The Iraqi Dinar Devalued-No RV (Revalue)

You heard right. The rate just adjusted again. It is now trading at 1190 to one U.S. dollar. Sam i am predicted the rate would drop a while back on a conference call. So with that in mind an updated conference call just took place. Topics include how far the rate will drop and the future of the dinar. Here is the call in its entirety.

Of course, many of the dinar holders on YouTube did not like this news. We have been going at it pretty hard and heavy in the comment section. Some of the commenters came back and deleted their comments when they realized we were telling the truth. One of the people who has been leaving comments is a guy by the name of haissemweneht. When we were talking about the strength of the dollar he had this to say

“Remember when gasoline was worth 1 dollar per gallon? The value of the US Dollar is 14 – 16 percent less than a few years ago. Now gas is 3 dollars. I would say that the dollar is worthless.”

This is total GCR propaganda nonsense and this is what these guys do. They confuse economic terms and rant like idiots! The big mistake in this GCR talking point is the fact that they are taking a nominal inflation rate and judging the strength of the dollar by it to make the claim that the dollar has lost global value.  These are actually two different things blended together to look like one thing. They are comparing inflation rates with exchange rates and claiming the dollar is weak!

First, we are talking about the global value of one currency against another currency. Let me give you an example. When we were invested in the dinar it took 1166 dinar to get one U.S. dollar. Today it takes 1190 dinar to get one U.S. dollar. This means that the value of the dinar has gone down and the value of the dollar has gone up. In fact, if you research this you will discover that the dollar is a lot stronger globally than most people know!

We are not talking about national purchasing power. We are talking about exchange rates not Inflation rates! If we were talking about inflation then it would only be fair to compare the United States inflation rates with other inflation rates. Let’s take his gas example. Gas went over a dollar in the 1980’s. In 1986 Gas was about 1.18 a gallon. That was 32 years ago. Now let’s look at what gas cost in England 32 years ago and compare that price with today’s price in England. By this dumb logic we would conclude that the pound is completely unstable.

Every country has inflation. That is a side effect of a decent economy. When the economy goes bad you have deflation or worse, hyperinflation. All currencies lose purchasing power over time. Even the dinar loses purchasing power and it had hyperinflation during the 1990’s. He was comparing the inflation rate of the dollar with the exchange rate of the dinar. These are two different animals and it is a really bad argument. The dollar is strong compared to other currencies, not inflation rates.

This is the type of typical GCR nonsense used to sell precious metals and dinar gurus steal the same talking points. They need the dollar to tank in their presentations in a feeble attempt to make the dinar look like a good investment.

Just as a side note, look at the name of our commenter who was spreading this nonsense. The name haissemweneht is actually the new messiah spelled backwards! I don’t think I would trust anyone who has a name like that. Thanks to Nash for pointing that out!

The Bitcoin Phenomenon Part 2

In part 1 of “The Bitcoin Phenomenon” we covered all the background about this currency. We covered a brief history of cryptocurrencies, and we covered some problems associated with them. We also covered some of the risks. If you have not read part 1 then click here.

Make no mistake, people have made money by investing in bitcoin, people have made money by investing in other cryptocurrencies too. This is not like the dinar in the sense that only the dealers and the gurus are making money. There has not been anyone that has ever become wealthy by investing in the dinar. In fact, the word is out that the dinar was pretty much an investment scam.

This is not the case with bitcoin. If this cryptocurrency was a known scam, as some have claimed, then NASDAQ would not consider trading it, and the exchanges would leave it alone. One of the main reasons bitcoin has soared in price is that the exchanges are now trading bitcoin. The dinar and other third world currencies were sold based on hype about a fictional revalue. The networks of gurus were actually getting kickbacks from dealers to promote the hype, while at the same time appearing to be independent.

However, I do see something that disturbs me. There seems to be a lot of hype based on fiction with bitcoin as well. Because of the potential to make money, common sense has left many investors. Reasoning and understanding is left in the dust as people rush out to buy it. Some of the same patterns we have seen in the dinar world are starting to emerge with bitcoin. This cryptocurrency has acquired its very own set of gurus, and information is made up. Nothing is vetted or verified, and total fictional fabrications are made up to make the investment more attractive. This causes many people to over-leverage, and they are not aware of the risks.

