7-24-2012

B says that indeed Iraq is going to redenominate, but of course he defines that as printing new lower denoms in anticipation of a 100,000% revaluation where they won't need the 000 notes any more.  No revaluation in history has required the printing of new currency, so if B is right this will be unprecedented and will deviate from the normal process of removing zeros from the exchange rate which has always been done by replacing one currency series with a new one at a higher value and lower supply.  


B says he hasn't heard anything negative in this investment.  Selective hearing, for sure.  Just a couple of days ago 100 people died in a bombing in Iraq.  But even if all of the bombings stopped and everybody in Iraq decided to hold hands and sing Kumbaya you still have to deal with the hundreds of articles and statements declaring the CBI's intent to delete the zeros which means redenomination (lop) which would mean a loss of profit for the vast amount of dinar speculators.  (I know some of you are tired of me saying that over and over but I have new readers all the time who don't know this so please bear with me.  I'm trying to overcome years of pumper BS here. )


B explains again his reasoning behind his "dirty float" theory.


They came out with 15 trillion at about today's rate.  Then they came out with another 15 trillion which should have divided that value in half because there's more money, and more money dilutes the value of the wealth that represents that currency.  So it should have went from 4 cents to 2 cents.  It did not.  Then they talked about how they were reducing the money supply, and did it change the numbers?  No it did not.  So that's what they mean by a dirty float.   (24 min. in)


This makes zero sense.  If they came out with 15 trillion at today's rate the value would have been less than a tenth of a penny, so how could it go from 4 cents to 2 cents when they doubled the supply?  If it was at today's rate and the supply doubled the argument should be that it should have gone from $.00086 to $.00043, not from 4 cents to 2 cents.  The fact is Iraq can print more money without adjusting the exchange rate as long as the foreign currency reserves they are backing their currency with is also growing, which it is.  There's no bogus or "artificial" rate here.  Yes, it's a dirty float, but that doesn't mean what B thinks it means. 


"Dirty float" is just another term for "managed float" as opposed to a free floating currency which they can't do with the dinar as long as their country is as unstable as it is now.  Think about it.  If they had a free floating currency the value would tank every time a bomb goes off, and every time something positive happens it would shoot back up, making the valuation too unstable.  Shabibi stated when he was in Washington last year that they want a stable exchange rate.  (All the more reason to reject the notion of a 100,000% RV to 86 cents.)  They won't get that without a managed float.     


As for them telling us they were reducing the money supply, the CBI has never said that they are now reducing the money supply.  In fact the figures from the CBI website indicate the exact opposite.  What the CBI has said is that their plan is to reduce the money supply when they redenominate which will take the money supply from 30 trillion to 30 billion dinar.    


http://www.youtube.com/watch?v=gKzb18gARGo&feature=plcp


http://dinardouchebags.blogspot.com/2012/02/breitling-catalog.html

http://dinardouchebags.blogspot.com/2011/10/breitling-busted.html