A Unique Perspective on the Dinar

I recently came across a video on YouTube where a minister named Sammy Tippit is talking about his experiences with currencies as he traveled around the world preaching in various nations through the past forty years.  If you want to listen to his views here's the link.  In this video he mentions that Breitling discussed this with him and they thought that it would be a good idea for him to share from his perspective.  (This isn't offered as criticism of Rev. Tippit.  He admits to not being any kind of authority on this type of investment, and he was responsible enough to say that there is risk and he didn't invest any more than he could afford to lose.)  He lists several countries whose currencies appreciated over the years as examples of why he thinks the dinar has to go up in value.  Among them:

1. Romania - Romania experienced hyperinflation from 1991-1997.  In 2005 they redenominated, removing four zeros from the old lei to create the new leu.  Iraq mentioned Romania's RD (along with Turkey's) to determine how they should proceed with their redenomination. 
2. Ukraine - Ukraine experienced hyperinflation from 1993-1995.  In 1996 they redenominated, removing five zeros from the old hryvnia to create the third issue of karbovanets.
   
3. Russia - Russia experienced hyperinflation from 1993-1995.  In 1998 they redenominated, removing three zeros from the old ruble to create the new ruble.
4. Brazil - Brazil experienced hyperinflation from 1981-1993.  They redenominated several times beteween 1986 and 1994, replacing the cruzado and the cruzeiro real until finally they introduced the real at a rate of 2750 to 1.  Not exactly a lop since the math is a bit trickier, but essentially the same as a lop.  Shabibi mentioned Brazil's successful redenomination in a recent statement regarding Iraq's future RD.   

If you've listened much to Breitling you know that he tends to rant against people who believe that Iraq will lop.  I find that somewhat ironic since he apparently encouraged Rev. Tippit to share his views, and the reverend is making a good case here for the lop, since all of the countries he mentioned did exactly that.  He states that now when he goes to those countries their currencies are much more valuable against the USD than they were in the past.  Why do you suppose that is?  It's because they redenominated.  They issued new currencies with zeros removed that gave them greater purchasing power.  The value went up and the supply went down, which is exactly what Iraq is telling us that they intend to do with the dinar.  There's a good chance that if he goes to Iraq in a few years he will experience the same thing there that he did in the other countries that he mentioned.  But it doesn't mean that anybody is going to become a millionaire by investing in the dinar.

People like Breitling exclaim "where do these people get this lop stuff?".  The answer is very simple.  Research.  Information on redenominations is all over the web.  Anybody can find it with a little effort.  Will Iraq redenominate or remove (lop) the three zeros from their currency as so many other nations have done in the past?  That remains to be seen.  But the precedent is there, and what Iraq is describing sure sounds consistent with what others have done.  And as the reverend stated, the results were often quite positive for their currencies.

Enorrste, Math, and the RV

Recently a discussion about the likelihood of a lop or an RV was held including dinar personalities like Tenmillion, JayP, Kaperoni, and Enorrste.  During this discussion Enorrste, the biggest windbag in the dinar world in my opinion, broke down the math for Iraq's projected oil income.  He was explaining that when Iraq reaches 5 million barrels a day in production their oil revenues are going to skyrocket to the point that they will easily be able to cover a $3 RV, and in fact could very well see their currency float on up to $5, $6, $7 or more as their economy grows.  Here's how he broke it down.

"Let's just say it cost a dollar instead of a buck and a half ... to make it simple ... a dollar to create a barrel of oil. And they're gonna double from two and a half to five million barrels.  Take that times a hundred dollars per barrel today, that's five hundred million dollars a day. Take that times 365 ... you're looking at 1.825 trillion dollars a year in income, and now you have to take off five million dollars a day for your cost ... of a dollar a barrel. So what you're gonna end up with is about a million ... I mean a trillion eight NET! Net money per year.  You think they can't afford a three dollar currency?"

Currently Iraq is producing about 2.5 million barrels a day for a total of $80 billion a year in oil revenues (averaging about $87/bl) which is roughly 2/3 of their GDP.  Steve (Enorrste) anticipates that after the RV their production will double to 5 million barrels a day and their oil will sell for about $100/bl.  According to his calculations their revenues will therefore increase from $80 billion a year to $1.825 trillion a year.  

Now if you have a calculator handy you might want to run through these numbers with me to check what he's saying.  I can assure you that a GDP approaching $2 trillion a year would change my opinion about this investment drastically, and I doubt that I'm alone on that.  So what numbers do you come up with?  Here's what I get.


 5 million barrels a day
x $100/bl
= $500 million a day
x 365 days
= $182.5 billion/year


That's right.  $182.5 billion a year, not $1.825 trillion a year.  It seems that Enorrste accidentally added a zero into his calculation.  Now I understand that anybody can make a mistake.  I make them all the time, and so do you.  But when you are presenting yourself as somewhat of an authority on the dinar and using numbers to support your premise, I think it's pretty important to check your math first.  And this wasn't a typo or a written error.  This was an emphatic statement that he made in a discussion, and he said the word "trillion" twice.  Yeah, it's just one zero off, but that zero throws the total off by over $1.6 trillion a year.  That's a damn big zero, wouldn't you say? 

This isn't the first time that Steve has produced some incredibly fuzzy RV math.  Last year he presented a case for the RV that prompted a dinarian named expat to respond:


As Enorrste points out, the CBI has $53 Billion in foreign currency reserves, which as he states is 700% (7 times) the value of the IQD in circulation (7.5 trillion according to him). Then he points out that the US only has 15% in reserves to back up the dollar it has out, Now, he points this out as if it is the proof in the pudding.
If all that is true and the CBI RVs to a rate of 1:1 to the USD…then they will have $53 billion to back up $7.5 trillion. That is less than 1% (0.7% to be precise) compared to our 15%. At $3.33 you can triple the difference, which makes it even more unlikely. These are his numbers, not mine.
Here is my question: Enorrste points out that the Iraqis all say they want a stronger currency– a point with which I agree — however, how is this accomplished by setting a rate that reduces the percentage of foreign currency reserves they have to back up the Dinar from 700% to 0.0021%, which is what will happen if they RV to $3.33 as Enorrste states they will? 

I don't post these things to ridicule Steve but to establish a very important point.  Many people are swayed by guys like Frank Villa, Checkmate, and Enorrste because they are gifted in the art of elocution.  They have a smooth speaking style that gives the unsuspecting a false sense of security about the information they're receiving.  But when you break down the actual content of the information the substance is sadly lacking.  I would be delighted to find out that the new IQD lower denoms are in fact already loaded into the ATMs in Iraq as Checkmate says.  I would love to believe that Frank's Arabic translator Delta has the lowdown on the impending $.86 RV.  And of course I would love to believe that Iraq's oil revenues will soar to $1.82 trillion a year when they double their production, but the facts just aren't lining up behind these statements folks.  It's time we stopped listening to these guys and started doing some honest due diligence for ourselves.  After all, it's our hard earned money we're talking about.  Do we really want to entrust it to the expertise of these internet armchair currency experts who most of us will never meet face to face?    
             

Douchie for Dec. 4-10

Reading through the moose hockey that passes for intel this week I was struck by the emphasis on the bank screens showing zeros.  Jonnywg was the main force behind this caca de toro.  I thought we had long since accepted that the bank screen intel was bogus, but apparently some are still sucked in by it.  Even Phoenix got into the act this week, and this is a guy who prides himself on not spreading rumors.  Anyway, as annoying as it was I didn't feel that this was sufficient to earn anybody a Douchie, so I kept looking for a better candidate.  (Jonnywg did say on Friday that we would see the RV this weekend, so he's already well positioned for next week's Douchie).  BWM said that Iraq can't be considered a sovereign nation without the RV which is a douchebag statement if I ever heard one, but still it wasn't quite enough.  

What I finally decided on was a conference call that was actually recorded late last week, but since I didn't listen to it until this week I feel that it qualifies.  My blog, my rules.  This was a call featuring names that I'm not too familiar with, but apparently they're part of the Okie/Blaino/PTR/MTT crowd.  Hammerman (host), bobgetz6 (mod/phone tech), Footforward, and a guy called Henry "Not His Real Name" were taking phone calls and spreading manure like their lives depended on it.  Among the highlights:

• Claims that gag orders on gurus are real
• Claims of a communications blackout in Iraq
• Codes set to expire were extended a week ... UST had to go in and extend the codes to make RV possible
• Bank screens in Europe are going crazy
• Maliki is on US soil but the media won't report it because Iran would try to kill him
• Hearing rate of 5.72 plus or minus 45 cents pegged to the British pound (comes to $8+)
• Hammerman's intel says RV between Dec 1 and Dec 7 (OOPS!)
• Woman calls in concerned that she will lose her house .... Footforward tells her about Prophet Kim Clement prophesying about dinar and tells her to proclaim that God will intervene

This call had it all.  Ridiculous rates, bogus intel, religion, RV dates, claims of top level sources, conspiracy theories .... you name it they had it.  At least two different people called in concerned about their financial predicaments and instead of doing the responsible thing and saying "don't count on an RV .... look for another solution" they stuck with the dinar guru dog and pony show.  It would have been funny if it wasn't so pathetic.

So for the first time ever, a Douchie is awarded to four people at once - Hammerman, Bobgetz6, Footforward, and Henry "Not His Real Name".  Congratulations, douchebags.  Well done!

 https://www.freeconferencing.com/playback.html?cid=conferences/124-17-65-67393588102-17-65-67-17-65-67-17-65-6750-17-65-6777103-17-65-67-17-65-6747.mp3&e=1325311200000&cn=94-43-28-63