Responses To 7 Questions For Dinar Speculators - Iraqi Business News
August 29, 2012 at 2:03 pm
Excellent and much needed common sense article. The entire self-centered blinkered reality of the “Go RV!” crowd is based solely upon a “me and my banknotes” obsession on the back of suspension of disbelief & manufactured hype, and consistently ignoring the blatantly obvious larger global impossibility on the flip-side of the equation.
There’s no economic difference in the Iraqi Dinar became 1,000x stronger vs the $ in real-terms overnight, and the $ devaluing by 1,000x against a static Dinar. Hands up who thinks it’s a good thing if Obama declared he wil devalue the $ by 1,000x tomorrow against a country the USA hopes to trade more with? Yet it’s exactly the same thing!
Read More Link On Right
In both cases, America (and all other non-Iraqi’s on the planet) would suddenly find Iraqi products 1,000x more expensive to import, since 1170:1 (0.000855 $ per Dinar) to 1.17:1 (0.854 $ per Dinar) outside of a redenomination would mean today $1 buys 1170 Dinar and tomorrow it buys only 1.17 Dinar, so a 1170 Dinar exported Iraqi product ($1 real terms) would essentially leap up to $1,000 for Iraq to export and for Americans (all non-Iraqi’s) to import! Trade with Iraq would cease to exist and Iraq’s export economy would collapse as the abnormal 1000-fold out of whack exchange rate simply wouldn’t reflect any real-world market prices compared internationally whatsoever to any other currency ($, €, £, Yuan, Ruble, etc) and no-one would trade.
“Q1: If the dinar becomes 1,000 times more valuable, it will become 1,000 times more expensive to do business in Iraq.”
Indeed. To give a real-life example of how absurd the “Go RV!” crowd’s junk economics is:-
Say you’re a Jordanian businessman buying agricultural goods from Iraq (say 100 tons of Iraqi wheat at $345 per metric tonne for a total market value of $34,500). Current exchange rates are:-
1168:1 IQD vs USD
1647:1 IQD vs JOD
0.707:1 JOD vs USD
$345 global wheat price per metric tonne. This $34,500 global market price (for 100 tons) of wheat works out to be both 40,296,000 (40m) Iraqi Dinars and 24,391 Jordanian Dinars.
- Redenomination (“lop”) : If Iraq redenominates (“lops”), then the Dinar moves to approx 1.168 vs the USD and 1.65 vs the JOD. Price of wheat gets 3-zeroes lopped off (as does everything priced in Dinar) and wheat gets redenominated to 40,296 new Iraqi Dinars. Price in Jordan and the USA is still respectively 24,391 Jordanian Dinar’s and $34,500. All three currencies reflect the global free-market value of wheat. All the maths adds up and the equations all balance (as they ultimately have to).
- “Pumper RV”If Iraq “RV’s” 1,000x to match the $ 1.168:1 WITHOUT a redenomination simply by arbitrarily inventing a new peg (like only pumpers are claiming), then the Dinar moves to 1.168:1 vs the $ and 1.647:1 vs JOD, but the price of that wheat in IQD stays the same (30m Dinars) because it hasn’t been redenominated with a 3-zero lop and “RV’s” (external peg adjustments) affect nothing internally. USA’s 7 Jordan’s currencies still match the global market wheat price, but Iraq’s wheat price is now manipulated by an artificial “RV” peg which results it in being 1,000x higher than every other country on Earth.
So the Jordanian businessman now sits there in amusement after being asked to pay 24.4m JOD’s ($34.5m) for the same amount of wheat priced in Dinar that he can still buy from Turkey, Greece, Europe, Asia, S. America, N. America, Russia, Eastern Europe, etc, for same market valued 24.4k JOD’s / $34.5k due to Iraq’s fake, artificial, 1,000x out-of-whack-with-reality, anti-free market “RV” currency peg (that the “Go RV!” crowd are amusingly calling for without understanding exactly what it is…)
This is why the whole “RV” argument is 100% junk economics that sounds all fluffy and nice when it obsessively focuses solely on a sandboxed “me and my banknotes” isolated bubble, but collapses in an instant when you look at the real-world global flip-side to that adjustment (it would take 1,000x more $, €, £, Yuan, Rubles, etc, to buy new Dinar vs today for every single transaction with Iraq in the future and result in a 1,000x fold split between Iraq vs every other country in terms of real market prices for goods priced in Dinar). Iraq’s economy would collapse overnight as would any trust in the Dinar as a serious currency both inside and outside Iraq.