This seems to be the same identical behavior that has happened with other cryptocurrencies too. This is part of the pump and dump process.

  • Step one; your group buys a cryptocurrency in massive quantities and drives the price up through demand.
  • Step two; make up lies and events to promote the currency. The reason for this is to present the appearance that the currency is going to go much higher. “Oh my, how high will it go?” This will attract many new investors. It’s like the shiny part found on a fishing lure.
  • Step three; once the new investors are in, dump your investment and get out.

Please allow me give you an example of the current bitcoin hype,

Central Banks Buying Cryptocurrency in 2018

The above article claims that the G7 central banks will buy bitcoin in 2018 due to the problems associated with all fiat currencies. Inflation seems to weaken fiat currencies because they have no intrinsic value, and bitcoin is immune to that. Because bitcoin is rising in value and is worth more than fiat currencies, the G7 central banks will buy bitcoin to use as a reserve for their currency. It will be used in SDR transactions, and placed in the basket of currencies. Because it is well-known that the definition of fiat means “no intrinsic value”, bitcoin will replace all currencies as reserves over the course of time. At least this seems to be what this article claims to me. Maybe I am wrong.

CNBC has produced an article with the same information, but then it says these are the claims made by the CEO of blockchain. Ah ha! Something does not sound right to me. The two currencies presented to be picked up by central banks according to this CEO are bitcoin and ethereum.

CNBC article

The Truth Is……

Let me explain a few things and give my analysis. First, “fiat” does not mean “no intrinsic value”. Fiat currency is currency that is used by a government because of decree or law. Outside of that decree or law it has no intrinsic value. When gold was used for money it had value outside of any law or decree, whereas our paper currency does not have value. The law that gives the U.S. dollar value is the Federal Reserve Act, and a series of laws were passed during the early 1930’s which modified the act, making it even stronger. These laws serve to protect the dollar against counterfeiting and declare that it is the official currency of the United States. When you pay your taxes it must be in dollars!

Dinar gurus constantly made the claim that the definition of “fiat” is ‘no intrinsic value”, as if to imply that the dollar really has no value and it was all based on faith, even in regard to the law of the land. This is where some of the GCR propaganda comes into play. I now see bitcoin gurus making the same arguments that we debunked when the dinar was popular! The reason for this is to hype bitcoin so investors can make more money.

Well I’ve got news for you. Bitcoin has no laws issued by governments to protect it. In fact, the value of bitcoin is also based solely on faith! It is also perceived! “Cryptocurrencies are, at the moment, treated universally as assets, and not as currencies for tax purposes. This means that if the price of bitcoin rises against the dollar and you cash in, then you are liable to pay capital-gains tax on the appreciation of the currency. If the value of the U.S. dollar rises 20% against the pound, then you are not liable to pay capital-gains tax on that appreciation!

Bitcoin started out as a currency independent of a central banking system. Without a central bank to regulate bitcoin there is no way to control the supply. In the past, the Federal Reserve has reduced the physical money supply in the USA as demand drops. When demand increases, more physical currency is put back into circulation. This action preserves the value of the dollar and it controls inflation. The Federal Reserve can also reduce the money supply to match a reduction in demand!

https://tradingeconomics.com/united-states/money-supply-m0

While bitcoin expands due to mining, there is no built-in contraction mechanism should demand drop. This is probably the main reason bitcoin has been so volatile in the past. This is why all cryptocurrencies are subject to pump and dump schemes. Cryptocurrencies will almost always have massive imbalances in supply and demand, because there is effectively an unlimited supply of them but a clear demand ceiling. The fatal issue for cryptocurrencies is that the supply can only go up! There is unlimited upside to the supply of all cryptocurrencies.

