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Q&A: Iraqi Dinar

Question

Iraqi Dinar

Should I invest in the Iraqi Dinar? What factors should one consider when making this decision?

Answer

Short answer is no. That is not to say that the Dinar could not appreciate against the US Dollar or other currencies, however, there are a number of reasons you should consider diversifying capital elsewhere. Here are just a few:

1) The Iraqi government is very fragile and geopolitical tensions in the area are on the rise. Sectarian fracturing and violence has become an issue and Syria's civil war could boil over.

2) The US has "war fatigue" and has taken a step back from policing this area of the world and is not as likely to intervene to address geopolitical instability.

3) Iraqi's current political structure does not typically broadly promote women's contribution to society. Thus, in terms of education, opportunity, jobs, etc. women are structurally discouraged from full participation. This is a structural issue that has kept many middle east economies from progressing materially over the last few centuries as it impacts first the education of children (preventing the mother from a robust education translates into women who are handicapped from contributing substantively to their children's education in their formative years) and restricts or eliminates many of the positive contributions to society that would have otherwise been provided directly by women.

4) The Muslim Brotherhood is gaining political influence in Iraq. Regardless of your set of beliefs, the fact of the matter is that this does not thrill the US as these two do not exactly sit together during lunch time in the cafeteria.

5) Beliefs held by certain sects rising to power in Iraq hold to ideologies that are fatalistic and nihilistic at their core. Fatalism discourages striving for improvement of one's current situation as the current situation is considered one's fate and suffering through one's fate, one's duty. Nihilism undermines meaning in this current life and the improvement thereof. These ideologies lead to emphasizing the hereafter to the extent that there is no drive to fully regard or improve the present.

6) The recent oil and natural gas discoveries in the US have been a huge global game changer as the primary resource in Iraq might not be in as much global demand as would have been previously assumed due to the uptick in supply.

7) If all of the above were not an issue, I would be thoroughly concerned with the relatively young and untested new government that was put in place fewer than 8 years ago. I just bought a bottle of wine that was older than their government (this was for charity, of course, and had absolutely nothing to do with my love for good wine).

8) Sound money is undergirded by the rule of law, which Iraq does not have. Iraq was named one of the most corrupt governments in the world (175 out of 178) as indexed by Transparency International.


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currency trading, Fatalism, Iraq, Iraqi Dinar, Muslim Brotherhood, Nihilism, rule of law, US Dollar

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