Those people shouting nonsensical “everyone’s a winner” slogans are just underscoring a chronic lack of education as Forex is a zero-sum game. For you to sell Dinars for Dollars at a 1:x rate, means someone on the flipside of that equation is going to have to buy your Dinars and sell you their for Dollars at inverse x:1, and no-one on the planet (especially bankers) will pay 1,000x more for something tomorrow than today, any more than you’d sell someone your car for $10k then offer to buy it back at $10m (whilst the same brand of 2nd hand cars were still $10k equivalents in every other countries currency), even if the “RV” were real (which it quite simply isn’t – just a fantasy “what if” that got out of control and hijacked by a few conmen and “pied piper” pumpers who’ve developed a cult following out of empty feel good promises, maths that don’t add up, a whole string of excuses, absurd redefinitions of clear-cut financial terms, several years worth of failed weekly predictions and weekly backpedalling)…
August 29, 2012 at 3:40 pm
“3. If there was any possibility of a 1,000x revaluation, would dinar sellers be so keen to sell their stock to you? Is it possible that they think their mark-up is the best profit they can make?”
Just to add : Read this for the current scale of Dinar mis-selling rip-offs:-
Dinar “traders” aren’t making millions from holding Dinar, they’re making millions from getting rid of them with a mark-up ranging from 20% to a jaw-dropping 1400%!
“5. & 6. The 1,000x rumour has been circulating for many years, but the forex markets have not reacted by driving up dinar prices significantly. On what basis do you believe you’re more “in the know” than the market?”
All advance fee fraud variant mis-selling scams (“give me $1,000 money today and someone else will come along and given you $1m in future”) rely on targeting people who feel special about being privy to “secret intel” (ie, manufactured made-up rumors & gossip written by salesmen under different “sock-puppet” pseudonyms) and are new to Forex trading. In real life, if someone said “Canada’s $ will jump 1000x on April 29th” (and it didn’t), “Russia’s Ruble will jump 1000x on New Year’s Eve” (and it didn’t), etc, after even 5 or 6 of those (let alone several hundred over 6-7 years), under normal circumstance you’d deem them either well meaning but delusional or a fraud & compulsive liar.
But “secret intel” is the “glue” that ultimately holds these scams together since it naturally leads to a permanent suspension of disbelief that shuts down a willingness to ask hard questions and expect serious answers beyond the scammer hiding behind imaginary “sources” (as if they’re just “waiting” to tell you the “truth”…)
Some are so suckered into it they even see the guru’s as “just as much a victim as I am”. It’s almost like a form of online “Stockholm Syndrome”. Same with religion and the old “But he’s a Christian and couldn’t possibly lie” chestnut about those who hold prayers online one minute then hurl foul mouthed abuse at callers who ask “difficult” questions the next or bring “unwelcome facts” to the call the next :-)
This is pretty much why people think they’re more “in the know” – 1. A false belief in “secret intel”, and 2. A sustained suspension of disbelief that leads them to never really question the existence of 1. Some are also so financially desperate they simply don’t want to ask any questions at all and withdraw into their “inner world”.
As for what the professional serious forex market thinks, try this from XE (most popular FX site and one of the top 100 daily visited websites in the world) : “In 2010, the Central Bank of Iraq announced their plans to redenominate the Iraqi Dinar to ease cash transactions.
The intention would be to drop three zeros from the nominal value of bank notes; but the actual value of the dinar would remain unchanged. That would mean that 1,000 IQD (pre-redenomination) and 1 dinar (post-redenomination) would both be worth the same amount in US Dollars.”
“6 & 7. Does scepticism of massive gains from the dinar make you angry? If so, and if you think you’re going to make 1,000 times your money, what is the reason for your anger?” Do you seek information that confirms your opinion, and dismiss information that challenges your opinion?”
