It was a hot summer day in the first part of July. The year was 2011. I have just read three news articles that shook the foundation of what I believe to the core. A year and one half was tied up into following and posting about the dinar. I wanted to talk more about global economics, but some people did not care about all that stuff. They just wanted to know what the dinar was going to do. Stop getting so technical Marcus. Just give us the dirt. There were two questions I was asked constantly. First one was when is the dinar going to revalue, and the second one was what is going to be the rate. The only problem was those were the only two questions I could not answer. The truth was no one could. But that did not stop people from asking. All I knew was this is taking way too much of my time. I am spending every waking hour researching this stuff and I still can’t answer the two most important questions. Now 18 months have vanished
By this time the revalue was an expected thing. It was not a matter of IF but a matter of WHEN. There were risks involved with this investment, but that did not stop anyone from thinking this was a sure thing. This caused a lot of friends of mine to over leverage themselves. People bought more than they should because they were told any day anytime. The dinar dealers were cleaning up. I even put a disclaimer on my site that told people to do their own research and I outlined risks. Most people just passed right over it. All anyone really wanted to know was exactly when they would be rich and how soon could they quit their job. This investment snared a lot of dreamers in their big wide net.
I missed my life. I am a musician. It seemed like forever since I played music on a regular basis. My playing began to go downhill. I needed to stop playing until I could recover from my injuries, but it had been months and I already returned to work a long time ago. So I hit upon an idea.
I would start another blog that had a broader title. I would move all my dinar research over there. I could write a bit more about world economics. I could just make the dinar a series. I never made any money off Iraq currency watch. Actually I was afraid to make money. I thought that if I made money then that would color my view and I would no longer be objective. Besides all that I was going to be rich anyway after the dinar revalues right? So I just started another blog and made the dinar a series and wrote more with a global focus. The big problem for me was finding a name. Everything was taken. It felt like I searched for hours making compromise after compromise. Try starting a new blog with a title with the words world economics or global economics and you will see what I mean. I settled for a title I did not even want, but I got tired of looking.
The plan was simple. Move all my research to the new site and shut down the old one. Write just a few more articles and return to my old life. the new blog would just be there for reference. It was intended to archive and correct all the errors of the last 18 months. My family missed me and I missed them. This dinar thing had consumed my life. Enough is enough!!!
The three articles I read really challenge me and I began to rethink everything. I went back to the drawing board
http://www.iraq-businessnews.com/2011/06/27/iraq-prepares-to-redenominate-its-currency/
http://www.rferl.org/content/iraq_said_planning_currency_overhaul_redenomination/24245867.html
http://www.alsumaria.tv/news/43253/iraqs-central-bank-to-delete-zeros-from-iraqi-curr
Yes these are redenomination articles. There is something that makes these different. There was a bill going through parliament concerning this. It talked about printing lower denominations. Sure enough there was a bill going through parliament and it talked about printing the new currency and adding Kurdish language and symbols.
Wait a minute….I thought the lower denominations were already printed. I thought they were going to release them any day. This is what Dustin called a forum fact. Dustin coined this word it means a lie that people take as fact regardless of what economist and news media say. The fact can only be found in the forums. The fact was I figured out in July of 2011 that the lower denominations were not printed and the legislation to print them was working its way through parliament. This meant two things; first the Revalue is a long way off if it is coming at all because they don’t even have the lower denominations. Second the bill going through parliament had redenomination language all the way through it. This made the redenomination plausible and very real for the first time.
I had this knowledge as I opened the other blog site. I just needed to get away. I already wasted too much time on this. I still believed in the investment, but I needed a clear head. I did not want to do anything rash. I did not want to rush to judgment, but I thought that this was not good. Not good at all!
