(NOTE: Last year we ran a post on our USER Q & A page about "Dropping the Zero's and a LOP". Many people continue to ask about this subject. Below we have repeated the question as well as the original comments. Comments (questions) are open for this post and will be posted after approval.)
The Question..Trying to figure out what you are saying with the dropping of zero's... if they printed new currency without the zero's, is our currency that we bought obsolete #1?? And #2 Will it still have the value of $25000 so then with revalue $25000 x 3? x however many you have ? This concept of removing zeros makes it seem like the revalue is the american equivalent value of the dinar ($25000= $22) x 3 or 5 or whatever the new ratio is. So rather than getting $1,000,000.(say, if you had a million iraq dinar) x 3 = $3,000,000. would be more like $1,000. x 3 = $3,000. which would still be a profit but not as much??
[mike] good question...if the iraqi people were confused on usd vs old dinar then new dinar then dropping of the zweroes then getting coins and then just to make it interesting a new currencey replacing the old but new non sadam currency....wow...its like following a family tree...past the trunk I'm confused.....
[Duane] In country they already make the calculation, if something is 25000 dinar, it costs 25 US I have personally been in country and that is what you negotiate price to. The Iraqi's will not see the cash return like the outside world, they will see the purchasing power side where a coke now cost 1 dinar and not 1000.
Read More Link on Right
[Vickie Wagner] So, they have to acknowledge our money with the Zero's........So
if you have 25,000 X 4 (number of dinar) 100,000 x 3 would hage
300,000 correct? Thank you
[ghostrider78] The way I understand it is that "dropping of zeroes" means the currency with three zeroes on it will drop out of circulation. It will still technically exist but it will not be used, much like the American $10,000 bill that was taken out of circulation decades ago. If I happened to have a $10,000 bill, I could take it into a bank and exchange it for money because it is still legal tender, it is just not used. Unless I have missed something, I don't think they printed new currency, just lower denominations. They will need the lower denoms when the RV happens because their money will be worth more and have better buying power. I think the situation you are worried about is a LOP. It has been explained to me in great detail why this would not benefit Iraq at all. By pulling the three zero notes off the street, they are able to destroy them, thus reducing the amount of money that they have on the street. This will, in turn, cause the value of their dollar, or dinar if you prefer, to rise. I hope I have said everything correctly and not confused you further.
[Benjamin Roth] ghostrider: I have also been confused by this "000 situation"... and then had it explained very thoroughly and carefully to me... (*BY "SOMEONE WHO KNOWS")..... And, As I now understand it::::: YOU HAVE EXPLAINED IT PERFECTLY AND CORRECTLY!!!!!. THANK YOU FOR POSTING THIS. GOD BLESS:::::
[anynomous398] I'll try to answer this the easiest way possible... to your first question the answer is yes... they have quit printed the larger bills...just like the US have stopped printed $1000.00 notes and larger for civilian use, so go the way of our dinar we hold, after the RV they will have no need for bills that are worth approximately $25k-100k depending on who you listen to.. The dropping of the zero's is slimply a translation misunderstanding...and that they removing them from circulation and not the fact that a 25000 note will be worth only 25 iqd after the rv... that is called a lop and has to do with out of controll inflation...Yes inflation in Iraq is climbing but it still in single digits ,,, lops have to do with inflation in the 100's if not 1000's... the notes you have are worth 25000 iqd before and after the rv... now we just need to know how much that translate into usd after the rv may it be $25000 to $75000 per 25k iqd... i hope this helps anynomous398
[hopefor4] That was a great explanation or how and when a lop is used. I have been convinced that this would be indeed a lop. But with Iraq not having out of control inflation the scenario you just described makes more sense
[Jake] Yes very much so. Thankyou for your time and faithfulness
[BeCon] I would like to know the answer as well, it is my husband's understanding that the zeros will be dropped when we cash in but I thought that 25,000 dinar bill is still just that, 25,000. I thought the zeros would be dropped after all the 25,000 dinars have been cashed in.
Please someone clarify this!!!!!!
[Benjamin Roth] BJ~Econ 101: BeCon: I simply refer you to ghostrider78's post above... whereby he explains this "000 situation" most perfectly and correctly... I hope that helps you to understand this:::::Once And For All:::::(*I know that it had been confusing me as well, for a very, very long, long time!!!!!) ... Until "Someone Who Knows" thoroughly explained it to me... As perfectly and correctly as ghostrider78 does in his above post.
