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Iraqi Dinar Revaluation Enthusiasts are Unaware of Bernie Madoff’s Fame

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Iraqi Dinar Revaluation Enthusiasts are Unaware of Bernie Madoff’s Fame

By Tom Cleveland, market analyst for Forex Traders, exclusively for Iraq Business News. Forextraders.com is an online resource for the foreign exchange market.

“Buy on the rumor, sell on the news” is a time-honored investment phrase that is oftentimes more confusing than the wisdom it attempts to impart. The meaning relates primarily to company securities that appreciate in expectation of a big news announcement. Early speculation drives ups the price, such that when the real announcement is made, most investors sell on the news to take their profits, often driving the price down, rather than up. “Pump and Dump” stock frauds also follow a similar scenario, but in this case, criminals benefit and investors lose.

A similar situation has been building for years, some say as many as eight years, surrounding the potential “revaluation” of the Iraqi Dinar. As the rumor would have it, the Iraqi economy has stabilized, and the potential for enormous foreign currency reserves from increased oil exports will drive the value of the Dinar to unconscious levels versus the U.S Dollar. The government authorities will be forced to revalue the currency from 1,175 to 3 per Dollar, resulting in an outrageous windfall for anyone owning stockpiles of the currency. Does something here sound a little too good to be true?

In actuality, the Iraqi Dinar, or “IQD”, is a “controlled” currency. The central bank of Iraq determines the exchange rate and must support that rate by maintaining adequate foreign currency reserves to handle capital flows across its borders. The IMF permits countries with a transitional economy to implement currency controls in order to stabilize their economy during its redevelopment phase. Presently, international banks will not accept the Dinar, and it is not traded on any forex exchange. Actual purchases can be made through currency dealers that have been authorized to buy and sell banknotes that are already in circulation.

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702 Responses to “Iraqi Dinar Revaluation Enthusiasts are Unaware of Bernie Madoff’s Fame”

  1. Stew says:

    Thanks Rich… I found it just from the title in the link.
    It is clearly an article talking about redenomination/lop. Don’t you think if it was about a 100,000% increase in value he would have mentioned that in some way?

    The first quote here form the article CLEARLY says the value of the old currency will not be affected.

    “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 and gradually withdrawn until the end of 2009.”

    The next quotes talk about how other countries have deleted zeros, and how Iran also plans to delete zeros in the future. These countries redenominated/lopped. There was no RV of the existing currency. No country has ever done what these scammers are claiming will happen. Kaperoni, Brietling, and all the other self proclaimed gurus are either complete idiots… or more likely scam artist. Neither is good for your wallet.

    “experiences of other countries:
    Moved from other countries suffered hyperinflation a similar course, particularly in Russia in the nineties of the last century. Turkey has also withdrawn (6) zeros from its currency without prejudice to the true value.”

    “Sudan is also the issuance of a law removing three zeros from the Sudanese pound coin, the sixth of its kind since Sudan’s independence in 1956.”

    “In addition, Iran has also been studying the removal of three zeros from the currency notes of the country in which the value fell because of high rates of inflation.”

  2. rich says:

    also stew read thisThe deletion process will be on according to the following: it becomes the U.S. dollar at today’s prices = 1200 fils in the sense that the U.S. $ 100 = 120 dinars, which is very suitable for such a stage that the government control inflation and keep it at reasonable levels

  3. Stew says:

    Yes… what he’s saying is that dinar is currently at 1200 (really 1166), so the NEW dinar, the new currency they keep talking about will be 1200 fils, or same thing as 1.2 dinars.
    That’s standard lop procedure.
    The two currencies will coexist for a period of time. If an Iraqi walks into a store and wants to buy a can of coke it will have two prices on it. If that can of coke currently cost 1500 dinars, he will be able to buy it with either 1500 of the current dinar, or he can use 1.5 of the new dinar. If he gives 5000 current dinar for the coke, the shop owner could give him 3,500 current dinars or 3.5 of the new dinars back in change. That’s how it will work during the exchange period. Once that is over then only the new dinar will be accepted.
    It’s very simple. One new dinar will equal 1000 old dinar. That’s deleting 3 zeros.
    Iraq currently has 30 trillion dinar in circulation. It’s worth about $30 billion.
    After the exchange is done, they will have 30 billion dinar in circulation, still worth about $30. Dinar in circulation reduced from 30 trillion to 30 billion. Again, that’s 3 zeros deleted.
    This is standard procedure and has been done over 100 times in different countries over the last 30 to 40 years. Nobody got rich off of any of these events. Iraq has stated they will be not be different.

  4. rich says:

    ok stew so how does this entice the iraqi people to wanna use the dinar they have said many times that they will improve their purchasing power they have to otherwise iraqi’s wont wanna use it

  5. Stew says:

    Rich… if these articles were saying what Kap and Breitling and others are claiming. You wouldn’t be able to get your hands on any dinar. The demand for them would have skyrocketed. If it was true that a 25,000 dinar note was going to be worth almost $25,000 in the near future, then people would be offering over $20,000 to buy them right now. It would still be a 25% increase and people/speculators would fall all over themselves for a return like that. It’s silly to believe Iraq is announcing a 100,000% increase in the value, yet they can still be bought at the current price.
    Breitling always like to tell people to watch what’s happening, read what the CBI is saying. You can see what’s happening. The CBI is announcing deletion of 3 zeros. The dinar is staying at exactly the same rate. In fact there was pressure on the rate to go down recently. They had to increase the rate to 1166 to try to convince people of the worth of the dinar. Banks were dumping record numbers of dinars at the auctions. If they were truly announcing a 100,000% increase there would be chaos. People would be murdering their neighbors to get dinar. It would be worlwide news. Heck… the new I-phone releases cause more chaos than this supposed RV announcment. That facts are that nothin like this is happening. That’s because most understand that it’s a simple redenomination that is being announced. They will trade in the current dinar for new dinar and will not lose or gain value. So it’s not a big deal… your eyes should be telling you that’s what’s happening over there.

