By John Lee.
We get many enquiries at Iraq Business News relating to the future of the Iraqi dinar (IQD), for example:
- Will the Iraqi dinar increase in value?
- Will the currency be re-denominated, dropping the 'three zeros'?
- Is it wise to buy Iraqi dinar?
Firstly, 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.
As the value of the Iraqi dinar affects trade, we will continue to report on any possible re-valuations and/or redenominations as soon as information is available.
We hope that this information will be useful to the key decision-makers in Iraqi business, and to all who are interested in the development of the country; gamblers and people involved in get-rich-quick schemes/scams are not our target readership.
It's clear from the correspondence we receive that some people, who like to think of themselves as 'investors', genuinely believe that at the stroke of a pen they will make a 1,000-fold return on their purchase of dinars.
Those people might like to consider some questions before putting any further funds at risk: Read more ...
I notice he couldn't or wouldn't answer my very simple question.
Because I’m sure that even to him, to make the claim that if Iraq had the same exact money supply today but it was 72 billion dinar at 85 cents apiece, that it would be undervalued and soon to RV to $850 per dinar. Even he knows that claiming that may get one locked up in a mental institution. Anyone and everyone would look at you as if you might be the biggest idiot in the world.
Yet that is the same exact claim, not one single bit of difference what so ever, as claiming they will RV the current 72 trillion dinar to 85 cents. Only difference is many people can’t see just how stupid that claim is.
Again, why soooo serious?...lol..If you dont have any, quit worrying over what they may or may not do!...As we wait..some calmly!..
What is all this nonsense talk about?
.....Even the so called 'gurus' gave in and admitted that the technical discussion has been about a re denomination where they will delete the zeros, or 'lop'; as the more juvenile among us call it.
....The Shabibi scandal brought a lot to the surface, but it didn't answer all the questions.
....And the big one still looming over the US and the rest of the world is whether or not there is a currency exchange being set up with the dinar as part of the scheme.
...Should any of you have concise facts on that issue, many thousands of people are waiting to hear what you have to say.
...Otherwise, you are wasting everyone's time!
Just waiting while profiting long term...that is a fact...so why worry?...lol...
Prior to the Iraq war the IQD was over $3.00 per Dinar. Now it's in the pennies per UDS. After the war, when the new IQD was printed, GW Bush was given 100,000,000 Dinar. Why do you think that was? And why do nay sayers doubt that it will ever return to its' previous highs? Fact is, with the fall of the USD, what makes anyone think that a million USD or two million USD will be a lot of money? Fact is it's not a lot of money in this day and age -- you could spend that in a day, and be broke instantly. Hey, if you have 4-million Dinar right now, and it even hits .25cents American, that only equals 1-million American when converted over, so what's the big deal?? Guess no one wants to see the little-guy make a few bucks? Oh yes, the IQD will one day revalue, it has to, based on the fact that IRAQ needs to once again be a world player if it ever expects to come back to its' glory days, and get itself back on the map.
Cyclingmasterseller, you asked "if you have 4-million Dinar right now, and it even hits .25cents American, that only equals 1-million American when converted over, so what’s the big deal??"
The "big deal" is a return of 250 times your investment - since when is that not a big deal? In fact, can you show me a single example of a deal that big in the entire history of currency speculation?
Do any of the naysayers on this understand what "DONOR NATION" means?...It is what Iraq will soon be, as per the recent news!..is'nt this what America has always been?...A donor means giving, and this will be to other countries...How can Iraq do this with worthless currency?...
4aprofit: if the currency is worthless why are rednecks handing over thousands of dollars each to buy it?
And why do Israeli's, Europeans, Asians, Latin Americans, Africans & Americans own it?...is there perhaps a notion that the country of Iraq will emerge wealthy?...Were'nt they already wealthy?...Why has'nt it all been tapped into before like now?...Don't most people, even rednecks', as you mention above...know that most of many of the worlds best investments, have for the most part, started out risky and bleak, at least to start with.."follow the money"...is something anyone can do!...lol..
I was misunderstood by one reader.
Yes, a large return of one million USD on four million IQD at a low re-valuation of only .25cents is a big deal -- when I said it was no big deal I was considering inflation, and the power of our dollar today, which is not much. As I write, and as January is closing in, the 'fiscal cliff' talks have sided with obama, in that taxes must be raised -- this is only going to kill the value of the USD even more... hence, the US looks very very weak at this point, and the speaker of the house is turning coward, and so it goes.
Bottom line: Any return on the IQD is good, it's just a matter of time. The United Nations must lift sanctions on Iraq before any revaluation can take place. And based on the fact that the US is the second largest holder of IQD, yes, I would say the revaluation, at some point, is a reality, it's just a matter of when.