There are people who get paid to hype this currency they make up all kinds of forum facts and post it on their sites and in the forums. Two really big lies are dinar will be sold for oil and the lower denominations are already printed. Another big lie is the dinar is needed to rebuild infrastructure. According to the bush administration oil revenue will be used to rebuild infrastructure and oil is sold in dollars not dinars. How are you going to get international contractors to come rebuild your country if you only have a currency that is traded only in your country? The answer is you’re not!!
http://www.csmonitor.com/2005/0714/p02s01-woiq.html
http://www.nytimes.com/2008/08/06/world/middleeast/06surplus.html?pagewanted=all
http://priceofoil.org/2008/03/05/iraq-us-senator-wants-oil-money-used-for-rebuilding/
http://english.alarabiya.net/articles/2011/06/15/153439.html
Some people have taken this out of context and they said the bush administration said oil revenues would be used to pay for the war. This was a very popular revalue rumor. Unfortunately nothing could be further from the truth. So I challenge anyone who believes this. Find the sound bite. The media should have it. They would use it if oil was not used to pay for the war. Ok I will provide my own sound bite.
http://videocafe.crooksandliars.com/heather/rove-denies-bush-administration-said-oil-r
There are all kinds of misunderstanding and lies told to hype this thing and increase sales. There was an article circulating that said Iraq was going to withdraw 70 percent of the excess liquidity. People including myself believed that meant Iraq was taking 70 percent of the money supply out of circulation. When I was researching money I learned the real term and meaning of excess liquidity. It does not mean the entire money supply. It means an excess of cash held by a bank above what is required by the regulatory authorities.
http://www.qfinance.com/dictionary/excess-liquidity
This meant that they were pulling out of the excess cash that was placed by the CBI in banks. Not taking 70 percent of the money supply out of circulation. This could be electronic currency for all we know.
So let’s count the lies circulating in the forums that have been disproven just with these two posts
1. Dinar will be used for oil
2 Lower denominations are printed. ( you should know that there will be no revalue on the scale the forums predict without lower denominations!)
3. Bush said the war will pay for itself
4. A redenomination is not possible.
5. The CBI has reduced the currency supply by 70 percent
6. Dinar will be used to rebuild the infrastructure in Iraq.
7. The dinar is part of biblical prophecy.
The theory with the last one is dinar is needed to rebuild Iraq and Iraq is found in biblical prophecy. So since Iraq must be rebuilt they need dinar to do this. I understand the reasoning but they don’t need dinar to rebuild. Biblical prophecy also talks about a one world currency. I can tell you the dinar probably won’t be it. The one world currency and the mark of the beast will be something totally different from that!
These rumors surface and circulate the forums on a regular basis. The hype is “you invest because the dinar will revalue tomorrow and you will be rich beyond your wildest dreams. Better hurry!” These lists of lies are meant to promote the hype, and increase sales. You need to stop take a big breath and do some research. I am not saying don’t invest. I am saying don’t rely on the forums or guru sites for so-called Intel. Above all else understand the risk!!
There are people who post bogus information to hype sales in forums. These people are called pumpers because they pump and hype sales. If they are really good then they start their own website or forum and begin to predict rates and dates. Then they come up with an excuse why it did not happen. These people have been elevated to a status of Guru. It is important for a Guru to know the entire dinar lingo. DFI funds, Coalition Provisional Authority, CBI, Paris club ect… A guru has to think fast on his feet. Sometimes a guru won’t pick a day for the revalue. Instead he will pick a time frame, say the fall of a certain year, or during a certain month. But in the end all the gurus have been wrong so far. There are some web sites that reveal some of the cons these guys play. One of my favorites is
http://dinardouchebags.blogspot.com/
Here are a few more
http://dinargurubuster.blogspot.com/
http://dontdrinkthepunch.wordpress.com/
Now I find out in July of 2011 that the redenomination is one plausible scenario. Of course I write about it on the new blog. I clean up all the old posts and get rid of the bad links and rumors. I do more articles on money and research money as a whole. I returned to music in September. I start playing and getting back in musical shape. In October I start playing out again. In November I begin to concentrate on a new music site. I began to make video and media for it. I spend a lot of holiday time working and with family. So now here we are into 2012.