  6. rich says:

    stew they are just bringing in the notes with 3 zeros they are not going to drop the value of a 25 k note

  7. Stew says:

    Rich… the simple act of giving them a currency that is almost equal in value to US dollar should increase demand for it. It a physiological thing, people are kinda ashamed of their currency, replace it one of equal value and that goes away. They will also give them bigger denominations. The biggest they have now is barely over $20. They have stated they will add a 50, 100, and 200. That will allow them to complete larger transactions more easily and they wont have to rely on the dollar so much. Both of these things should increase demand for the dinar and lower demand for the dollar. If they continue to improve then they should be able to implement small increases in the value in the future. That’s the increased purchasing power. SMALL increase just like all other countries implement if called for. None of this fantasy 100,000% increase. That was NEVER ever even considered or thought about. It was all dinar pumper made up fantasy.

  8. Stew says:

    “they are just bringing in the notes with 3 zeros they are not going to drop the value of a 25 k note”

    This is Breitling crap and makes no sense. Explain to me in a little detail exactly what you (or Breitling) are claiming here. The quote I posted above clearly stated that they are replacing all the notes… right down to the 250.

  9. rich says:

    guess we shall see stew! lol their not lopping their currency if they were their wouldnt be aneed for the lower denoms

  10. rich says:

    if they were doing away with their entire currency they surely could have done this by now and theres no article that says they are doing that

  11. Stew says:

    “their not lopping their currency if they were their wouldnt be a need for the lower denoms”

    Shaking my head… Rich, that statement makes absolutely no sense and make me wonder if you have any idea at all what a redenomination/lop even is.
    A redenomination/lop is the act of replacing large denomination notes with lower denomination notes that have the same value.
    How you come to the conclusion that they wouldn’t need lower demons to lop is amusing at best.
    It’s like saying the US will replace all gas cars with electric cars… but we don’t need electric cars to do it.

    You still didn’t explain how your (or Breitling’s) silly claim works. I’m guessing you really don’t know… it’s just what you heard.
    Similar to “they don’t need lower denoms to lop”…. lol

  12. rich says:

    i know what a lop is stew but if nothing is really gonna change as fa as value why dont they have lower denoms out now then

  13. Stew says:

    “BAGHDAD — The Iraqi Central Bank is planning to redenominate the national currency in an effort to ease transactions and allow people to carry less paper money, RFE/RL’s Radio Free Iraq (RFI) reports.”

    “REUTERS:
    BAGHDAD: Iraq plans to redenominate its dinar currency…..”

    “STATEMENT: The Central Bank of Iraq has announced their plans to redenominate the Iraqi Dinar to ease cash transactions.”

    “According to a report from Al Sumaria News, Iraq’s Central Bank announced on Thursday that it is planning to delete the zeros from its currency, the Iraqi dinar.”

    that took about 10 seconds….
    There are hundreds of stories out that state they plan to redenominate/restructure/delete zeros (all the same) from the Iraqi Dinar. That implies the entire currency. I can link hundreds of these. Can you find me one single article that states it will only be the bigger notes. There are articles where they use the 25k or 10k note as examples of what will happen, but I guarantee you there is not one legitimate article that states or implies that it will only be the bigger notes as the scammers claim.

  14. rich says:

    stew im going to get the most convincing article i can get my hands on for you might take a few hours or a day to get it but i will

  15. rich says:

    stew thats easy i can get you plenty of articles that say they are just talking about the notes with 3 zeros give me some time

  16. Stew says:

    Rich… haven’t you read the articles. They have been doing studies, they have been submitting it for approval from Parliment. This all takes time. It’s perfectly normal for countries to discuss and plan redenominations/lops for years in advance of actually doing it. They still have to get it printed. They still have to educate the people of Iraq (and lot’s of soon to be ticked off speculators) how the proceedure will work.
    Again… the new currency, and only the new currency will have a new value. The current dinar will not change in value (might incease up to 1000:1 before the lop). It will take 1000 current dinar to get one new dinar.
    You again are arguing against something that has happened 100 or so times in the last 40 or so years. It’s a common event.

  17. Stew says:

    You will not find an article that say it’s ONLY the big notes. Yes… there are planty of articles that use a big note as an example. HUGE difference.

  18. rich says:

    stew you havent seen articles that actually say “deleting of the 3 zeros? ive seen many of them and they do say the 3 zero notes thats all no other bills are affected

  19. Stew says:

    Again Rich… I just posted this.
    “According to a report from Al Sumaria News, Iraq’s Central Bank announced on Thursday that it is planning to delete the zeros from its currency, the Iraqi dinar.”

    FROM IT’S CURRENCY, THE IRAQI DINAR.

    That does not mean that they are just deleting notes with 3 zeros on them. That’s extremely tortured logic to think that. Again… look at history… EVERY TIME, not some, EVERY TIME a country has ever deleted zeros from it’s currency, and that’s 100 or so times in recent history that you could research. EVERY one of those times it applies to the entire currency, all denominatios, no exceptions, not once , not ever.

  20. Stew says:

    And again… from the latest delet 3 zero article out just today.

    “confirming that the »Delete the zeros will cancel the usual small currency in circulation by the local class (250) such as rent, for example”

  21. rich says:

    stew ill show you your wrong its just the 3 zero notes

  22. Stew says:

    Rich… I found all these quotes in news stories on the internet. All of these refer to removing, deleting, knocking zeros off of the currency. Same as Iraq describes what they are doing.
    All of these countries: Zimbabwe, Turkey, North Korea, Russia, Mexico, Paraguay, Bolivia, Ghana, Romania, Georgia… they all lopped. None of them did as you claim and only removed certain notes. They all replaced the entire currency.

