Thursday, February 2, 2012

Iraqi Dinar Scam - RV

                         I have been hearing about an RV “very soon” for years.
The dealers make some money on fulfillment costs (shipping and handling) but most of it comes from the spread. They are able to buy dinar at a much lower rate (about 20%) than they sell it for. A spread on investment products is normal but 20% is extreme. To give you some sense of perspective, if you were to buy the Euro through an FX dealer it would cost you about three ten-thousandths (.0003) of a penny per dollar of value. Even the hard currency dealers at the airport only charge a point or two.
The Iraqi dinar is the perfect storm of financial desperation, ignorance and the internet. It is heartbreaking to see so many people fall for the foolish claims of the pumpers and promoters.

A revaluation, as proposed by these people, has never happened in the history of the world. Germany after WWII and Kuwait after the Gulf War was not the least bit similar. But, of course, people don’t know that. They hear “revaluation” and figure they’re all the same. Currency exchange is a zero sum game. Wealth is neither created nor destroyed in the process, it is only transferred.

People that believe wealth will be transferred to them through a revaluation of the Iraqi dinar should ask themselves from whom the wealth is going to be transferred. For them to receive the wealth of an RV, someone (or something) else must give up their wealth. Who will that be? The Central Bank of Iraq? The government of Iraq? Why would they do that? Why would anybody? It makes no sense. It’s an absolutely foolish notion. The government of Iraq would not willingly and voluntarily relinquish the wealth of its nation. No country would. They may squander it through fraud, corruption and mismanagement, but they would not willingly transfer it.
Layman terms – as simple as counting from 1 to 10
A scenario that to me makes perfect sense in explaining how there is NO way that this could play out the way these “dream chasers” believe it will.
According to numbers I’ve seen from 2009, the “average hourly pay” for an Iraqi citizen is roughly US $2.10 per hour. That currently equates to ~2,500 Iraqi dinar, per hour. So let’s take an average early 20′s Iraqi boy that gets a job, say “moving rocks”. He goes out and puts in a hard 10 hour day worth of work. At the end of the day his supervisor approaches and hands him his fresh, crisp 25,000 dinar note.
The boy takes his note and heads for the convenience store. He proceeds to fill his car up with gas, grab a coke, a bag of chips and a candy bar, basically spending his entire days pay. He goes home and goes to sleep happy. The next day the boy gets up, goes to work, and again earns his 25,000 dinar. However, his car is full of gas and his belly is still full of sugar, so he takes this 25,000 dinar note home and puts it in a little tiny box under his bed.
Now, day 3 begins and low-and-behold, this is the day that this magical “RV” happens. This is the day that an Iraqi dinar transforms from being worth a fraction of a US dollar to being worth 3 US dollars. The Iraqi boys wakes up, sees the morning news, grabs his 25,000 dinar note from under his bed, and proceeds to go down to the local Mercedes dealership where he buys himself a brand new $75,000 Mercedes SLK 500.
If the U.S. government had a massive conspiracy to create a bunch of millionaires why wouldn’t they do it by “revaluing” the dollar rather than the dinar?
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