And here is the kicker for those idiots who attack dinar-holders: They say that we are fools for buying more, and holding on to Dinar, and the fact is, "WHY" are they so upset? Fact is, in relative terms, Dinar is cheap, and because holding it, and buying it won't "break you" financially, WHY NOT HAVE IT? The nay-sayers act as though your spending your last dollars on it -- how wrong they are. I for one can say I am not going hungry because I am holding Dinar, quite the contrary. Good luck to everyone reading this, take care!
Funny, why do nay-sayers of the Dinar even read the Dinar news?? Pretty strange wouldn't ya say? It's more or less a hobby for me, it's cheap, and can only return value in time, and CAN IN NO WAY HARM YOU TO HOLD IT, so to the nay sayers, keep your UDS and hopefully Obama can turn it into Gold -- but, since Obama is a puppet for the Bilderberg Group, he is directed, and HELL bent on leading down the path to complete dependency on government hand outs -- not me baby. Keep your free cell phones and food stamps Obama, I want more, a lot more. Is this not the America we want, one which prospers, where hard work and opportunities bring about hope and prosperity? You're damned right it is. So obama, we don't need you, we don't want you, so take your dictatorship and shove it! May God once again kill the evil in this country, and deliver us from it.
I've always found it strange that these naysayers spend so much time worrying over and knocking this investment...and it has'nt even finalized yet....at least as per the total finality of it..while some have actually had gains..they must be proiting from doing this...or they would'nt be spending more time with this than their own investments...that's if they even have any...instead of constantly haggling over this...An examnple: If I like fishing, I dont study and read about, let's say needlecrafting, or would I put stuff on the blogs about how much I hate needlecrafting!...How retarded!...lol...
its just like playing the lotto! but i dont have to buy new tickets every week.low investment high reward is very common in the american way. think about china and nike it cost them 2 dollars to make a pair of shoes then sell them to us for 120.00 .its called captialism
What has been so strange here...is all of the theories of what cannot happen...and nothing bad has happened, with this investment, or yet....there have even been some long termers that have even had gains, and I know that these naysayers know this...so for them to do what they have done here, with all of their negativity, while so many other things have actually lost in the investment world...leaves me at a loss for words of where they are at when it comes to riding the blogs on those proven losers, instead of wasting time on an un-finished or non-finalized venture...while this one has'nt been proven to be a loser, or yet!...It makes me think that the naysayers are paid or compensated some how for doing this...as no one spends the time to do this...when it is not even been really proven, or at least as per a final or end result...these guys should have been there as soon as Bear Stearns, Leahman Brothers, Worldcom or Enron were forming...telling everybody to look out...but it was like the general hysteria was positive on all of these investments, or at least until they actually tanked...I'm beginning to think that taking the opposite advice is working?...lol...
Prices will not rise inside the country in the short to mid-term. The spending power of the currency will in fact buy more though. This is one of the main misunderstandings of this. They could loop- but investors would still get 3-4 times their money on return if they return to former values. Their export prices will rise yes..but in comparison to the region- they could. They will have increased investment in their country which will create the 'wealth effect' - which will help offset the mid -term inflationary effects.
As for multiples of returns on investment have you ever heard of penny stocks, options trading?- or are you living in a cave on that one as well?
If I buy a penny stock for .02/share and it goes to 1.00 whats my return? ....nearly a 1000%
Fact of the matter and bottom line. If you don't think a country in that area of the world- even with the political turmoil- having a currency with values that low is an under valued assets then you should stick to writing disinformation articles that try to undermined constructive discussion.
Nobody knows the final outcome as per the finality of it all, it's just that some have already had some long term gains, so whatever happens with Iraq's currency, it could still be a profitable venture for the future as well, so no matter what they end up doing in the end, whether one loses in the end, or makes 1%, a 100%, a 1000%+, etc., "Who Knows", (but it must transpire first, for better or worse, either way)...what I've said all along...WHY FRET IT UNTIL THE GAME IS OVER?...lol....
P.S. There are way too many things that were supposed to be safe and sound investments..that have already tanked and many have lost their life savings on...we are talking about some of the biggest of the biggest...ALL investments are RISKY!...Some of the wealthiest people in the World have actually made much or most of their profits by predominently taking RISKS!...To each his own!...
I agree with part of Robert's response, but I do think we need to keep everything in perspective. .....The dinar is not a commodity, but a currency capable of being manipulated in whatever way the controllers of that currency desire. .....Some try to link the dinar to commodities, but in reality, that link is vague and undefined.
There are many aspects and projections for this situation, and NONE of us know which will settle the arguments. ....Till that time, an open mind is the best asset one can have.
