[el mechanico]

Some of my friends and every employee of my small local bank have been counting down the days until they will not ever have to work again from a 900 dollar investment (1 million dinar)

Some guys I know out west in OK and TX are dead sold on this and have planned their entire futures around it. One gave me a 10 thousand dinar bill.
Can this really happen?

[Caligula]

It's at best a wildly optimistic reading of markets, at worst an outright scam.

Don't think anyone will be retiring off a small investment in IQD. At best they'll reap a small profit if and when revaluation comes, but it won't be anywhere near the 1000x return people are talking about.

Some informative links here:
http://www.blifaloo.com/info/dinar.php

People assume that the Iraqi government has to revalue their currency when the economy strengthens. The argument is that oil money will grow the economy and strengthen the currency, spurring the gov't to revalue it.

The problem is that even if they do revalue (which isn't certain) they're more likely to start with a new currency that will be traded internationally and set a reasonable exchange rate from the old dinar to the new internationally traded dinar they'll create. I think something similar was done in 2003 because Saddam made the economy a basket case and the old dinar was worthless.

And that's if Iraq decides to revalue at all. A growing economy fuelled by oil money may also lead to inflation, meaning that the currency devalues. This will make servicing its debts cheaper and fuel the export economy.

I wouldn't buy it.

http://www.moneyshow.com/trading/article...rency-Scam

[el mechanico]

(09-21-2011 01:57 PM)Caligula Wrote:  

It's at best a wildly optimistic reading of markets, at worst an outright scam.

Don't think anyone will be retiring off a small investment in IQD. At best they'll reap a small profit if and when revaluation comes, but it won't be anywhere near the 1000x return people are talking about.

Some informative links here:
http://www.blifaloo.com/info/dinar.php

People assume that the Iraqi government has to revalue their currency when the economy strengthens. The argument is that oil money will grow the economy and strengthen the currency, spurring the gov't to revalue it.

The problem is that even if they do revalue (which isn't certain) they're more likely to start with a new currency that will be traded internationally and set a reasonable exchange rate from the old dinar to the new internationally traded dinar they'll create. I think something similar was done in 2003 because Saddam made the economy a basket case and the old dinar was worthless.

And that's if Iraq decides to revalue at all. A growing economy fuelled by oil money may also lead to inflation, meaning that the currency devalues. This will make servicing its debts cheaper and fuel the export economy.

I wouldn't buy it.

http://www.moneyshow.com/trading/article...rency-Scam

I thought that it would revalue and they would just knock zeros off the money but the value would stay the same.
Nobody wants to hear it. The bank manager said that Trump has 20 mil tied up in it.

[Imthattypeofguy]

@el mechanico

I purchased a few million dollars worth in 2004 when the ratio was 1 usd = 4000 iqd right now 1 usd = 1173 iqd. During Operation Desert Storm (Iraq Kuwait War) the Kuwait Dinar was extremely low against the usd (approx 1 usd =3000 kwd). For the past 10 years or so the exchange rate as been .29 kwd = 1 usd. I was in Kuwait last month and it sucked paying 4.000 kwd for subway combo.

Iraq has more oil reserves than Kuwait but the country still isnt stable although it is much safer than it was 1 year ago. The economy is still slow but has picked up and will increase once the land mind fields are cleared and large oil companies begin to pump. I've been working in Iraq since Nov 2003 and I can see some changes with the majority being in Erbil, Basra and central Baghdad. The main concern about buying iqd now is that there are discussion about reprinting the currency. The discussions are about dropping one of the digit off the existing dinar.

[defguy]

The president of Iraq has been announcing for years he intends to revalue the dinar to give people more buying power. Iraq is the 2nd major source of oil in the world, maybe the first if they come up with enough money to drill for more and find more. It has to happen because the standard of living will stay low unless they do revalue. If they dont, the economy simply cannot grow. The problem is the government moves far slower than ours does. It wont happen for a long time, people have been holding the dinar for over 10 yrs just waiting for it to revalue. Assuming that the economy is based off of oil, like Saudi Arabia's economy, Iraq Dinar SHOULD be similar in value. Look at all the neighboring countries currency. Iraq is the lowest even though it shouldnt be. But SHOULD and IS are 2 very different concepts. I bought several million "just in case." Though I wont spend any more money on it and I dont expect it to happen. If it does, Ill be a millionaire overnight, if it doesnt, I havent lost much...

