8-10-2012 2nd Show

B says that the idea that Iraq will only raise the value of their currency when they redenominate is false.  I agree, and I never claimed that they won't raise the value.  They've raised it many times in the past and may very well raise it in the future.  I'm hoping they do, in fact.  But they won't raise it 1000 times its current value.  It will likely be an increase of less than 10% and won't require the printing or distribution of any new currency.  What I have said repeatedly is that when they say they are going to increase the value its always within the context of redenomination which won't produce any profit for investors.  (8/12/12 NOTE!  When I posted this I forgot that they have also talked about raising the value via the auctions.  That doesn't change the official value, however.  They just use the auctions to manipulate the money supply to bring the street value back up to around the official value from time to time.  My point is still valid that they aren't referring to raising the official value which is what a revaluation is.)  If they want to bump up the value a few % tomorrow they'll just do it.  No fanfare.  No announcements.  Just change it like they did back in January.  That's how revaluations work, folks.  That's why you shouldn't listen to gurus.

B says that a 27% increase in the value of the dinar (as occurred from 2006-2009) is nothing.  Actually, given the history of currencies and valuations a growth of 9% a year is huge.  True, it's nothing compared to the 100,000% increase (from $.00086 to $.86) that B and other gurus are expecting, but a 100,000% increase has never happened nor will it.  A 10,000% increase has never occurred.  A 1000% increase has never occurred.  A true economist or currency expert will tell you that it's rare for a currency to increase more than 10% in a year.  That's one of the many reasons I liquidated over 98% of the IQD I once held.

B says that Shabibi's job is to add value to the currency.  Actually one of the many jobs that Shabibi has is to maintain stability in the exchange rate.  Here's a quote from the UNCTAD Trade and Development Report in 2009.

"The report points to the importance of stabilizing real exchange rates at a sustainable level. Such a system would go a long way towards reducing the scope for speculative capital flows that generate volatility in the international financial system and distort the pattern of trade. A stable real exchange rate (RER) at a competitive level would achieve a number of targets simultaneously"

http://onedinar.forumotion.net/t8407-central-bank-of-iraq-s-governor-sinan-shabibi-and-the-united-nations-un-meeting-nov-23-24


Shabibi spent 20 years with UNCTAD.  And here they are talking about the importance of stabilizing real exchange rates.  How could Shabibi's job possibly be to add value?  The only increases that we've seen to the dinar were brought on by inflation.  From 2006-2009 they were frequently increasing the value to bring inflation down and it worked.  They maintained that value for three years until the exchange of dinar for dollars brought on by departing coalition forces in late 2011 caused a spike in inflation.  In late January of 2012 they bumped up the value by a third of 1% and inflation came back down.  There have been no increases since and it's unlikely that there will be unless inflation becomes a factor again.  No, Shabibi's job is not to raise the value.  It's to maintain stability as much as possible and that's exactly what he's doing. 


http://www.youtube.com/watch?v=sxn1X0DHyWE&feature=plcp

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

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