Currency Chatter Members Sharing Thoughts & Opinions Part 1
Deekon Moses: This is only MY OPINION. When you see caps I am not yelling just putting emphases on WHAT I’m trying to express.I never have been a great writer. LOL.
Anyway, Those who have been in this investment for quite some time know that per the CBI the OLD currency and the NEW currency (lower denoms) will co-exist together for a PERIOD of TIME.
The CBI has been REDUCING the “money supply” WITHIN Iraq to whatever their goal is as it relates to the greater context of the their 3 zero plan/PROJECT in terms of monetary reform.
I am of the OPINION that when the RATE increases, that it will at minimum increase on par the US dollar (Exchange Rate).
I also believe that even though OLD 3 zero notes will co-exist WITHIN Iraq with the new LOWERS DENOMS for whatever period of time that it will be legal tender.
However, I don’t believe that the Iraq citizens will be able to spend the 3 zero notes within Iraq. I believe that they will only be able to exchange them for the NEW “lower denominations.” 1, 5, 10, 25, With that being said, Iraq’s old and new currency will be equivalent hard currency value/purchasing power( IQD 25,000= 25.00).
They just will not be able to spend the three zero notes within Iraq. They will only be able to exchange for the lower demons, or deposit the 3 zero notes into their bank accounts.
When they deposit IQD 25,000 into their account, their account will show IQD 25.00 for that IQD 25,000 that they deposited because the personnel inputting the data will be REQUIRED to input IQD 25.00 based upon the laws that will be in place to facilitate the entire process WITHIN Iraq.
(Iraq’s within Iraq see nothing but PURCHASING power based off of the adjustment of prices and the new laws WITHIN Iraq)
Also, because of the value/EXCHANGE RATE of their currency I believe there will be some type of laws passed that will not allow them to travel with or ship the 3 zero notes outside of Iraq because of the NEW EXCHANGE RATE.
They will only be allowed to travel with or ship lower denoms ACCORDING to the laws passed that will govern this 3 ZERO PRJECT/PROCESS so that the Iraq’s only benefit from Purchasing Power and not exchange rate.
But INTERNATIONALY form a COLLECTIVE IRAQ they benefit because their currency has STRENTH as it relates to other currencies EXCHANGE RATE.
Other currencies will be more than willing to deal with IRAQS new currency and its new exchange rate and WHAT'S going on in the NEW IRAQ.
The PROJECT/PROCES will benefit the NEW Iraq and us IQD Holders outside of the country can exchange our currency for whatever the new EXCHANGE RATE is.
THE IQD will be treated like any other CURRENCY EXCHANGE and Iraq’s internal laws, that were created to govern and facilitate the process within Iraq will not effect IQD holders outside of Iraq.
That is just MY OPINION though. "DEEKON MOSES"
Deekon Moses: I don't believe in a LOP BLUE.
Maybe you misunderstood what I was saying, or I did not explain myself clear enough. When the Currency increases in value. Internally in Iraq, they see "purchasing power." Outside of the country we see the exchange rate.
What I am saying is, when the currency increases in value lets say 1 dinar equal 1 US dollar, there will be laws in place that will not allow the iraqi citizens, namely the smart ones who understand that their currency has increased in value, to travel outside of the country with their "3 zero notes" so that they get the exchange rate for their currency.
I don't believe that the RV will happen and make the citizens in Iraq that have 1 million IQD a millionair.
Again, the Iraqi's will not see an exchange rate inside Iraq, they will see purchasing power, and prices will be adjusted internally. All of that will happen at once.
However, when we outside of Iraq exchange a 25,000 note, we get 25,000 dollars because the exchange is 1 to 1.The citizens in Iraq are not doing currency exchanges, they are doing currency swaps(The 3 zero notes for the lower denoms).
They walk into the bank, give the bank a 25,000 note, the bank gives them a 25 note, or inputs in their account 25.00 they never lost anything. The currency incressed in the purchasing power and prices accountig etc were adjusted.
Whatever the exchange rate is for 1 dinar everyone outside of Iraq will be able to exchage for the current exchange rate at that time.
So after the RV, "no" a wealthy man in Erbil would not be able to do what you stated as quoted below becuase there will be laws in place to keep them from TRAVELING and SHIPPING the 3 zero notes.
"a wealthy man in Erbil.... with 30 million IQD worth about 30,000 USD right now.. would have a very strong motivation to get his ** to Turkey.. and on the London.... in order to exchange.
So as far as a LOP, 1 IQD 25,000 note equalling 25.00 is not what I'm saying. I'm saying laws will be in place such that while they are doing the currency swap in Iraq for the LD's that they will input data entry wise 25.00 or give them 25.00 they will not give them an exchage rate. They would have to actually leave or smuggle the 3 zero notes outside of Iraq to do an exchange and become millionairs.
Deekon Moses: My position on a so called LOP is a 25,000 note will be equal to 25.00 in and outside of Iraq. My understanding of a LOP was deleting three zero's off of the currency. I don't hold that position.
