Moslem gold standard

[EZ_E]

How the Islamic World Plans to Beat the West: A Gold Coin

LewRockwell.com ^ | Nov. 13, 2002 | Bill Sardi

 

 

Posted on 11/18/2002 7:31 PM PST by 2sheep

 

 

 

The Return of the Gold Dinar

by Umar Ibrahim Vadillo

 

The Muslim world has found a novel way to strike back at the West – or at least at Western bankers who rule the world's currencies – introduce a gold coin. Malaysia expects to use gold dinars to trade only between Islamic countries beginning in 2003. The gold dinar, which is 4.25 grams of 24-carat gold, would unite Muslim nations who blame "greedy" currency traders for Asia's downfall in the economic crisis of 1997–98. There is also a silver Islamic Dirham coin of 3.0 grams silver. The dinar is being privately used in 22 countries and is minted in 4 countries.

 

The Malaysian premier, Prime Minister Mahathir Modamad, last year proposed that the gold dinar would eliminate paper money which has no intrinsic value and would cease making exchange rates arbitrary and subject to manipulation as seen during the Asian financial crisis. "The risk of speculation can be reduced to almost nothing. World trade can actually expand because the cost of business will be much reduced as the need to hedge will practically disappear," said Modamad.

 

 

Gold dinar, Syria, ~720 AD

 

 

The Islamic world has historically used a gold coin, the Dinar. Imad-ad-Dean Ahmad says "Muslims cannot escape the fact that gold is our money. Instead of fighting the will of Allah, I propose that we embrace it. If the one billion Muslims of the world would use gold as their unit of account the volatility would stabilize."

 

The dollar, franc, mark, pound, rupee, and all the other currencies of the world are called fiat currencies, that is, they are paper money made legal by law or fiat, although not backed by gold or silver and not necessarily redeemable in coin.

 

The result of a gold-backed currency in the world could cause the US dollar to crash in value. Some suggest the gold dinar would cause a shift in economic power from the West to the East. Trading in Islamic dinars is also planned to open up on the Internet.

 

November 13, 2002

 

Bill Sardi [send him mail] is an investigative journalist writing from San Dimas, California. His public affairs website is www.shadownews.org.

 

Copyright © 2002 Bill Sardi Word of Knowledge Agency, San Dimas, California. Not for commercial reproduction without permission of the author.

 

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[New_Horizons]

Forbes used the desire to return to the gold standard, as one of his platforms, in his bid for the Presidency... seems more and more countries, around the globe, are taking a good, hard look at this timeless metal...

 

That was a nice post!!! Thanks for the info!!!

[Oldtrader3]

Gold currency for Indonesia might work because most of the population lives in a cash society, without checkbooks and credit cards. Gold backing for currency is one issue. Actually using gold for currency is quite another. It was tried in this country and most did not use it, preferring government backed paper currency instead. Besides, how is the Government of Indonesia going to pay for this gold. Their currency internally is worth whatever you can get for it in the Black Market.

 

This sounds like another pipe dream of fundamentalist Moslems wanting to pull down the "Godless Western Devil". All this makes good reading maybe, but I doubt that realization will ever take place.

 

[BillJones]

The value of a currency is determined by its purchasing power, not by the metal from which it is made or by the fact that the paper can be redeemed for gold or any other commodity. I hope the radical Moslems go ahead and do this. It's most likely that it will place artificial limits on their money supply which will cause their economies to perform even more poorly.

 

If the radical Moslem currency has buying power, it will remain in circulation and facilitate trade. If it does not, businesses and individuals will redeem the paper or hoard or melt the coins until their stock of gold runs out or the monetary authorties stop the redemption process. Either way the radicals will lose.

[EZ_E]

I'm definitely a proponent of gold-backed currency; however, in order to re-implement it in the US, one would have to scrap the entire Federal Reserve System.

 

The US government currently owes over $7 billion to the Fed Reserve. This doesn't include all of the US Treasury IOU's floating around (i.e. in the Social Security fund). Most do not grasp the quantitative size of one trillion. If one opened a business at the time of Christ and lost one million dollars a day up until the present time, it would still take another 600 years to lose $1,000,000,000,000. There isn't even a total of $1 trillion dollars in circulation. So, in order to return to gold backing, we would need in excess of 10-20 trillion dollars in gold bullion on hand. Otherwise, the government could pay off the debt owed to the Fed and then abolish it. Afterall, the Constitution authorizes Congress to coin money and to regulate its value thereof. We could mint one coin with the value of the national debt and just hand it right over to Alan Greenspan and receive a receipt that says "paid in full". It just doesn't make economic sense to pay compounded interest for the production of money when Congress could do it for cost.

 

Circulated bullion coinage is not feasible due to its physical bulk and the variation of gold's value. People would not accept a coin that was worth less than its face value under the gold system and they would hoard it when its value rose above face value (as silver was historically hoarded). The alternative is to have gold in reserve and issue a gold certificate equivalent to x amount in gold.