the money supply by 1000x. How much IQD is floating around outside of Iraq is hard to estimate but it seems very unlikely to me that its more than 10% of their money supply, so taking this drastic step would only shrink the supply (if my estimate is correct) by at most another 10%. That seems like a lot of bother, expense, effort and upset for a small gain. The multi-year plan presents it all as an orderly calm change over, no hurry, no worries, while the few months plan is much more crisis evoking. So I think the multi-year plan is what the will perfer.<br /><br />So I think IQD holders will be able to exchange once the RD commences, but just for significantly less then they can now. I suspect the dealers will be happy to reverse the flow and make another 20% selling your dinars back to Iraqi banks. Now they can sell them to RV believes for $1050 (Sterling's price today) but once the only market to buy them back are Iraqi banks the prices per million would be more like $780 (the CBI offers $860 but dollars are in demand so banks downstream can get more IQD per dollar. If the dealers can participate directly in the "auctions" perhaps they can get the higher price. So 80% of 780 is $624 which is about what I'm guessing will likely offer you for your IQD. If dealers can get $860, you might get $680. Now dealers will buy them for $820 (about 80% of 1050). So why hang on when there is no possible upside and you will only lose more if you wait to sell?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-38542211837756151962014-05-17T07:24:14.217-07:002014-05-17T07:24:14.217-07:00Relative to Iraq's meager non-oil exports, the...Relative to Iraq's meager non-oil exports, the difference between the impact of an RD and an RV (assuming to make it easy that they both went to $1 per dinar, though for the RD its $1 per New dinar and would really only be to .86), is that the RD does not change value. So the prices and costs for a manufacture are all the same, just measured differently. The mythical RV would radically change value so its very unlikely that a vendors costs would drop by 1000x while to remain competitive with foreign companies their prices would have to drop by 1000x. I have a post higher up in response to your earlier question along these lines that has more detail.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-42304839849182875372014-05-17T06:08:12.076-07:002014-05-17T06:08:12.076-07:00Brian, thanks for your very clear explanation and ...Brian, thanks for your very clear explanation and the time you spent, that is exactly the info I was looking for! After reading that my confusion has almost turned into embarrassment at not having understood in the first place. <br /><br />BTW, if some of the other posts I made seem to make it look as if I am still confused it's because I somehow managed to miss yours and DaveD's replies until I had already posted.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-89530099307359443702014-05-17T05:49:19.215-07:002014-05-17T05:49:19.215-07:00It's quite clear now and I suppose I was just ...It's quite clear now and I suppose I was just as guilty as the Dinar Idgits for seeing only part of the equation, I was looking only at the $3 EXCHANGE rate and not the actual value (or in that case imaginary value).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-53160378326302185122014-05-16T20:22:08.607-07:002014-05-16T20:22:08.607-07:00An RD is just using a different yardstick to measu...An RD is just using a different yardstick to measure the same value. This is easy to see since both currencies will exist alongside each other for a year or two in most proposed plans. A company that charges 100,000 IQD for their widgets will continue to do so, while also expressing that same price as 100 IQI (where IQI is the new dinar). Likewise for wages and prices throughout the economy. There is no need to change any value. This of course is the only way such things can happen as the value of the currency (not the economy) is really the reserves at the CBI. Currently those reserves are only about 15% greater than the size of the money supply multiplied by the current exchange rate, so no RV can be more than about 15%. Since that head room (the ability to make small increases in the exchange rate) is the CBi's primary weapon against inflation, they are very unlikely in my view to fire it, unless inflation becomes a problem. So even after an RD I would not expect for there to be rise in the exchange rate to an even $1 to 1 IQI. <br /><br />Contrast the RD case (no value impact) to the impact to a manufacturer after a 1000 to 1 RV (which can not happen). Now for this manufacture to remain competitive with foreign companies they must drop their prices by 1000x. To retain their profit margin they must then lower their costs by 1000x, but are they likely to be able to do so? Suppose they drop everyone's wages by 1000x, will the employees stay or leave? When all the workers in the country have just been given a titanically large chunk of cash (if they just got their weekly pay prior to an RV it would be 20 years