Dinar doomed?

According to sources, the Iraqi dinar will collapse in two years, if the amount of cash dinar is not decreased



Mohammed Allawi: Iraqi dinar could collapse within two years




Baghdad - INA / MP and former minister Mohammed Allawi, on Wednesday, the possession of the Central Bank of Milarat dinars has not pumped into the local markets, while stressing the need to develop economic solutions to the crisis out of the current crisis, warned of the collapse of the Iraqi dinar in two years. 

Allawi said In a comment posted on his page on the social networking site (Facebook) that "the problem is not liquidity, central bank has billions of dinars printed and that have not inflicted to the market, and could have inflicted whenever he wants, but he can prints new dinars and inflicted to the market." 

He pointed out "The sole determinant in the available cash in the street is critical cover from the reserve to the dollar," pointing out that "in 2013 the reserve was more than 230% of the cash mass Dinars, which is a high percentage, but due to lack of reserve that percentage dropped to about 170%, which is also high but if the situation continues as it is now will reach to 100% under this rate we will enter in the caution zone. 

"said Allawi, a former Minister of Communications, that" if it reaches the cap of 60%, we will enter in the danger area ratio and hence the risk, where if we do not provide then the collapse of the dinar solutions where we can reach a point where the central bank is unable to provide the dinar against the dollar and we could get to this point with certainty within a period not exceeding two years. "

http://www.iraqnewsa...قي-قد-ينهار-خل/

Why was my post basketed? I thought that maybe the peeps would like to have info regarding this-

It was only removed temporarily, so I could GOOGLE the article and put it into your post.  It is now visible again.  Thank you for sharing the article !It is a good one !

Sorry for the confusion- You are SO welcome!!

HMMMM INTERESTING

Interesting indeed ... however this appears to be an op-ed, and as such one person's opinion, and not an economist at that.

Still an interesting article to contemplate.  I am sure most gurus will spin it as smoke and mirrors

What's really interesting is that a "RV" (or ANY other significant increase in exchange value) would create the exact same situation! That has always been the insurmountable problem that everyone seems to ignore, Iraq would not have anywhere near the reserves to support any kind of increase that Dinar "investors" hope for unless they first do the dreaded "LOP" in order to reduce the money supply by a corresponding amount, it's simply economically and mathematically impossible!

This is, always has been and always will be the reason that the mythical "RV" is impossible, has always been impossible and will remain impossible yet clear as the problem is people still refuse to accept the FACT that this has always been from the start nothing but a con-man generated scam!

Perhaps, perhaps not. There is nothing etched in stone that says a country has to have enough reserves to cover their currency. In fact under the fractional banking system in use today, it is rather the opposite.

That said, the abundance of evidence points to the fact that it is highly unlikely that we will see any sort of significant increase in value of the dinar, RV or otherwise, anytime soon.

Pretty accurate evidence, if you ask me-I don't ever think it will happen in our lifetime-

Kevind53 wrote:Perhaps, perhaps not. There is nothing etched in stone that says a country has to have enough reserves to cover their currency. In fact under the fractional banking system in use today, it is rather the opposite.

That said, the abundance of evidence points to the fact that it is highly unlikely that we will see any sort of significant increase in value of the dinar, RV or otherwise, anytime soon.

There may not be an "etched in stone" law but there is economics and mathematics that make it impossible whether it's legal or not. Think about it, if Iraq doesn't have enough Dollars to back their currency how would anyone collect on it? I mean it's just common economics, all those people out there that hold all those Dinars are going to want to exchange them immediately so in order for the Dinar to maintain any claimed value it would have to be redeemable but where would all those Dollars come from if Iraq don't have them to back their currency? That's the economical angle but it's also mathematically impossible because there are not enough Dollars in existence to cover a 1 to 1 exchange rate if Iraq had every last one of them in their possession!

The whole idea is just ridiculous when you think about it, an exchange rate of 1 to 1 at the current money supply Iraq has would require more Dollars than exist on the planet so how can it possibly be perhaps or perhaps not instead of absolutely not? The above article is talking about the Dinar collapsing if the reserves drop to half or less than what is needed to cover the existing supply but a "RV" to $1 would exceed the reserves by thousands of times so how can it even be remotely possible? Even at 10 cents the reserves would still be exceeded by many times and if Iraq don't have the Dollars to back them how can they redeem the Dinars that would undoubtedly come pouring in? The fact is that it is not and never has been a possibility and the whole thing is and always has been a pipe-dream conjured up by scam artists and nothing more.