[MI$$I$$IPPI Gurl] That is the understanding I got as well. The dropping of the zeros will not affect the value of our dinar. once we cash out and they pull the larger notes they will do like the United States did and make smaller bills. A 25,000 note is and will be 25,000 dinar. so 25,000x3= 75,000. or what ever the rate might be. that is all smoke and confusion dont get pulled in.
[IITB] What you are describing is a lop, and then a revalue of a lopped currency.
After 8 years in I can assure you that is not the case.
There are way to many factors to go into detail.
However in order to understand the situation fully might I suggest familiarizing yourself with the Marshall plan, post world war two .
I suspect you will find the similarities uncanny.
;HANN] You are describing a LOP, and no it will not LOP. That has been debunked for a couple of years now. Your 25,000 dianr x 3 will equal $75000.00 USD. Relax and quit worrying.
[john] THE DROPPING OF THE ZEROS IS NOTA LOP THEY ARE NOT GOING TO CUT 3 ZEROS OFF OF THE LARGE NOTESTHE CBI HAS STATED OVER AND OVER AGAIN THE OLD AND NEW CURRENCY WOULD COINCIDE WITH EACH OTHER FOR TWO YEAR UNTIL OLD IS GONE WHY DO YOU THINK THE CURRENCY AUCTIONS ARE GETTING LARGER THEY ARE REMOVING AS MUCH POSSILBLE FROM THE STREETS ALSO THE DROPPING OF THE ZEROS IS FROM THE NOMINALRATE .00086 OCNE REMOVED.86 OR HIGHER
[Jake] Wait... Lol I still don't understand. Is it possible that they will make a new currency (other than the one we all have)? Wouldn't the dropping if the zeros mislead the RV? Maybe I just don't understand economics...
[TAMBOK] Here's the best & very clear explanation on this Subject Hope this help http://bit.ly/z7jl1x
[Natedawg] By "Dropping of the zeros" they are referring to removing the bank notes from circulation with three 0's (25,000, 10,000, 5,000, and 1,000) they will remove these by you and I cashing in.
Iraq/CBI will release new notes into the market of lesser value so that normal items can be bought after the RV. Otherwise, currently the lowest denomination of IQD in circulation is 50. I certainly wouldn't want to buy a Coke that costs $1-$1.50 and pay with a 50 IQD note. That's a pretty good tip for a coke. They must release lower denominations in order to RV!!! (According to other intel this may have already been done as it was indicated that the contractors in Iraq are already being paid in the lesser denominations not sure if this is true or not.)
1=1, 2=2, a 25,000 IQD note is worth 25,000 IQD This will never change. What will change is what 1 IQD is worth. If it RV's to 1 IQD = $1 a 25,000 IQD note will be worth 25,000 IQD which would be $25,000.
[msnewman] There are two issues regarding "dropping" the zeros. The first is the LOP, or loss of principal. That's where a sovereign gov't literally drops the (3) zeros on the larger denomination notes, and a 25,000 dinar note becomes and is treated as a 25 dinar note, thus a loss of principal. The other is a shift by a factor of 3 decimal points of the value of the dinar where $1 was convertible into 1,170 dinar before the adjustment, and after the adjustment, $1 becomes convertible into 1.170 dinar.
The interpretation of most in the reading of the intention of the CBI and the GOI is the latter, in conjunction with a new valuation beyond the 3 decimal point change in the dinar. What most expect is the large notes will stay in circulation through 2012, together with the older, post Sadam, larger dinar notes. Thus the larger (25k, 10k, 5k notes) will be used for larger transactions (real estate, water development, utility infrastructure, oil & gas development, construction, etc.), while at the same time the normal or smaller notes and coins will be used for household expenses, food, clothing, etc. Over time, the larger denominations will be pulled from circulation as they are collected by the commercial banks, and delivered in bank to bank transactions with the CBI.
So in short, we are all looking forward to a 3 decimal point shift in conjunction with a revaluation of the Iraqi dinar, rather than a LOP, or loss of principal.
[micmoney] They have stated that both currencies will coexist for a period of time, to draw in the old over a 2 year time span. If the majority of Iraqi's who stashed away a $25,000 notes and the government immediately made them worth $25 found out about this, you could easily expect civil strife. Kaperoni explained the LOP in an easy to follow manner.
10 reasons why the IQD will not LOP
1. Monetary policy was a success talking inflation from 35% or higher to around 7% currently.
2. Any type of currency devaluation (LOP) is considered a failure of monetary policy. Dr. Shabibi has not failed.
3. Lesser value notes in circulation such as 50, 250, 500. Devaluing the larger 3 zero notes would make them worth less than these lesser notes.
