I am grateful to the great American Libertarian legal scholar Stephan Kinsella for pointing this article out to me from our very own dear Guardian. I have taken the liberty of correcting the title of the Guardian article (see above). It seems that some of our Islamic cousins have seen the light and wish to move away from paper money and back to commodity money, notably gold and silver. It seems that a brave state in Malaysia will be doing this within weeks. We welcome this.
Regular readers of this site will know that in this article I calculated how much the Pound and Dollar (answer 99.42% and 98.17%!!!!!!) have declined in value since they were detached from their roots in gold. The beneficiaries of this massive wipe out in the purchasing power money are, firstly, the governments of the day, which can issue excess paper currency to fund their various promises via “monetising” bits of their debt obligations. Secondly, the handmaiden in this activity, the private sector banks are the next in line to benefit. They use the state supported apparatus to create new purchasing power out of nothing via the bank credit generated by the new deposits made available to them via the monetisation process, and thereby enrich themselves and their favoured clients. This is the Crony Corporate Capitalism that we have today. Fair play to the state of Kelantan who wish to get the monkey off their back. The Americans, with the dollar as the world’s reserve currency, have been able to print gigantic amounts with little negative economic effect to themselves, so each time an Asian exporter sells real goods for this newly created paper or bank deposit, that has been created out of nothing, he essentially trades his real goods for depreciating purchasing power.
The Guardian article points out that
The idea was first mooted by Malaysia’s former prime minister, Mahathir Mohamad, in the aftermath of the 1997 Asian financial crisis. He argued that the coins would never hang their possessor out to dry in the same way that paper money had. As precious metals with intrinsic value, gold and silver are more resistant to market fluctuations and devaluation compared to the US dollar – an argument he took to the Organisation of the Islamic Conference as a tool to battle western hegemony.
It will be interesting to watch the UK based Dinar Exchange mentioned in the article:
Then there is Dinar Exchange, the British equivalent of Indonesia’s WIN. As the “official certified supplier of Islamic gold dinar and silver dirham in the United Kingdom”, the company had just concluded a month-long series of roadshows in May that saw it promoting the gold dinar to Muslims in key UK cities such as London, Birmingham and Edinburgh. The group is inviting more to spread this Islamic vision as dinar agents.
Immigration is very controversial in this country. Here, at least, I clearly see potential for Islamic immigrants to have a positive ideological influence on the native community, by imbuing new spirit in the fight for Honest Money!
This is the people’s money spontaneously trying to compete with the legal tender pound sterling controlled by the state. Bad money crowds out good money with legal tender laws, as Gresham taught us. I do see this as a beacon of light in a very murky world.