Even though an individual cryptocurrency may have a ceiling on supply, there are many of these currencies out there. If a new cryptocurrency is introduced in the future, and if it is believed to be superior to all existing cryptocurrencies, then you would likely see a massive move out of existing cryptocurrencies and into the new superior currency!

Furthermore, because you cannot reduce the supply of a cryptocurrency, that drop in demand would not be matched by a drop in supply! If demand goes down but supply does not, we will all see a drastic reduction in the value of that cryptocurrency. Its economics 101.

The ever-increasing supply of cryptocurrencies can be seen in the recent boom in so-called “initial coin offerings”. One of the main problems with bitcoin and other cryptocurrencies is that people still view them as investments rather than a means to exchange goods and services. New cryptocurrency startups will issue digital coins or tokens in exchange for real money. This real money is then used to fund projects. Billions have been raised using this method.

This ultimately means that cryptocurrencies fail in the two key areas of what makes a currency a currency! A currency has to be a widely used as a medium of exchange. Cryptocurrencies are never going to achieve that as long as they are used as an investment.

Second, you cannot use cryptocurrencies to settle tax liabilities. On average, around 34% of all economic activity is taxed. Governments are not likely to accept cryptocurrencies that they do not control to settle tax debts. You are therefore removing one of the main sources of demand for a currency. One of the key issues, whenever we talk about monetary economics, is that the money supply should never be considered in isolation of demand.

All money supply needs to be considered against money demand. If you do not have the ability to use cryptocurrencies for the largest single transaction in the economy then it will never be used as a major medium of exchange.

The Jiaozi was a banknote that was used around the 11th century. They first appeared in the Sichuan capital of Chengdu, China. Many numismatists (currency collectors) regard it as the first paper money in history. The banknote came from the Chinese Song Dynasty (960–1279 AD). It was highly successful at first because the kingdom of Sichuan insisted that people pay their taxes using this paper currency. Because of this requirement there was an enormous demand. For a while the paper currency kept its value.

There were no economists in the kingdom of Sichuan. Unfortunately they just kept printing the stuff. They were in serious trouble when the money supply exceeded demand. This is why governments won’t accept bitcoin to pay taxes. It removes demand for the currency they control.

Another key feature of a currency is that it acts as a store of value. This means you can put your money into it and be reasonably sure that in normal circumstances its value will not fluctuate on a massive scale. Cryptocurrencies cannot do that. Bitcoin has had many hyperinflation episodes. In a few cases it has dropped as much as 80 percent in value. In some cases its ability to purchase goods has dropped more than 25% in the course of just one week. That is not a stable store of value.

The G7 countries (Also known as The Group of 7) is a group made up of Canada, Germany, Japan, France, Italy, the United States and the United Kingdom. These countries have the 7 largest advanced economies in the world. These economies represent more than 62% of the global net wealth with an approximate value of $280 trillion. It is highly unlikely that these countries will use a cryptocurrency that has a track record of being 18 times more volatile than the US dollar! Furthermore, if these central banks ever accept bitcoin it will remove demand for the currencies these countries already use and control.

Will the International Monetary Fund allow bitcoin to be used along with SDRs to settle debts when the value of bitcoin changes so rapidly? That is highly unlikely! Let us recognize these assertions for what they really are. This is hype to make these cryptocurrencies appear to be an investment without high risk!

I think that in the end it would be ironic if central banks controlled a cryptocurrency like bitcoin through buying all of it as an asset. They would control a currency that was never designed for them to control.

The Bitcoin Phenomenon part 1

If you have watched the news recently you may have heard about tremendous gains in bitcoin. You may have thought about investing in this cryptocurrency. If everyone is getting rich off of this investment why not invest and make money too? It seems like a sure thing, right? People are dumping all kinds of money into this with the hope of getting rich quick. No one is being informed of the risks involved, and after investing in the dinar I am getting feelings of déjà vu. So allow me to give a brief overview and history of bitcoin. and let me explain some of the risks involved with this investment.

First it should be noted that unlike the dinar, investors have made money with bitcoin. Investors have also lost money. People have made money by mining bitcoin, which is also known as “earning”. This cryptocurrency has even been used in commerce. Now let’s discuss the history and the risks.

