Important: What the Price of Gold is Telling Us
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Peace,
This article is especially important for board members in the US, or elsewhere whomever is holding paper money. Do you know the pre Federal reserve 1913 dollar is now only worth 4 cents? The purpose of this so called institution allegedly suppose to manage price stability!!
I appreciate the subject of money is kind of vulgar or boring to some but without understanding it, we're sweating over worthless pieces of promises because of a franchise offered by the government to a private institution(s) which incidentally contradicts the US constitution.
Ron Paul is a remarkable politician and he has some excellent views, I attach a speech of his in front of the US house of representatives in late April, stay with it as it is an important education for us all.
http//www.house.gov/paul/congrec/congrec2006/cr042506.htm
From an islamic point of view, I don't see fiat currency as a legitimate source of exchange. Basically, there is no basis to trade others liabilities, a transaction needs to be fair and equitable and extinguished. With fiat currency until you convert it to something of use, the value has already dissipated fwiw.
Peace
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Wow, 14 readers so far...I am puzzled at the disinterest in an economical situation that is important for all of us. Perhaps, many do not realise how they're enslaved with the paper money="false promises to pay you" system.
Meanwhile, we get born into a system which accept inflation as a fact of life, it isn't. Its an additional tax that taxes the poor and goes into the pockets of the bankers.
Peace all
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Peace Myr,
What we have to acknowledge is we have been taught economics based on Keynesian principles. The alternative school of thought is the Austrian School advocated by von Mises etc...is in my view a lot closer to quranic principles.
The main elements of our system is 1-) Monetised debt i.e. fiat currency 2-) Fractional reserve system.
The Austrian school of thought defines inflation as an effect due to increased money, credit supply in excess of goods and services. The Keynesian thought focuses on the effect and not the cause. The reason you need risk management in the fiat system is because money is a debt instrument and there is a risk of default. With gold/silver there is no risk of default. The fraud with paper money is the government issues bonds to the Fed and Fed deposits a check into the governments account for it to spend. Where did the Fed get the money? From thin air...so the privilaged make money from thin air and we have to sweat and lose life energy over it.
If everyone paid their debts there would be no money as the fiat currency system stands.
The alternative system is real money which has intrinsic value and extinguishes transactions such as gold and silver. Furthermore, the elimination of fractional reserve and the move to full reserve system. I would not sweat over gold, real estate appreciation as this is a reflection of fiat currency losing value. Since Fed was founded in 1913 the value of the dollar has declined to 4 cents. However, the price of many things have not changed that much when you price it in gold.
I hope this answers your questions. I would urge you however not let this topic slide as you begin to peel the onion you are going to find out truth is a lot stranger than fiction.
Peace
Ash
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Peace Myr,
I know little of the Malay currency, however I would imagine it had no gold backing it, i.e. fiat currency.
The system that the Austrian school of thought advocate is
1-) Gold and/or silver based on weight.
2-) Full reserve system.
With these two elements money retains its value. You have no debt induced inflation and boom and bust cycles. What made the gold standard boom and bust cycles was the fractional reserve system, i.e. people pretending there was gold but there was none.
However, when the Spanish pillaged the Aztec and Inca empires see what happened
http//www.sharelynx.com/chartsfixed/600yeargold.gif
You see its all about money supply vs good services equilibrium. However, with the finding of the new continent something drastic happened.
The message is annual production of gold increases no more than 2-3%, this is compensated with productivity. Hence, gold is the best store of value.
Gold is real money because it is transportable, divisible, homegenous, has intrinsic value by itself.
I recommend that you find James Turk book "The coming collapse of the dollar", see if your library has it.
Sorry for the haphazard post got to get ready for work ;D
Peace
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Assalamu'alaikum
I've thought about this a lot too lately. However, what do you propose we should do, the fiat system is the only recognized system worldwide. Are we to start hoarding gold for investment? Doesn't the Quran talk about those who hoard gold? Until we're able to exchange gold, silver or any other precious metal for a loaf of bread at the checkout, then I think the fiat system is the only way to go, perhaps? Any thoughts?
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Peace,
As I understand saving is allowed according to the qur'an provided that it is purified via charitable giving. Gold/silver can be sold and lifes necessities can be purchased.