I am just a casual observer, and also a holder of some IQD. My take on it is this, a country's currency, within its' given region, must, for trade's sake, be somewhere on a similar level as its' neighbor's currencies. Therefore I find it highly, and logically incoherent, to believe Iraq's oil output (now in second place, just over Iran's) will not push its' currency at least up to $3.50 to $4.50. Right now the IQD's value is a joke within its' region and must rise to compete and trade within its' territory. Either way, it's just a matter of time. Just like gold it may take forever, but one day it will rise. Hence, all the children waiting for the big pizza to arrive will just have to be patient. PLEASE.
I agree Gary...not that anything will happen today, or even anytime soon, but some that have been in this long-term have already had gains, so unless one jumps into this and right back out with the spread losses, what's the gripe?...I can't ever recall this much commotion and jibberish, (mostly negativity), from all of the years of watching gold & silver rise and fall..as many were winners and many were losers with those over the years...and then some of the same ones went back in and played the reverse role even after winning or losing in Gold & Silver..(Again & Again for Some)..lol...
The law of supply and demand is one of the most basic economic fundamentals and can be explained easily to elementary school students. Yet it is a totally alien concept to dinar holders.
Stew...if you dont like em'...don't hold em'...and whether you own any or not...why worry over em?...lol...
4aprofit, Stew has answered that question a hundred times, so why to you keep asking it? He, like many people, hate to see people getting ripped off - is that really so hard for you to understand?
There is no 72 trillion dinar out there. They told us they have reduced the money supply in statements from the cbi.
This site has published this anti-investment statement before.
I have never seen someone so afraid of someone wanting to invest in a currency as an investment -- folks do it all the time, everyday in fact.
So what bugs this writer I'll never know.....
jdog "There is no 72 trillion dinar out there. They told us they have reduced the money supply in statements from the cbi."
Monetary Base as of Dec 2012 = 72,512bn Dinar. Straight from the CBI website:-
http://www.cbi.iq/documents/key%20financial.xls
There are indeed still 72.5 trillion Dinar out there jdog, if you look at the real facts and ignore the pumper sales propaganda.
It is true that they have reduced dinar through the auctions. But that reduction results in them having 72 Trillion dinar. The Central Bank documentation explaining the M2 number clearly states the figure takes into account all dinar bought back.
Anyone with a lick of common sense could figure it out. For 10 or so years now Iraq has had a budget of 60,70,80,90 Trillion dinar. So that’s how much money they put into the system every year. It was stated once that about 20% of that spending is in dollars and the rest is dinar. So 80% of the budget is dinar going into the system. If we use 75 Trillion dinar as the average over the last 10 years, that’s 750 Trillion. 80% of that is 600 Trillion dinar that have been put into the system through the budget. So it’s a very true statement that they have been reducing the amount of currency through the auctions. They have put 600 or so trillion into the system and have bought back a big part of it resulting in 72 trillion dinar as the M2.
I sure hear a lot of talk from these bashers Put some facts on the table and not a bounch of stuff from other countries that have nothing to do with Iraq. the last time i checked most of the info you get out of Iraq is ******** even the stuff you claim that is on CBI web site. SMOKE AND MIRRORS I have friends that live there and they laugh at me when i tell them the info that comes to light on this side of the world. You will have to do better then what i've seen so far
Holding - "Put some facts on the table"
Facts already have been "put on the table". Obviously if you're the type of person with a delusional paranoid conspiracy mindset who shrieks "SMOKE AND MIRRORS" in big capital letters at anything you don't like to read, they will inevitably end up flying straight over your head 😉
Holding -"even the stuff you claim that is on CBI web site"
Well it is on the CBI website in plain sight as can be seen by above link. It's also in World Bank & IMF annual reports. That you use the words "you claim" is an open admission that you didn't even attempt to look at the CBI's site - out of fear of being proven wrong, which seems about normal for Dinaraholics 'quality' of "debate" outside of heavily controlled & censored pumper-run boards where "unwelcome honesty" results in accounts being deleted on a whim...
Holding -"I have friends in Iraq". LOL. Don't we all?... My bestest best friend is a 19-star general, and I play golf with the oil minister at the weekends and they all say "RV tomorrow!", blah, blah, blah... 🙂
Indeed John. Iraq's 72tn money supply is "claimed" to be on the CBI's own website in the same way it is "claimed" the sky is blue or it is "claimed" the Earth is round and not flat...
At the end of the day, the Dinar is a highly emotional investment for some (especially for those hooked into it for years on end), and as with all such "tulip mania" style investments, people will see only what they want to see even when the truth is staring them in the face...