    “Zimbabwe’s bank chief plans new currency reforms _ removing “more zeros” from the plummeting Zimbabwe dollar”

    “New Turkish Lira. As of 1st of January 2005, six zeroes have been deleted from our currency and YTL”

    “The North Korean government recently knocked two zeros off its currency, the won.”

    “Yeltsin to Lop 3 Zeros Off Ruble in Currency Reform”

    “New pesos: Mexico will trim three zeros off its currency”

    “The Central Bank of Paraguay (BCP) has created the Currency Revaluation Project to improve the efficiency of financial transactions by eliminating three zeros from the guaraní.”

    “Bolivia, which in 1985 had the world’s highest inflation rate, introduce a new currency today, trimming six zeros off its peso.”

    “Azerbaijan. Georgia. … told RFI that a plan has been made to remove three zeros from the currency and phase out the current banknotes late this year”

    “Ghana recently knocked off four zeros from its old currency and introduced a new currency”

    “Romania is to relaunch its currency, knocking four zeros off the leu”

    Every one of these was a lop Rich. They replaced all notes. None of these did they only replace some notes.

  23. rich says:

    and ill bet if you checked stew all those countries they had problems with inflation and doesnt have going for them what iraq has

  24. Stew says:

    LOL… that’s funny Rich. So the dinar fell in value to 3000:1 and you claim they didn’t have inflation.

    “This report was originally prepared at the request of the Senate Committee on Foreign Relations. With the Committee’s permission, it is being made generally available for the use of Members.”

    Inflation: During the 1990s, a period of hyperinflation occurred. The government continued to print money to meet expenditures while economic sanctions shut off the supply of imported goods leading to a classical monetary overhang. A yearly inflation rate of upwards of 2,000% per cent was reported in open market food prices between 1990-1991.36 Another source estimated that inflation increased 5,000% between 1990and 1995.

    Simply put they had massive inflation during the 90s and early 2000’s

  25. hookahman says:

    Stewie…

    Iraq has allowed people outside of their country for the last 8 years or so to speculate on their currency, they have benefited by being able to say and having the world now recognize that they have a strong dinar (the demand for the dinar & Christina Lagarde SAID SO) and ironically, this is greatly due to the fact that there are a lot of online pumpers. Now for every positive, there’s a negative. The negative for Iraq is they must honor their currency whether they re-denominate or not.

    Why they won’t re-denominate? There would be a great demand for everyone outside of Iraq to cash out and again they must honor the currency that they have issued. A lot of Dinar has been sold over these 8-9 years and there are serious consequences for Iraq or any nation if they won’t honor their issued currency. This is also the same reason why anyone should not expect a ridiculous overnight RV…

    It does not take a country 8 years to understand there is an imbalance in their exchange rate to the dollar. They knew that all along. Also, if they wanted to RD they could have done this sooner. An RD is a way easy way out and it could have been rectified in 2004 when they issued the NID but the IMF and the rest of the world wasn’t going to let Iraq off the hook for what Sadam had created. They worked the inflation down but now its been a couple of years since then, so why haven’t they re-dneominated? :-)

    This dancing between the central bank and the GOI over the three zeros is purely political crap, this is not a difficult issue to understand since the situation has changed very little for Iraq in all of this time. In the end the GOI will gain credibility and the central bank will take the hit because the GOI will tell the central bank NO to re-denomination.

    The main reason why it has played out like this is because it causes fear to their masses which manifests itself by the action of the masses to run to the dollar and also a firm decision for no RD would give credibility to the GOI which will contribute to political/security which IS IMPORTANT.

    The central bank of iraq is in charge of the country’s currency and does not fall under direct authority of the GOI. CBI stopped the dinar from appreciating years ago and have now allowed it to move up 4 dinars in value. Okay big deal. Its the first time in 4 years they have done this but more importantly, they did not need the blessing of the GOI to change the exchange rate and they have the support of the U.S. and IMF.

    They have the support of our US dollar which is another reason why there is no CLEAR NEED to re-denominate. Please see their daily currency auctions. They have been regularly buying 200 million daily for the last few months.

    What other country in the world that’s not china does this???

    As many other’s believe the only way out for Iraq is contraction of their m2 through open market strategies and naturally updating their exchange rate as money is removed. Since they are in a rebuilding phase and they need more foreign investment for their private sector this is a perfect way to to get this done.

    A re-denomination or a crazy RV = SELL OFF and uncertain future interest in the Iraqi Dinar. Iraq at this stage can not afford this.

    If you look at turkey russia brazil or any country that has re-denominated, did they allow or was their ever heavy speculation of the likes that we have seen for Iraq towards their own currency? NOPE.

    Were those countries purchasing 200 million dollars a day in their own currency auctions? Probably not.

    With Iraq having a poor stagnant economy for many years since we invaded, have you ever wondered why their M2/M1 just kept increasing month to month? Year to year? I can only remember of one month where it fell bellow where it was at the previous month. People purchasing dinars contributed to this…

    Next to oil, I would venture to say that Iraq’s greatest export to the world is their currency.

    Exporting their currency? Who does that remind you of?

    Well it reminds me of the United States of America

    Babylon will rise again

  26. Mark Buchanan says:

    when will the dinar RV? who will be buying the dinar back since the bank First Convenience , who sold it to me says they will not be buying it back, I have $700000 worth of Dinar, what will it be valued at and when can I cash in?

  27. hookahman says:

    Mark you will have to wait on Iraq to rebuild and for their economy to grow before the dinar exchange rate will increase in value but don’t worry it will.

