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

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

[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.

Bill Sardi Archives

[2sheep]

Re 6:6 And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny,* and three measures of barley for a penny;* and see thou hurt not the oil and the wine.

1220. *denarion
denarion day-nar'-ee-on
of Latin origin; a denarius (or ten asses):--pence, penny(-worth).

[2sheep]

Bump

[LoneRangerMassachusetts]

Good. Let them eat gold when they go hungry. Paper is easier to chew.

[SamAdams76]

Money is basically just a medium of exchange for goods and services. So tell me, what goods and services are these Muslim countries going to be producing? They can't even extract the oil from under their feet without Western technology and know-how.

[Billthedrill]

Silliness. This has nothing to do with economic relationships between nations, this is merely which specie is to be used within them. If anyone is naive enough to think that Saudi Arabia is going to purchase that Indonesian-built freighter with sacks of gold coins that individual and his coins "soon will be parted."

[Dog Gone]

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

Somebody has been smoking some fine hashish oil.

[okie01]

If anyone is naive enough to think that Saudi Arabia is going to purchase that Indonesian-built freighter with sacks of gold coins that individual and his coins "soon will be parted."

How would you do a wire transfer on gold dinars?

Rent a Concorde?

[Mike Darancette]

...you shall not crucify mankind upon a cross of gold.
- William Jennings Bryan, 1896.

Hey Guys --- the West got the gold.

[Billthedrill]

Camels.

OK, OK, so they can't swim...jeez, everybody's a critic...

[mhking]

[John Lenin]

The US should go back to the gold standard to counter them.

[John Valentine]

Absolute silliness and economic imbelicity as well.

There is an old truism and it applies at all times and places where economic activity occurs.

"Bad money drives out good."

These Malaysians apparently think that their good money will drive out the bad. Are they in for a rude surprise!

[2sheep]

Bump

[2sheep]

 Allah and the Real-World-Order

 Great Babylon: The Cry of the Watchman

[pttttt]

All very well and good. The only thing is, the Islamic countries can't make anything worth buying. (Their only substantial exports are extractive - like petroleum and opium poppy extract, both of which they get non-Islamic help with.) So they're not going to buy it from each other with their gold coins. One way or another, they'll still have to trade with the non-Islamic world. And the non-Islamic world can get gold without the Islamic world, but it'll be a long time before you see the Islamic world build a good car, a jet airliner, or a computer chip at all, or even with a lot of non-Islamic help.

This isn't an accident. There's a reason why "industrialized" and "Islamic" don't go together in the same sentence. The Islamic prohibition against interest-compensated debt financing prevents quick, efficient accumulation of capital, which you need to industrialize. A big reason why the Islamic world hasn't industrialized after all these years but Japan has -- only 150 years out of medieval feudalism.

So they will have to trade with the non-Islamic industrialized countries, which do make stuff people -- even Islamic people -- want and need. Not putting gold down - but you can't drive, fly, eat, drink, or shoot a gold coin.

And they've got to do something with all those petrodollars they have now. This is one "threat" which can be dismissed quickly.

[AmericaUnited]

Let's do some quick calculations...

1 dinar = 4.25 grams of gold

1 oz = 28.35 grams

6.67 dinars/oz gold

$300/oz gold = 44 dinars

$1,000,000 = 3,333 oz of gold = 146,666 dinars

$100,000,000 = 333,333 oz of gold = 14,666,666 dinars

So for an arab company to transact with another arab company for $100,000,000 worth of "stuff", 14,666,666 dinars would have to trade hands. That's 10 tons of coins.

LOL!!! The author is right, western civilization is doomed. Everyone into the bunkers. ROFLOL!

[Stefan Stackhouse]

Oh no! NOT THAT!! Oh please, please, please, Mr. Brer Fox! Whatever you do, please don't throw us back into the terrible gold standard briar patch! Please, anything but that!

(With apologies to Uncle Remus)

;-)

[Billthedrill]

There is an old truism and it applies at all times and places where economic activity occurs.
"Bad money drives out good."

Aw, you beat me to it. That's Gresham's Law, and it would be kind of a fun experiment to have a few Islamic countries actually try this to see if it's still true. I'm sure they'd be beautiful coins for the thirty minutes they'd be in circulation. Heck, I'll be owning a few myself, especially inasmuch as that will no doubt be strictly forbidden by Islamic authority.

[Mortimer Snavely]

There isn't enough gold in the world to back up all the paper dollars floating around.

[Gunslingr3]

How would you do a wire transfer on gold dinars? Rent a Concorde?

Are you serious? Do you think when you perform a wire transfer right now that cash gets put on plane and flown to the other bank? Most American dollars exist as electrons on a bank's hard drive, not a piece of paper in a vault.

There are many reasons to prefer gold as money to government backed paper. For starters it reduces government counterfeiting (via central bank, deficit spending, etc.)