Ariel (@Prolotario1): The Baseline Value of the Dinar

on December 28, 2024

Ariel
@Prolotario1

The news is just coming out at rapid rates. Speaking of rates. I need to reiterate something. If $3.22 in 1980 was equivalent to $12.34, that’s a 283% increase due to inflation 12 years ago when Dr. Shabibi first brought this up.

If the exchange rate reflects the cumulative inflation from 1980 to now, Iraq cannot simply restore their currency to pre-2003 levels without adjusting for inflation over those decades.

The baseline value of the dinar must reflect the erosion of the dollar’s purchasing power over time, which suggest that a direct reinstatement at older rates would undervalue Iraq’s economic position.

If $3.22 in 1980 is now $12.34, applying a similar inflation multiplier (around 3.8x) to the pre-2003 exchange rate of 1 IQD = $3.22 would place the new rate between $12 and $16 per IQD.

However, geopolitical factors, resource control (oil), and economic growth could justify rates exceeding even $16 per IQD to reflect Iraq’s current reserves and output.

Do you know what that means if you just have only 100,000 IQD? That is atleast 1.6 million. People this is just basic economics. Not throwing some dream rates out there for a dopamine fix. Just something to think about.

Governments generally honor old currency to maintain economic stability and trust. They would be shooting themselves in the foot.

Declaring large amounts of existing currency invalid overnight would cause chaos, legal challenges, and undermine confidence in the banking system.

When Iraq revalues, the central bank is more likely to phase out old notes gradually or allow exchanges, not outright invalidate them. Which is written in policy.

There is no written policy in Iraq that supports any theory that shares this thought pattern among those who agree with this subjective thinking.

For instance, in 2003, the Coalition Provisional Authority introduced new dinar notes to replace those bearing S****m Hussein’s image. Both old and new notes coexisted as legal tender during the transition, allowing citizens ample time to exchange their old currency without sudden invalidation.

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