    Think about this, why would Iraq revalue their currency at something like a dollar when they could revalue it at less than a penny and possibly get the same result of you turning in the money?

    That’s what I never understood of the RV, they can not pay for us. People say they have oil and yes they do but its still in the ground. Their M2 is 69 or 70trillion dinar now….TRILLION….your going to turn the value of the dinar equal to the dollar or more? You will instantly inject currency equivalent to 70 trillion dollars into the world? I don’t even know if there is 70 trillion dollars total in the world to make that stick. Iraq is a muslim nation they practice full reserve banking ie Islamic banking. They back their currency by 100%.
    I don’t expect them to just abandon this way of banking. Their currency reserves that gives their money their current value is 60 billion dollars which is a lot.

    Billions of dollars backing Trillions of dinars…

    But Open market strategies where currency is removed from the economy through the sale of government securities is how the dinar exchange rate can rise. Just know that investor confidence is crucial to their success and they won’t do anything to disturb this because there is no need to.

    But if the dinar were to make a come back. It would show a great comeback for Iraq and it will make things much easier for Iraq who has struggled the past few years to attract foreign investment.

  28. rich says:

    hook they are gonna have to do soemthing to get peeps in iraq to wanna use dinar again make it enticing for them to use it otherwise they will keep using usd they have had symposiums telling the peeps what they are going to do and also iraq does not care about the dinar outside of their country this whole thing is about the currency inside their country and they have said that their peeps would have more purchasing power with their money

  29. Stew says:

    So Hookaman… you think all these delete 3 zero articles are just a smokescreen?
    Starting in the summer of 2006 when they first announced they would like to redenominated the dinar. The minister of finance pushed for a couple years to get the CBI to agree. The CBI then decided they wanted to redenominate. They then did multiple studies, submitted the plans to Parliament and Ministries for approval. All the talk of it finally happening in 2013. The 3 phases. The plan to print new currency with 3 languages on it. The new 50, 100, 200 dinar bills and coins to be introduced. 100s of articles discussing this over the years… you think that’s all just for show? For what purpose again? Remember this has happened about 100 times in recent years.
    As for all that cash leaving Iraq… they have used the word “smuggled” to describe this money. Iraq law forbids all this cash to have left the country. Don’t be surprised if they bring that fact up once the redenomination process starts, making it hard to get “smuggled” cash back into Iraq for exchange.

  30. rich says:

    Sam-I-Am
    Well, it appears you are going to great lengths to convince people your re-denomination theory is correct. To go so far now to even list JayP and yourself (Chuckles) as one of the “ones to listen to” haha. Interviewing even the President would be a waste of time in my book if he has not done his homework on this investment. Your latest, may have a business degree in accounting finance, but it still does not make him an authority on the dinar without doing the proper investigative research. I can bring experts as well in various fields to speak there opinion (such as Bob the DinarAlert site owner) who is a one of the top brokers in the nation and a self made millionaire to also state that this is a RV, but i don’t, because event though he believes this, he does not spend the time reading and deciphering articles as i do because he trusts my skills. Therefore, his view is simply that…a view.
    My recommendation to you is to stop trying to convince yourself its a re-denomination by bringing such interviews to your blog, but to do the actual do diligence yourself by reading as many articles, documents, etc. as you can and draw a factual conclusion. You then will know this is RV and not a RD.
    Your recent post, including me on your BS list has earned YOU your own Douche Award. If you read just one of my chats, you would know that each and everyone of them is backed up by factual information (usually quotes) from various articles or documents. And if you followed my research over the past year, you would know i am the only researcher who has proven factual information on this investment. Here are a few last year alone…
    1. What delete 3 zeros means really means
    2. Provided photographs from summer education dinar symposiums
    3. Confirmed that Iraq would not achieve accession to the WTO in 2011
    4. Documented the World Banks roll in the RV (including the financing of the information campaign to the Iraqi people articles and symposiums)
    5. How the RV fits in the overall banking reforms and economic reforms
    6. Clearly stated in Oct that parliament was the key and the issues with parliament are preventing this from occuring.
    7. That Iraq was scared to pass the economic reforms needed to expedite the move to a free market economy and give Shabibi the support he needs to RV the currency (read my 4 part chat titled “the truth and reality of the Iraqi Government”).
    8. Most recently the information from parliament pertaining to the phases of the delete 3 zero process and where we sit in that process (phase 2)
    9. And today, that the RV cannot or will not happen till after the budget is passed as parliament has stated they will NOT take up passing economic laws until after the budget is passed. And we know, these economic laws include a law adjusting all accounting records (which would not be needed if a re-denomination was occurring).
    Like I said, you spend way to much time trying to prance in so called more “intelligent” experts to prove it’s a re-denomination, when in fact, there is clear evidence that it is not. In fact, there are also insinuating facts (occurrences that happen in a rv not a rd) that support a RV as well. I also challenge you to bring in an Arabic translator. One who can give you the true meaning of audio tapes or articles such as I have. You see, until you have done the real homework, you are nothing more than one of the douche bags you name on your site.
    I consider myself an expert on the dinar investment, not because i hold a degree from Harvard, or am an economist, but because there is literally no document that i have not read that pertains to it. More importantly, i categorize and disseminate that information so it can be applied to the overall “puzzle” if needed. That is how you become an authority on the subject. Anyone (and there are many) can simply bash, or discard ones statements. If you really study what i present you would see many of the so called gurus using my information in there own attempts at intel within days of my releasing it (the accounting law is a an example). I guess i should take that as a compliment.
    I leave you with this challenge to uncover, Ali Agha owner of DinarTrade used to purchase dinar direct from Trade Bank of Iraq. He said on numerous occasions that he talked to the Trade Bank several times a week (and that makes sense since he purchased from them) and they stated clearly to him that this would be a RV and not a LOP or RD. His words are on a Dinar Daddy’s recordings (think there are 4 or 5 that feature Ali. Listen and document this on your blog. That in itself is compelling unless he lied. Then again, why would he spend millions buying a bank in Iraq, or buying real estate (exchange centers) if he did not believe this information?
    When this RV’s you should be the first one to email me. I expect to see this stating…Kap you were right!
    BTW, i am posting this on DinarAlert for all to see.
    Kap

  31. rich says:

    here ya go stew and other naysayers chew on this!!