worth of wages), will they be able to attract workers at all? What about the lease on office or manufacturing space? Why would a landlord who has a contract to provide space for a certain number of IQD volunteer to drop that price by 1000x? What about all the supplies this company uses, will all those prices be dropped by 1000x? I suspect not. It would be difficult to remain in business at all let alone maintain your profit margin, which is not exactly what investors are looking for<br /><br />There would be a violent plunge in prices due to the effects outlines above, but there also would be great upward pressure just due to huge demand and limited supply. Everyone would immediately be able to buy all the stuff they have not been able to afford, whether its cell phones or power plants. Who would not be willing to spend 1% of your cash to get all the things you have wanted/needed. But supply can not ramp up overnight so this is huge pressure on rising prices. It would be economic chaos.<br /><br />But there is only $80B available to exchange (that 1% of M1 would be $750B USD worth, nearly 10x the CBI's reserves), and after that runs out in about 2 seconds, the banks are going to be torn down. Everyone who just sold something big will be thrilled and everyone who just bought something big will be really upset. So you have an economy with wages and prices in chaos, the CBI is bankrupt (not just by some technical measure but actually out of reserves), and of course with well armed militias looking for ways to grab power at the ready. That doesn't sound promising to me. Countries that do provide wealth to their people do not do it by constantly rising exchange rates, but just by giving away services if not base income (Qatar if I recall, offers free medical, free education, subsidized housing, etc. and a first class infrastructure).<br /><br />In the CBI's documents it says clearly that its goal is a stable exchange rate (not a rising one, fast or slow) and low inflation. That is because that is what is good for business. That is what Shabibi meant by a "strong currency". If you have IQD, it isn't going to be worth more than it is right now, likely less once this myth finally becomes a myth to everyone (now its true to some), since then the dealers will have to sell back to Iraqi banks instead of to other believers. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-47651156695603334842014-05-16T13:59:06.907-07:002014-05-16T13:59:06.907-07:00OMG Brian you have done it again. That is the bes...OMG Brian you have done it again. That is the best way of putting this that I have ever seen. I really have to say that you are one amazing intelligent person. Thank You for all this wonderful wisdom that you give us all for free. If you ever make it to Florida I would love to shake your hand I have great respect for youAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-80382587536037066052014-05-16T07:02:44.769-07:002014-05-16T07:02:44.769-07:00OK, the price change seems to be the answer to wha...OK, the price change seems to be the answer to what I have been confused about and maybe the common argument against this scam (which a scam it surely is, I am talking to you David Phillips!) that the $1 to $3 exchange rate from the "RV" would be devastating to Iraq's economy might not be entirely correct as is usually argued.<br /><br /> This came about when I tried to explain to someone that the higher Dollar value of the Dinar would make exports and doing business more expensive and thus less desirable for Iraq and is the reason that countries like China hold their rate as low as they can get away with. This is a VERY common argument used to show why a $3 Dinar would not be in Iraq's best interest but when I tried to explain that I was immediately pounced upon and it was pointed out that the higher Dollar value was exactly what would happen with the "RD" and that I couldn't have it both ways! At that point I had to admit defeat and bow out of the discussion, unlike most Dinarians I do not resort to insults and name calling when I find myself at a loss for a way to intelligently uphold my position. Simply put the question would be "Why would, in the event of the "RV", a $1 to $3+ exchange rate be undesirable to Iraq because of higher export prices (excepting oil) and more importantly because of the increased cost of doing business in Iraq but the same $1 to $3+ rate would be acceptable in the event of a "RD"? <br /><br /><br />I understand that the "RD" value would not be a full $1 unless the current rates increase somewhat before the change but it's commonly thought, and entirely reasonable, that Iraq desires to have an even $1 to Dinar or higher exchange rate and they have actually mentioned that $1 in several articles, I have seen these myself and I am not repeating someone else. Of course I am talking about a re-denominated $1 rate and NOT something that would make anyone any money at all, never mind getting rich! <br /><br />They were right, I couldn't have it both ways and I was at a loss as to how to explain my position.