Okay, so now you know some of the background of the “project to delete the zeros”, let me now explain to you some specific details as to how it will actually work in the long run to give us the “revaluation” out of the “reinstatement” (the final result when we go to the bank and get rich).
Some people have a very difficult time understanding what the project to delete the zeros actually is because they keep wanting to make it into a “lop”. I have explained above why this is not a lop. So let me now show you how this will all work to our benefit.
Let us use the 25,000 dinar ( 25k) note in our example. What happens to 25,000 dinars when you drop the three zeros? The 25,000 become 25 right? So does it surprise you that in the new set of lower category notes the CBI has already printed a 25 dinar note and plans to someday issue this 25 dinar note? Why do they have a 25 note? Doesn’t this seem uncommon and weird to you since most other developed countries don’t have a 25 note?
What is the real purpose in the future for the 25 dinar note?
To answer this question let us look at what the current “sanction” CBI currency auction rate of today. It is around 1190 dinars to 1 US dollar putting a value on it of about $21 USD for a 25,000 dinar note. But what would be the optimum value of the dinar under the sanctioned currency auction rate if you were to someday want to easily convert the 25k dinar note to the 25 dinar note, thus drop the 3 zeros (or delete the zeros)? Of course this answer is easy. It would be 1000 dinars to 1 US Dollar up from the 1190 rate? 25,000 / 1,000 = 25. But this is not reality and they must deal with some inflation and spreads in the auctions and dealers. So it is hard to get the CBI rate to the 1,000 dinar rate optimum mark. So as a starting point the CBI may never come out with the dinar just exactly equal to 1 US Dollar, as many may say. But is 84 cents close enough? That is the actual value of the dinar right now if they were to go to the next stage of deleting the zeros project. 1000 / 1190 = 84 cents (or .8403361). Do you understand how I derived at 84 cents. If not re-read what I just explained to you in this paragraph because this is the most VERY important part in understanding this investment.
First level of Confusion:
I don’t believe this is real since how can they just drop the zeros without a major impact on the economy?
So many people argue and argue how can they just “delete” all these zeros? It would have such a wide range and devastating impact on everything in Iraq (loan contracts, salaries, store prices, etc,, etc). These people are missing the point of how this project to delete the zeros is really going to work. You see the Iraqi dinar is already at 1 dinar = 84 cents USD only you can’t yet go to the bank and do anything with the dinar you hold because you want to exchange it outside of Iraq. Why do I give it this value of 84 cents? Did it already RV?
No, it did not “officially” RV but it does not have to RV in order to realize the 84 cents. Get it? The value of 84 cents is already there with the 1190. Only now they have to drop 3 zeros to make it more apparent and practical, thus launch the 25 dinar note.
Be careful! Let’s not get ahead of ourselves. I know what you are now thinking. You are thinking the CBI can’t do this without a significant change in the rate…right?
The merchants in the stores don’t care if someone hands them a 25,000 note or a 25 note as far as value goes. They are still selling something for 84 cents USD. Right? They value is still the same .84 cents but only as far as their inventory value goes. Get it? The inventory is already bought and on their shelves. It’s only later, when after the reinstatement and the revaluation occurs, that the merchants can purchase much more with the dinar when it is let’s say worth $3.71 USD then when it is 84 cents. So the prices in the stores later on and only at this time will change downward by almost 4 times. So the merchants post RV can then take that 84 cents and it can now buy 4 of the items that used to cost 84 cents USD each. Now only costing just 21 cents USD each. So the stores will change prices downward to much lower prices since the merchants can then buy much more inventory with a dinar rate of $3.71 than they could with 84 cents. Follow me so far?
So if someone happens to hang on to a 25k note and the reinstatement and rate increase on the currency changes to $3.71, they can then go to the store and buy $92,750 USD worth of goods or services. But they are not shopping in the US they are shopping in Iraq and so what is the dinar going to be worth in Iraq? Remember they shop using dinars. Dinars are used in their economy not US Dollars.
Of course that 25k note is always going to be worth 25,000 dinars, nothing more, nothing less. The CBI is NEVER going to cancel the 25k note and tell the citizens to go to the banks with a deadline and turn them in like they did with the old Saddam Hussein notes. So I said dinars not US dollars. So will you please stop converting to US Dollars? This is why you are getting so confused during this process. You live in the US, Europe or Canada and will exchange the dinar for your currency and then use your currency to buy things not the dinar. Get it? In Iraq they use dinar and so a dinar will always be a dinar.