  32. rich says:

    this was a post from kaperoni to a guy named sam and i thought you might like to see it

  33. Stew says:

    I found this, just came out today, should be a good read for you…
    http://dinardouchebags.blogspot.com/2012/01/interview-with-john-jagerson.html#comment-form

  34. Stew says:

    Kaperoni is just one of the many pumper/guru idiots who continues to spread lies and misinterpretations to continue this scam.

    This is probably what he’s upset with…

    An Interview with John Jagerson
    Since I first started visiting dinar forums one thing that has bothered me is the fact that most of the “experts” on this investment have a background in something other than finance, economics, or investment analysis. Many of them come from the world of MLM, selling products like Xango or Fuel Legacy. Some are former military personnel. Some work as contractors or in the oil business. One guy was a corporate recruiter. Another worked in the restaurant business. One guy was even a snake breeder. Not exactly what I was looking for.

    Well I found one man who has discussed the dinar at length who is indeed qualified to discuss this investment, but some of you probably won’t like what he has to say. His name is John Jagerson. He runs a website called Learning Markets, and his videos were included on one of the first posts I did back in September. Recently he commented on my blog which frankly surprised me. I replied and invited him to participate in a brief discussion for my readers which he agreed to do. I may not agree with John on everything, but I respect his credentials and his opinions and welcome his thoughts on investing in the IQD.

    Sam: I appreciate your taking the time to answer a few questions for us. Could you give us a brief bio with your credentials?

    John: I graduated from Utah Valley University with a degree in Business Administration where I emphasized in accounting and finance. I later completed the PLD at Harvard that has a strong international business focus. I have spent most of my career as an entrepreneur, which led me in two directions that eventually converged to form my current occupation. The first direction was to become involved in private equity (AKA venture and angel capital), which gave me experience in investment and risk analysis. The second was my experience (early in my career) importing products and equipment from Asia. While I was doing that I was frequently hedging currency risk and the currency-trading bug bit me. I haven’t turned back.

    In 2003 I left entrepreneurship briefly and went to work with Investools, which was a roll-up of several online companies focused on investor education and information. Investools later acquired the options-brokerage thinkorswim (Barrons’ #1 rated), which was later acquired by TDAmeritrade after I left the company. I was a Vice President at the firm and was responsible for content, training, and client education. Working at thinkorswim Group I had the opportunity to get to know how individual investors work. This gave me a lot of insight into the biggest mistakes they make as well as the commonalities among successful traders.

    For a brief period I was also a principle for a small CTA (NFA registered) focusing on forex trading, but left the industry when regulation changes in the U.S. pushed so many domestic traders overseas. I currently still write two option advisory letters that have done well. I ended 2011 profitably, which is “pretty good” in my book even if I didn’t blow the doors off.

    I have written three books published by McGraw Hill. Two of these were about the international currency market or “Forex”. The third is on gold investing. I am currently writing a book on the coming (in my opinion) bond market collapse. I regularly write and record videos for online publications including Nasdaq.com, Scottrade, International Stock Exchange (ISE), LearningMarkets.com, Mint (an Intuit company) and Alpari among others.

    OK that was not brief and I apologize for that but I thought it would be helpful to make sure that people wondering about the dinar know that I am not just speculating. I have experience in this business and I can show them how to find real information for themselves.

    Sam: That’s quite all right. Have you reported on other redenominations that were pumped as big profit opportunities?

    John: Yes and no. I have reported on RVs and RDs in the past, but the dinar is an unusual situation that is being pumped unlike anything I have seen before. Everyone in the business knows that RVs and RDs are virtually impossible to trade so pumping would have just been seen as nonsense. The IQD RV is being pumped successfully because they are using it to scam non-professionals who don’t know how the currency market works.

    I was “introduced” to the dinar RV by a friend who asked me what I thought. I told him RVs don’t work that way and that it sounded like a “rain maker” scam, but he invested anyway. I did a little investigation into how this scam was working and starting writing about it in 2008. I felt like this was a good thing to take a stand on since so many service men and women are being taken advantage of by the scammers.

    I have written about other redenominations (Turkey, Mexico, Venezuela, Zimbabwe, Germany, Japan, China, Kuwait, Iraq, and Vietnam) and revaluations (China, Japan & Switzerland). Both redominations and revaluations happen but none of them have or could work like dinar-RV investors think. – I have also written about other investor scams like advance-fee frauds, target date funds, HYIPs, and mail-order bullion dealers.

    Sam: I’m sure a lot of my readers are saying “how can you call the dinar a scam? I bought dinar at BOA or Chase”. How do you respond?
    John: It is legal to exchange currencies with a service bureau or a bank in the U.S. There are still a few that will even exchange the dinar. However, that is not the same as advising that this is a “good investment opportunity.” That is the scam. The currency is just paper issued by the Iraqi government.