That would mean that holders of the three zero notes outside of Iraq get pretty much a revenue neutral when exchanging their 3 zero notes for the current exchange rate.
Also, when I say they/Iraqis never lost anything, I'm saying that post RV their 25.00 gives them way more purchasing power than a 25,000 note that pretty much got them nothing pre RV. The RV means we all win, they get purchasing power we get the exchange rate oustide of the country for our three zero notes.
Schiz: Yeah it's a hard one to wrap your brain around and fully understand, it makes total sense when you get it and understand it correctly....took me about 2 yrs lol......and no its not a lop, it's nothing for the iraqi people. Straight swap from one value to the next.
Hopefully we get to find out this year but to be truthful, iraq can kiss my ** once they rv LOL
Mike: Thanks, guys. I believe it was an article that was cobbled together from the previous purchase in March of 2014. If you Google " Iraq buys 36 tons of gold" you'll notice that ll the articles are from 2014.
It was a record purchase and made a huge splash in the international media, there's no new articles about a recent purchase. Iraq's kind of funny like that, they'll outright republish an old article and sometimes they'll cobble together one with the most recent officials and put it out there again.
I mean, I could be wrong, but I can't find another article or mention about it in any other press source and it should have generated the same amount of press from multiple sources.
LiveFree: Maybe I can add my 2 dinars worth to help better clear this up... in your case scenario DeekonMoses, I understand exactly what you're saying.
Now compare that Iraqi swapping that 25,000 dinar note for a 25 dinar note where the zero's have been removed... this will be reflected at the stores too,
what USED to cost 25,000 dinars (about the price of a pack of cigarettes over here, lol), will be re-priced to 25 dinars (zero's removed at the stores too) so whatever the 25K note initially purchased will still purchase the exact same thing for the exact same value but with the zero's removed.
In this case no additional purchasing power has yet been added... it's the same as it ever was... until they begin their new exports where their dinar's are buying more product from overseas, that should lead to decline in prices at the stores over time and so the Iraqi's will eventually benefit. Get it? Man, this one's a hard one to explain in writing! :/ I should add JMO.
Mike: Here's the thing, you can't treat one currency two different ways. That's why they can't lop the digital dinars and treat the physical dinars as if they have different values.
If you have a 25K note and Iraq deletes the three zeros, that's a lop and it will apply to all dinar, not just the stuff in country. Like I said, if that were the case I'd wire transfer my dinar to a Jordanian bank and, presto, I've got more value.
Or, I jump on my camel and I haul my crew over to Turkey and, presto, I have more value. You can't have an in country lop. You can't have a digital lop. Has anyone ever heard of a currency that's worth more in your hand than it is in your account? Nope, no one would use a bank if that was the case.
The same thing will happen in Iraq. They need the citizens to engage the banks, 8 out of 10 don't even use it outside of a currency exchange center. Iraq already has a dual currency (MCP) problem with the dinar, the banks says it's worth 1179 (commissions included) and the street says it's worth 1215, and the IMF is telling them to tighten up.
Can you imagine the uproar if you tried to say there was two values for the dinar, one for digital and one for physical? They'd come undone.
When Turkey lopped their money, it was across the board, Conversely, when the Swiss franc went up, it applied to all currency, in and out of the country including physical and digital francs.
If someone can find an example of this occurring, please share, I couldn't find anything. Same for the bank run story, please post if you can find it. Great thread, gang. This is just my opinion, not a statement of fact. " We are all born ignorant, but one must work hard to remain stupid " Benjamin Franklin
Frank: This article was posted on Currency Newshound in 2012 (Tags: Central bank, Central Bank Iraq) - in any case it relatesto the above .
A source at the Central Bank of Iraq weeks before the government’s intention to change the currency by deleting three zeros from the right side of the categories of the current currency,
any division of denominations present on A, and thus become a category one thousand dinars, the current, for example, equal to the new dinars and five Thousands equal to 5 dinars new
and hundred thousand equal to one hundred new dinars. and will be the new currency in 2013
and will take bring new currency to replace the current two-year void at the end of the old currency, but banks will continue to receive for 10 years then for the purposes of the switch and not for circulation.
The source added that the value purchasing for the new currency will remain equal to the value of the current purchasing power of currency.
Valslah that worth a thousand dinars now become a value of the new currency dinars, and that their current million dinars become worth a thousand dinars, and so on.
Because of the importance of the subject and a misunderstanding of some of it as there are those who believe that it is possible to make profits from buying the Iraqi dinar present and sell it in the post, must be asked two questions – first: What is the government’s goal of this change?
The second: How will the government, especially the monetary authority, to ensure the relationship offsetting between the two currencies existing and new so as not to cause the switch to damage one?
can say in answer to the first question that the Iraqi dinar was, until 1981, partly covered with gold and foreign currencies (70 percent), permissions and partly because the Iraqi treasury, Iraq was applied to the vestiges of the gold standard.