Mr John Richardson
Thats funny no delusional or paraniod here my friend. I have to ask why when you reply must you insult people. i never did i'm very down to earth by the way most stuff that the goverment does is not told to the general public so why would i not reply by saying smoke and mirrors
I do look at the web site of CBI / IMF and world bank doesn't mean that what they put there is true its a proven fact that goverments don't always tell the truth
I'm not here to bash people just here to see what people have to say about it but i had to say something cuz its just turned into people bashing other people stick to facts thats it people don't want to hear that s**t
OH by the way i come from a long line of army i'm a army brat and have spend many years of my life on bases around the world and yes i do have friend that live in Iraq
MR John Richardson I would like to meet your 19 star general friend and the oil minister you play golf with lol
One other thing when did i say anything about RV ???
Just here to get other people take on this investment
You should learn to stick to the facts and not bash people if your facts are true then you will prevail remember there is a thing called karma and its always comes back to you
Thanks you made my morning LOL
Mr Holding, Iraq's money supply is not a big secret. It's openly and independently audited ever year. It's not up there with "Area 51", nor is it something you can hide since if the unofficial printed rate deviates enough from the official printed rate, then a black market quickly springs up (see North Korea as an example where no-one buys and sells at their declared peg). This is why you cannot hide such discrepancies (see Zimbabwe). People who buy and sell the currency every day for trading (ie, real business) aren't stupid, nor are Iraqi's who would kind of "notice" if half their money got taken out of circulation when they run out of money...
Pumpers have been shoveling the same stupid debunked lies over the Dinar's circulation year after year, because it's the obvious "elephant in the room" which makes the RV claim look absurd. "Iraq has taken all 25k notes out", "Iraq has taken 80% of all Dinar out of circulation, etc", are all silly lies that get recycled on junk sites like DinatVets & DinarRecap by people who so badly want to believe in it that they suspend all common sense & critical thinking more like a religious cult than an "investment".
Declaring anything you don't want to believe in a "lie" might work with moon landings & secret space-ships, but the Iraq Central Bank is audited several times over, and there simply is no "big secret" there. As Barry said, there are still 72,512bn Dinar in circulation:-
http://www.cbi.iq/documents/key%20financial.xls
Holding - "I do look at the web site of CBI / IMF and world bank doesn’t mean that what they put there is true"
This is precisely the attitude of a paranoid conspiracy theorist - "If I don't agree with it it must be a lie by 'the man'" without a shred of proof whatsoever that it's inaccurate...
Holding - "I’m not here to bash people just here to see what people have to say about it but i had to say something cuz its just turned into people bashing other people stick to facts thats it people don’t want to hear that s**t"
You're the only one who isn't sticking to the facts (or producing any of your own) instead repeating "everything is a lie" over and over, more as an emotional comfort blanket than a serious debate. That might work over on DinarVets but this is a site for serious long-term investments in Iraq not self-sourced "tidbit rumors".
If you want "only the facts", then here you go:-
Iraq's M2 Money supply annually since the invasion:-
2004 = 12.25tn Dinars
2005 = 14.68tn Dinars
2006 = 21.08tn Dinars
2007 = 26.95tn Dinars
2008 = 34.92tn Dinars
2009 = 45.44tn Dinars
2010 = 60.26tn Dinars
2011 = 65.11tn Dinars
2012 = 72.02tn Dinars
There is no "big secret" with Iraq's money supply any more than there is with Iran's, Saudi Arabia's, Afghanistan's or Kuwait's money supplies. It's only Dinar sales hype based around manufactured false expectations that cause some to believe otherwise.
Just facts thats all people want not elephant in the room / Zimbabwe / rants about some pumper or some bull about other forms
JUST FACTS JUST FACTS JUST FACTS
I must say that the way you carry on over pumpers and what other people belive i think that i have to say who's delusional and maybe a little paranoid ???
I never made any claims that i have the facts or have i told a lie about the facts i am simply here to get the facts and info
I do belive that i said that not everything the goverment does is told to us and not everything that we read is true i did not say they were lying
Not everything in life is as it looks and there are many inturpations of things
I on the other hand am a very well known hot rod builder and if you want facts about that i would be happy to help other wise i'm here simply to get info on this investment. not read a bash fest about people investment or about the lie's some people are spreading (there are other places for fiction) if the fact are correct then they will rise above all
Please don't respond to me as i will not get into a debate over this like i said i'm just a guy who builts vehicle for a living (not a financial guru) just give the facts if your the type of person that must tell everybody what is going on
I look forward to reading the facts
Thank you
Holding - "JUST FACTS JUST FACTS JUST FACTS
i did not say they were lying"
You've already been given the facts on Iraq's money supply to which your only response was "the info you get out of Iraq is ******** even the stuff you claim that is on CBI web site". That's a word for word quote from your first post, so yes, you DID actually call them (and us) liars in your first post... If you're claiming politicians in general are dishonest, then yes, I agree with you, but it isn't politicians doing the auditing, it's independent (and multiple groups of) accountants working for several different organizations, and their M2 figures provided are indeed correct.
