Malaysia, well, at least its northern state of Kelantan, is putting the Islamic gold dinar and silver dirham into circulation as legal tender and it could be implemented as early as mid-August. It won’t be the first nation using gold coins — Indonesia has already minted about 25,000 pieces for use in Australia, Malaysia, and Singapore — but, they are going to be useable in a rather comprehensive fashion.
According to The Guardian:
“If information on its website is to be believed, the council has the blessing of the state’s Islamist government, Parti Islam SeMalaysia (Pas), to kickstart the dinar in three moves. First, the state will pay a quarter of its public servants’ salaries using the dinar. Second, all state companies will accept dinar payments. Lastly, some 600 commercial enterprises will also embrace this currency.
“Inspired by selective religious sources and backed by historical precedents within the annals of Islamic history, the gold dinar system is touted by certain fiercely proud Muslims as the Islamic answer to thwart capitalism’s woes.
“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.”
In and of itself, choosing a gold-backed currency as a tool “to thwart capitalism’s woes” seems a bit wrongheaded. Its use could raise the ire of capitalist public accustomed to paper money, but there are many true-blue capitalists that would sing the praises of a gold-backed US dollar, for instance, given the opportunity. The concept of a gold-backed currency other than the dollar, in this case the dinar, could conceptually offer a threat to the dollar’s reserve currency resilience, but not without a global endorsement of its usefulness in international trade. Anything’s possible, but it seems unlikely even China, with its particular reserves quandary, is going to rush to support a Malaysian reserve currency anytime soon.
You can read more details about the gold dinar and silver dirham in The Guardian’s coverage of whether or not Malaysia’s Islamic currency will be able to thwart capitalism.
The Daily Reckoning
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let?s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
when people criticize capitalism these days they don’t mean real capitalism. they mean the corporatist/fascist-capitalism hybrid currently practiced in the west.
real capitalism is a beautiful thing.
the real point is that gold is severely undervalued, perhaps by a factor of 10, so anyone who pays it out for goods and services at these prices is a fool. maybe the government is trying to impoverish itself. stranger things have happened. To be continued….
It would seem that a gold coin is not to be confused with a currency that is backed by gold. The coin IS gold, some of that commodity; a paper bill backed by gold is something that you need government performance on in order to get the gold. That could be problematical.
So the gold dinar would never be a reserve currency. It would just be some gold held in reserve by a central bank (which is already done by most central banks)— bullion in another shape.
“real capitalism is a beautiful thing.” Yea like a beautiful sunset or a beautiful woman. Pathetic.
I think they misunderstand capitalism, gold and silver coinage would restore capitalism and harm socialists.
Iraqi Dinar is very real, but the pitch many Dinar dealers try to send your way is far from reality and designed to get you buy from them. Some of these dealers even go as far as to explain that they are trusted by the government and supply you with a document to reinforce this illusion.
First, the US government requires a business (or anyone for that matter) to register with them when selling any kind of currency. Once you register, the US Government will send you a letter confirming your registration. IT DOES NOT mean that they trust or vouch for the company, only that they complied with the law.
I was looking ervewyehre and this popped up like nothing!
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