Two words : “confirmation bias”. Many amateur first-timers are simply seeking positive reinforcement rather than the truth. That’s why some Dinar-only boards end up turning into cults wrapped up in “appeal to authority” howling / calls for censorship (as a substitute for debate), whereas professional business / professional Forex forums tend to actually talk about the facts of the currency and not obsess about people or personalities.
“We hope these questions will help speculators and potential speculators in their decision making.”
Anything that gets people thinking rather than just continuing to “open wide and swallow what the nameless stranger on a forum says” is a good thing! Again – congrats on a great article and a great site.
August 29, 2012 at 3:47 pm
When I served in Iraq (1st Infantry Div), some people got well and truly sucked into this scam. Some of the talk is so convincing (especially in the earlier years before the recent clearer Iraqi TV broadcasts on the subject). The three mis-selling tactics are mostly the same though:-
Guide to Dinar Pumpers:-
1. Sell “The Enticement” – “You buy a thousand and get a million. For free.” Who doesn’t like the sound of that?
2. Sell “The Secret”- “RV next week”, “I’ve got a source I can’t reveal that says…”, blah, blah, You’ve heard it all before. This mostly relies on accepting something blindly simply because they want to believe it and suspension of common sense (that something as large as banknote changeover for a whole country will be done ‘in secret’ and pop out of nowhere and that American Internet Radio hosts will know about it before Iraqi’s inside Iraq…)
3. Sell “The Stage Props” – These are typically genuine facts that sound great but are irrelevant to the Dinar’s value. “Unemployment is down”, “oil production is up 2%”, “electricity supply more stable”, “fewer bombs”, etc. “Verify it yourself”. You do and think “we’ll he’s telling the truth about those, so he must be telling the truth about the rest, so the next time he makes a claim, eg, “Iraq’s money supply is 3tn Dinar” then I won’t bother because I know he’s “honest”". This stage is more of a confidence trick and is based on a string of “Straw Men” / old-fashioned bluff.
As said I’ve been to Iraq. They have TV broadcasts on Alsumuria TV (their Arabic language TV channel) and they talk about the redenomination all the time – explaining how the prices will get lopped and how you will hand in 1,000 current notes and get 1 new note back but it will be worth 1,000x more.
Iraqi’s already know the truth – it’s American’s who’ve never been to Iraq that don’t…
John Richardson says:
August 29, 2012 at 4:20 pm
Yup. Superb as ever Barry. The “RV” argument is comical because changing a currency’s real international value will obviously affect future purchases of goods in that currency. Same with the “Iraq wants a stronger currency because it plans to export more”. That’s completely stupid and a*s-backward. Why do people think export oriented China deliberately *undervalues* their currency? This really needs to be taught in schools as it’s shocking how many grown adults still don’t understand even the basics:-
“Exchange Rates and Exchange: How Money Affects Trade” -
“In the international market today, the supply and demand for currencies and the resulting relative values of currencies can affect the demand for imports and exports. For example, if we have a strong dollar, the dollar is very valuable compared to other currencies; other currencies appear very inexpensive to us. Because we can buy the currency more cheaply, the prices of the country’s products appear lower to us.
An important negative effect of the strong dollar, however, exists for American exporters. When we have a strong dollar, buyers from other countries see our currency as being very expensive; they must give up more of their currency to buy dollars.
As a result, the prices of our products appear more expensive to them. Therefore, the quantity demanded of our exports falls. This harms U.S. exporters, such as computer companies, auto manufacturers, and farmers, because they must lower their prices to try to attract demand for their products, resulting in lower profits and possibly forcing some firms out of business completely. The resulting impact of a strong dollar is a trade deficit. Imports rise, while exports fall.”
Swap Dollar for Dinar and it’s all the same. Stronger Dinar = Iraq’s export market gets hammered (because Iraq’s products will become more expensive and less competitive in real $ values vs peer Gulf states). And as said, an “RV” that essentially demands the entire world pay 1,000x more for all future Dinar & Dinar priced goods would turn the Dinar into a junk currency (like North Korea’s) virtually overnight…
In 10-20 years after Iraq has redenominated, some people will look back and think “How the hell could we have fallen for that one?” Ah, well. Have a good day.
August 29, 2012 at 5:04 pm
The dinar crowd is going to laugh at you guys for your ignorance.