If you (and jdog - which is who Barry was talking to before you jumped in the middle) want similar facts from another source, say a graph taken from a separate World Bank report here you go:-
http://img31.imageshack.us/img31/6500/iraqdinarmoneysupply200.jpg
The figures given are correct. As for "why are people talking about pumpers, the RV scam, etc", that's actually the whole point of this article you're posting your comments on:-
"We hope that this information will be useful to the key decision-makers in Iraqi business, and to all who are interested in the development of the country; gamblers and people involved in get-rich-quick schemes/scams are not our target readership. It’s clear from the correspondence we receive that some people, who like to think of themselves as ‘investors’, genuinely believe that at the stroke of a pen they will make a 1,000-fold return on their purchase of dinars."
The "RV" scam is what this whole topic and comments have been about if you've bothered to read through them. We are not "off topic" given that's what this whole topic is about.
What "facts" do you want, Holding? My link to the CBI's audited statistics was in response to "Jdog's" claim (based on years old well known Dinar "pumper" propaganda) that Iraq had reduced their money supply, and the factual, honest truth is they haven't. If you (or he) still dispute this despite the plethora of correct figures given above, then here's a separate 2010 World Bank report saying the same thing:-
"The Money and quasi money (M2) (current LCU) in Iraq was last reported at 61,393,052,000,000 [61 trillion Dinar] in 2010, according to a World Bank report published in 2012.
http://www.tradingeconomics.com/iraq/money-and-quasi-money-m2-current-lcu-wb-data.html
Since then it's risen to 65tn (2011) and 72tn (Dec 2012). As you said - "just the facts"...
There's a guy in Puerto Rico who has been pushing dinars for years and has lured a lot of suckers. He has a TV show and links himself to God. Not a bad salesman (if you like the used car type).
Why is it, no one has mentioned the 31 tonnes of gold Iraq had acquired over the past year? Or, the possibility of the U.S. losing their global reserve status? Me, I think its a good time to buy the yuan.
Why would Iraq invest in gold if their own dinars are going to increase 1000-fold?
Iraq is actually full of GOLD itself!..And everything else!...Everyone just has'nt found out yet!...lol...
Jeff, the answer is it’s pretty irrelevant. 31 tonnes of gold is worth about $1.5 billion.
Iraq backs their currency with foreign currency reserves (mostly dollars and euros) and some gold and I assume some silver. I think they have roughly $70 billion in reserves. All they did was take $1.5 billion of their reserves (about 2% of their reserves) and convert it from cash (dollars and euros) into gold. They started with about $70 billion in reserve and after the gold they still have the same amount. If they bought the gold at the top of the gold spike they have actually lost FX reserves due to the move.
LOL. 31t of gold = approx $1.5-$1.6bn. It doesn’t even back 2% of Iraq’s money supply today, let alone 0.002% of a $72,000bn “RV”. Read the maths here:-
https://www.iraq-businessnews.com/2012/12/24/iraq-boosts-gold-reserves/
As usual, this is a perfect example of how people will blindly and unquestioningly lap up anything & everything as "proof of the RV" purely because they desperately want it to be true, without thinking any of it through and doing little more than chirrup pumper sales slogans. It's called "Confirmation Bias".
If you want a sense of perspective of "31 tonnes of gold" : the USA has 8,133 tonnes of gold (262x more than Iraq, ie, $432bn worth), and the EU has 10,787 tonnes (347x more than Iraq, ie, $573bn worth). In fact, if you took all the gold reserves on Earth (over 35,000 tonnes worth, ie, $1.86 trillion) - it would require 39x planet Earth's worth of gold to back the absurd "100,000% profit RV" nonsense the chronically dishonest pumpers and their mindless puppets keeps pumping. And that's just for Iraq - ignoring the other 189 countries on Earth.
That's how ludicrous the "RV" fantasy is to anyone with half a brain, a working calculator and an ounce (or is that "31 grams" 2collectg 😉 ) - of common sense...
"'Iraq is filled with Gold' for having 31t, yet the USA and Europe are 'dirt poor' for having several thousand tonnes each" is a perfect illustration of how silly some Dinar "investors" are...
Here is a big question in my mind. If the Old Dinar was devalued 660,000%,,,how was the old Dinar worth 3.30 to our USD an number of years back?