So what is the dinar worth in Iraq right now? The dinar is worth whatever the acceptor of the dinar will accept from the bearer of the note. The CBI has fixed this amount to 1190 dinars per US dollar. But you say the face value is 25,000 dinars. Right? Why then only about a 7th of a penny per dinar? Why would it be worth any less than the face value?
This is the artificial CBI rate of 1190 or 7th of a penny. The dinar is now being stiffened due to sanctions on the dinar. But you might ask why, since the sanctions have been officially lifted as of December 2017. This brings us to the dilemma. So it is actually worth its face value on the note, if fact 3 or 4 times the face value. So this is where many make their mistake in trying to figure all this out. Why not reflect the true value then?
Conversely in the USA if you go into a store and buy something the store is going to take that US dollar at face value on the note. They are not going to convert it to Dinars, Euros, Canadian Dollars or Rupiah right? Why would they? So what happens in Iraq stays in Iraq. Get it? They use dinars and there is also no need for them to keep converting to any other currency unless they are going to trade with that country. At that point they need to know just how much a dinar can purchase in goods and services equivalency with their trading partner’s currency. So I hope this clarifies the first level of confusion.
First the CBI must complete a very important step. They must delete the zeros first. How do they do this?
Second Level of Confusion
When will the CBI launch the newer smaller category notes?
As you can clearly see that in my example with the 25k note converted to a 25 dinar note, that they can now realize this 84 cents USD (but it has always been there) even today until they launch these smaller category notes AND until you convert it to USD. So in my example, the first step is to launch the 25 note. Then the dinar will actually surface as 84 cents, but this is already the exact same value it already holds today under the 1190 rate. (.84 x 25 = 21.00 USD) only it has 3 zeros before it on the face of the note, as 25,000 . So at first, WITHIN Iraq dropping the zeros has no impact on value, since we know the value of 84 cents was always there. Am I missing something here. Why all the arguments? I hope this clarifies the second level of confusion.
Third Level of Confusion:
When does the 25k note then get more value than the 25 note in Iraq?
The 25k dinar note will ALWAYS have more value than the 25 dinar note. Am I missing something? I just explained it all to you above. Is your US 20 dollar bill note going to be worth any less than a $5 US dollar note? Of course not! Why? Because the FACE VALUE printed on it is what tells the merchant the value. Get it? The same applies to the 25k dinar note vs a 25 dinar note. The face value dictates how much the receiver of the note from the bearer is willing to give you in goods or services. This is basic microeconomics 101.
So remember when the CBI does this initial switch over to 84 cents per dinar, the prices actually do not have to change since the current inventories are already in stock are based on 84 cents USD the exact same as the older 3 zero notes. Get it. It is only when the revaluation happens and they buy new stock that the prices will change. So this is a gradual process. So there is no need any longer to spread rumors to justify another rumor of an RV happening in Iraq due to the prices changing. Initially there will be NO impact.
But after the launching of the 25 notes if you were in Iraq and took that 25k note to the store and tried to buy something, the buyer would have to be educated on just what happened to the currency or he/she might get ripped off it the store owner looked at it value only as $21 USD and not 21,000 USD. Right? But again I am telling they SHOULD NOT and nor do they have cause to because they shop using dinar and not USD. So why in hell would the merchant even think about converting it to USD in his mind? The buyer would simply have to be educated on the CBI’s process and know that the 25k note is now worth 21,000 USD and can now buy 1000 times more than the 25 note. Even as dinar is it worth 1000 more. This is an education issue in Iraq. Like I keep saying this is a BIG CBI campaign that still has to happen in order to launch these smaller category notes. This will be our que this is really happening.
The prices of the goods and services will go way down when the NEW inventories are purchased but much later after the dinar is reinstated and they can use the dinar to purchase NEW inventories at the NEW market rate of the dinar, no longer using the sanctioned currency auction rate. For instance, if it goes up to $3.71 USD then they can purchase almost 4 times the goods and services with the same dinar they had before, the one that used to be 84 cents. they can now buy 4 units of the same for 21 cents each. Wow! The key now is that they can use the dinar to trade with foreign countries and not rely on going to these currency auctions any longer where the rate was regulated and stiffened by the CBI due to the sole de facto peg to the US Dollar. The outside market will drive how much they can buy with the dinar and not the CBI.
Fourth Level of Confusion
The RV will happen all at once we will run to the bank.
NO! NO! NO! This is not how the process with work. So Iraq will need some time to let the inventories sell down once they go to the 84 cents and launch the smaller categories, thus let it adjust for inflation. When they hit a certain point (the CBI has indicators to tell them when) they then will launch the “reinstatement”. This is the tricky part since the CBI has to do all this prep work ahead of time and be prepared. I just told you they had to educate the citizens too.