4. Iraq wants the dinar to be an international reserve currency. Cannot devalue the notes in reserve (25,000), circulate them as payment, or traded amongst countries.
5. Iraq holds arguable the second largest oil reserves and is mineral rich. They are too wealthy to not honor the value stated on the notes.
6. Iraq has stated..They want the “strongest currency in the Middle East” Any such type of LOP would be a devaluation and therefore not considered strong.
7. US holds dinar as a result of funding the CBI's initial reserves. This dinar will eventually payoff the war debt.
8. One of the authors of the currency exchange plan - Assistant Professor Dr. Fadel states in his documentation, “We must emphasize the extremely important issue is that if you remove three zeroes from the currency should not affect the actual value thereof to be trading in the old currency…”
9. In 2003 when the NID was introduced at it’s initial rate, the previous currency was in essence devalued taking all wealth from the country to prevent funding of terrorism. Raising the currencies value will in essence, return that wealth now that the GOI is stable and economic conditions have improved.
10. The CBI has stated “both currencies will co-exist” and the process will not change the “monetary value” of the dinar.
Ti] ANSWERS TO THE QUESTIONS (HOPEFULLY SIMPLIFIED :-)
1) "NO" - The world Governments (mainly the U.S.A.) that hold Billions / Trillions in Iraqi Dinar would never allow these 25K, 10K, 5K notes to become "invalid".
2) "NO" again - The 25K IQD will remain a 25K IQD - just the same as the US $10,000.00 note still remains a US $10,000.00 note.
Further to explain #2 above - the CBI when they refer to deleting the "Zeros" or the "000" they are talking about deleting them from circulation in the economy - just the same as the US Gov had our Fed Reserve pull all the currency above the $100.00 bill back in the 1970s.
Additionally, since the CBI will be removing these "Zeros"/"000" they will shrink the supply - Shabbs is going to shrink this supply by at least 7 Trillion, and perhaps even more. This shrinking of the supply against demand raises the value. And since there will be less supply with their Economy on the rebound and more oil being pumped than has been for Decades - this increases its net worth/value. Think of a currency as being similar to a company's stock shares!
Most of us really have a difficult time wrapping our head around this concept of purchasing 1,000,000 IQD for just $1,170.00 USD - and then seeing an "RV" a short-time later and suddenly "hitting the lottery" and becoming multi-millionaires!!! But, this is what has happened in the past (i.e. Kuwait) and will happen again and again!!!
This RV with the IQD is simply-put, really no different that purchasing a "penny stock" on the OTC Board, and a few weeks/months/years later that company announces they have the latest major cure for some major disease and the stock is suddenly trading on the NYSE or NASDAQ at $10+ USD!!! If you had a tens of thousands or even a million shares of that penny stock - you are now a $Millionaire - right?
Another example - I'll use is Apple Stock - 10 years ago (like the war on Iraq was roughly 10 years ago also) Apple was 'trashed' - the current CEO (former Pepsi CEO guy) drove the company into the ground trying to copy Microsoft's example of open architecture. The Apple stock traded around $10/share back then. Steve Jobs took over as CEO (i.e. same as a "new government leadership" for Iraq) and he turned the company around!!! Today Apple trades nearly at $500/share - that is incredible growth over these last 10 years - right!!!??? Similar to the turn-a-round that Iraq has had over the past Decade too!!!
Don't let the "talkers" out there drive you crazy - many have absolutely NOTHING "new" to say to you!!! So, to keep their fingers tapping on keyboards and their lips flapping on Conference Calls - some less scrupulous "Gurus" use nonsense and scare tactics to keep you "following" them!!! For what reason, who knows???!!!
In conclusion, remember don't panic and just keep it simple.... :-) Happy RVing!!!
[Darlene] thanks! ;)
[Chris] Scenario 2. Take the 1170 to 1 ratio and make it 1.17 to 1 by removing three zeros from the ratio. That would give us our $.86ish to 1IQD. They can then keep the face value of every dinar printed and RV at any desired amount. IMO
[calfcreek] My banker (boa) told me when it rvs that 25000dinar bill at 1to1 will be worth 25000usd @ 1to1 this is from my boa manager. I have already had my notes veriified by the same banker several weeks ago. In bank by book and black light. I have been working with this banker for over 9months. These notes were all from Safe Dinar. All current bank notes. For what its worth. Midwest BOA.
