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Will there be a LOP? Posted by David (revalue.us) on 06/24/2011 20:55
In the article "Currency Overhaul - Iraq Said To Be Planning Currency Redenomination" the sixth paragraph from the bottom states "In the longer term, Saleh said a redenomination is needed wherein three zeros will be dropped so that the 25,000 Iraqi-dinar banknote -- currently the largest denomination -- becomes a 25-dinar note."
It is intellectual dishonesty to read that article and not conclude that it supports the theory of reducing the value of the 25,000 IQD to 25 IQD, dis-affectionately referred to as “The LOP”.
This could be true were it not for two major other factors;
A) Non 3 Zero Dinar Notes exist like the 500 IQD, the 250 IQD and a 50 IQD note , and
B) The Central Bank of Iraq and Government of Iraq has been quoted as stating in these articles that whenever the lower denominations are introduced, they will “CO-EXIST” in the market place. Source 1, Source 2
There will be such massive security risks and instability in Iraq if I have two 25K IQD Notes totaling 50,000 IQD and my neighbor has two 50. IQD Notes totaling 100 IQD;
And upon the alleged LOP he still has 100 IQD and I now have 50 IQD seeing my 50,000 IQD holding has been reduced by 3 zeroes.
Every Basic law of economic fairness and common justice is automatically breached in a LOP scenario where Lower Denominations than those being lopped exist. Except of course there is a way to remove all currency at once and replace with a new currency. The problem however with the afore stated is B above where the CBI makes a case for the coexistence of both in the market place.
Based the premised article that went on to further state:
“He added that large denominations equivalent to around $100 will be issued to simplify major purchases, and new coins and lower denominations will be introduced for smaller transactions.
In the longer term, Saleh said a redenomination is needed wherein three zeros will be dropped so that the 25,000 Iraqi-dinar banknote -- currently the largest denomination -- becomes a 25-dinar note.
He said the change is inevitable, considering the economy is expecting high growth in the coming years with a planned increase in oil production to finance reconstruction projects.
Saleh said there are currently some 29 trillion dinars in circulation in Iraq, represented by some 6 trillion banknotes of various denominations, most of them quite small. He said this also causes complications for the central bank and government, as well as commercial accounting departments.
Saleh said the monetary-restructuring plan was drawn up with the help of foreign experts and financial institutions, including the International Monetary Fund (IMF), of which Iraq has been a member since 1945.
The plan will soon be presented to the cabinet, which is expected to subsequently send a bill to parliament.
Saleh noted that until 1980 the Iraqi dinar exchange rate was 1 dinar/$3.3 compared to $1/1,168 dinars now due to hyperinflation that occurred during the latter part of the late ousted leader Saddam Hussein's reign.”
This just might be the likely scenario;
1) Denominations Less than 1,000. IQD are about to be released
2) Expected Denominations will mirror that of the past; coins, 1,5,10 and 25 IQD Notes
3) These lower IQD notes free of 3 Zeroes will be introduced while still at the 1170 rate or while still at some nominal rate. (Re-Instatement average just above $1.00USD*)
4) The 3 Zero Notes 1,000. IQD and above will be removed from circulation gradually
5) For bigger transactions for which the citizenry usually use the 100USD, an IQD note equal to 100USD will be introduced. (maybe a 100,000 IQD Note).
6) 3 Zero notes will be almost non-existent and apart from the IQD note equaling 100USD the largest IQD will be the 25 Dinar Note.
7) Greater Value will be added to the lower denominations (Re-Valuation)
a) That Higher Valued note that once equaled 100USD will be removed from circulation and used strictly between banks and countries.
The Revalue.US team will then Morph into Post RV Mode
9) The Iraqi Dinar will rise to true value over the course of a few years.
Except for Numbers 6, 7 and 9 above, it is my 95-5% belief that this article and previous articles this week have painted this picture.
Because of articles like "PM Economic Advisor opposes CBI's currency restructuring", we can see there being fierce opposition to the plan. There are forces in and out of Parliament that propose bringing the IQD back to full strength upon the direct introduction of the Lower Denominations in Step 1 above. However the purpose of this piece is to prove or disprove the LOP as evidenced In the article "Currency Overhaul - Iraq Said To Be Planning Currency Redenomination" . Seeing we are now arguing Rate, I guess we can conclude the LOP a farfetched theory.
*Several articles lay claim to a gradual increase in value of the IQD commensurate with economic development over time. The above $1.00USD suggested here is to support the notion that 23USD will not purchase 25,000 IQD anymore but will instead purchase 25 IQD and the fact that they intimate thei intent to bring out a note equaling 100USD. If upon the reinstatement in step 2 they came out at Real Value around $3.33 (Future of Iraq Project Page 12), there will be no need to bring out anything above 25 IQD for larger purchases like cars and property.
The argument should not be on the side of whether they could or should not Revalue at a lower or higher rate but whether they WILL or WILL NOT.