    Sam: You say the IQD hasn’t revalued since 2003, but many investors will tell you that they have doubled their money since they purchased.
    John: A real RV is the result of intentional action by the central bank. Most currencies fluctuate in value over time without any interference from the bank. It is definitely possible to have bought the dinar at some point over the last few years and to be in a profitable position right now but that was not the result of an intentional RV. The real question is whether the dinar can continue to appreciate versus the dollar now?
    Whenever I hear this I get pretty skeptical though. Where is the proof? There are plenty of folks who can show they bought between 1500 and 1100 to the dollar, which is where the official rate has ranged since the new series was issued, but counting costs and spread that is a far cry from a money-doubler. There was a VERY brief period in 2003 when the dinar was exchanged at over 1900 to the dollar, but I have yet to see anyone prove that they bought during those few months. Keep in mind that these aren’t my numbers. These are from the Central Bank of Iraq. I always tell people to go look it up themselves and make sure they are getting their information from the source rather than a pumper.

    Sam: Can you tell us definitively how the Kuwaiti dinar redenomination unfolded?

    John: Stage one – Fall 1990
    Iraq invades and replaces the Kuwaiti dinar with the Iraqi dinar as the “official” currency. The Kuwaiti government was essentially in exile. However, because of the way currencies were managed in the early 1990’s the official rate for the KWD never changed. The UN condemned the invasion and no one of any consequence recognized the right of Iraq to replace the government and currency of Kuwait. There are many anecdotes floating around that you could have bought the KWD for a fraction of its original value on the black-market for a few weeks during that period but I don’t know of anyone brave enough to come forward and admit (and prove) that they did it.

    Stage two – Winter 1991
    The U.S. led invasion and liberation of Kuwait was chaotic to say the least for money supply in Kuwait. I have again heard anecdotes of people being able to buy KWD on the black market during this period but the official exchange rate was still the same. The old Kuwaiti government was restored following the withdrawal of Iraqi troops. This is really important => Unlike Iraq, the same government, currency, central bank, money, and civil system was in place before and immediately after the Iraqi invasion.

    Stage three – September 1991
    The KWD was redenominated with new bills in 1991. This means that the old bills held by the public were exchanged for new bills. Sometimes redenominations are done at a ratio (referred to as “lopping”) but this one was 1:1 straight across. Theoretically it is possible (this is a big “if”) for some investors who had bought KWD on the black market during the occupation to have made a big return but there are no known institutional investors who have admitted engaging in that activity and I suspect that the few people who did it are keeping quiet since war-profiteering is generally an unpopular if not illegal thing to do.

    KWD Exchange rates
    The KWD has been pegged to a basket of currencies (dominated by the dollar) or the dollar itself since 1975. Since the mid-1980s when the dollar was released to float more freely the KWD has had an exchange rate that has ranged between $2.78 and $3.10. This includes the period of the Iraqi invasion and the U.S. invasion of Iraq in the early 2000s.

    The bottom line is that if you had 1,000KWD worth $3,000 before the invasion you still had 1,000 new KWD after 1991 that was still worth about $3,000 assuming you were able to exchange your hard currency. No one profited from the invasion.

    Sam: What about the claims that some people made a fortune on the KWD?

    John: As I mentioned above I have heard rumors and stories about profits being made by people who were buying KWD for a few weeks on the black market in the fall and winter of 1990, but where is the proof? There is none. In any case, these stories don’t help the hopes for the Iraqi RV because the same money and government existed before and after a 6 month war in Kuwait, which is why it is even theoretically possible to have made some profits. The only thing the Iraqi dinar has in common with the pre-1990 IQD is the name. Everything else has been changed. The government, central bank, and quantity of money supply has been changed since the invasion.

    Sam: Did any currency dealers profit from the Kuwaiti dinar?

    John: Theoretically it was possible to profit from the KWD if you had purchased it on the black market during the Iraqi invasion. There was a brief window of time that it was possible. However, it’s a lot like saying “oh I knew Apple was going to come back so I bought it at the absolute lowest price and sold it at the highest.” That sounds great but where is the proof? Even if he did its still moot. The KWD was the same thing with the same government backing it before and after the invasion. You can pull the historical exchange rate right from the central bank’s website. The IQD is a different currency, different government backing it, different supply, etc, etc.

    Sam: If a dinar guru claims that he profited from the Kuwaiti dinar would you say he’s lying? Adam Montana for example made such a claim in a book he wrote.

    John: Yes, but can I prove it? No, but I can’t prove he doesn’t have magic beans either. It seems extremely unlikely that he was present in Kuwait and prescient enough to buy the KWD on the street when it was available before the Americans went in. If he did it then it should be easy to prove.

    Sam: To your knowledge, what is the most substantial RV in history?

    John: In absolute value terms the most significant RV in history was the RV of the Chinese Yuan in 2005 that is still ongoing. The exchange rate has actually moved in favor of the yuan 31%. However, there are slim pickings for this kind of RV. Usually an RV is done to lower your currency’s value. The Bank of Japan does this periodically by budging its exchange rate down by a few percentage points that usually evaporates within a few weeks. The Swiss National Bank did it last year when they pegged to the Euro but the change was just a few percentages then as well.

    The IQD has fluctuated but has not been revalued since it was reissued in 2004. The Central Bank of Iraq (CBI) has been raising interest rates to head off inflation which probably helped protect its official peg of 1170 to the U.S. dollar. However last year, inflation started getting away from them and the unofficial exchange rate (as reported by the CBI) is now about 1200 to the dollar.

    Sam: Have investors ever managed to make a profit off of a redenomination?

    John: Its pretty tough, but it is possible. The problem is usually one of liquidity because it is really difficult to buy and sell most of these currencies that go through a redenomination. If you want to do it, the most reliable way to make money from a redenomination is to short the currency. The vast majority of redenominations lead to a currency that continues to fall. You would have made money shorting the TRY in 2005 or the MXN in 1995, which were both trading actively in the forex at the time. This problem is that this is exactly the opposite of what IQD buyers are waiting for. They believe the IQD will go up after an RD, which has pretty much never happened.

