Originally Posted by
TerryTate
Yes, I can see that you don't Elfwizard, so let me try to explain it another way....
If a commodity has value then it is worth more right? If it is worth more then it is harder to obtain, right? If there is an abundance of Dollars available then that implies that the Dollars aren't valued as much as people are dumping them.
Don't confuse the availability of Dollars with Dollars being used as medium of exchange. It may strictly be a currency exchange and not a purchase of goods scenario. The Haji mart having Dollars to sell doesn't always equate to Dollars being used for purchases by the locals. Dollars may be used for purchases, but as the Haji mart is usually a black market currency dealing outlet it appears that the locals are selling the Dollar to the Haji Mart or as you suggest exchanging the Dollar for goods, but it appears the locals are not trying to get Dollars back, which is the point here. So, this leads to an abundance of Dollars available on the black market. And a demand by the locals for Dinar.
If the Dollar were the currency of choice then the locals would be demanding dollars back from the Haji mart and thus there would not be an abundance of Dollars on the black market (i.e. Haji mart).
Sorry if that seems convoluted, but let me try to explain it this way. If I had 2 tons of gold in my basement and the value of gold started to drop relative to the dollar with no end in sight, what would I do? Would I sit on the gold, or would I try to move to a higher value commodity? I would sell the gold. Now if everyone dumps said gold at the same time, does that make gold the dominant commodity (i.e. currency)? No, that makes Gold the commodity that everyone is trying to get out of. So, even though Gold is being used in large quantities at that moment Gold would be the least desired commodity. What makes a currency or commodity the asset of choice (i.e. dominant currency) is the desire by the community to have it, not the desire to get rid of it.
Hope that helps, and I hope this trend continues in Iraq....
:ro_emote: