Thread: Iraq/Dinar News. 09/05 to 01/14/07

Originally Posted by bjft

Dont want to pour cold water on this but this is my understanding of the dinar - USD scenario. Note this is my understanding not a verified fact.

You are currently holding a 25,000 dinar note which currently has an exchange rate of 1400 dinars to 1 USD.

Iraq will lop the the zero's which means the actual value of a 25,000 dinar note will now be 25 dinars and the exchange rate will be 1.4 dinars to 1 USD because the face value of the dinar note has been reduced 1000 times (1400 to 1 divided by 1000 = 1.4 to 1).

This means that the exchange of the current 25,000 dinar note (new actual value 25 dinars) to USD will be 17.4 USD and not 17,400 USD as people are speculating.

Can anybody verify that this is correct or come up with a plausable scenario to show that the exchange will in fact be 35,000 USD.

I read the following on another forum, thought it might make for an interesting read and possibly answer your question.

The lopping theory says knock off three zeros off the currency and push to the dollar.

Lets see:

Iraqi has 3000 dinar pre war at the rate of .30 USD was worth about $900.00 USD. After the invasion a one for one exchange of dinar is made and the rate becomes 1450/ dollar so now that same 3000 dinar is now worth about $ 2.04 USD now lets lop;

Knock off three zeros and lift to the dollar. Now you have 3 dinars worth 1.00 each so the prewar worth of the Dinar was $900.00 USD now it has become $3.00USD. So democracy has yielded a loss of $877.00 USD in this case.
How in Jesus’ name is that parity with the dollar and how does that benefit this person?

No it does not work and would make this person yearn for the good ole days of Saddam.

Do you think the US is going to let that happen? I do not think so.


Now we have the lifting of the three zeros off the exchange rate.

3000 dinars @.30 pre war = $900.00USD now valued at $2.04 USD

Lets lift: current exchange rate @ .000685 New rate becomes .685

3000 dinars now revalues post war to $2055.00 USD

This gives that same person $1155.00 USD profit or increase on his monies worth.
Now to this person democracy has really paid and improved his quality of life. He likes democracy under this formula.

After looking at this it becomes simple to understand, which direction is the proper one both financially and politically. But you decide for yourselves. I'm sure the reality will prove that this is the road Iraq soon takes.


This is not my work and thought it might help out the NO LOP camp... Like I have said before if a LOP happens a civil war is soon to follow...JMO Have fun with it Dave, Sometimes its not black or white (M1,M2) It maybe GRAY...

Arco

Hi melg,

Thank you for a sensible answer, I also noticed I did the exchange the wrong way round and had already changed it.

I know the risk v reward scenario, just wondering how such a revaluation from 1400:1 to 1:1 even with the oil assets could be feasible and sustainable.

Purchase and sale of the Iraqi dinar outside of Iraq could spark a currency collapse which would be detrimental to the Iraqi people. As I cited before the Asian currency crisis in 97 which caused the collapse of economies in Indonesia, Philippines, Thailand, etc and the IMF had to step in to bail them out. In the 80's when there was a run on the european currencies it had the same effect on Italy, Portugal, Spain and even France until the Bundasbank stepped in to help them out.

I am not putting it down as an investment opportunity, just evaluating the possible realities.

bjft,

A pleasure for the answer - I try to see both sides of the coin and believe that seeing both the negative with the positive allows one to make their own reasoned decisions.

I believe that it has been mooted that the major countries worldwide have agreed to hold any dinar they have for a period of 5 years and, given it is normally safe to assume that the major holders of currencies worldwide are the countries themselves this should minimise the mass sell-off that one would expect if and when it revalues.

I am not au fait with what happened in Asia unfortunately but hopefully the above would avoid such a calamity.

Thanks Arco and melg,

The comment on countries holding off selling dinars is a welcome one.

Many tried to blame Soros for the run on Asian currencies, but even with his wealth I do not think he could have had enough power to do the damage that was inflicted. It had to be countries, which puts the whole ball game in the political arena and that is fickle to say the least.

bjft

Interesting,

Once again we hear lopping, but did even one of these articles ever mention lopping from the mouth of any official, or was it in the translation that created the assumed lopping from press? Having read it all, I never saw the word lopping used. Lifted or removed is not the same, and then again, knocking off as MSNBC headlined article, I about choked laughing over it.

Besides that, the original currency was flown in and required 27 plus cargo planes to deliver new currency. Given the expense and monumental task of printing all new currency, never mind delivering it, and the millions of dollars that would be wasted, and subsequent loss of faith in currency after finally establishing stability, lopping makes no sense at all.

Good luck to all, Mike

another good reason for a subject search. There are one gazillion letters on this subject in the last quarter gazillion pages.

Originally Posted by bjft

Dont want to pour cold water on this but this is my understanding of the dinar - USD scenario. Note this is my understanding not a verified fact.

You are currently holding a 25,000 dinar note which currently has an exchange rate of 1400 dinars to 1 USD.

Iraq will lop the the zero's which means the actual value of a 25,000 dinar note will now be 25 dinars and the exchange rate will be 1.4 dinars to 1 USD because the face value of the dinar note has been reduced 1000 times (1400 to 1 divided by 1000 = 1.4 to 1).

This means that the exchange of the current 25,000 dinar note (new actual value 25 dinars) to USD will be 17.4 USD and not 17,400 USD as people are speculating.

Can anybody verify that this is correct or come up with a plausable scenario to show that the exchange will in fact be 35,000 USD.

Have you ever heard the saying "beating a dead horse"? Well....you just have!! You need to read and study this thread so as not to keep re-hashing old discussions.

Hello, I am new to this forum and have great arguments before and against. I personaly have 1.25 mil in dinar and plan on buying another 250k. I believe it is a risk you can't pass up provided you can afford to. I know that I would be sick to my stomach if I found out we pegged @ 1.00 or more (heck even if you just take the three zeros out of the exchange rate and put it at .68 would be a HUGE return) and I did not take advantage of it. Anyway great debates, great arguments, I am pro Dinar.

John

By the way I would be interested in the tour after P-day

Did anyone tune into Dr. Q tonite... I did and wish I hadn't ... not that he said anything outright negative.. he just is so guarded that it drains the excitment I feel after hearing from Mike and Adster and the rest of the Dinar gang.. think I'll go back acouple pages and try to get back on the high track... libby

Originally Posted by melg

bjft,

A pleasure for the answer - I try to see both sides of the coin and believe that seeing both the negative with the positive allows one to make their own reasoned decisions.

I believe that it has been mooted that the major countries worldwide have agreed to hold any dinar they have for a period of 5 years and, given it is normally safe to assume that the major holders of currencies worldwide are the countries themselves this should minimise the mass sell-off that one would expect if and when it revalues.

I am not au fait with what happened in Asia unfortunately but hopefully the above would avoid such a calamity.

I appreciate this thoughtful dialogue. I also try to look realistically at both sides of this issue. Sometimes, though, the whole thing makes my head spin!

This business about major countries agreeing to hold their dinar for 5 years is interesting...I've heard it suggested, but haven't seen anything official that would confirm this as really being the case. Do you have a link or can you share how you came across this info?

Thanks.

Caroline