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-63705223526889054972014-05-16T05:13:51.573-07:002014-05-16T05:13:51.573-07:00I cant seem to find that thread CFO. What section ...I cant seem to find that thread CFO. What section is it in? Maybe they took it down. Wouldn't surprise me. Dinarckhttps://www.blogger.com/profile/16878623693877258701noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-31432963534718809492014-05-16T00:47:54.860-07:002014-05-16T00:47:54.860-07:00DaveD - "Here’s what gurus are really claimin...<b>DaveD -</b> <i>"Here’s what gurus are really claiming will take place. They describe some type of hybrid event. They claim the dinar will RV 100,000% (increase 1000 times) or more. Yet they think the entire economy… goods, services, prices, salaries and so on will lop 3 zeros like a redenomination. It’s an absurd notion."</i><br /><br />^ This. What guru's are ultimately trying to argue to get around the absurd "$1,000 loaves of bread" elephant in the room issue, is that <i>"Iraq will lop without lopping"</i>. It's total double-speak gibberish. The 000 price-adjustment comes directly from exchanging new:old Dinar at 1:1000, ie, a 1000 IQD : 1 IQN exchange rate. Without that there's zero change in domestic prices or money supply.<br /><br />What guru's are arguing is the absurd equivalent of Dell manufacturing laptops for $350 / €256 & selling them for $499 / €364 retail price, then Obama "RVing" the USD 1,000x fold, (driving up the cost of laptops to €364,000), then trying to "hide" the obvious absurd export prices by demanding Dell sell laptops which cost $350 to make for $0.49 via a Communist diktat... Either way the maths don't add up, and what the guru's are laughably pumping with <i>"fix the prices 1,000x lower without a redenomination"</i> is literally totalitarian Communism seen only in the basket case North Korea where internal prices at their declared peg bear no relation to reality of same prices in other countries...Anonymoushttps://www.blogger.com/profile/02729824382467700841noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-16074937815205366992014-05-15T20:09:35.097-07:002014-05-15T20:09:35.097-07:00Wow....a long standing member on DV is selling off...Wow....a long standing member on DV is selling off 23 million dinar as of last night. Coincidence? <br /><br />Has anyone read the thread on DV about this interview....lots of pure stupidity going on and of course easyrider and his conspiracy nonsense is on there as well. Poor kidcallingfoolsouthttps://www.blogger.com/profile/10201281885057333907noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-6631826996094541182014-05-15T19:45:38.050-07:002014-05-15T19:45:38.050-07:00This comment has been removed by the author.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-90977397159656687892014-05-15T19:27:03.253-07:002014-05-15T19:27:03.253-07:00As others mentioned you don't have to sell bec...As others mentioned you don't have to sell because naturally that is your decision to make just like when you purchased the paper. However, I would suggest you take a look periodically at the "dinar buy back price" of all major dinar dealers and see if the price continues to drop as it has been doing over the last 2 years OR "IF" it is starting to rise FROM the price that you paid for the paper. That alone should give you enough information to think about what you should do. I will give you a hint though, if the price you can sell back for now is significantly lower like $100 less than you would have gotten last year then you are already losing and that doesn't include the ~20% you lost / overpaid when you purchased the dinar. Cruzerhttps://www.blogger.com/profile/07135530520029479770noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-69369021164962862182014-05-15T15:08:03.149-07:002014-05-15T15:08:03.149-07:00Dwm and David Phillips.
It a basic difference betw...Dwm and David Phillips.<br />It a basic difference between a redenomination and a revalualtion.<br />A redenomination is a neutral event. It doesn't really affect imports and exports. A dollar still buys the same thing. What 1000 dinar would buy would then be bought with 1 dinar. (3 zero lop/redenomination)<br />A revaluation does have an effect on imports and exports. It’s been talked about many times with regard to China’s and other countries holding down their currency. There’s always talk about trade between the US and European countries as the Dollar to Euro price fluctuates. And these are BIG shocks from 10 or 20% moves over long periods of time, not some mythological 100,000% or bigger move overnight.<br />Here’s what gurus are really claiming will take place. They describe some type of hybrid event. They claim the dinar will RV 100,000% (increase 1000 times) or more. Yet they think the entire economy… goods, services, prices, salaries and so on will lop 3 zeros like a redenomination. It’s an absurd notion.