[el mechanico]

(09-21-2011 03:07 PM)defguy Wrote:  

The president of Iraq has been announcing for years he intends to revalue the dinar to give people more buying power. Iraq is the 2nd major source of oil in the world, maybe the first if they come up with enough money to drill for more and find more. It has to happen because the standard of living will stay low unless they do revalue. If they dont, the economy simply cannot grow. The problem is the government moves far slower than ours does. It wont happen for a long time, people have been holding the dinar for over 10 yrs just waiting for it to revalue. Assuming that the economy is based off of oil, like Saudi Arabia's economy, Iraq Dinar SHOULD be similar in value. Look at all the neighboring countries currency. Iraq is the lowest even though it shouldnt be. But SHOULD and IS are 2 very different concepts. I bought several million "just in case." Though I wont spend any more money on it and I dont expect it to happen. If it does, Ill be a millionaire overnight, if it doesnt, I havent lost much...

In theory our government could bank if they revalue? Could they push this in these trying times?

[Aliblahba]

I've been in the Middle East about as long as Imthattypeofguy, and haven't bought any Iraqi Dinar. I foresee them reprinting the currency. If that happens they'll lock down the borders and U.S. military bases. Anything held in foreign banks will be useless paper. Feel free to do as you wish though.

[Kona]

Every time I went to Iraq there were groups of guys really in favor of this, then there were guys that said whatever you do don't buy the Dinar.

Granted these were all military guys, but many of them had degrees in economics or finance, or what not. Those are the guys I listened to. Like Was said above, once the dinar is worth anything, they are going to get rid of it for some reason.

I know there money in shit sometimes, but if you've ever seen that country first hand, there isn't much about it that's positive. It doesn't seen to be the kind of place you'd want any type of investment tied up in.

Personally, I bought some rubbermaid containers filled with fake tiffany's silver jewelry. My sisters sold most of it off and made a killing. Try that.

Aloha!

[mycleverid]

If you really want to know whether a country is a harbor for a nightmare economic disaster in the making, find a reliable data source on that nation's savings rate.

Corruption is the tell in any economy. Bear in mind, I am talking about the good stuff when I talk corruption. Not a few bankers playing with the spreadsheets. I'm talking countries where everyone is taking a cut. Countries where the mob is half the GDP. Countries where a town of 800 people employs fifty cops who sit in a bar drinking on the tax payer's dime all day.

Countries that are now sweltering shitholes of corruption will have a high savings rate.

The ideal current example is Greece before joining the Eurozone. Had the ECB regulators given a shit to check the books, they would have seen that Greece had a savings rate in any given year of 20%. This whole crisis could have been averted if the ECB skipped the governments' books in the PIIGS countries and instead taken a look at the locals' books.

By comparison, the United States up until the recession had a savings rate of -7%. We actually borrowed more than we saved.

A currency's value is, at the end of each day, the collective judgment of the entire world on that country's credit-worthiness. When a lyra is trading at 1,000,000 on the dollar, that's a verdict that the country prints too much money and pulls too much bullshit relative to their ability to actually fulfill their obligations.

As Zimbabwe proved, when a nation has spiraled into complete corruption, the printing presses roll.

An actual best example is Nationalist China under Chiang-Kaishek. Their finance minister in the 1930s, T.V. Soong concocted a plan to sign a shitload of arms deal and then intentional tank the currency to reduce the price of financing their military.

In every case, the corruption is detectable and present long before the shit hits the fan. And the people on the ground know the ground truth. That ground truth first appears in the data as the savings rate. People are nervous in a corrupt society. Nervous people are savers. Also, launderers are savers.

So, you want to invest in the Iraqi dinar? Find a reliable source for Iraq's savings rate. It's a country with giant outlays for construction. It has a load of oil. It imports a lot of heavy machinery and military goods. If they're playing honest and don't expect to tank their economy, savings rate will be low. If they're pulling a T.V. Soong, the savings rate will be high.

[Samseau]

Japan had a huge savings rate in the 1980's, and wasn't corrupt at all.

While it is true that corrupt nations have high savings rate, it isn't true that all countries with a high savings rate are corrupt.

[mycleverid]

(09-26-2011 11:48 PM)Samseau Wrote:  

Japan had a huge savings rate in the 1980's, and wasn't corrupt at all.

Look at Fukishima. Japan is rotten to the fuckin core.

Take a good look at match fixing in sumo wrestling. Take a look at deliberate reporting of murders as suicides in Japan.

Japan is the worst kind of corrupt: the kind that has established a reputation as clean.

Everything in Japan is rotten and has been rotten for a long time. The fact that their form of corruption is quieter and more formalized and more socially accepted does not make them any less corrupt.

[Caligula]

(09-27-2011 12:38 AM)mycleverid Wrote:  

(09-26-2011 11:48 PM)Samseau Wrote:  

Japan had a huge savings rate in the 1980's, and wasn't corrupt at all.

Look at Fukishima. Japan is rotten to the fuckin core.

Take a good look at match fixing in sumo wrestling. Take a look at deliberate reporting of murders as suicides in Japan.

Japan is the worst kind of corrupt: the kind that has established a reputation as clean.

Everything in Japan is rotten and has been rotten for a long time. The fact that their form of corruption is quieter and more formalized and more socially accepted does not make them any less corrupt.

Might be a useful heuristic for getting an idea of a country's corruption level but nowhere near being a solid rule.

For example, Germany has over three times the savings rate of Britain (something like 11% vs. 3%) but scores better on the Transparency International perception of corruption index http://www.transparency.org/policy_resea...10/results

[Samseau]

(09-27-2011 12:38 AM)mycleverid Wrote:  

(09-26-2011 11:48 PM)Samseau Wrote:  

Japan had a huge savings rate in the 1980's, and wasn't corrupt at all.

Look at Fukishima. Japan is rotten to the fuckin core.

Take a good look at match fixing in sumo wrestling. Take a look at deliberate reporting of murders as suicides in Japan.

Japan is the worst kind of corrupt: the kind that has established a reputation as clean.

Everything in Japan is rotten and has been rotten for a long time. The fact that their form of corruption is quieter and more formalized and more socially accepted does not make them any less corrupt.

Meanwhile, Japan is corrupt today, and their savings rate is extremely low. Yet another counter-example to your theory.

[mycleverid]

@Samseau . . . I'm not gonna flog an argument with someone who is missing the point. A marked increase in savings rate is a big red warning light in an economy, period.

@Caligula . . . the Germans are an odd people when it comes to money. And that number is still only half of what the Greeks were savings prior to their entry into the EU.

The Germans harbor some old wounds from the Weimar days. And the way they express it often seems to show up in their view of money.

Is the savings rate theory an iron-clad perfect theory? No. Like all theories, it provides a frame for thinking about a problem. I will say it makes for a good starting point when you're looking at any investment that encompasses an entire country. It's a very good first clue to read.

[Caligula]

(09-27-2011 02:32 PM)mycleverid Wrote:  

@Samseau . . . I'm not gonna flog an argument with someone who is missing the point. A marked increase in savings rate is a big red warning light in an economy, period.

@Caligula . . . the Germans are an odd people when it comes to money. And that number is still only half of what the Greeks were savings prior to their entry into the EU.

The Germans harbor some old wounds from the Weimar days. And the way they express it often seems to show up in their view of money.

Is the savings rate theory an iron-clad perfect theory? No. Like all theories, it provides a frame for thinking about a problem. I will say it makes for a good starting point when you're looking at any investment that encompasses an entire country. It's a very good first clue to read.

