* Phoenix Email to Dinar Daddy (Explaining a Few Things)
FEBRUARY 21, 2010 · POSTED IN CHATS / POSTS · 13 COMMENTS
I would like to explain a couple of things.
First the removal of zeros.
This is NOT a standard LOP!
This is a novel solution to a novel situation.
When they say “remove the 3 zeros” They are talking about the removal of the larger denominations the 25,000 the 10,000, the 5,000, the 1,000.
Now at the exact same time that they introduce the new currency which is nothing more than the lower denominations that they have had printed for years and in storage they will also revalue the Iraqi Dinar to at or just above the dollar.
So I understand why people are having a had time grasping what is about to happen.
People are trying to use past economic events in other nations as a guide but the problem is what we are about to see happen is unprecedented and without historical reference.
So the doubt and confusion is to be expected.
Now the next topic.
Iraq the RV and the Dinar
Ok I would like to address something that I see brought up all of the time.
And that is the question: “How will Iraq cover the exchange?
How can they pay for this?”
Now what people seem to not understand is that the Iraqi Dinar is the currency of Iraq.
The Iraqi Dinar is not a “claim ticket” or “raffle ticket” that will be redeemed for cash.
The Iraqi Dinar IS CASH. It is CASH MONEY!
The real deal. Just like the Euro…just like the Dollar.
So when the revaluation takes place Iraq is not going to turn into a giant currency exchange!
Nor would any other nation!
People seem to wrongly think that after the RV all of the Iraqi Dinar will be sent back to Iraq and a that Iraqi will be required to exchange their own currency for some other nations currency.
That is total BS and not how the world works!
The Iraqi Dinar will be it’s OWN value! Backed by the wealth of Iraq.
Lets say for example that if after!
the RV you were to walk into an Iraqi bank
with 20 million IQD that post RV was worth $20,000,000 USD you will have 2 choices,.
1. Deposit that IQD into an IQD account with strict withdrawl/conversion restrictions.
2. Leave the bank and go buy something with your IQD in Iraq.
Sure…they may exchange a small amount needed for travel but even that is up to them if they chose to do so.
Iraq nor any other nation is not required or expected to exchange their own legal currency for any other currency and that is solely up to their own discretion.
Yes Iraq has a lot of currency out side of Iraq….big freaking deal…so does every other nation on earth.
The United States has over 2/3rd’s of all of our currency spread all over the world.
Now lets imagine for a moment that for some reason the United States announced that they were going to RV the USD up to say the Euro rate.
What do you think would happen?
Do you think the US banks would be flooded with U!
SD from all over the world demanding Euros in exchange?
What do you
think would happen if you were to walk into a US bank with a suit case full of dollars and demanded they exchange it for Euros?
First off they would give you the same two options mentioned above.
1. Deposit those dollars into the bank in a USD account again with strict withdrawl/conversion restrictions.
2. Leave and go buy something!
There is no law or requirement that any nation do currency exchange and for good reason…it would destabilize the markets and would drain that nations foreign reserves.
So all of the talk of “How will Iraqi pay for this” is based upon the lack of understanding of the basic functions and properties of currency itself.
So what backs the IQD? The wealth of Iraq itself plain and simple.
So there is nothing “to pay for” the IQD itself is the wealth.
Hope that helps.