If it was at 3.30,,, what was the basis of its value and how was it backed, not by the amount of Gold in those days, or how much oil was output?? Also, how is Kuwait's currency worth 3.65 to our USD? Where's its basis for its M2,, its gold?? Its oil?
Not sure, but all the arguments above, hold no water when considering this,, Also the Government Report on this released in 2005 from our State Department,, Unclassified discusses and states these facts? It talks about Iraq and the hopes of re enstating the value it once had??
Any answers for the Report and these actual very factual numbers?? I would love to hear your answers? Sure you have them, but I would consider that if someone bought the Dinar today, it definately won't be worth less than the toilet paper it is today, so cash out and what's the loss?? Tell us this answer too?
wk - First, the word "devalue" is used when a central banks lowers the value of their currency. That didn't happen with the dinar. The old Saddam dinars depreciated because of excessive printing following the imposition of sanctions over 20 years ago. When they changed the currency to the IQD it retained the same value and has since increased somewhat as it is on a managed float.
What reduces the value of a currency is when conditions lead to an expansion of the money supply relative to the monetary base. The money supply in Kuwait didn't expand like the money supply in Iraq did, so they managed to maintain their pre-war value.
Also, your belief that the dinar won't go down in value might be warranted but then it might not be. Iraq has been very concerned about high inflation because if it returns it could trigger a return to hyper-inflation of 50% or more and further lower the dinar's value. When Turkey redenominated in 2005 they had to cut 6 zeros from their currency instead of the 3 zeros Iraq is planning to remove.
Just because a currency's value is low doesn't mean that it can't go lower, but even if it doesn't you could still lose money if the value doesn't increase enough to cover your spread which is nearly 20% for most dinar investors. In the last 7 years the dinar's value has only increased by about 27% as things stabilized and inflation was brought under control. The chances of it going up that much in the next 7 years aren't too good IMO but even if it does and they don't redenominate you're still looking at only a 1% annual return. If they do redenominate and you don't have any way to exchange your IQD for the new dinar or USD you could lose everything you invested in dinar. So they question to ask is "is it worth risking every dollar I invest on something that likely won't increase in value at more than 1% a year?
Sam's response is right on the money, but put more simply:
In the 1980's the M1(currency circulated) was in the range of 25 billion dinar; while the current estimates are running in the 30 to 40 trillion dinar range.
......They have printed far too much currency to support a high value!
.....The path back to a stable, highly valued currency is known as re denomination, and all of the rhetoric easily fits those designs.
WE ALL AGREE THE IQD WILL STRENGTHEN, BUT THE METHOD IS THE BIG QUESTION!
As we wait, we will see?....
WK.
When the dinar was $3 back in the early eighties it was backed and valued exactly as it is today.
Back then they only had about 20 billion dinar, and they had 60 billion in FX reserves. that's a 3 to 1 rate.
The Central Bank of Iraq shows those historical figures on it's web site. There were also many articles out when Iraq's FX reserves went over (about) $65 billion that stated is was a new record for Iraq and surpassed what they had in the early 80's.
So Iraqs FX reserves are back where the were whent hey had the $3 rate. But they now have 70 Trillion dinar compared to the 20 billion they had back then. that's 3000 times more dinar, so it's very natural that the value would be 3000 times less than it was back then.
That also is why the IMF is on record as saying the dinar is fairly priced exactly where it is.
Here’s some Iraq history.
http://www.cbi.iq/documents/Annual_2002f.pdf
This report goes back to 1991. It was 10 years prior to this that Iraq had the 3 dollar rate.
Table 2 shows in 1991 Iraq had a Money supply of 24 billion.
Table 10 shows the exchange rate was already down to 10 cents at that point.
You know what happened in that 10 years from 1980 with a $3 rate to 1991 and a 10 cent rate? That’s when Saddam came into power and took Iraq into war with Iran. He took the $60 billion in FX reserves and blew it fighting a war, so that’s why the rate went down to 10 cents. Once he spent all the FX reserves, it was then in the 90’s that he started printing huge amounts of Saddam dinars. The Saddam dinars came into existence with about a 10 cent rate, they were never worth $3. Only the old Swiss dinar ever saw that $3 rate. So all these pumpers and believers who keep talking about how they dropped the Saddam dinar from $3 to .001 overnight are full of crap. It never happened.
Table 10 shows how the rate dropped over years as the money supply ballooned from Saddam printing dinar.
Countries DO NOT, CAN NOT, and WILL NOT EVER RV their currency after events like this destroy the value of it.
