Thanks John For sending this to us today
The “Apple Theory” by JohnP
I have a theory on the whole dinar "rate" discussion. I call it the "Apple Theory". In fact it could also be the "Gumball Theory" if you like as the implications are the same but I don't know if they're allowed to have gumballs in Iraq.
Anyway we'll stick with Apple Theory in the meantime, and maybe someone can research whether they're allowed gumballs.
Anyway, with all the discussion and conjecture about the rate, I think folks are missing the most important point, and that is what the LOWEST denomination that will be in circulation is - and how do you pay for an apple.
We heard about the "fils" a couple months ago and that made me VERY happy as they were supposed to be a fraction of a dinar. And this is where the Apple Theory comes in.
You see, in the real world you have to be able to buy an apple - not a bushel, but a single apple. This means that you can impute the planned exchange rate by looking at the lowest denomination that will be in circulation, and estimate what it will cost to buy an apple (or gumball, if they're allowed to have those).
I believe that if they move to parity with the dollar, then the lowest denomination in circulation should be about 1/10th of a dinar. The smallest coin we use here in New Zealand is a 10 cent coin and everything is rounded up or down to ten cents.
If, on the other hand, they are going to RV at 3.86 (or whatever), them the lowest denomination in circulation should be about 1/30th of a dinar, because that's about what it takes to buy an apple.
To some degree the same theory can be applied by looking at the HIGHEST denomination that they will have in circulation.
For practical purposes the biggest note in circulation in the US is a $100 note. The same is true here in NZ. Therefore discussion about introducing a 50k note is probably not a good thing.
If we assume that a modern society needs a note worth about $100 in buying power for day to day transactions and convenience, then having a 50,000 dinar note should mean that they are looking at a rate of about double what it ts now, or about 1/500th of a dollar.
If it is confirmed that they plan to introduce a 100k note then that should mean that they are not looking at raising the rate at all and the rate will remain about 1,000 dinar to a dollar.
There is a possibility that they will only use a 50k note for banking transactions but I doubt very much that they would make a big deal about that with the public as the public wouldn't have any need for a note that large if they RV at 3.86.
After all, all THEY care about is buying an apple!