2004 Discussion on Pegging the Dinar

[Bill in Dc]

am starting a new thread with this comment from an earlier one (sorry, am new to this so i didn't realize the necessity or efficacy of starting a new thread)!!

pegging the dinar?

--------------------------------------------------------------------------------

jared, tony, m&m, et.al.--
had a thought on the commute in this morning (which is something one should not do ): wouldn't pegging the dinar to oil, in perhaps a too nuanced way, incentivize the protection and subsequent development of the oil industry? think about it: if the exchange rate, which will effectively determine the relative wealth of all iraqis, is directly dependent on the price of oil, each iraqi would then have a vested interest in protecting the resource! alas, i fear such an idea is too subtle for current circumstance.

but as many have suggested, perhaps a combination of fixed, peg and then perhaps float may well work: fixing it returns relative wealth to the irqi population sooner; pegging it later incentivizes protection and modernizationof the infrastructure; and ultimately, floating it takes advantage of market forces in the currency market! for those of us who plan on selling off just a little to pay some bills (and retain the remainder as an investment), an initial fix of say 10 to 30 cents would work, peg it over time, and after everything's up and running, let it ride! ah well wishful thinking perhaps.

comments?

[Jared]

Gold would have to be part of the peg (in PEP). It is the only commodity that the insurgents cannot touch. It will help as a baseline, I just don't know how much of it they have. Tough to benchmark without more accurate figures.

Jared :cool:

[Just_Sayin]

Gang -

I ran across this article from a Harvard egghead. He talks about the strengths and weaknesses of Iraq's pegging options for the Dinar. As dry as it is, (and as much of a bonehead as I am), I still learned a lot about the issues involved with oil, gold, commodity, and currency pegs.

Interestingly, he concludes that the best option for Iraq is pegging to a basket of oil and currency: specifically 1/3 dollar, 1/3 euro, and 1/100 a barrel of oil. Assuming a $40 barrel of oil, that pegs the dinar to $1.15 !!!!

Boy, I hope this egghead is right!!! :happy64:

Just_Sayin...

http://64.233.167.104/search?q=cache:qmMjFQO73TMJ:ksghome.harvard.edu/~.jfrankel.academic.ksg/What_to_do_with_Iraqs_Currency.pdf+iraq+currency+a ppreciation&hl=en

[BRYAN]

Gang -

I Interestingly, he concludes that the best option for Iraq is pegging to a basket of oil and currency: specifically 1/3 dollar, 1/3 euro, and 1/100 a barrel of oil. Assuming a $40 barrel of oil, that pegs the dinar to $1.15 !!!!


http://64.233.167.104/search?q=cache:qmMjFQO73TMJ:ksghome.harvard.edu/~.jfrankel.academic.ksg/What_to_do_with_Iraqs_Currency.pdf+iraq+currency+a ppreciation&hl=en
This is interesting , wonder if the Iraqi Goverment will use this model ????

[toemaas]

I wish I could remember who, but someone at the old T&B forum back in early July interestingly used this same model and came up with $1.19 !
Let's keep our fingers crossed. :wave:

[DinarBabydoll]

OH be still my heart! $1.15 per dinar would be enough for me to cash out! Although I think that is just too good to be true, I believe that the dinar has to be valued at high enough to make the Iraqi's think the war was worth it to them, and that they are better off now than before the war. It seems that the Iraqi's will need to see some immediate gratification when the currency opens, so that it needs to open at a fairly good rate. Just my (wishful) opinion. :wave:

[kvb]

Could someone help me understand? If the US Dollar rise's .30 cent's in one day, will the average American notice a change in their day to day life?
If so, what change's would we notice?

[PrincesssDayzee]

Guess I havent paid attention lately...you are over 900 posts?!?!?!?!?!

WOW!! :happy64:

[kelleyB]

I wanna get to 900 :(.. I will catch mr. tony. Oh yes I will. even if I have to do silly useless posts like this every hour on the hour...Muahhhaaahhh


OOOOH lookie I am a Dinaraholic now. Yeah for me.

"Hi"
*you all say hi now*
"My name is Kelley and I AM a Dinaraholic with no plans of recovery"
*you now say, "welcome Kelley"*
"Thank you" *then I bow and proceed to post like crazy to the next phase*
:happy64:

[kvb]

you mean if the iraqi dinar rises to .30 cent's each dont you? lol

Yea, I was just trying to make sense of it here. Will the average Iraqi notice a huge change if the rate goes from .0007 to .30 in one day?

If our currency flucuate's let's say, .10 in one day, will the price of consumable good's flucuate drastically as well.

Just trying to get a correlation as it's easier to understand by thinking in USD terms.

[kelleyB]

Good question. What I wouldn't give for it to open that high. I am not saying it is impossible. If they set the date for everything to go up along with the dinar, I don't see why not. It would be crazy though. People would lose money until they got their prices changed. I can see it opening up at .30, but not $1.19. Maybe $1.15 lol No seriously I don't see it opening up that high. Probably because that is "TOO GOOD TO BE TRUE". The .30 seems more realistic to me. Get them back where they were and work their way up. I can't see it being worth less then that. If they opened at .01 that would show their economy is in perils (which it is growing). Why would anyone want to invest in them at that. Someone said that they need to show that the war was worth it. I agree and to open at less then .30 is suicide to me. Ok, I am saying that because I want it to open at that. But truly I believe it will be around that. Hoping for more but would be happy with that.