The History

The domain name “bitcoin.org” was registered on August 18th, 2008. In November of that same year a link to a paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” was posted to a cryptography mailing list. This paper was authored by Satoshi Nakamoto. The identity of Nakamoto remains unknown, but he implemented the bitcoin software as open-source code and released it in January of 2009.

A cryptocurrency is designed to work as a medium of exchange. It is a digital asset that uses cryptography to secure its transactions. Cryptography is also used to control the creation of additional units, and to verify the transfer of these digital assets. Cryptocurrencies are mainly classified as a subset of real digital currencies. They can also be classified as a subset of alternative currencies, and are often referred to as “virtual currencies.”

In January 2009, the bitcoin network came into existence after Satoshi Nakamoto mined the first ever block on the chain also known as “the genesis block”. A reward of 50 bitcoins was included on this genesis block. Embedded in the coinbase of this block was the following text: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This text has been interpreted as both a timestamp of the genesis date and a cynical comment on the instability caused by fractional-reserve banking. Its launch was close to the 2008 meltdown.

For this reason bitcoin is the first decentralized cryptocurrency. The decentralized control is directly related to the use of bitcoin’s blockchain transaction database in the role of a distributed ledger. Cryptocurrencies use various timestamping schemes to avoid the need for a trusted third-party to timestamp transactions. These timestamps are added to the blockchain ledger. Bitcoin and currencies like it use decentralized control as opposed to centralized electronic money or central banking systems.

One of the first supporters of bitcoin was a guy by the name of Hal Finney. He was the receiver of the first bitcoin transaction. He was also a programmer and a contributor to bitcoin. Finney downloaded the bitcoin software the day it was released and he also received 10 bitcoins from Nakamoto in the world’s first bitcoin transaction. Some websites list other early supporters as well. They include Wei Dai, who was a creator of the bitcoin predecessor b-money, and Nick Szabo. He was the creator of the bitcoin predecessor bit gold.

In the early days, Nakamoto is estimated to have mined approximately 1 million bitcoins. In 2010, Nakamoto handed the network alert key and the control of the Bitcoin Core code repository over to Gavin Andresen. This man became the lead developer at the Bitcoin Foundation. Nakamoto removed himself from any involvement with bitcoin. Gavin Andresen stated that he wanted to decentralize control, saying: “As soon as Satoshi stepped back and threw the project onto my shoulders, one of the first things I did was trying to decentralize that. So, if I get hit by a bus, it would be clear that the project would go on.” This statement allowed speculation and controversy over the future development of bitcoin.

The value of the first bitcoin transactions were negotiated by individuals on the Bitcoin Talk forums with one notable transaction of 10,000 BTC used to indirectly purchase two pizzas delivered by Papa John’s. Since then bitcoin has gained in value and popularity worldwide.

A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold or store a person’s bitcoins, because of the design of the system, bitcoins are inseparable from the blockchain transaction ledger. A better way to describe a wallet is a digital system that will store the digital credentials for your bitcoin holdings. This wallet will allow you to access your bitcoin in order to spend them.

Jordan Kelley is the founder of Robocoin. On February 20th, 2014 Kelly launched the first bitcoin ATM in the United States. The kiosk was installed in Austin, Texas. It is similar to a bank ATM, but it also has scanners installed in order to read government-issued identification. This kiosk will scan a driver’s license or a passport. This is done in order to confirm a users’ identity. By September 2017 1,574 bitcoin ATMs have been installed around the world with an average fee of 9.05% per transaction.

In 2015, the number of merchants accepting bitcoin exceeded 100,000. Instead of 2–3% typically imposed by credit card processors, merchants accepting bitcoins often pay fees between 0% to 2%. Firms that accepted payments in bitcoin as of December 2014 included Dell, Newegg, PayPal, and Microsoft. More local businesses also started excepting bitcoin.

