Here's Guru SWFloridaGuy's LOP post... (full post inside)
Published: Fri, 08/03/12
Hi, ,
Hamlet reference sooner or later! :)
Appears Guru SWFloridaGuy has dug even deeper into the LOP or NOT
question.
Dinar Guru has Over 30,000 of the most savvy Dinar investors
around...so I knew you would want to see this.
A word of warning...

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This is NOT for the faint of heart. He brings up real questions
and observations that some may not want to face.
Read until the end...
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8-3-2012 Newshound Guru SWFloridaGuy: I want to start by saying RV,
RD, RI, I have
no clue. I can only hope for the best. We continue to see the GOI
stratagem toward reform (which would be the optimal solution for
investors). The more I study macroeconomics, the more I understand
the Lopsters argument. If you solely look at historic large
currency appreciations, even a 20% increase, runs the risk of
having negative long term effects. A 100,000% increase is not even
something regarded as possible by most economists. The
macroeconomic effects of "appreciation shocks" differ between
developed and developing countries. Iraq is a developing country
despite the fact that they have functioning (somewhat) branches;
Executive, Presidency Council (one president and up to three vice
presidents); CoM (PM, 3 deputy PMs, and 30 cabinet ministers),
Legislative-(COR) consisting of 325 members and the Judicial
(Supreme Court appointed by the PM and confirmed by the CoR). The
differential effects appear particularly pronounced with regard to
the external balance that deteriorates more persistently in
developing countries. Export growth takes a stronger hit in
developing countries, but is counterbalanced by stronger domestic
growth. However, what the Lopsters fail to recognize is the fact
that Iraq is a very unique situation. The value for the IQD is
still there. Iraq was devalued due to a war strategy (have yet to
see proof from a Lopster that it wasn't) and the U.S. has been in
control of the reconstruction from the start. I believe Iraq will
revalue and the real questions are - how high, when and by what
mechanism? Several incremental adjustments (to get us to 1 to 1
initially) would be what I prefer. That would ensure that the large
notes retain their value.
If they go to 1 to 1 initially or just higher, that would be
something the world has never seen and the best case scenario.
Eventually, I think Iraq will have the strongest currency in the
M.E. but only over time. The IQD is a pegged currency, not one that
is actively traded. The CBI sets the value, as they did from 1189
to 1166. What I would prefer to see is a move to 1000 (between Sept
- January) prior to on par with the USD. Iraq has to have a stable
and improving economy and manageable monetary supply in order to
improve their purchasing power. Let's not forget all the debts that
have been forgiven in conjunction with corporations, foreign
governments, banks and powerful organizations that have all chipped
in to aid in Iraq's reconstruction, in order to reap the benefits
themselves. The IQD is a very unique economic situation that has
come along during at a very desideratum time in history. Foreign
governments, corporations, banks and organizations have invested
heavily into Iraq, putting their money where their mouth is. Iraq
is a unique situation, therefore the rules do not apply. However,
let's not simplify this. Iraq must choose between capital mobility,
monetary policy autonomy, and exchange-rate stability. Nominal
appreciation must lead to sustained real appreciation. The
definition of a large exchange rate event comprises a 10% (or
larger) appreciation of the nominal effective exchange rate over a
two-year window (or less), leading to sustained real effective
appreciation. In the past 52 years there have been 25 episodes of
large nominal, real appreciations and revaluations. There were 14
cases of "appreciation shocks" that occurred not as a result of
discretionary policy action, but were linked to the appreciation of
the anchor currency under pegged exchange rates. What we believe
Iraq will accomplish is a 100,000% increase. That is unprecedented
but possible under these circumstances (just my opinion). That's
why we are all here. This is a unique situation and we were all
lucky enough to recognize that.
No country has ever accomplished what Iraq is about to. I cannot
prove that the IQD will revalue, nor do I think it's fair to
require such proof of others. Economic policy is influenced by
international capital markets and foreign central banks and I
certainly don't pretend to know the motives behind those that would
influence either. I can only speculate that this RV is how the GOI
will reassert monetary sovereignty, dedollarize and give the
citizens confidence in the national currency. Establishing their
credibility is also a major factor, not only with their own
citizens but also with international capital markets. If Iraq is
truly predestined to become a respected borrower and location for
private investment in the eyes of global capital markets, then they
would take the necessary preparatory steps (which we believe we
have been witnessing) to achieve that. These foreign central banks
that have invested so heavily into the reconstruction of Iraq will
prosper and Iraq's debts will be paid. Democratic governments RD in
response to hyperinflation. Authoritarian governments RD in the
presence of civil conflict. Neither of these conditions describe
Iraq. Their inflation is decreasing, not increasing. Inflation fell
to o 5.8%. Iraq's Ministry of Planning said that inflation in Iraq
for the period from June 2011 to June 2012 has been running at
5.8%, which was down from the 6.2% reported in May, and the 6.7% in
April. I believe once the zeros are removed from the IQD, the large
notes will retain their value. Locally the currency will be
exchanged at branches of the Rafidain and Rasheed banks. Iraq got
to where they are today with a lot of help. The formerly mentioned
entities assisted in the reconstruction of Iraq in order to benefit
from the CBI once they instituted the framework for a functioning
monetary policy that achieves stability. Iraq is a unique
situation, something the Lopsters fail to grasp. However, I
recognize that both scenarios are possible and leave it up to you
to decide. In closing, my research has led me to believe that this
investment is solid. This is just my opinion, which may or may not
be correct.
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