8-13-2012 SWFloridaGuy: I have no proof that Iraq will revalue their currency but here is another possible explanation of how a large currency appreciation or "appreciation shock," could help reduce global imbalances. This establishes four key aspects that relate to the ongoing debate about the role exchange rate adjustments for global rebalancing.

I'm not referring to a "global reset" where 70 countries RV or anything remotely similar to the rumors we've heard. I do however believe that just as the IQD didn't get to their current value alone (UN imposed - resolution 661) http://www.fas.org/news/un/iraq/sres/sres0661.htm - Link, they can't recover alone either. I believe this is all part of a well-orchestrated plan and while the IQD will not be the world's savior by any means, it does present a unique opportunity to rebalance the system allowing the Central Banks to use this currency as an adjustment tool or stimulus during this global financial crisis.

In this respect a significant revaluation somewhere on par with the USD gains a bit more tenability. We all know there is no historic precedence for a 100,000% revaluation (appreciation shocks range from around 20%-40%) but we do believe this may be possible due to the unique situation Iraq presents and the tremendous gap between the current rate and previous values the IQD has held. Another possibility could be incremental adjustments to eventually lead us to our destination. We all know this is long term but thank goodness we're almost 10 years in and approaching the exit.

There are many powerful governments, corporations and organizations that are all heavily invested into Iraq and looking to profit from this wealthy country as well. I do believe eventually Iraq's currency will recover. The only questions we have are the recovery duration and by what mechanism they will achieve this. If all the reports out of the CBI lately are true, we don't have that long to wait. One way or another Iraq will be added to the history books in 2012 and my money is on this being a historic appreciation shock.

Here are some interesting reports on currency revaluations in addition to a Harvard study on possible solutions for Iraq’s Currency. IN ORDER BELOW: 1. Currency Appreciations Reducing Global Imbalances. 2. Infrastructure Finance in Iraq. 3. Inflation, Exchange Rates and Monetary Policy. 4. Currency Appreciation. 5. Harvard Study On Possible Currency Solutions For Iraq.