6-17-2012 Enorrste (Part 1): You may recall that Abdul Hussein Anbuge was one of those interviewed in the now infamous LOP article that we took apart a few days ago.This article falls in line with that article but is now limited to the one person only.
He offers 10 reasons why, in his opinion, the "remove the three zeros" project should be indefinitely tabled. Unfortunately none of his reasons deals accurately with the situation. His first "reason" is a simple matter of opinion: aren't there enough other things to worry about in Iraq that changing the currency?
Of course since he doesn't understand the process, even though it has been adequately explained by the CBI, he goes on to provide other "reasons" why this is such a bad idea, all of which are based on a false premise. The simple fact is that the plan has been in place for over 5 years, and is a major element in the overall recovery plan for Iraq. So the answer to this question is an unqualified YES!
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This is important and does need to be addressed now, in spite of the fact that there are other issues in Iraq that also need to be addressed.
His second reason is also based on a false premise. By failing to understand that the project involves an RV instead of a LOP, he doesn't understand that the RV will CURE the inflationary pressures rather than exacerbate them.
He also doesn't believe that the project will "contribute to the value of the dinar." Unfortunately, this statement runs directly in the face of the CBI's statements to the contrary. The CBI has stated clearly that the project will definitely contribute to the value of the dinar. Therefore, we see that Mr. Anbuge is just uninformed.
His third "reason" has been mentioned by others: the cost of the new currency is too high and the money could be better used elsewhere.
6-17-2012 Enorrste (Part 2): The CBI has stated that the cost of printing a new currency is about $150 million, or less than the amount of dollars sold at auction on a SINGLE DAY by the CBI. In other words, the cost is not high at all. Furthermore, the new currency will eliminate counterfeiting and fraud, both of which have a signicant ONGOING cost at the present time in Iraq. Therefore, the overall affect of printing the new currency may well lead to a SAVINGS rather than an expenditure!
The fourth reason is almost laughable, namely that the Iraqi people will suffer psychologically when 3 zeros are LOPPED off their currency (as he sees it now). Once again he fails to see that the project involves and RV and not a LOP. Therefore, he doesn't understand that the people will benefit greatly from the RV. In short, there will be NO psychological impact on the people except a POSITIVE one as their wealth increases.
The fifth reason has also been expressed before, namely that the project will lead to corruption and money laundering. I find this one to be the most humorous, because there is absolutely no evidence whatsoever that this would occur.
It is an argument made out of thin air and has no evidence to support it. In fact we read yesterday that 35 banks have now entered fully into the electronic banking that the CBI and IMF have been working on for some time now. The issuance of a new currency will in fact REMOVE any opportunity for money laundering or corruption, rather than create it.
The sixth reason is one that might have merit, were it not for the fact that the CBI has been managing this through seminars and symposiums to clarify the "process" so that the complexity of the project is minimized. Admittedly switching from one currency to another is complex, and even more so when performing an RV at the same time, but it is not as if this has never been done before!
The CBI has numerous other country examples to look to for guidance during this process. So why should it be any more difficult in Iraq than it was in other countries? After all, they survived the process, right? In short, this is a spurious argument that has fear as its basis, rather than logic.
6-17-2012 Enorrste (Part 3):The seventh reason is once again based on a false premise (the LOP theory). He claims that people will "clam up" and stop spending due to "confusion". However, just the opposite will occur when the project involves and RV instead of a LOP. With more wealth spending will INCREASE, as will CONFIDENCE.
There will be no confusion and certainly won't be any slowdown in the economy. Reason number 8 is really weak. He claims that there will be no real difference in "accounting". For instance, he says, if something cost 12550 dinars before the project it would cost 12.550 dinars after the project (or in other words, the same amount of "numbers" but just a movement of the decimal point). My response to this argument is simple: SO WHAT? This is no reason not to go ahead with the project, and carries no weight at all when there are many other POSITIVE reasons for the project to proceed, as stated numerous times by economists, Saleh, and others.
Reason number 9 is about the same as number 8. It again assumes a LOP. However, when it is understood that an RV is in the mix, then the reason fails. A man who made 1 million dinars monthly prior to the RV would have a salary of 1000 dinars after the RV.
In other words, his salary "value" would not change. The 1000 dinars would be "worth" what the million dinars had been worth prior to the RV.
The "number of banknotes" will not change (he is correct on this point) but the MONEY SUPPLY will drop from 30 trillion dinars to 30 billion dinars after the three zero notes are removed.
Therefore, his point is pointless, because he is counting bank notes instead of MONEY SUPPLY. Who cares how many bank notes there are? What matters is that the MONEY SUPPLY drops, which it will, causing the dinar to become one of the most powerful currencies on the planet.
The final tenth reason is spurious as well. He claims that there will be problems with the money supply because "good money forces out bad/old money". This is called Cretiam's Law, and the CBI is COUNTING ON THIS as a part of the removal of the large notes process!
Rather than creating a problem it is actually solving one. The large notes (old/bad money) will disappear quickly after the new small denom notes are introduced in 2013. In addition the old/bad small notes will also disappear quickly. This is in complete agreement with the plan of the CBI.
Therefore, reason 10 has no bearing in terms of being a negative. Well, there you have it. Once again the "bad guys" are shown to have false premises, faulty understanding of the process, and possibly motivations that have nothing to do with the goals of the CBI (improving the overall economy of Iraq and its position in the world economy). It makes you ask this question: Exactly what is the motivation for these naysayers?