[PennStateMtnMan]

I agree, the currency is going to have to open above a penny.

[turbofastaz]

yep we will have to wait again for that special monent to come one day
:huge:

[dinardude]

Good question. What I wouldn't give for it to open that high. I am not saying it is impossible. If they set the date for everything to go up along with the dinar, I don't see why not. It would be crazy though. People would lose money until they got their prices changed. I can see it opening up at .30, but not $1.19. Maybe $1.15 lol No seriously I don't see it opening up that high. Probably because that is "TOO GOOD TO BE TRUE". The .30 seems more realistic to me. Get them back where they were and work their way up. I can't see it being worth less then that. If they opened at .01 that would show their economy is in perils (which it is growing). Why would anyone want to invest in them at that. Someone said that they need to show that the war was worth it. I agree and to open at less then .30 is suicide to me. Ok, I am saying that because I want it to open at that. But truly I believe it will be around that. Hoping for more but would be happy with that.


Nice save :)

[kelleyB]

Nice save ????:confused: ????I am lost:drunk:

[dinardude]

I wanna get to 900 :(.. I will catch mr. tony. Oh yes I will. even if I have to do silly useless posts like this every hour on the hour...Muahhhaaahhh


OOOOH lookie I am a Dinaraholic now. Yeah for me.

"Hi"
*you all say hi now*
"My name is Kelley and I AM a Dinaraholic with no plans of recovery"
*you now say, "welcome Kelley"*
"Thank you" *then I bow and proceed to post like crazy to the next phase*
:happy64:

From the above to the below


Good question. What I wouldn't give for it to open that high. I am not saying it is impossible. If they set the date for everything to go up along with the dinar, I don't see why not. It would be crazy though. People would lose money until they got their prices changed. I can see it opening up at .30, but not $1.19. Maybe $1.15 lol No seriously I don't see it opening up that high. Probably because that is "TOO GOOD TO BE TRUE". The .30 seems more realistic to me. Get them back where they were and work their way up. I can't see it being worth less then that. If they opened at .01 that would show their economy is in perils (which it is growing). Why would anyone want to invest in them at that. Someone said that they need to show that the war was worth it. I agree and to open at less then .30 is suicide to me. Ok, I am saying that because I want it to open at that. But truly I believe it will be around that. Hoping for more but would be happy with that.

You crack me up! :drunk:

[kelleyB]

Was it drastic? :D I am only here to please ;)

[dinardude]

Was it drastic? :D I am only here to please ;)

Drastic no...just shows how versatile you are :) and please you do :)

[dinardude]

*taking a bow* Thank you and to all my fans. Here is a big one for just you!




***SMOOCHIES***


Oh for little ole' me...(dinardude looks for southern accent button)...hey Tony where's that button? :huge:

[atxdinardude]

Yea, I was just trying to make sense of it here. Will the average Iraqi notice a huge change if the rate goes from .0007 to .30 in one day?

If our currency flucuate's let's say, .10 in one day, will the price of consumable good's flucuate drastically as well.

Just trying to get a correlation as it's easier to understand by thinking in USD terms.
First, I'd like to state this is my first post, and my apologies to the original dinardude for my lack of imagination.
In terms of USD, it would be like $1.00 being suddenly worth almost $400.00. (400% increase)
If our currency fluctuates ten cents now, no, we don't see any real difference. But their currency is worth thousandths of a dollar and it would significantly increase the individual's buying power for their currency to be worth hundredths of dollars, not to mention the buying power of their government and businesses internationally.

[Dinardreams]

Could someone help me understand? If the US Dollar rise's .30 cent's in one day, will the average American notice a change in their day to day life?
If so, what change's would we notice?
Overseas investments and when you travel abroad and exchange your Dollars for other currencies. Just two examples.
Good day and good luck. DD

[ROB5891]

i believe you made a mistake with the percentages. 1 dollar being worth 400 is not 400%. 40,000% is the number you were looking for. it looks astronomical but hey it could definitely happen

[atxdinardude]

ROB is right. I did have the percentages wrong.The point I was attempting to make is that the difference between .0007 and .30 is that .0007 means that it's worth 7/10,000 of a dollar right now, and that at .30 it would become worth 3/10 of a dollar. I think anyone would feel the difference in buying power in that. Thanks for the correction.

[Marilyn]

I'm bringing back some interesting threads from last year for your reading pleasure....

[Dollar Bill]

I did a little research on the dinar. Prior to the 2003 invasion the dinar was @.20 with saddam in power. Now that would be a slap in the face if the US said they wanted improve the Iraqis quality of life by removing saddam.With the tyrant remove their buying power is LESS(if it's pegged low), for many of them I imagine they would prefer saddam with much more buying power. I know I would be a lil PO'd.

[Marilyn]

I'm sure the loss in the value of their currency has been very hard on the Iraqi people. Imagine the cost of a loaf of bread going up nearly 400%. The subsidies are desparately needed until their wealth can be restored.