<br />Just remember this. Iraq has 40 trillion physical dinar in circulation. That’s how they are able to sell stacks and stacks of 25000 dinar notes for peanuts. If you take all the other countries in the world and add all their currency in circulation together it’s about $6 Trillion. So if Iraq were to RV to $1 they would have $40 trillion worth of dinar, or almost 7 times more than the rest of the world combined. Iraq has less than 1% of the worlds economy. Do you think they need, or can support, 7 times the worlds currency with less than 1% of the economy?<br />DaveDhttps://www.blogger.com/profile/12051340224470148267noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-40284158431651153922014-05-15T14:34:31.382-07:002014-05-15T14:34:31.382-07:00dwm009 - "I suppose I am getting the exchange...<b>dwm009 -</b> <i>"I suppose I am getting the exchange rate and actual value confused but how would an (impossible!) "RV" of the exchange rate to $1 be different to the Dinar reaching the $1 value by "RD"? In both scenarios the exchange rate per Dinar would be the same so how come the Dinar rising to a $1 value by "RD" would not have the same devastating effects as if it did so by "RV"?"</i><br /><br /><b>Redenomination</b> = Iraq has 87tn IQD. If they redenominate 3 zeros, they exchange the "old" (IQD) for a new one (say "IQN") at 1:1000. This results in everything in Dinar lopped by 3-zeros. 87tn money supply lopped to 87bn. A 25,000 IQD product costs 25 IQN. Nothing changes in real terms. 87bn IQN @ 1.166:1 has the same $74.6bn overall value of 87tn IQD @ 1166:1. Everything balances out (as it has to). Likewise, redenominating doesn't make investing / importing more expensive since if you wanted something currently priced at 1m IQD ($860), you'd now purchase only <b>1k IQN</b> @ 1.166:1 ($860) - instead of 1m IQD @ 1166:1 ($860). You wouldn't be buying 1m IQN ($860,000).<br /><br /><b>"RV"</b> = Iraq has 87tn IQD. If they simply demand everyone on the planet pay 1,000x more for Dinar without redenominating 3 zeros, nothing else changes. They still have an 87tn IQD money supply & no new currency code with the same internal inflationary effect. Now though, those 87tn IQD @ 1.166:1 now supposedly equal a $74,600bn money supply in terms of "declared" wealth (which would be a ludicrous 350x times more than the size of Iraq's economy). Internally, a 1m IQD product is still 1m IQD but simultaneously will have an absurd international value of $860,000 (1m Dinar @ 1.166:1) whilst simultaneously still being worth $860 in terms of intrinsic tangible value, eg, maybe 2.5x tonnes of wheat or an expensive laptop). Likewise, to purchase 1m IQD is now $860,000 instead of $860. Nothing balances, and the value of Dinar-priced Iraqi goods don't even begin to match reality vs any other country. People see this, see the peg isn't real and results in a currency that's useless for trade, and it soon collapses with a black market rate rapidly appearing around the same 1150-1250:1 it is now.<br /><br />This happened for real in North Korea. They used to have a similar absurd fake-peg as the "RV" crowd are cheering on of $1 = 2.16 Won despite being massively inflated. At the same time, the internal price of rice is around 3,500-3,800 won per kilo. If people treated NK's peg as "real", that would result in stupid international prices of $1,750-$1,900 per kilo of rice. Even today, the "official" (yet still untradable) rate of 131:1 results in $13-$14.50 per kilo prices, which is why no-one will touch the KPW for trade.<br /><br />Same applies to 1,300 Dinar bread @ $3 rates. Iraqi bread is 1,300 Dinar because Iraq have inflated their money supply from 20bn to 87,000bn. Unlike a redenomination, "RV's" takes no money out of circulation, so all that money will still result in 3-zeros on the price of everything. A 100,000% RV wouldn't make a country richer - it would render the currency useless for trade (until the official peg matched reality / market / street rate). The "RV" illusion instantly dissolves when you start pricing goods in that currency vs whatever currency it's pegged to, ie, 0.32 KWD (Kuwait) vs 1,300 IQD (Iraq) for local prices of bread, yet both supposedly having the same $3.5 rate = $1.14 Kuwait vs $4,550 Iraq USD prices for a loaf of bread...<br /><br />That's why the RV is total junk. The RD vs RV exchange rates may look the same, but the actual resulting "declared" international prices of an "RV" would be screwed up / thrown 1,000x out of whack with reality of what those goods would be worth in reality compared to other countries when all priced in USD.Anonymoushttps://www.blogger.com/profile/02729824382467700841noreply@blogger.comtag:blogger.com,1999:blog-5596379580203915255.post-41031272991555625452014-05-15T14:15:41.685-07:002014-05-15T14:15:41.685-07:00Don't take my question as support for this myt...Don't take my question as support for this mythical "RV", don't sell if you want but you WILL lose your money! I don't have any interest in getting anyone to sell, it would make no difference because you could only sell to another sucker or a dealer who would in turn sell to some other sucker so either way it makes no difference at all, hang onto that worthless paper and you will eventually see what I mean!Anonymousnoreply@blogger.com