About the Iraqi Dinar

The word on the street is, the Iraqi Dinar will soon be revalued substantially.

Today (May 2011) the exchange rate published by the Iraqi government is about 1168 Iraqi Dinars to one US Dollar.

The theory is that the exchange rate will be changed overnight to something like three or four dollars to one Iraqi Dinar. This would mean, if you had a thousand dollars worth of Iraqi Dinar in your pocket before the revaluation (or "RV" as the Believers call it), you would have over three million dollars after the RV.

Since the Iraq War began in 2003, a community of people in the United States and elsewhere has been buying Iraqi Dinar at this very low rate. The community has grown as word-of-mouth has captured the interest of more and more people. Online discussion forums, as well as banks selling Dinar, have sprung up everywhere.
Two examples of such banks:
www.dinarbanker.com
www.dinartrade.com

Two examples of online discussion forums:
http://peoplestalkradio.com/
http://www.investorsiraq.com/

If you search for such banks or forums, you'll find more of them.

It appears that there are hundreds of thousands -- perhaps over a million -- of people in the United States each with a cache (no pun intended) of Iraqi Dinars, each waiting for the Big RV to come, and for all their financial problems to evaporate. Some have a few hundred dollars worth, some have ten thousand dollars worth.

On these forums, every day or so, you can read a posting from one person or another saying that the RV "will happen tomorrow" or "in the next few days", or even that it "has already happened" and that everyone just has to "wait for it to be announced".
Individuals talk of having "boots on the ground", meaning they know people in Iraq who have "intel" about the imminent RV. "Intel" is knowledge of impending revaluation of the Iraqi Dinar.
So assured are these folks that the RV is about to happen, many have signed up for a "RV Event Celebration" in one city or another, due to happen two weeks following the Big Day, whenever that is.

The Reality

Any challenge to the assertion that the substantial revaluation of the Iraqi Dinar will happen is met with immediate disdain and ridicule on these discussion forums. There is no room for dissension. You might as well log on to a forum of Area 51 Believers and say aliens don't exist. These people are convinced that the Iraqi Dinar is about to be revalued, giving them a windfall to match their dreams.

No one can know -- outside of perhaps a handful of people -- if an RV is about to happen. In addition, the mere possibility of it happening lends itself to nicely to scam artists. You set up a forum website on the subject, get some traffic going, and plant a couple of shills who dish out "intel" every few days to get everyone excited. All the while, you are selling Dinar, collecting advertising revenue or selling some other crap to the unsuspecting visitors.
Even if there is a one-in-a-hundred chance of benefiting from an RV, if that RV gives you 3,000x return, it's worth it to become a "Believer" and go along with it.

Here is evidence that suggests the Iraqi Dinar Revaluation is a scam. By "scam" I don't mean there will never be a revaluation, but rather, when it does come, it won't give anything like the return people are dreaming of. Instead, it might give the type of return you get on your wall street stocks in a good year.

1. There are no articles on the Wall Street Journal, the Financial Times of any other source talking about a possible RV.
2. All of the claims about imminent or possible RV are on websites that benefit from the idea that an RV is possible or imminent. For example, Peoples Talk Radio sells content-visitor specific advertising (e.g. for websites selling Dinars or post-RV Events).
3. Although claims of imminent RV get posted almost daily on these sites, they are never supported with any external evidence or proof. You read the claim, but see no supporting link of verifiable story. Often claims are prefixed with "I strongly believe..." or "Jesus is telling me ..." or "I know God wants us to enjoy the RV, ..." and so on.
4. Every claim of impending RV is either from someone supporting the site, someone selling Dinars or someone who has no authority and is just making the claim.
5. Every claim to date about imminent RV has turned out to be fiction.
6. It is difficult to imagine that the Iraqi government would consider doing a straight revaluation of their currency where existing currency holders get a 3000x return. More likely, they remove three zeros and do a 3x return. Even then, the payback to existing currency holders would be enormous by investment standards.
7. Claims that this "has happened before in Kuwait" are not substantiated on any independent website like www.wsj.com, but instead are on websites whose affiliations cannot be determined.
8. Forum postings are replete with badly-written claims about imminent revaluation, awash in grammatical and punctuation errors that would fail a paper submitted by a fifth grader. The preponderance of poorly written and ambiguous material suggests a low level of education among contributors and a singular lack of critical thinking skills. The back-and-forth banter is similar to that of a handful of drunks arguing over something meaningless. Terms like "Nuff said" and "Don't shoot the message boy" (sic) tell me that the debating capacity of contributors is almost non-existent.
9. The wholesale rejection of any challenge to "the facts" is met with personal attacks on the individuals who make them. This lack of intellectual honesty creates an environment where new members see a very rosy picture -- devoid of dissension -- of impending and imminent revaluation of the Iraqi Dinar, which in turn encourages them to buy into the deal before the proverbial door closes (tomorrow of course, when the RV happens).
10. Invitations to register for a "Post RV Event" for a fee (e.g. $25) makes no sense. Why would a person need to book a position in an event that for which no one knows the date? It makes more sense that a person would simply register without a fee, and be emailed/asked, when the time comes, if they would like to attend. Post RV events are another tangential scam that this RV scam has generated.
11. In place of critical debate or argument, the forums are awash in  talk of 'thanking God for the blessing" or "Pray for RV tonight" and "God Bless America" or "God bless our troops". These forums are more like fundamentalist churches than investment environments. Beliefs trump facts.
12. Instead of a critical examination of the facts, Iraqi politicians are routinely derided for being "stupid" when they don't make the RV happen again this week. Claims like "the Iraqi people need this now" and "the Iraqi government is screwing their people by delaying" are typical of the baseless nonsense posted to these forums.
13. Contributors to the forums seem untraveled, uneducated and untrained in the business of foreign exchange, judging by the undisciplined and low editorial quality of their contributions and postings.
14. Owners of these forums will delete any negative talk or any attempt to draw people's attention to the nonsensical nature of it.
15. Mostly, though, no country on Earth would give away such a portion of their national wealth for nothing. More likely -- MUCH more likely -- they would reissue a new set of notes and buy back exiting notes with the new notes. It doesn't take a rocket scientist to work that much out.

Doing a basic "smell test" will tell you that this is a scam. It preys on vulnerable people, all wishing for a speedy and effective exit from the daily challenge of making ends meet and, for once in their lives, contemplate the possibility of a life of luxury. The sheer magnitude of the payoff is beyond the dreams of avarice. It is so outrageous, it is almost believable. And that is what draws people in.
To listen to the conversations reminds me of how compulsive gamblers talk. They blow the dice as if it will bring them luck. They let the rest of their lives -- their friends, family and other relations -- fall apart around them as they wallow in the self-hypnotism of an imaginary future that will never come...

More later.

L'nard.