Some have mentioned that they will knock 3 zeros off the currency, so that 25,000 dinar would now be worth 25 dinar. That will not happen, either! Why? Because the new dinar currency has the value right on it. It says 25,000 dinar right on the bill. Paper currency is worth whatever it says on the paper currency. No more and no less.

If they did want to get rid of the big numbers and knock off three zeros (which makes a lot of sense to do so, just for the ease in comparing currencies and buying things), they would have to replace the currency. This is a possibility. A 25,000 New Dinar bill would be equivalent to a 25 Newer Dinar bill. The Iraqi mint would print the Newer Dinar bills, and people would have to bring their old New Dinar bills into the bank to exchange them for the new Newer Dinar. This would be a bad thing if you were not in Iraq. How in the heck are you going to exchange your old bills for the newer ones if you’re in the US, or anywhere else other than in Iraq? They might even have a deadline (say 6 months) for you to exchange your old bills before they become worthless. Like I said, this would be a bad (but possible) thing for those of us holding paper New Dinars.

I think that as the Iraqi economy betters and “if” political stability ever happens, we could see an increase in the New Dinar (which is why I’m holding 5 Million in play money myself – I’m fortunate enough that I could lose this without a significant impact on my finances). I would not recommend holding any more than play money. This is a purely speculative adventure! I purposely did not use the term investment.

The bad part is that there are a number of catastrophic things that could happen that would make the New Dinar worthless. Some of which are:

1) A replacement of the New Dinar as mentioned above with no way for us to exchange our bills to the Newer Dinar. Result = complete loss of value.

2) Political stability resulting in a new President that decides that he wants his mug on the currency, so he issues a newer currency much like the previous example with no way for us to exchange our bills. Result = complete loss of value.

3) As is happening currently, there is a loss of interest in the New Dinar. People get tired of waiting for their supposed lottery ticket to put out. They decide to dump their Dinar and put their money elsewhere. Result = decline in value of New Dinar.

4) The new government wants to re-distribute the oil wealth from the peons (you, me and the Iraqi citizens) to the government, where they feel it belongs. As they become stronger, and the world is buying loads of oil from Iraq, they simply print more money. The new dinar notes will decrease in value (more supply). Say, the total number of New Dinar printed to date was 100 Trillion (50 Trillion held by the Iraqi government and 50 Trillion held by the others (including you and I)). They decide to print another 100 Trillion. The $US value of all the New Dinar currency will remain unchanged, but the exchange rate will be cut in half since there are now twice as many New Dinars in circulation. Our Dinars will now be worth 1/2 as much as before, but the government will now hold 75% of the currency instead of the previous 50%. Their money went up by 50%, and ours went down by 50%. Good for the Iraqi government, bad for the speculators. It’s a simple redistribution of wealth. It has nothing to do with exports or economies, just the will of the government to take a bigger piece of the pie. Result = decline in value of the New Dinar.

There are other risks, but I’m tired of typing and hopefully by now you’ve got the idea. The future of the New Dinar is unknown. Those who think otherwise think they know more than they do, or they’re just trying to sell you something.

Having said all that, please continue to buy Dinars, so that the value of my play money goes up. And, let’s all cross our fingers in the hope that none of these catastrophic events happen and the New Dinar is just left as it is so that Supply and Demand and recovering economies can work their magic and make us a little bit of money.