    If you are wondering about making money from the actual “redenomination” process then the answer is no. A redenomination does not affect the total value of the currency. If you had 120,000 IQD that are currently worth $100USD (1,200 USD/IQD) and the dinar remonetizes tomorrow by dropping three zeroes to a new exchange rate of 1.2 IQD to the dollar then you are flat. You would have to exchange your 120,000 dinar for 120 new dinar, which are worth $.833333 each or $120 in total. A redenomination results in the same aggregate value. Outside of the costs incurred in the transaction there are no gains or losses.

    Sam: Is it possible that the US Treasury will take our dinar and use them for oil credits? This is a common claim made to explain how the RV process will work.
    John: I don’t know why they would. The Treasury has FX reserves but not in any amount that would put a dent in oil imports from Iraq in the far future. Besides that, why would spending (injecting more dinar) into the world market drive its value up? Increasing supply drives prices down not up. Secondly – and this is really important – Oil is priced in U.S. dollars and most exporters sterilize their capital flows to prevent becoming dollarized or to head off inflation and some kind of massive reserve of the dinar would make that very difficult. The last thing I always ask when this question comes up is how do they know that the Treasury has some massive dinar reserve? Where did that data come from? It didn’t come from the Treasury. Like most of these rumors and “facts” it was just made up by the scammers.

    Sam: Can fractional reserve banking allow investors to cash in $2 trillion or more?

    John: Not without creating a significant shift in the value of the U.S. dollar. Money supply is measured in different ways but one of these – M1, which is a measure of liquid dollars and deposits in the economy – is just over $2 Trillion now. So you would basically be doubling the liquid dollars in the market. Can a fractional system absorb that from a practical perspective? No.

  35. rich says:

    john would get his clock cleaned by kaperoni!

  36. rich says:

    nope stew his beef was with sam on the douchbag site but im sure he would have no problem debating anyone on the issue of rd or rv

  37. rich says:

    oh and john just so you know iraq actually has had a few rv’s since their money was devalued and if anyone who bought their dinar say 8 years ago they have actually made money on their holdings so that throws your theory out the window

  38. hookahman says:

    Stew you talk about smuggled cash. It takes two to tango my friend, they’ve issued the currency unless its been counterfeited or smuggled. Either way its a black eye for them if they RD and it turns out that so many dinar dealers were selling counterfeit or smuggled dinar. It would be news worthy, how would that make Iraq look on the international front? How would that influence those decisions makers that may or may not invest in Iraq? Maybe it won’t directly but you understand the negative effect something like that would contribute towards the outlook of a country. So its CBI’s responsibility to understand where their money is going, who they are issuing their money to. This is a country that has only 30 million people. This is not very difficult and Dr Shabibi is certainly not a stupid or incompetent man. He knows.

    Yes I believe the issue of three zeros is a smoke screen. You talk about them educating their people. What? Educating their people that they don’t know what they will do? They talk about all of these plans and contradict each other left and right hold these debates. Shabibi even promised the Iraqi’s that it would be 1 to 1 by 2012 but now its 2013 right? Its constantly being pushed to the right. Coincidence right? I believe based on articles that many iraqi’s are holding their life savings in US dollars now and not the dinar. That is not too much of a stretch….

    What did these zero articles accomplish?

    What would talk, just talk about dinar being smuggled out of the country that its illegal accomplish?

    People will turn it in…. ;-)

    Until they finally make a decision and I maintain that if they were serious about an RD they could have done this at any time even when they had a caretaker government! because aside from the appreciation that was allowed up until I think 2009 and then the decreasing of inflation and then this very tiny uptick in the exchange rate, i mean lets face it, not a lot has happened in regards to the dinar currency. THE FOCUS has been on investment laws, the government – political instability, security….with good reason..

    A currency represents a nation as a whole because of Iraq’s use of our US DOLLAR, there is not an immediate need for them to re-denominate. Their currency has become popular with speculators. Once that is gone, and they have parted ways with the billions in value that they allowed us to exchange for, (RD=SELL OFF) then there is no more interest in the dinar. Rather than instantly lose that interest that demand for the dinar over an RD, you would want to ride the demand to a place where you want the currency to be. With more activity w/OMO + raise exchange rates. It’s not inconceivable to think that the Iraq can not arrive at an exchange rate close to the dollar within the next 5 to 10 years.

    Look where they are at as a nation. They can get there in another 5 or 10 years without changing their monetary policy. Islamic banking, full reserve all the way.

  39. Stew says:

    Iraq latest money supply numbers are 32 Trillion in circulation and 68.8 Trillion in M2… and both numbers are growing practically every month despite the claim from scamming pumper gurus that Iraq has been pulling all the big bills for years.
    You believe that they can maintain 100% backing for that much currency and get to 1:1?
    They need to reduce the money supply by 99.99% to do that. There is no way possible to reduce by that percentage… oh wait, there is ONE way. It’s a redenomination/lop.

  40. rich says:

    well stew if they are going to lop what are they waiting for? seems to me they could have done that by now thats cause their not and they are collecting only the 3 zero notes and have said in many articles that they intend to have a simnilar value as the usd and eventually get it back to where it was pre war as their economy grows.

  41. Stew says:

    I answered that question for you the other day. Obviously you didn’t read it.
    I also think it’s a funny question coming from a RV guy. You’re gurus have been predicting a RV at any minute now for 7 years now. A RV that MUST happen and that they have been weekly confirming for 7 years.
    As far as I know the CBI has never given a date as to when they would lop. They always answered that question by saying they had no timeframe. I think one time in early 2010 a representitve said they expect to have it done by the end of 2010… but soon after that they went back to saying no timetable. For the last 6 months or so they have stated they expect it to happen in 2013. So let’s say they’ve given 2 dates for redenomination. LOL… the gurus have done that almost every week for 7 years for the scam fantasy RV.