1.Everyone knows that they are going to reduce prices of everything 1000 times at the same time they RV the currency 1000 times. In other words everything will get lopped/redenominated 3 zeros except the currency, which will magically just straight RV 1000 times.
2. They don’t think anyone has to buy their dinar. They have been hoodwinked into believing the Fed will buy back all this dinar and keep it as FX reserves and to buy oil. Then use it for fractional banking!! Fractional banking I tell you !! LOL
3. Dinar sellers are simply making more money so they can buy more dinar.
This is too easy… I should be a pumper.
4. They have been told the big boys don’t like to take a risk. The big boys will all flock in and buy after the redenomination. Cramer said buy dinar!!!
5. It hasn’t gone up based on the rumor because it’s a worthless currency, who wants it? Once it’s given value, 100,000% RV, then everyone will want it.
6. Their mad because you are a know it all. And no one knows what will happen with the dinar.
7. They seek the truth. The truth from Not-So-Breitling, Krapperoni, Franky, Dinar Daddy and his really good friend Okie Oil Man, Randy, Adam Montana and the many other economic masterminds running dinar sites draining them of every penny possible.
August 29, 2012 at 7:21 pm
How old do that is telling people that it was all a scam. The same government agencies including the U.S. Department, BBB, Financial intituciones, FinCEN, Treasury, bank executives, experts in Japan and economies and even Iraq itself from the CBI have been warning the public about how to operate these scammers with their tales of roads that the dinar will increase its value, which is the revaluation morning, blah blah blah, all lies.
Their whole scheme scam has always been aimed at an audience, the sucker who does not know anything about economics and investments. And everything to keep their businesses with liquidity. The following phrases as Dianartrade, DinarBanker, Tampadinar, Dinarespr and many more who were dedicated to the sale and purchase of rare coins and gurus accomplices, deceivers of rumors and her backup singers are those who have made money.
Everything was a fraudulent scheme well premeditated sales strategies under epeculaciones false, unfounded rumors, manipulated and false news. Everything is evidenced for missing and they think they do not reach their day are arrested and sentenced to so all who were scammed can feel assured that if they can not get their money for at least the scammers do not enjoy it. And if not, may God take confessed. Thanks for the excellent article IBN and hope and many people believe consciousness.
August 29, 2012 at 8:10 pm
This article, along with others dating back to April 1 of this year by “The Iraq Business Team” make me wonder. If this topic is so useless to discuss, and I believe it is, why as stated in the beginning of this article….. “Iraq Business News is not in a position to give investment advice.
Our mission is to provide our readers with the highest quality information on the business and economy of Iraq”……Why does the topic continue to be discussed?
For a news agency full of articles that showcase Iraq as a place where the economy is booming like no other on the planet….where every country is investing yet entirely exist on a currency of another country (USA), it seems strange that if there was no news about currency reform to report there would be no reason for an agency as outstanding as Iraq Business News to waste time answering such questions. Just a thought.
Those who believe in a whirlwind economic recovery for this country have little time invested in investing. The expectation of Iraq saving the world is as far fetched as the US Stock Market doing the same.
August 29, 2012 at 8:57 pm
Mike, the article also says …….. hope this information will be useful for key decision makers in business in Iraq, and all who are interested in the country’s development, players and people involved in get-rich-quick schemes / scams are not our target readers.
1,000% w/u The expectation of Iraq saving the world is as far fetched as the US Stock Market doing the same. SCAM SCAM SCAM.Enter this link and read as the NP selling dinars compared with the movie thieves HIT AN RUN.
Read as ironically one of the vendors dinars in U.S., Dinartrade in their answers mocks its own customers. This article itself leaves a lot to think about. If I were an investor dinars, would run to give me back my money.
At dealer DinarTrade, for example, buying 1 million dinars will cost $1,020, according to the website. But selling them back will earn you just $810, said DinarTrade founder Ali Agha, citing the unfavorable exchange rate by the Central Bank of Iraq.
MORE COMMENTS / RESPONSES CAN BE FOUND AT THIS LINK INCLUDING SWFLORIDAGUY AND MILNDOLLARBABE -
For comment section, please scroll down. Thank you.
This website uses marketing and tracking technologies. Opting out of this will opt you out of all cookies, except for those needed to run the website. Note that some products may not work as well without tracking cookies.Opt Out of Cookies