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One last discussion on the question of a “lop” 
« on: Today at 09:26:46 PM

Al called me earlier today to have me address the issue of a potential “lop” of the dinar one more time.  As you all know I have addressed this issue many times but most thoroughly in my book which is available for free on this website.  I will very briefly review just a couple of articles that clearly show that a lop is not in the cards.  My review this time will bring us up to yesterday.

Beginning in August of 2008 we had an article entitled Plan to increase the value of the dinar against the dollar and the deletion of three zeroes which was published in the Forat News.

translate.google.com/translate?hl=en&ie=UTF-8&sl=ar&tl=en&u=http://www.foratnews.com/paper.asp%3FID%3D8383&prev=_t&rurl=translate.google.com&twu=1

Here is the important quote from this article.  I am not going to read the entire article, but it is available in my book.

”The Finance Ministry has prepared a plan to increase the value of the dinar against the dollar and then delete the three zeroes from the dinar’s value to contribute to the advancement of the Iraqi economy during the coming …  He said that successful fiscal policy pursued in Iraq has contributed to increasing the value of the Iraqi dinar against the dollar, noting that the dollar exchange rate dropped significantly during the current year, stressing that all efforts will be channeled to the deletion of three zeros from the value of the dinar.

The early last year, on February 6, 2010, we saw a more specific article entitled Iraq Planning Currency Redenomination.

rferl.org/content/Iraq_Pl…n/1950504.html

Here is the relevant quote from that article:

“The Iraqi Central Bank is planning to redenominate the national currency in an effort to ease transactions and allow people to carry less paper money…

”Muhammad Saleh, a member of a Central Bank advisory panel, told RFI that a plan has been made to remove three zeros from the currency and phase out the current banknotes late this year.

”Saleh said by the end of 2010 the new banknotes will be fully introduced while the old banknotes will be gradually removed from circulation.”

It is clear from this article, as well as other articles that I referred to in a previous conference call, and which is posted in our forum, that the “removal of the three zeros” means removing the notes with 3 zeros on them, or the large notes that we all carry.

In July of this year Shabibi announced to the public that the process of removing the large notes was 70% completed.

Then on April 13, just a few days ago, we saw this article, entitled Iraq Central Bank to remove three zeroes from Iraqi Dinar.

Iraq’s Central Bank announced on Tuesday that the project of Iraqi Dinar re-denomination consisting of removing three zeroes is close to completion.
The re-denomination project is believed to be a strategic plan that will be passed to the ministerial council and Parliament once complete….

In an earlier statement to Alsumaria News, Iraq’s central Bank adviser Mohammed Saleh affirmed that the bank plans to remove three zeroes from the Iraqi Dinar noting that the zeroes which were added to the Iraqi currency previously constituted a large money supply estimated at 27 trillion Iraqi Dinar.
 
alsumaria.tv/en/Economics-News-Iraq/3-62912-Iraq-Central-Bank-to-remove-three-zeroes-from-Iraqi-Dinar.html

Now we should note that when referring to this process, the issue is an internal matter only.  Removal of the large denominated notes only applies to the currency within the country of Iraq.

Yesterday we received even more good news, confirming that the process is now done, that the large denominated notes all almost entire withdrawn from the Iraqi market.  The title of the article is Iraqi central bank says that it will submit a law organizing the process of removing 3 zeros from Iraqi dinar.

iraqdirectory.com/DisplayNews.aspx?id=15366

Here is the relevant portion quoted from the article:

Advisor of Iraqi central bank Mohammed Saleh said that the central bank is working on drafting a law organizing the process of removing three zeros from Iraqi dinar and upgrading the value or Iraqi currency in local and international economic transactions.

The advisor said that the central bank will submit the law to the Iraqi prime ministry and after approval it will be sent to the Iraqi parliament for endorsing.

Iraqi ministry of finance said on last February that the removing of three zeros from Iraqi dinar will free Iraqi economy of restrictions and enhance the value of Iraqi currency in international monetary fund….

The Iraqi government is working on making some changes on Iraqi currency including removing three zeros from Iraqi dinar to enhance the value of the currency nationally and internationally and end the financial inflation.

Please note in this article from yesterday that no less than three times it is indicated that the removal of the three zeros, which we know means the removal of the large denominated notes from within the country, will “enhance the value of the currency nationally and internationally.”

Therefore, this is not a lop in which the removal of the three zeros has no impact on the value of the currency.  I do not believe that this could be more clearly stated than this.

As you all know, in a call a couple of weeks ago, I also read out the entire history of articles starting in 2005 in which it is perfectly clear that the plan has been in existence from the beginning to return the value of the dinar to a level that is AT LEAST equal to the early 1980s value of $3.33.  It appears that with inflation, the increased price of oil, and the need of the world to get rebooted from this RV, that in fact the opening rate will be somewhat higher than $3.33, as Al has hinted in his remarks.  Furthermore, I have stated previously that I personally believe Iraq’s currency will rise after its initial entry into the world market because of its great underlying wealth.  I have indicated that it could support a value over $11 from my statistical analysis over a year ago.

The bottom line is this:  the lop only applies when you have a country with hyperinflation, as in Venezuela or Mexico.  It does not apply to Iraq, and the Ministry of Finance and the Central Bank of Iraq are clearly on record that a lop is not in the cards for this currency.

I hope, finally, with the RV only days away now, that we can put this issue to rest.

Thanks for listening.

Steve