Saturday, May 26, 2012

Keep the change

5-24-2012  Newshound Guru Adam Montana  There's a lot of confusion on the whole "redenomination" thing. The simplest way to understand it is this: If the value raises to 1:1, then the average Iraqi has more money in his pocket. They can't eat a Mercedes, so they will still need to buy smaller items like bread and meat.  When they buy bread and meat, they will need to get change - bread isn't suddenly going to go up to $4000 per loaf!  Therefore, if the value raised to 1:1 they would need to immediately introduce smaller denominations into the market.   ["continued in post 6...stay tuned"]

While I generally make it a point to avoid responding to incoherent, blathering idiots, Adam Montana has obviously made that impossible.  I'll give it my best shot though.

How does the average Iraqi have more money in their pocket if the value raises 1:1?  The only way an Iraqi has more money is if that Iraqi has money in savings.  How likely is that?  Do a quick google search on Americans and their savings.  I found one source that said the average American saves like $367 a year, and the average American's savings account balance is $3,800.  So are we supposed to believe that the average Iraqi, from an average 3rd world, war torn country, is going to have any significant amount of money in savings?  Doubtful.  And what the #%&$ does a Mercedes have to do with anything?  

How much is a loaf of bread in Iraq?  According to this website it's 1,329.24 dinars (1.14 X 1166).  Why does it take sooo many dinars to purchase a loaf of bread?  I'm no Harvard grad, but I bet it has something to do with the hyperinflation that Iraq experienced in previous years.  What causes hyperinflation?  Hyperinflation results from a rapid and continuing increase in the supply of money, which occurs when a government prints money or creates credits in bank accounts.  So can someone explain to me how flooding the Iraqi economy with trillions of dollars via an RV won't create hyperinflation, thus leaving Iraq in the same position they are in right now?  A loaf of bread may not be $4,000, but it will be darn close.

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