A key point to understand is fiat currency is manufactured using debt and there is nothing backing it. Hence, existing savings can be destroyed by merely printing more of it and channelled into the pockets of governments. Using this tool governments have stolen the life savings of their unsuspecting public and increased their size, become oppresive to their own people and waged war willy nilly across the globe. Pulling a certain amount of money out of the fiat system contracts the money supply by 10 times which reduces the debt in the system, the interest that is paid and makes it hard to print more as there are less willing takers. By supporting fiat you support usury as banks make 2-3% on spread between borrowing and lending, and lend that amount 10 times due to the fractional reserve system making 20-30% from their own capital.
Whilst in todays world it maybe difficult to change the system but it makes sense to understand how it works and reduce ones dependence on it. All fiat currency collapses anyway, read about the Assignat the Reichmark and the continentals, sooner or later we will see the same phenonemon in larger proportions. At least you know you're going to get so many grams of bread for so many grams of gold ensures the value of your currency is retained.
Peace
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A currency system based on precious metals is every bit as illogical as one based on paper. The value of gold is purely speculative in the same way as the value of paper money - and central banks control the price of gold by buying and hoarding it in the same way.
And then there's the simple fact that the world economy operates far more efficiently, creating more jobs, alliviating poverty more effectively, without currencies being limited in such a way.
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A currency system based on precious metals is every bit as illogical as one based on paper. The value of gold is purely speculative in the same way as the value of paper money - and central banks control the price of gold by buying and hoarding it in the same way.
And then there's the simple fact that the world economy operates far more efficiently, creating more jobs, alliviating poverty more effectively, without currencies being limited in such a way.
Peace,
Agreed Mr. Mahmud. Money is a means of exchange, it is meant to facillitate trade. As you know within the last year the price of gold has fluctuated depending on the stock market and is very speculative. Besides, there is not enough gold left in the world to be mined and to be kept as reserve for notes. I also doubt it could be done with silver.
Money should have value because it is good for the payment of taxes and because there is an amount proportional to the population of the country in circulation. There is nothing wrong with fiat currency.
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paper money would be fine if it was actually tied to something, e.g. gold. This was done in the past until this link was broken.
The current way gold is priced has a little speculation in it but not as much as fiat currencies, and this would likely reduce under a gold backed system. Also in the long term, gold is more stable.
Besides, there is not enough gold left in the world to be mined and to be kept as reserve for notes. I also doubt it could be done with silver.
Conjecture. Any precious metal could be used if it met criteria.
Why are most of the investors now turning back to buying gold at the moment? Simple, they all recognise it has intrinsic value, unlike fiat currency which can collapse to a value of effectively zero. This is proven fact, see Iceland or Zimbabwe as examples.
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I'm 4 years late to this, but last year read Ron Pauls two books and found my view on politics, tax, and money transformed.
I've read much more since on money, and that has led me to the same conclusions of abolishing of fractional reserve banking, fiat currency, and usury as discussed here.
Pity the original poster is no longer here. He was well ahead of the curve.
The collapse of the financial system is near. The most massive transfer of wealth in history will occur around this event. The only way to become a winner is to hold precious metals. Sell all your stocks (non gold mining ones), reduce debts, fix your interest rates, and buy silver and gold.
Do your own research as I dont offer absolute advice, but I think it would be a fool who reads about and then ignores the coming collapse.
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peace truth,
Nice to see you post bro )
If you have not seen these already, check them out
Money as Debt
http//video.google.com/videoplay?docid=5352106773770802849#The Money Masters
http//video.google.com/videoplay?docid=-515319560256183936#It is also possible to buy these on DVD, and one could thereafter distribute them locally/nationally/etc. I did think about doing this, but I am swamped at the moment with other projects.
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The problem is buying gold. Just gold, not jewelery. And storing it it too. I would also like to buy silver. In America they have midas resources (inforwars.com links to it). However, in the UK, apart from the odd buy on ebay, it is very difficult.
Anyone have an ideas?
Roshan
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Salaam,
before you can understand the Islamic concept of economics you must first understand ownership, the simple oft repeated concept within the Qur'an that Allah is the owner of all is explained in this short essay
http//servantofthelight.com/content/view/68/98/