I began to research a little in January of 2012 because I had some extra time on my hands. I began to look at Kuwait. I did key word searches. Basically I typed things like Kuwait+news+articles+1991. As a result I began to read through countless news articles from 1991. Way back when Iraq invaded Kuwait. I used different types of keyword combinations. What I found shocked me. Kuwait never revalued their currency! The central bank did not change the rate. As people fled they grabbed all the cash they could. When they got to countries along their border they began to exchange the Kuwaiti dinar for the currency they needed. This created a flood of Kuwaiti dinar in other nations. The value dropped on the black market because foreign banks and the people lost faith in the currency.
Saddam Outlaws the Kuwaiti dinar and it falls in value. He said that people needed to trade in their Kuwaiti dinar for Iraqi dinar before Oct 6 1990. When America begins to regain Kuwait the value rose again. It is important to note that this is not a result of the bank changing the rate. It is a result of the black market interpreting the news of the day. This is the same thing stocks do. It is the same thing that happened when Saddam tried to adjust the rate of the Iraqi dinar and said it was worth more than it was towards the end of the 80’s. But outside Iraq. The Iraq dinar was trading for less.
The important thing is the central bank never adjusted the rate below 3 dollars. In fact, The Kuwaiti central bank was occupied by Iraqis and they were not open for business! When America came to the rescue of Kuwait primarily because of the petro dollar agreement they kicked Iraq out. When the people regained their country everything was up and running just 7 months later. All the oil well fires were put out, and everything was almost back to normal. Kuwait redenominated. The only reason for this was because Saddam took a bunch of Kuwaiti dinar from the Kuwaiti central bank.
This is an entirely different scenario then what happened in Iraq. Kuwait’s currency was not expanded because of sanctions and they did not have a period of hyper-inflation. This completely threw me for a loop. I always thought and was told that what happened in Kuwait was going to happen in Iraq. Kuwait never had over a trillion in circulation. You see when it comes to any denomination going through a revalue the money supply is key. This is because there is a debt liability with a revalue. They can’t just say it is worth x amount. The government itself is on the hook for that amount. Money=debt and debt=money.
http://en.wikipedia.org/wiki/Invasion_of_Kuwait
http://articles.latimes.com/keyword/kuwait-currency
http://articles.latimes.com/1991-03-24/news/mn-1395_1_kuwaiti-banks
http://articles.latimes.com/1990-09-25/news/mn-1116_1_kuwaiti-dinar
“Significant quantities of these notes were stolen by Iraqi forces and some have appeared on the international numismatic market. The “Standard Catalog of World Paper Money” (A. Pick, Krause Publications) lists notes with the following serial number prefix denominators as being among those stolen:
After the liberation, a fourth series was issued on 24 March 1991 with the aims of replacing the previous withdrawn series as quickly as possible and guaranteeing the country’s swift economic recovery. This fourth series was legal tender until 16 February 1995. Denominations were ¼, ½, 1, 5, 10 and 20 dinar.
The fifth series of Kuwaiti banknotes has been in use since 3 April 1994 and include high-tech security measures which have now become standard for banknotes. Denominations were as in the fourth series.”
http://en.wikipedia.org/wiki/Kuwaiti_dinar
So Kuwait redenominated because Iraqi soldiers took dinar from the central bank before they left. They wanted to redenominate to prevent Saddam from using those notes. It was changed out for a rate of 1 to 1. There was no revalue during the redenomination the rate was never altered. It fell in the black market.
Now I began to wonder about terms like revalue and reinstate. In all my research on currency and how it works I never researched this process. I started with the term reinstate. The only place I could even see anything about currencies reinstating was in the forums and on dinar guru sites. Currencies don’t reinstate! They float, and the ones that don’t float are pegged to the ones that do. This is how the system works. You would not expect a stock to reinstate on the stock market. Maybe they reinstate dividends but they never reinstate value. No currency has ever reinstated in value…EVER! Drivers licenses, insurance policies, Laws, and policy regarding stocks can all be reinstated. Currency values are not, and never will be reinstated.
http://www.investopedia.com/terms/r/reinstatement.asp#axzz1s61wlgdN
The only place you can find this is in the forums and on the guru sites. Just do keyword searches on reinstate and currency. See if anything comes up other than the Iraqi dinar outside of a guru site or a forum.