Point taken, I agree that it's worth factoring in when looking at economies.

[Samseau]

(09-27-2011 02:32 PM)mycleverid Wrote:  

@Samseau . . . I'm not gonna flog an argument with someone who is missing the point. A marked increase in savings rate is a big red warning light in an economy, period.

Try reading for comprehension.

Quote:

While it is true that corrupt nations have high savings rate, it isn't true that all countries with a high savings rate are corrupt.

[mycleverid]

@Samseau . . . You think you're right without exception. No need to equivocate.

[Samseau]

(09-27-2011 11:07 PM)mycleverid Wrote:  

@Samseau . . . You think you're right without exception. No need to equivocate.

It's easy to look right all the time when one talks to an idiot.

[mycleverid]

(09-28-2011 12:24 AM)Samseau Wrote:  

It's easy to look right all the time when one talks to an idiot.

Charming. Keep it classy.

I like the notion that my example that, BTW, charts nicely into Japan's economic meltdown, marks me an idiot.

[Samseau]

(09-28-2011 11:42 PM)mycleverid Wrote:  

(09-28-2011 12:24 AM)Samseau Wrote:  

It's easy to look right all the time when one talks to an idiot.

Charming. Keep it classy.

I like the notion that my example that, BTW, charts nicely into Japan's economic meltdown, marks me an idiot.

By your theory, they should have a high savings rate because they are so corrupt.

[el mechanico]

What does this have to do with Iraq? It's a unique situation.

[cartman]

I see people making a profit off of it, but definitely wouldn’t plan my life around it. Like several have said it will most likely be revalued. Think about when communism fell they really just knocked numbers off (Romania). Most recently North Korea revalued their currency, but what did they do? They set a limit of how much of the old currency could be traded in. Before I invested in currency in unrest I would study the history of similar occurrences.

[j r]

The problem with this investment strategy is that people seem to be confusing revaluation with redenomination. Right now the IDR is pegged to the dollar. The Iraqi government has recently signaled that they are going to redenominate their currency, but that doesn't affect the peg. Like el mechanico said above, it just knocks zeros off. Basically, the government says that you can trade in your old IDR 10,000 bill for a new IDR 10 bill. It doesn't increase purchasing power it just allows people to carry fewer bills.

There is some possibility that the Iraqi government may let the currency appreciate in the future if the economy takes off. In 2009, they let the dinar appreciate by somewhere between 20 to 30 percent; that's a decent return, but that's not going to make anyone rich overnight. More importantly, think about what you have to do to get that return. You have to take your dollars and buy dinar, at which point someone will charge you 5%. You have to hold that dinar while inflation eats away your investment at about 5% a year. Then you have to trade those dinars for dollars, at another 5%, to realize your profit. Even if the dinar appreciated by 30% in the next three years, which it won't, you'd only walk away with around 5% profit.

[BackToBasics]

(10-14-2011 06:12 PM)j r Wrote:  

...More importantly, think about what you have to do to get that return. You have to take your dollars and buy dinar, at which point someone will charge you 5%. You have to hold that dinar while inflation eats away your investment at about 5% a year. Then you have to trade those dinars for dollars, at another 5%, to realize your profit. Even if the dinar appreciated by 30% in the next three years, which it won't, you'd only walk away with around 5% profit.

Exactly. These folks are hedging their entire investment on the presumption that they can just show up at a bank, with a wad of ancient, pretty easily forged currency, and get full face value.

Maybe if you had that IQD in some other kind of account or monetary device other than hard currency, you MIGHT, have an easier time converting it. Then again, you're trusting a corrupt Third World banking apparatus with custody of your cash.

And I'm sure a corrupt Third World banking apparatus is less than enthusiastic to aid carpet-bagging war profiteer Westerners. Same if somebody tries a legal suit if a bank does screw them. Best case scenario, you're going to have to pay one or more slimballs a helluva of a bribe (*cough* service fee *cough*) to cash that IQD, especially more than a decade from now.