Not much to report this month other than a couple of articles and a really stupid guru comment.
The article that seemed to generate the most interest was this one.
“A few days ago announced a committee of economy and investment in the Iraqi parliament, that the deletion of zeros from the Iraqi currency will be working by next year (2015).
It is noteworthy that the subject of the deletion of zeros from the Iraqi currency is not new, it was the Iraqi government project about deleting three zeros from the Iraqi dinar, to reduce inflation suffered by the Iraqi currency, but it has been postponed. He was scheduled to testify in 2011 to delete the three zeros from denominations of Iraqi currency, so that it becomes the new dinar, equal to 1000 Old dinars. What does that mean?
First, it is necessary to clarify the fact that the abolition of zeros any currency in the world, does not mean in any way an improvement in the exchange rate, and this in turn leads to another conclusion is that the deletion of zeros does not mean as well as any improvement in the Iraqi citizen’s income, it does not mean to address the many economic problems suffered by the Iraqi economy. If that is the case, for all the world’s governments scrapped zeros from their currencies. The deletion will not address inflation and will not contribute to the aggravation, and will enhance the economic reform, that if there is any economic reform originally.
The only goal is to facilitate the buying and selling processes, and the mitigation of carrying large quantities of banknotes, and perhaps give a positive psychological boost for Iraqis, so that they feel, even if only from the door of the feeling, that the purchasing power of the dinar, has become the best. In any case, we must clarify here is the fact that the Central Bank of Iraq, the authority is independent of the government is not entitled to state intervention work.”
The article clearly states that:
- The new dinar will be equal to 1000 old dinars. That means that it will be valued at $.86. That would be a lop, folks.
- The deletion of the zeros doesn’t mean in any way an improvement in the exchange rate or in the Iraqi citizen’s income. That would be a lop too, folks.
- This isn’t being done to fix their economic problems. If they could fix their economic problems by removing zeros then every country would do it. While that sounds sooo obvious it’s amazing how many dinarians can’t seem to comprehend the fact that you can’t revalue your way into prosperity.
- The only goal is to facilitate buying and selling. “Facilitate” means it will be easier, which is what a redenomination (lop) does. It makes cash transactions and accounting easier. They go on to say that they hope that this will provide a psychological boost to use a currency with a higher value, even if there’s no true increase in purchasing power.
The article concludes with a reference to the dinar returning to its glorious past (how many times have we heard gurus talking about the dinar returning to its glorious past through a revaluation?), but that this is “false joy, nothing else”. In other words, the redenomination will give the people a good feeling, but it’s only a feeling. There’s no true increase.
Another article getting a lot of attention was this one that says the initiative to revalue and delete zeros from the Iraqi Dinar will be delayed for five years because of the political and security situation in Iraq. Of course there are some who will point to the word “revalue” and insist that it’s not a redenomination or “lop” that they’re talking about but an increase in purchasing power from a revaluation. But as many of us can attest, you have to go by the description of the process and not the particular verbiage resulting from the translation of Arabic into English. The process they’ve been talking about for at least four years is a typical redenomination that you can read about in any financial or investment dictionary. You don’t delete zeros, issue new currency, and remove the old currency from circulation in a revaluation. Even if they botch the translation the description tells you very clearly what they intend to do.
|Removing Three Zeros – Brad, Charlie, and Michael Teadt do the perp walk (Sept. 2012)|
But the good news from October in my opinion was the sentencing of Brad Huebner and Charlie Emmenecker from the BH Group. Brad got seven years and Charlie got three for dinar fraud and related charges. It seems there is at least some justice in this world. Apparently Brad is still in denial, stating that “one day in the near future the Iraqi government would revalue its currency and everyone’s investment would pay off”. Unbelievable! Their partner in crime Rudy Coenen received a five year sentence back in September for his role in the ruse. Now if we can just get the justice department to follow up with a dozen or so more indictments.