Shallom
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In the article "Currency Overhaul - Iraq Said To Be Planning Currency Redenomination" the sixth paragraph from the bottom states "In the longer term, Saleh said a redenomination is needed wherein three zeros will be dropped so that the 25,000 Iraqi-dinar banknote -- currently the largest denomination -- becomes a 25-dinar note."
It is intellectual dishonesty to read that article and not conclude that it supports the theory of reducing the value of the 25,000 IQD to 25 IQD, dis-affectionately referred to as “The LOP”.
This could be true were it not for two major other factors;
A) Non 3 Zero Dinar Notes exist like the 500 IQD, the 250 IQD and a 50 IQD note , and
B) The Central Bank of Iraq and Government of Iraq has been quoted as stating in these articles that whenever the lower denominations are introduced, they will “CO-EXIST” in the market place. Source 1, Source 2
There will be such massive security risks and instability in Iraq if I have two 25K IQD Notes totaling 50,000 IQD and my neighbor has two 50. IQD Notes totaling 100 IQD;
And upon the alleged LOP he still has 100 IQD and I now have 50 IQD seeing my 50,000 IQD holding has been reduced by 3 zeroes.
Every Basic law of economic fairness and common justice is automatically breached in a LOP scenario where Lower Denominations than those being lopped exist. Except of course there is a way to remove all currency at once and replace with a new currency. The problem however with the afore stated is B above where the CBI makes a case for the coexistence of both in the market place.
Based the premised article that went on to further state:
“He added that large denominations equivalent to around $100 will be issued to simplify major purchases, and new coins and lower denominations will be introduced for smaller transactions.
In the longer term, Saleh said a redenomination is needed wherein three zeros will be dropped so that the 25,000 Iraqi-dinar banknote -- currently the largest denomination -- becomes a 25-dinar note.
He said the change is inevitable, considering the economy is expecting high growth in the coming years with a planned increase in oil production to finance reconstruction projects.
Saleh said there are currently some 29 trillion dinars in circulation in Iraq, represented by some 6 trillion banknotes of various denominations, most of them quite small. He said this also causes complications for the central bank and government, as well as commercial accounting departments.
Saleh said the monetary-restructuring plan was drawn up with the help of foreign experts and financial institutions, including the International Monetary Fund (IMF), of which Iraq has been a member since 1945.
The plan will soon be presented to the cabinet, which is expected to subsequently send a bill to parliament.
Saleh noted that until 1980 the Iraqi dinar exchange rate was 1 dinar/$3.3 compared to $1/1,168 dinars now due to hyperinflation that occurred during the latter part of the late ousted leader Saddam Hussein's reign.”
This just might be the likely scenario;
1) Denominations Less than 1,000. IQD are about to be released
2) Expected Denominations will mirror that of the past; coins, 1,5,10 and 25 IQD Notes
3) These lower IQD notes free of 3 Zeroes will be introduced while still at the 1170 rate or while still at some nominal rate. (Re-Instatement average just above $1.00USD*)
4) The 3 Zero Notes 1,000. IQD and above will be removed from circulation gradually
5) For bigger transactions for which the citizenry usually use the 100USD, an IQD note equal to 100USD will be introduced. (maybe a 100,000 IQD Note).
6) 3 Zero notes will be almost non-existent and apart from the IQD note equaling 100USD the largest IQD will be the 25 Dinar Note.
7) Greater Value will be added to the lower denominations (Re-Valuation)
a) That Higher Valued note that once equaled 100USD will be removed from circulation and used strictly between banks and countries.
The Revalue.US team will then Morph into Post RV Mode9) The Iraqi Dinar will rise to true value over the course of a few years.
Except for Numbers 6, 7 and 9 above, it is my 95-5% belief that this article and previous articles this week have painted this picture.
Because of articles like "PM Economic Advisor opposes CBI's currency restructuring", we can see there being fierce opposition to the plan. There are forces in and out of Parliament that propose bringing the IQD back to full strength upon the direct introduction of the Lower Denominations in Step 1 above. However the purpose of this piece is to prove or disprove the LOP as evidenced In the article "Currency Overhaul - Iraq Said To Be Planning Currency Redenomination" . Seeing we are now arguing Rate, I guess we can conclude the LOP a farfetched theory.
*Several articles lay claim to a gradual increase in value of the IQD commensurate with economic development over time. The above $1.00USD suggested here is to support the notion that 23USD will not purchase 25,000 IQD anymore but will instead purchase 25 IQD and the fact that they intimate thei intent to bring out a note equaling 100USD. If upon the reinstatement in step 2 they came out at Real Value around $3.33 (Future of Iraq Project Page 12), there will be no need to bring out anything above 25 IQD for larger purchases like cars and property.
The argument should not be on the side of whether they could or should not Revalue at a lower or higher rate but whether they WILL or WILL NOT.
Shallom
[You must be registered and logged in to see this link.]