Since the introduction of bitcoin many other cryptocurrencies have been released. The success of bitcoin has created a whole bunch of bitcoin wannabes.  Everyone seems to believe that if Satoshi Nakamoto can do it, they can too. Numerous cryptocurrencies have been created. These are frequently called alt-coins. They serve as a blend of bitcoin alternatives. Today there are hundreds of cryptocurrencies out there and they are all trying to be the next bitcoin.

Most cryptocurrencies are designed to gradually decrease production of currency as more is mined. The purpose of this is to place an ultimate cap on the total amount of currency that will ever be in circulation, thus mimicking precious metals. However, people still mine for bitcoin today.

The Risks and Dangers With Cryptocurrencies

Now that you have a brief history on bitcoin and other cryptocurrencies let’s discuss some of the risks and problems associated with them. There is a lot of hype involved and as a result, there is a currency out there for almost everything. There is even a Ron Paul cryptocurrency.

Consider all the variables to make this work. A tremendous amount of effort must be expended to create an alt-coin.  There is the cryptocurrency itself and the electronic wallet that all possessors of a coin must have on whatever electronic device they may be using. This also means that the program must work on a wide range of computers and smart-phone platforms. There is also a marketing expense to get some people to start speculating in it. There is the process of setting up the mining operation so that the virtual miners of the world can start “earning” the coin so that they can sell it on an exchange. There are literally hundreds of these currencies out there and one estimate has the number of alt-coins around 1,100.

These alt-currencies are all attempting to duplicate bitcoin’s success. The majority of bitcoin users are acquiring bitcoins not in order to buy goods and services but to speculate. The main usage of bitcoin and similar cryptocurrencies is that they are seen as an investment.

From our experience as dinar investors we should know that’s a bad investment decision, and it also hurts bitcoin’s prospects. The problem with having the bitcoin economy dominated by speculators is that it gives people an incentive to hoard their bitcoins rather than spend them. This happens to be the opposite of what you need people to do in order to make a currency successful. Successful currencies are used to transact day-to-day business and lubricate commerce. But if your reason for buying bitcoins is hoping that their value will skyrocket, as any investor would, you’re not going to be interested in exchanging those bitcoins for goods, This is because you will lose when the value of bitcoin rises. Instead, you’re going to hold on to them and wait until you can cash out.

Merchants accepting bitcoin ordinarily use the services of bitcoin payment service providers such as BitPay or Coinbase. When a customer pays in bitcoin, the payment service provider accepts the bitcoin on behalf of the merchant and then converts it to the local currency! These bitcoin services will send the obtained amount to the merchant’s bank account. They charge a fee in return for the service. We are led to believe that merchants accept bitcoin and then later on use it in other transactions, but this is not the case! Merchants around the world who accept bitcoin will get a government currency immediately deposited in their account during the course of the transaction.

There are pump and dump schemes that artificially drive the price up on cryptocurrencies for a short period of time. Pump and dump schemes are where people collude to buy a small cryptocurrency at the same time, and thus push up the price by artificially inflating demand. Those involved collect a quick profit by selling to new investors who are attracted by the rising price. People involved in this make up large groups that will pour millions of dollars into a cryptocurrency at one time. These people view the currency like a stock. Once new investors are in they sell off the currency for a huge profit. (check the link below)

Pump and Dump Schemes 

The big question then is this. Has bitcoin ever been involved with pump and dump schemes? There are wild price swings in bitcoin’s history. The price of bitcoin has gone through many cycles of appreciation and depreciation. Many people refer to this as bubbles and busts. Here are a few notable examples. In 2011, the value of one bitcoin rapidly rose from $0.30  USD to $32.00 USD and then it fell to $2.00 USD.  In the second half of 2012 , the bitcoin price began to soar once again on April 10th, 2013 it reached a high of $266.00 USD. Then it came crashing down to around $50.00 USD. This event is known as the 2012–13 Cypriot Financial Crisis. On November 29th, 2013, the cost of one bitcoin rose to a peak of $1,242.00 USD. Then in 2014, the price sharply fell creating heavy loses with investors. As of April of that same year the price of bitcoin remained depressed. It was little more than half of 2013 prices. As of August 2014 it was under $600.00 USD

As of 2014, bitcoin has volatility seven times greater than gold, eight times greater than the S&P 500, and 18 times greater than the US dollar. This is the analysis of Mark T. Williams. However, Forbes claims that there are some uses where volatility does not matter, such as online gambling, tipping, and international remittances.