It’s not that easy! We know that the IMF has repeatedly been given permission to reinstate the dinar, started the process of launching the smaller categories, then the “reinstatement part of the process was later denied. It screws up the entire process and so we get this sketchy intel coming from Iraq and some say it has RV’d or the rate is so and so in certain regions, etc..etc.. I don’t doubt this info but you have to be smart about listening to it. If you are an idiot you hype it up and go off half cocked screaming RV, RV! This has been part of the intel problem all along with all these intel gurus -they do not know the process so they can’t evaluate what they are hearing to the process to see just where we are.
Fifth Level of Confusion
What if someone has a 25k note in Iraq. Aren’t they going to get rich overnight if the rate changes to 84 cents USD per dinar?
Yes, that person that owns the 25k note after the 25 notes are launched and the 84 cents is then finally realized will get 25,000 x .84 or $21,000 USD. Iraq is using dinar not US Dollars. Once the currency auctions end there will be little US Dollars even in Iraq unless the banks have it for travelers or to trade with the US. This is also why I keep telling everyone, as foreign investors, we may NEVER even be able to exchange during this part of the process, as the dinar may not even yet be reinstated until weeks later. You will probably never even see the 84 cents as it will be in-country only for a short period of time and then the reinstatement occurs later.
Sixth Level of Confusion
But then how can we in the USA become millionaires?
This is the tricky part to understand and these skeptics don’t really want to hear because it debunks all their skepticism. They are negative people anyhow and should never have come into this investment in the first place. But let me tell you anyhow.
Did the CBI not tell us many times that the older 3 zero notes would remain in circulation for “inter-banking” transactions? If Iraq begins trading using the dinar, wouldn’t they need some very high denominations to global trade deals worth millions? So they told us that once they launch these smaller category notes they will “coincide” with the old 3 zero notes for many years to come. One article said 10 years but this process has been delayed so many times we are not sure what the duration is. Anyhow, you as a holder of these old 3 zero notes, living outside of Iraq, are essentially acting like a bank and given the same privileges as the bankers as you are international. But to be given these privileges, the dinar must be “reinstated” first to the global stage (thus global currency exchanges) and traded globally. This is why I keep telling everyone don’t put the cart before the horse. Let’s first look for the “reinstatement” of the dinar on FOREX and then we can go to the bank. We are not looking for an RV and I just explained to you why.
The entire nature of this process does not fit the “lop” definition and a lop is conducted under very high hyper-inflation and holders are usually given a timeframe and a small buy-out rate to turn them in. Then the Central banks usually do a “restart” of the economy hoping their new strategy will work. On the other hand Iraq, like I told you, already had the value in their currency (the 1190 84 cents) and just needed to realize it and bring it out. No lop here just a redenomination.
So all you worry warts who keep badgering me about the deleting the zeros, please read and re-read this entire Facebook Note that I have taken the time to write for you. All the answers are here for all you questions. Don’t read into this process that is about to take place. The CBI has is all laid out and under control. Also remember you are not in Iraq and are acting like a foreign banker holding these 3 zero notes outside of Iraq. Remember also that Iraq must start off this final stage of removing the three zeros with a minimum rate close to 1 US dollar such as we can now see is about 84 cents.
Seventh Level of Confusion
But what about all these crazy rates we are hearing of $3.00-4.00 USD on the bank screens?
As I said you are an investor acting like a banker when you hold these 3 zero notes in a foreign country. But this is not meant to last long. The dinar, once reinstated, will climb due to the global trading market. First it has to be “reinstated”. This will drive up the rate on the currency exchanges and we can see rates even higher than the $3-4.00 mark USD and varies depending on where you live. The CBI itself has said their target is to “bring back the glory days of the dinar”. Although they do not directly tell us, we know by research that these glory days were between 1930’s and 1940’s period (the WWII period), they show diagrams and pictures of past performance and always reference to this period too. So I believe they hope to get the rate to stabilize at around this period of time which was at $4.86. But this rate is not going to come out with a sudden trigger in a flash one night, as many of you are told. First things first, as they will first have to rollout the smaller category notes and get to realize the 84 cents as I used in my example (as close to 1 dinar : 1 US dollar). They will have to adjust for inflation and watch it closely within their own economy first. Then wait for FOREX (the reinstatement) This process from start to finish could take up to 2-3 weeks once these smaller category notes are launched.
Source: Dinar iraq and dong vietnam