  42. rich says:

    stew i agree with you on the gurus i really do i learned quickly that they are nothing but pumpers but if you knew kaperoni like i do he never calls the rv like these other morons and he bases his information off of pure facts and articles unlike these other morons and also you have and never will hear kaperoni pump up the dinar he doesnt have any promo codes on his site unlike most other gurus and he is in this investment because he believes in it or im sure he would be out of it and i welco0me you to come into the website chat room anytime and debate kap on your theories the site is called dinar alert.webs.com

  43. BigCountry says:

    I’ve always thought that to lop the zero’s was meant to remove the zero’s from the currency exchange rate, going from .000856494 to .856494 (?).

  44. Stew says:

    Thanks for the entertainment Rich. I checked out that site. They are actually selling dinar related merchandise. The have shirts and sweatshirts with “Kaperoni” on them. Hats and coffee mugs for sale… even one with “Delete 3 Zeros”. LOL… I can’t wait to see people wearing this stuff.
    HILARIOUS!!!!! I’ll give it to Kap… he’s taking this scam to a whole new level.

    I’ve been on these sites before Rich. They will not debate me. I wouldn’t last more than 10 minutes before they ban me. That’s why all these Gurus operate at web sites that are locked down and controlled. They are not on open discussion forums. That itself should tell you they are full of it.
    Kaperoni may not pump RV dates… but he’s still blatantly twisting the meaning of these articles and he continues to simply make stuff up and claim things as fact with absolutely no proof.
    He’s either not very bright or he’s a scammer. The fact that he’s selling merchandise based on this fantasy should give you the answer.

  45. Kaperoni says:

    Oh, what did i stumble into?

    I will comment on this. Stew, I think your missing many facts that have occurred over the past several years that when placed together, imply a RV rather than a RV or LOP.

    You posted several titles that state “re-demination” but i can as well find equal that state revaluation. Including a statement last April 2011 when asked about a revaluation – Shabibi himself said it depends on if he can control inflation (which he has).

    That being said, you make a valid point about the dinar our of country. And that is a very big concern. IMO, there is 6-10 trillion outside of Iraq. Just the thought of Iraq supporting that at a 1 to $1 rv sounds impossible. Or is it?

    The CBI stated a few times they want the Dinar to be part of the “worlds foreign currency reserves” Would this then be the solution we need for the RV? Could this whole event be in essence, funded by central banks and the Federal Reserve to distribute the dinar globally to back other currencies? If so, then IMO a RV is a real possibility.

    In any case, it appears we are getting close to the end of the ride one way or another. Finance Committee member Haitham Jubouri stated earlier this week that they have completed “phase 1″ of the delete 3 zeros process and are now on “phase 2″. The definition of this phase by him was…”while the second phase of the introduction of currencies simultaneously, and will last six months to withdraw the old currency and the survival of the new currency.”

    I would like to invite you to chat anytime to DinarAlert. We don’t ban people for informative, and mature discussions. We discuss facts almost nightly and I would love to continue this anytime.

    Kap

  46. Kaperoni says:

    BTW, my sentence above should read…

    I will comment on this. Stew, I think your missing many facts that have occurred over the past several years that when placed together, imply a RV rather than a RD or LOP.

  47. rich says:

    stew i knew that was coming about the t shirts and stuff lol but he just recently did that in the last month but before that the sites been going on for about a year and no promo codes to buy dinar and you really have to know the guy like i do hes not what you make him out to be and i think he only did that to help pay for the site but the tshirt company makes 90 percent of the money and to be honest if you came in there and debated him i guarantee you you wouldnt get banned or kicked or anything he loves to talk if someone has a good argument for an rd over an rv and he can back up everything he says otherwise he wouldnt say it come in some evening my names rockinrich in the chat room

  48. Stew says:

    Kap… I’ll give you credit for posting here.
    Simple as this. Countries DO NOT announce RVs. Iraq just moved their currency .34% and no one had a clue it was going to happen. None of the gurus had any inclination it was going to happen. Rumors will come out a country might be increasing their currency and we’ve seen numerous instances of countries denying they will increase only to later increase… and that’s for 1% or smaller moves. What in the world would make you think Iraq is publicly talking about a 100,000% increase?
    As far as the word revaluation being used in some of the articles… it’s just sloppy reporting. They should be using the term redemination because that’s what they are doing. They have used the term redemination a number of times and they have used the “delete 3 zeros” term many times. That also means redenomination. The University of North Carolina study done on redenominations/lop is titled “DROPPING ZEROS, gaining credibility”. Iraq has even stated a number of times they are doing what Turkey and Russia did. Which is lop. They have stated a number of countries have dobe what they plan to do. Which again is lop. No country has ever substantially RVd. Back to the term revalue. Search on the internet for currency revaluation. You will find many redenomination/lops were described as revaluations. It’s just a sloppy use of terms. If the current dinar is valued at approx 1000:1 and the new dinar comes out and is valued at 1:1 then it’s pretty easy to see why it might be described as a revaluation. But the fact that ONLY the new currency will have that value and the old currency will retain the 1000:1 value and all old dinar will be exchanged for new dinar at a rate of 1000 old for 1 new makes it a redenomination.
    So again… countries never announce true RVs… not even tiny 1% or less moves.
    Countries almost always announce redenominations, it’s a neutral event. Very common for countries to discuss it for years before actually implementing it.
    So we’ve seen literally hundreds of these articles from Iraq talking about redenomination, rebase, revalue, delete 3 zeros. So which is more likely that they are discussing so openly in public? A redenomination/lop of the currency where no one loses or gains any money… or a 100,000% massive RV?

  49. Seetrader1 says:

    Stew,

    Thanks for keeping it real.


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