According to an article in The Wall Street Journal, as of April 19th, 2016, bitcoin had been more stable than gold for the preceding 24 days. The article seemed to suggest that its value might be more stable in the future. On March 3rd, 2017, the price of a bitcoin surpassed the market value of an ounce of gold for the first time in history as its price surged to an all-time high of $1,268.00 USD.

Metcalfe’s law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system. A study in Electronic Commerce Research and Applications, going back through the network’s historical data, revealed the value of the bitcoin network as measured by the price of bitcoins, to be roughly proportional to the square of the number of daily unique users participating on the network. In other words, the bitcoin network is well modeled by the Metcalfe’s law.

So what is driving up the cost of bitcoin now? It is really a number of things. First, as the price continues to go up more speculators are jumping on board, and driving up demand. Second, the same Global Currency Reset nonsense that is used to sell precious metals and foreign currencies from third world countries is being used to hype the bitcoin as a viable investment, and the GCR propaganda is also attracting new investors. Third, Cboe, the options and derivatives exchange, is launching the first-ever regulated futures exchange for bitcoins on Sunday December 10, at 6 p.m. CME Group is scheduled to launch its exchange on Dec. 17, and Nasdaq will start trading the futures in 2018. This has caused wild speculation for the cryptocurrency. The coming futures exchanges have caused the price to skyrocket, but some investors jumped out on Friday. (See link below)

Bitcoin Sell Off

Conclusion

Yes there are people making money with bitcoin, but there are many people who had big losses in the past. As of this writing, bitcoin remains super volatile. Many more long term investors may jump ship before the exchanges take place. This investment is an extremely high risk gamble. You need to be careful with the amount you are willing to invest because it must also be an amount you are willing to lose.

The Wealth of Iraq

In dinarland we often hear gurus talking about the vast wealth of Iraq as the reason we can expect an unprecedented revaluation of their currency.  Iraq has a reported 143 billion barrels of proven recoverable oil in their reserves, which would amount to over $7 trillion dollars worth of oil.  While that’s an impressive amount, I think we need to put it in context.  You see, their neighbor to the east – Iran – has 158 billion barrels in their reserves.  Canada has 170 billion barrels in their reserves.  Saudi Arabia has 266 billion barrels in theirs, and Venezuela leads the world with over 300 billion in theirs.

Now, let’s take a look at their currencies.

The Iranian rial is valued at $.00003, down from $.000033 in 2015 and $.00004 in 2013, despite all of the hype generated by dinar/dong/Zim/rial pumpers in recent years.  Okay, maybe their reputation as a renegade radical Islamic state has kept the rial’s value down, so let’s look at the others.

Canada’s dollar (the loonie)  is currently valued at $.79, up from $.76 two years ago but down from about $.96 four years ago.

The Saudi riyal is valued at $.266, just like it was two years ago and just like it was four years ago, because it’s a pegged currency on a managed float just like the IQD.

And then there’s the Venezuelan bolivar, currently valued at $.10 after the country has fallen into an economic crisis.  Four years ago the bolivar’s value was $.16 and five years ago it was at $.23.

So we can see from these numbers that oil reserves don’t determine the wealth of a country or the value of its currency.  Why would the US, with only 35 billion barrels in their reserves, have a higher standard of living and a more valuable currency than the others?  Because the country has a diverse economy, an educated populace, a strong military, a stable government, and an arrangement with almost every oil producing nation to sell their oil for USD.  Many countries use the dollar along with their currency, or they use the dollar exclusively and don’t even have a currency of their own.  Countries want US products and US services, and they need US dollars to get them.  When Iraq has all of the qualities with its economy that the US has with its, maybe their currency will have a value near that of the USD.  Maybe by the end of the century that will happen, but by that time the IQD and the people who own it will be long gone.

 

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