[Suhmdinar] In response. Listen to the mods. A simple lop with even a 2 to 1 ratio is still not enough to support their budget annually. Revalueing first has to be done before replacing the currency. Looking at the history and the way replacing a currency is done and keeping that in mind while matching it up to press on cbi wanting the new currency in, will take a year to effectively swap the currencies globally.
An increaseded rate enables them to usher in their econimic boom weve all read about. A lop first is not logical with so many countries holding dinar in reserved currency. I suggest you research past posts. Too much financial pressure not to substantially revalue (upward of at a minimum of 2 dinar per one dollar) just to make their 2012 budget even feasable. Relax, your investment is sound. Yippie
[Dennis] THERE IS ABSOLUTELY NO POSSIBILITY OF A LOP. Do you think the UST who is holding trillions of IQD would stand by and approve the reduction of their cache by 1000 times? Don't worry, our Dinars are worth face value regardless of what the RATE is.
[MAX] 1 IQD = $ 0.00086. DROPPING OFF 3 ZEROS WILL MAKE ONE IQD EQUAL TO $ 0.86. THAT CAN MAKE 1 IQD = $ 1.16.
THAT IS WHAT I THINK. THANX
Brent Summers 01/11/2012 18:25 So, does anyone know if the dinar we are holding is obselete or will be calculated as dinar with the three Zeros removed?
[Dee] Sort of lost being Canadian, where in the world will we get to CASH??? very very little said to us Canucks..starting to worry..any help would be appreciated~told by bankers santion against Iraq will prevent us from cashing and they (RBC) will not deal in it because the volatile state of Iraq...helpppppp
;micmoney] forex is forex, no matter what country you live in, it all depends on your bank. and many banks I have spoken to in Canada have stated they will take it if it shows up in their currency lists that are safe to trade.
[Larry] The zero's are dropped off the price you paid to purchase the dinars. which was .00086 or there abouts. So your dinar would then be worth 86cents us dollars per dinar you hold. So if you hold a million you would get 860,000.00 before tax's of course. I thought this was cleared up month's ago.See this would make the dinar close to the vaule of the dollar which would in turn hopefully get iraq citizens to use the dinar and not the dollar. this then would increase the value of the dinar as they use it,so don't rush to cash in.God bless the RV
I wish you were right--but I think your 25k dinar will be worth 75 usd.
[GEEZ] OK here goes.
Simple. Dropping of the 000's is the process of bringing value to the lower denominations. At the moment lower denoms are worth very very little. At 1170 IQD to 1 USD, could you imagine what it would be like to by a 6 pack of Pepsi? To make transactions, Iraqis would need wheel-barrels full of lower notes to buy things. In order to bring value to the lowers, CBI needs to bring in the larger notes (which they have been doing for some time). Bringing in the 000 notes reduces the supply in circulation. CBI brings these notes back to Iraq and puts the notes in a big box and takes them out of circulation never to see daylight again. The more money printed and in circulation, the less the value. The less currency in circulation the higher the value. Witness the USD. Print more money, lesser the value.
So, imagine the CBI has a bunch of little, highly skilled people that work in that box where all of the notes with the 000's are at and what they do is take scissors and cut each note up into smaller denominations, 1's, 5's 10's, 20's and 100's- like USD denominations They destroy the 000 notes but actually turn them into new notes! The 25000, 10000, 5000, and maybe the 1000 notes get destroyed but the value is still there, The value is transferred to the lower demons, Now, people can put the currency into their wallets and get rid of the wheel-barrel and start using it for gardening instead. The CBI can regulate how many of the lower denoms are put into circulation, allowing them to control inflation and value! By the way, the value in the currency is a reflection, or representation of the value of the assets of the county.
Does that make sense? Hope so.
[rbkbiz] Most have a good grasp on zero deleting!
Instead of another extended diatribe from me, just know that your Blessing is Coming Up!! Smile! Give Thanks!!! ;-)
[Alice Doyle] I would like some help for those of us that will not makes millions but maybe 1 million.What local banks in missouri and kansas will be able to cash in my dinar? I have called them and they all say no we will not be able to without sending it out. I need help or advise.
[tom3215] ...... Do not worry about a zero lop... Will not happen.... The powers that control all the Central Banks within the western Banking system,
(this does not include Russia, Turkey, China etc) are very careful NOT to do anything that will disrupt the public confidence in paper money. VERY CAREFUL. They do not want people to flock to silver and gold. What is more likely than a lop is a low revalue, to mop up all the large notes. Much like what was done when the Doha bank was Buying back dinar at .35 cents on the dinar (after conversion- and I personally talked to) and the 5 or 6 other ME countries that did the same. Soon will be our chance to turn in.