In order to maintain the cover, has been the successive governments linking fiscal policy, especially current expenditure and investment expenditure in the case of balance of payments, an increase of the revenues from Iraqi foreign assets,
especially oil export revenues, reserves of gold. and the success of this linkage introduced administrative restrictions on foreign exchange, both, trade goods and services, and capital movement, and applied monetary and fiscal policies of the province.
Iraqi dinar remained a result, maintaining a stable exchange rate and the official of $ 3.2 of the dinar.
The Iraqi dinar has as large a store of value inside Iraq and in foreign markets, especially markets of neighboring countries.
But after fading precautions Iraq’s vast foreign currency after the outbreak of the Iraq war – Iran and the impact of war spending exorbitant, left the government of a law the currency and started to spend without quantitative restrictions,
which led to a continuing decline in the Iraqi dinar exchange rate in the value of purchasing power. and increased blockade economic embargo imposed on Iraq in 1990 it worse.
Despite the government’s adherence to the Iraqi official exchange rate of $ 3.2 of the dinar in official dealings, highlighted the developments of the last price is the price of dinars on the black market, which is determined by the forces of supply and demand, and reached the price of three thousand dinars to the dollar.
After the occupation of Iraq and the lifting of the ban on oil exports and reserves of the country abroad, and turning to the Iraqi Central Bank to regulate the auction day to sell the currency to banks, the value of Iraqi dinar than three thousand dinars to the dollar to about 1125 dinars now.
deprived the Iraq war – Iran and the economic blockade after the dinar many of the Iraqi mind the store of value and medium of the circulation, causing the transformation of most of the transactions to the dollar.
And thus the dollarization of the economy got in Iraq. It will be the first impact of the decision to change the currency rehabilitation of the dinar and make way for all denominations, including small to find its way back to trading as well as to end the dollarization of the Iraqi economy and return to dealing in dinars only.
As for your second question, and most importantly, Vldman relationship offsetting between the two currencies existing and new, You need the monetary authority to issue instructions provided on the following: divide the Iraqi government expenses, including salaries of staff on A as well.
The civil servant who receives currently 1.5 million dinars become a salary of 1500 dinars again, and divide the price of all goods and services on A as well, becomes a commodity that currently worth a thousand dinars, equivalent to the JD and impose censorship on implementation.
divided existing debt on individuals and the government, companies and the banking sector A as well, A person who his trust to the bank becomes a current million dinars his trust again.
And take all the courts and judicial authorities in this division, upon receipt of specific complaints. But if the dollar of the debt shall continue to fulfill it to the dollar.
As well as bank deposits are divided over a thousand. But the monetary authority will continue to face more difficult task is to determine the exchange rate of the Iraqi dinar.
Will resort to install it to the dollar or a basket of currencies or managed float method of tracking any leave, as is currently the case, is determined by the forces of supply and demand within the margin of acceptable power to intervene to maintain.
The most appropriate option for the conditions in Iraq as a developing country is to stabilize the exchange rate, both against the dollar or to a basket of currencies, and choosing the appropriate exchange rate because the official exchange rate of the previous $ 3.2 of the dinar was originally overstated and should be chosen exchange rate less may be the price at which the link dinar against Currently the dollar after dividing it into a thousand dollars to 1.125 dinars a good price.
BigJohn: ALL very good points. But, if this were the case (Iraqi walks into the bank w a $25K note and gets a $25 dinar note in exchange, as LiveFree and DeekenMoses highlight) why was the delete the zeros project not started a year ago? 2 years ago? 5 years ago?
Why would Maliki stop the delete the zeros project over and over again? What would he have to gain or lose by stalling this project? Why would Shabibi feel pressured to just float the currency in Sep 2012? What LF and DM describes is a neutral event inside Iraq. No appreciation of the physical IQD inside Iraq.
If this is and will be the outcome, why hasn't this already happened? What is Iraq waiting on?
Why continue to reduce the amount of IQD currency inside Iraq? Sure, less currency would create more demand and a higher value but why inside Iraq only. No effort has been made to reduce the amount of currency outside Iraq. Just the opposite. What is outside Iraq is being sold everyday.
The fact is, Tlar's scenario is the most likely to happen. Physical dinars will appreciate inside and outside Iraq. Bank accounts and Loan contracts will be adjusted to create a neutral outcome. JMO
DreamWeaver: Good morning all. Frank, in reading your post--speed reading--IMO it isn't article but opinion piece that begins explaining it as LOP and ends suggesting they'll LOP first and then establish an RV-type exchange rate.
It must be very confusing--a mishmosh of fact and fiction--on those boards that post opinion pieces as articles. Thankfully, CC posters always have links for articles--big cudos for them.
Rocko: Mike, You may be right. The official number has Iraqi reserves at 89.8 tonnes.
Comments may be made at the end of Part 2 Thank You