Thread: The $7 debit card dilemma.

Originally Posted by MunnyBaggs

The very latest IMF/CBI information releases clearly state it will be a gradual IQD value increase starting at a projected 1345 IQD to 1 USD by end of this year.

You must be farmer because you sure know how to spread manure. Every forum you've tried to sell your "duh theorums" you've been debunked and laughed off.

Originally Posted by MunnyBaggs

TABLE D

All this information has been culled from the World Factbook:

GDP Purchasing Power parity World Ranking. Note Iraq rates closest to UAE, Israel, Egypt, and Saudi Arabia. Note Iraq’s purchasing parity will increase as does its economy:

So what you are claiming is that the current rate for Iraq is the real rate even though the IMF says differently, calling it the program rate.

There have been tons of references; from the seemingly piddly contracts approved by the Iraqi Gov't for refurbishing a sports arena that in today’s value wouldn't buy a basketball hoop, to the purchasing of 24 transports planes for nearly a billion USD.

When you consider the disparity of those numbers both loudly proclaim that a higher rate is coming and that the mere pittance of your theorem won't satisfy the need.

One would have to ask, why would the government behave so foolishly and irresponsibly by entering into either contracts that are either worthless or unobtainable? No, the only answer that makes sense is a high peg rate.

This concludes my part of this discussion and everyone else is free to consider the facts and decide for him or herself.

Your math works out with the figures you're using, MunnyBaggs, but that doesn't mean much. We've heard conflicting reports about how much was printed and, in any case, the amount printed is irrelevant. It's the amount in circulation that matters.

We know there were 14 denominations printed, and we know that several have not been released into circulation. In order to reval at a high rate, they need only control the amount in circulation. This is easily done by removing the higher denominations from circulation as they introduce the lower. They can also adjust the total amount in circulation while doing this.

For this reason, they can reval to whatever value they choose, and we can only speculate from the many and various hints we find in the news.

Originally Posted by greatstuff

In order to reval at a high rate, they need only control the amount in circulation. This is easily done by removing the higher denominations from circulation as they introduce the lower. They can also adjust the total amount in circulation while doing this.

For this reason, they can reval to whatever value they choose, and we can only speculate from the many and various hints we find in the news.

Yep - they can hold the 25K after i cash them in and start to give out 1's and 5's!

Originally Posted by MunnyBaggs

Japan may not fit the regional makeup but it is a real World example.

Sigh...

I’m stunned. I explained this to you once before. This is truly amazing and unbelievable to me how you cannot grasp such a simple concept. Let’s try this again. I’ll type really really really slow for you. And I need you to read this very s l o w l y several times over.

Your Japan argument is bogus. In 1984/85 the Yen was trading at 250 Yen to the dollar and in one day they cut it in half to 125. They were under enormous pressure from the U.S. at that time to open their markets to U.S. exports to reduce their trade deficit with us. Instead of opening their markets to more of our products they made the few imports they allowed cheaper and their exports more expensive. The Japanese people had purchasing power because they had an enormously successful economy and lifetime employment. The rate was changed for political reasons, not based on GDP and was not always at the current rate THEY-LOWERED-IT.

I experienced this first hand. I was working over there at the time. I was paid in dollars and had to convert to Yen to pay my expenses. My cost of living doubled in one day!

So, there you have it. Cold hard facts that prove Japan's exchange rate was not always at the current rate. I have to say now if the light bulb does not come in muddy boy's pea brain at this point there’s not much else I can do to help him.

My experience has been when someone is this wrong on one thing they're usually wrong about most things.

Ching, that was an excellent example of a REVALUE and rightly said, For "Political reasons" thus proving it is NOT about crunching numbers or what the GDP can support.

For the Record:

Massive inflow

More than in the case of the original newly industrialising countries (NICs) of Northeast Asia, the Southeast Asian NICs have been dependent for their economic growth on foreign capital inflows. The first phase of this process of foreign capital-dependent growth occurred between the mid-eighties and the early nineties when a massive inflow of capital from Japan occurred, lifting the region out of recession and triggering a decade of high seven to 10 per cent GDP growth rates that were the envy of the rest of the world.

Central to this development was the Plaza Accord of 1985, which drastically revalued the yen relative to the dollar, forcing the Japanese to seek low-cost production sites outside Japan so they could remain globally competitive. Some US$15 billion in Japanese direct investment flowed into the region between 1986 and 1990. This infusion brought with it not only billions more in Japanese aid and bank capital but also an ancillary flow of capital from first generation NICs of Taiwan, Korea and Hong Kong.

Addicted to foreign capital :: Focus on the Global South :: A Program of Development Policy Research, Analysis and Action

From now on I will remember the "Plaza Accord" of 1985

Originally Posted by wciappetta

Ching, that was an excellent example of a REVALUE and rightly said, For "Political reasons" thus proving it is NOT about crunching numbers or what the GDP can support.

Absolutely right Bro. More times than not these things are influenced by political rather than economic reasons.

Originally Posted by wciappetta

From now on I will remember the "Plaza Accord" of 1985

The guy who ran our office over there will remember it too!! He had a ton of yen from doing business over there for years. When it went down he could now buy twice as many dollars than the day before. Basicly he doubled his money overnight if he converted his yen to dollars! Not too bad. Now it's our turn!!

Originally Posted by OneShotOneKill

Very good recap that I can understand. But I still think it will be in the 1 to 1 range in order to cut down on the black market trade that is impeding their economy. I think the $3.22 rate will happen a few years down the road, so I will hold some in reserve.

But again, thanks. Very good post!

OSOK

1:1 is far more realistic than 1:3 in the short term. But even that depends on a whole bunch of "ifs" "ands" and "buts". First off 1:1 would require more than just a few new IQD denominations. A smaller re-val would require no immediate release of new denominations or just a few depending on the amount. 1:1 pushes nearly every denomination in current circulation into being unusable. 1:3 would completely wipe out ALL the current notes and coins and require completely new denominations. You also have to have a deal in place around the World with banks to not "cash out" when a high re-val is in place. Believe me, at 1:1, there will be thousands of people lining up to cash out Billions of IQD for USD. If those banks in turn require payment from the Iraqi reserves, they would bankrupt Iraq under the current CBI structure. Next the backing has to be there. CBI would have to suspend the current 25% reserve requirement and back it with this dubious secret "Swiss" gold (if that even really exists). Or the Hydrocarbon law has to include a provision that Iraq can use oil futures to back it's currency. Unlikely until terrorist sabotage of that industry is completely halted. So, until many of these events occur the best we can expect is exactly what the IMF/CBI have said they will do. They WILL raise the IQD value in a gradual manner. At least that is what THEY say.