GregHi Poses Thoughts and Question: Reading several articles in the past, the CBI and economist always say the deleting of the 3 zero's will deplete the total money supply from Trillions of dinars to Billions of dinars.
My question is: How do you change your currency from Trillions of Dinars to Billions of dinars? I am not the sharpest knife in the drawer, that is why I am throwing out this question.
Scenario 1)Let's say I am an Iraqi with a 25,000 dinar note and the IQD RV's to 1 Dinar = $1 USD. (TO make the math simple). Now I can go and buy a car with my 25,000 dinar note since the car is worth 25,000 Dinar or $25,000 USD.
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I have now bought a car and have 0 money left, however, the car dealer now has 25,000 Dinars that he can buy another car to sell. The Dinar does not deplete, it just changes hands to someone else.
Scenario 2) Same as number 1, I am an Iraqi with 25,000 Dinar and I take my dinar to a bank where it is turned into digital currency in my bank account. The bank keeps my 25,000 dinar note but I have 25,000 dinar in a bank account that is attached to a debit card which I buy 25,000 dinars worth of goods with.
Again, the overall worth never goes from Trillions to Billions, it simply changes hands as people buy goods and services, and those people buy other things with the money they made.
Any comments would be appreciated to enlighten my feeble mind..
Optimus Replies: Well Greg, This question has most certainly placed "The elephant in the room." (Meaning: An important and obvious topic, which everyone present is aware of, but which isn't discussed, as such discussion is considered to be uncomfortable.)
I looked up the meaning of the above phrase, and it most certainly applies in this instance, for many people are viewing your question, but are hesitant to respond with a comment.
The most obvious answer to this, is a redenomination. Taking the 3 zeros off the currency, would redenominate a 25,000 IQD, to be a 25 IQD. Trillions suddenly become billions. We would lose no value with the IQD that we hold, but the hopes of a 1000% gain, would be obliterated. Now this forum is a No L*P Zone, so we don't want to spend much time debating, if this particular scenario could happen.
I personally hope articles like the ones you are referring to, are translated poorly, or maybe even written to mis-lead the general population.
If anyone else has another explanation for Greg... Please chime in. Have a nice day everyone!
GregHi Replies: Thanks Prime.. I'm not wanting to start any trouble, in fact, if the mods want to remove the post, please do so.
I'm just trying to think it through and thought maybe I was missing something that somebody could clarify for me. I used to think the big notes would end up in the CBI and just be removed from circulation, but the more I think about it, the large notes would just be turned into digital currency of the same value in somebody's bank account, so, so much for that idea...
Anyway, thanks for posting! Always enjoy reading your posts Prime!