So I began to research revalues. A revalue is a change in policy like devalue is a change in policy. A revalue only affects currencies that are pegged. They revalue or devalue a currency because the currency it is pegged to has risen or fallen. It can also be based on that nation’s economy, GDP and inflation factors.
The big thing here is there has never ever been a Revalue above 50 percent. It would be hard to find a revalue in history over 35 percent. This means that if you believe the dinar is going to go from 1166 to $1.00. Then you got to know that is over 100,000 percent. No currency has ever done this. Consider that as the dollar has gone down the CBI kept putting more and more dinar into circulation. So by 2011 there was at least 30 trillion in circulation. That is an incredible debt liability for a nation the size of Iraq to acquire if that currency revalues to 1 dollar. That is twice the size of our national debt. It is much more money in value than America has in the M2 money supply. Do you know what that would do to inflation in Iraq? If the dinar was all of a sudden worth just 25 cents tomorrow hyper-inflation in that country would soar through the roof.
This is because of a concept in modern money mechanics which states that a currencies value is determined according to how rare that currency is. In other words the more money in circulation the less rare it becomes and the more things cost.
All this seemed to be a nail in the coffin for the RV scenario. But the final nail came in February. I was on a conference call with some friends in skype. We went to the CBI’s web site. We downloaded an excel document. There was a document called Key financial indicators. It had a date of Jan 2012 It said Iraq had over 28 trillion outside of banks in physical money. Their M1 money supply is almost triple that of our M2. It is crazy to expect a revalue of even 1 penny under those circumstances. But let’s continue
http://www.cbi.iq/index.php?pid=Statistics
Click on the link above and download this document for yourself scroll down to line 79 in the excel document. The one that is up there now is dated April 11th the information has updated. Now on that same line the currency outside of banks is 34 trillion 999 billion. Their M2 is now 69 trillion dinars…. WOW! Do you still think that they will revalue a currency to a $1.00.00? If they do then the entire world’s money supply will go way up. This will have a tremendous impact on hyperinflation. Rest assured if they do this then that rate will only be in Iraq as the currency implodes. I highly doubt that the rate will be honored outside of Iraq. Do you honestly think the IMF will allow Iraq to threaten the world’s economy in this way?
This is the final nail in the coffin for me. It is time to put this to rest. The Dinar is will not revalue above a penny with that much currency in circulation. If they want to raise the value of their currency then they got to shrink the money supply. The supply keeps going up! The only way in economics to shrink a base money supply that large is to redenominate. That is the only option. Money expands and contracts from the base money supply. But Iraq’s base supply is about as larger as our highest expansion. There is no revalue coming that will make everyone rich!
After seeing this for the first time I had to figure out my next move. I decided to bring back Iraq Currency watch and warn everyone who has read my blog. I felt a sense of obligation to warn my readers. For years I supported this investment. Now I needed to set the record straight and warn of the deceit that is rampant in the chat rooms. This is the same deceit from which I fell victim to.
I sold all my dinars and got completely out. Some people sell their dinar on eBay. I could not bring myself to sell this to another investor knowing what I now know. So I tried to sell it back to the local banks. None of the banks where I live exchange dinar anymore. At one point they did, but now they won’t even touch it. This was a big red flag for me. So I sold my dinar back to a dealer in one straight shot and took a loss.
The dinar itself has become a game of musical chairs. When the music stops anyone caught holding will lose. There will be a point when people will figure out what is going on. When that day finally comes you won’t even be able to give your dinar away. I will talk more about that day and why it is coming in the next post.
Now you know my story. Now you can make an informed decision on what to do next.
Iraq Currency Watch 