The entire world is moving into Iraq!..Even Kuwait, with the most valuable currency in the World, is investing Billions in Iraq!..(Wealth follows wealth, not poverty)..So, with that, who thinks that their currency wont ever be at a good value as per going before the world, no different than if the U.S. Dollar dropped to a penny tomorrow...we would be toast!...And the U.S. is doing nothing monetarily in comparison to Iraq...and some say that Iraq wont be a viable economic force to be reckoned with, and as per having a currency to do the same as well?..What goat-wagon did they fall off of?...Sure, just because today the dinar is valued as toilet paper, even though at one time it was very valuable, for many decades actually it took several U.S. Dollars to buy just "one" Iraqi Dinar, and all of this was when the U.S. was doing something and even had a gold standard, and oil was only a few bucks a barrel, and hardly nobody had moved in to explore and exploit the resources of Iraq like they are doing right now!..Naysayers keep writing all the things that cannot happen...but you better go look for a toilet to throw up in when Iraq emerges here in the future!..But that's right, there is an agenda to tear down this investment, by those that know it is the real deal!..It's like some of these guys live to write only about..."WHAT CANNOT HAPPEN"..and it's not even over yet!...lol..
wk - Here is a big question in my mind. If the Old Dinar was devalued 660,000%,,,how was the old Dinar worth 3.30 to our USD an number of years back?
If it was at 3.30,,, what was the basis of its value and how was it backed, not by the amount of Gold in those days, or how much oil was output?? Also, how is Kuwait’s currency worth 3.65 to our USD? Where’s its basis for its M2,, its gold?? Its oil?
wk, It's quite simple : 1990's Iraq had a money supply measured in the BILLIONS. Under post Gulf-War-1 sanctions, Iraq printed a massive amount of money (because if you can't trade or borrow - all you can do is print, print, print). Inflation went through the roof. In fact, Iraq has printed more money for its 31m population than USA + Europe + China + India combined have for 3.4bn (100x more people)! The only way of curing that is a redenomination (lop).
"RV's" don't take any money out of circulation at all nor do they lower inflated prices (eg, a loaf of bread in Iraq is 1300 Dinar - it used to be barely 1 Dinar in the 90's - due to inflation). A good analogy is if the Federal Reserve printing a staggering $10 quadrillion (10 million billion $) and the price of bread (and everything else) in the USA shot up 1,000x to $1,300 per loaf. Trying to "pretend" its value "should be just like the old days as Grandpa explained" by demanding China, Europe, etc, all pay 1,000x more Euro's & Yuan to buy $ when trading with the US is absurd - and yet that's exactly what the "RV" pumper fantasy is!. The effect of a 99,000% RV in Iraq would be - all prices of goods in IQD would end up 1,000x more expensive for the rest of the world to buy resulting in their export economy collapsing overnight! The only way of bringing "the old days" back would be to get rid of most of that over-printed money via a redenomination (lop) so that each unit of that currency wouldn't be diluted so massively. That's precisely why the process was invented in the first place...
An "RV" is nothing but an external currency peg adjustment (like China "RV'd" the Yuan vs the $). It doesn't fix the problem of weak currencies devalued via past inflation (the Iraqi Dinar in a nutshell), and a 99,000% RV is just junk economics as the result would be an 11,680 Dinar ($10) product would cost $10,000 when bought from Iraq (because the flip-side of an "RV" is it would cost $1,000 for 1168 Dinar vs $1 for 1168 Dinar today), but still only $10 from every other country except Iraq!... An "RV" on that scale does nothing more than create a fake abnormal split between its genuine free-market value and it's "demanded" fake international value.
North Korea has tried this - they "RV'd" their currency 3x higher vs the $. It hasn't made anyone 3x richer, because a black market (ie, real rate) instantly sprung up 3x lower. People either trade at the market rate or treat the official "dictated" over-valued exchange-rates as junk and take their business to other countries.
Here's a quote from the CBI explaining why the Dinar fell:-
"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. Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, told RFI that a plan has been made to remove three zeros from the currency and phase out the current banknotes. Salih added that in 1990 the value of banknotes in circulation was about 25 billion Iraqi dinars but is currently some 25 trillion dinars."
That was from a couple of years ago. If you want actual facts and figures, here they are straight from the Central Bank of Iraq and IMF & World Bank reports:-
Iraq's Money supply by Year:-
1990's- Approx 25bn banknotes & approx 50bn Money supply.
2004 - (7.1tn banknotes) / (12.2tn total money supply)
2005 - (9.1tn banknotes) / (14.5tn total money supply)
2006 - (11.0tn banknotes) / (21.1tn total money supply)
2007 - (14.2tn banknotes) / (27.0tn total money supply)
2008 - (18.5tn banknotes) / (36.9tn total money supply)
2009 - (21.8tn banknotes) / (46.4tn total money supply)
2010 - (24.3tn banknotes) / (60.4tn total money supply)
2011 - (26.3tn banknotes) / (65.1tn total money supply)
2012 - (29.8tn banknotes) / (72.0tn total money supply)
1tn (trillion) is 1,000bn (billion). When the Dinar was $3 there were less than 25bn banknotes / 50bn total Dinars (M2) in circulation. Today there are over 31,000bn banknotes / 72,000bn total Dinar in circulation. Also in comparison, Kuwait still has a total money supply of just 29bn (2,000x less) today and single digit bn banknotes.
Here's the link to Central Bank of Kuwait if you wish to verify their figures:-
http://www.cbk.gov.kw/cbkweb/servlet/cbkmain?Action=mtbl&archive=201204&tbl=RM02
This is quite simply, why the Dinar is worth overt 2,000x less than the Kuwaiti Dinar - Iraq has printed 2,000x more money and the total assets backing it (CBI FX reserves) have to be spread over 2,000x more money which dilutes each currency unit's by same ratio. All the "conspiracy" nonsense being peddled by pumpers is just confused nostalgia. You aren't going to have a currency worth $3 with trillions of banknotes in circulation for the same reason you can't buy a house for under $1,000 like you could in WW2 when there was 1,000x fewer Dollars, and "RVing" the $ vs the €, Yen or Yuan then pointing out "grandad bought one for that, so I should be allowed the same too" will not change inflationary devaluation or suspend supply and demands economics one tiny bit...
wk -"Not sure, but all the arguments above, hold no water when considering this,, Also the Government Report on this released in 2005 from our State Department,, Unclassified discusses and states these facts? It talks about Iraq and the hopes of re enstating the value it once had??"
They were talking about redenominating, ie lopping 3 zeroes so 1165:1 with 72 trillion Dinar becomes 1.165:1 with only 72 billion Dinar (by exchange notes up at 1:1000). They have never, ever said anything about a "1:1 banknotes exchange" or "99,000% RV" in the conman / pumper sense (which obviously wouldn't take any money out of circulation at all since you'd just be swapping 72tn for 72tn...)
Barry, check out my link and the CBI gives the exact numbers for the 1990s
http://www.cbi.iq/documents/Annual_2002f.pdf
Table 2
In 1991 the total money supply (m2) was 24.670 billion, currency in circulation was 21.873 billion.
Table 10
Exchange rate in 1991 was 10 dinar per dollar, or 10 cents.
The $3 rate was 1980, just as Saddam was coming into power. I think it's safe to say in 1980 the total money supply (m2) was about 20 billion
The funny thing is there were quite a few articles that talked about the only currency Iraqis were using were 250 and 10,000 dinar notes. Gen. Huh Tant who was in charge of the currency swap talked about it. So these people claiming the dinar was worth $3 right up to the war, if that were true, which we know it wasn’t, but if true that means Iraqis were running around doing all their business, buying scraps of bread and supplies with only $750 and $30,000 notes.
I’ll have a coke, and if you don’t have change for my $30K note I’ll take your Mercedes.
It also funny that people still bring up Kuwait’s dinar value. I understand a newbie bringing it up and not understanding, but these guys that have been around for years and had it explained to them over and over and they still don’t get it. SMH
http://www.cbk.gov.kw/cbkweb/servlet/cbkmain?Action=mtbl&archive=201211&tbl=RM02
Latest numbers from Kuwait’s Central Bank. They have 1.14 billion dinar in circulation. They have a total money supply of 28.9 billion dinar. At a $3.50 exchange rate that means they have 3.99 billion dollars worth of dinar in circulation and 101.15 billion dollars worth of dinar total money supply.
Iraq numbers are 35 and 70 TRILLION. At the exchange rate of .00085 Iraq has 29.75 billion dollars in currency in circulation and 60 billion dollars worth of dinar total money supply.
So even though Kuwaits exchange rate is about 4000 times higher, their total money supply is not even worth 2 times more than Iraqs. $101 billion to $60 billion. Kuwaits currency in circulation is actually worth 7.4 times less than Iraqs, $3.99 vs $29.75, even though Kuwaits rate is 4000 times higher.
It very simple math, practically elementary school level math. Iraq has a couple thousand times more currency, so it’s very normal for each unit of that currency to be valued a couple thousand times less. How simple can it get??? It’s stunning that after years people can’t figure out that simple concept. I bet if I walked into a class of 8 year olds I could get 3/4 of them to understand that in about 10 minutes. Yet grown adults holding dinar for years on end can’t add it up?