Keep in mind, The smoke and mirrors is that we are going to get 3 to 7 bucks per dinar. I believe it is possible but not likley for us. In the 7 year, 5 month, and 20 day dinar journey since I "bought in", is that most of us have lost all sense of reality. People are flying in outer space if we think we will turn $800 into 3 million.... not going to happen. Can we turn $800 bucks of dinar into $180,000 to
$350,000. YES. Remember, this has gone on longer than anyone imagined. It was supposed to be done over 4 years ago. Now they have printed to much, United States citizen ownership of dinar is over 3 % of all dinar printed.
Remember, one of the best rules in investing. " You many times have good hunches about market/ stock directions. However, they often just do not do perform to the degree that you expect them too."
The person, that sunk 20 to 200 grand in dinar will reap the kings ransom. The person, who stuck 1500 bucks should still be able to buy a nice house after taxes. For a couple of thousand dollars will
not likely retire for the rest of your life.....this is the truth.....
In the next 2 years when most have turned all the big bills in and they have been destroyed and demonitized, then you will see a second revalue to a much higher rate. Keep in mind, we the speculator, by design, have financed all the money base in the cbi, I repeat, by design. We are now just about finished with our part of the plan.
Let us pray that we can turn $800 into $80,000 which is 1000 times your investment........I advise everyone to temper their expectations....
to avoid what could be a bitter, bitter dissappointment when we do not get $3.00 to $5.00 dinar.
Regardess of all the intel from sources that "tickles Gods toes"....
This will happen as I have just fortold..... and the future will confirm what I have said.
[Jake] Thanks for the honest and sober note. Cheers and prayers to $7 a pop, but if your right, it'll be a lot easier to bear having heard this prior.
Still, like you said, 1000k return is pretty good
smitty 01/11/2012 21:36 what happened when kuwait revalued?
[jon] All that I have read this is going to be a lop. A 25000.00 bill is worth 25.00. The economy cannot absorb the outstanding 20 trillion in circulation with a RV at any rate. This is going to be a RD not a RV. That's a term the pumpers created.
[kris] That is exactly wait I have been worried about, Because thats what it is worth. And You times the 25.00 times what the new rate come out after. Or they dont do nothing and we lost our money and the dinar dealers are the ones that got rich.
[Tee] If I am correct, DROPPING THE ZEROS has been done before. If you notice, there are no no $1,000 bills and the worth hasn't changed. I feel our Dinar will still be the same and the newly printed money will have their own worth. They are merely getting the higher Dinar notes off the streets.
Also if I am correct, you may be able to exchange the larger Dinar for smaller Dinar and get the same amount you originally purchased. I believe you can do that right now.
[Mrsmoore2sing] What does IMHO or IMO mean?
[Marie] I'm new to this and may have missed something. Will the banks be charging fees to cash in the dinars?
[Chet Snow] Thank you one and all for these timely and mostly-valuable comments; especially thanks to msnewsman and tom3215. I am a dual-national with France (my wife is French) and in 1958 General de Gaulle did a LOP of the Franc where 100 old francs became 1 new franc. Everyone was required to turn in their old money within 12 months and show where their money came from - to get rid of counterfit bills and black market profiteers, common here before 1958... The CBI of Iraq has stated many times that a RS or RV of their dinar will NOT be a similar LOP but rather the 3x000 bills will be removed from circulation - most already have been inside Iraq, causing a big cash shortage there since 2010 - but dinar-holders will have a set time period (maybe 1 month, maybe 6 months or??) to turn in their big bills, receiving full value for them in foreign currency - US dollars, GB Pounds, Euros or other internationally exchanged currencies. The IQD will then become an internationally recognized and exchanged currency, fulfilling Iraq's pledges to the World Trade Organization, UN and others. The Date and Rate are still being hammered out but I think it's safe to say the exchange rate will be at least one IQD per US dollar. That would be fine by me! Go RV!
[Kris] M y fear is since they have already started changing out the currency before the rv , and since 25,000 dinar is only worth around 25 usd already. That 25,000 dinar worth 25.00 usd x what the Rv price. My 2mill dinars at 3.00 would be worth 6,000. How do we know thats not what will happen when the RV happens? because the 25,000 dinar isnt worth 25,000 usd in the first place only around 25.00 usd.