Subject: [lets] The New Islamic Dinar
>Date: Sat Jan 9 11:49:53 1999
>From: tom@cyberclass.net ("Tom J. Kennedy")
>Subject: [lets] The New Islamic Dinar
>To: lets@onelist.com ("Lets onelist")
>
>THE NEW ISLAMIC DINAR
>This information which I found on another mailing list may be of
>interest to LETS advocates given that Muslim banking is supposed to
>be "usury free". I think I'm right in saying that some Islamic
>countries allow fixed price repayments - e.g. you borrow 100 coins,
>you pay back 105 - but forbid usury. Perhaps some subscribers can
>confirm/deny this. I invite you to review the article.
>Working with you for "peace and plenty" by 2020 I AM Tom J. Kennedy
>***
>monetarystudies@hotmail.com
>Muslims world-wide are being encouraged to convert their paper
>currencies into a new one hundred percent gold Islamic Dinar. In an
>internet article about the new coin, Jay Taylor writes: Pakistan, a
>Muslim country, recently exploded an atomic bomb. Frightening as the
>atomic bomb is, another kind of bomb, namely, The Islamic Dinar could
>pose an even greater threat to our existing financial system almost
>nobody has yet caught on to this very recent development. A catchy
>opening. I was caught by it enough to look further.
JCT: And when they run out of gold, they run out of money leaving
them at the mercy of the gold bullion brokers like most of history
just as David Astle points out in his Babylonian Woe.
>Taylor reports that the Islamic Dinar is now being privately used in
>more than 22 countries and is currently being minted in four
>countries, including South Africa. The State Government of Kelanton,
>the Northeast Sultanate of Malaysia has officially adopted the
>Islamic Dinar, so the new gold coin can be expected to circulate
>through the hands of hundreds of thousands of people there.
>Apart from its savings worth and perhaps growing trade worth, the
>gold dinar meets a religious need in Islam called Zakat, which
>dictates that Muslims must give at least 2 percent of their income to
>the poor; giving tangible merchandise or honest money of actual
>substance, therefore not paper money.
JCT: So if I give you food, that's okay but if I give you a
coupon for food, that's somehow wrong? I consider paper money "honest
money of actual substance" unless someone has decreed that only one
substance is substance.
>The new Islamic Dinar represents a renewal of a centuries old coin.
>Its weight (4.3 grams) and its role are set by the Sharia---i.e. the
>Islamic Law. There is also a silver Islamic Dirham coin of 3.0
>grams. Seven dinars can be traded for ten dirhams. Taylor reports
>that an Islamic Agency has been set up in the tax haven city of
>Dinai. The goal is to open 10 000 accounts within the first year of
>operation in Dubai. The scope for growth out of modest beginnings is
>tremendous. There are 1,100 million Muslims in the 51 member
>countries covered by the Islamic Development Bank. If even a small
>percentage of Muslims begin to demand Islamic Dinars as their medium
>of exchange instead of paper, it could have a dramatic effect on the
>price of gold," writes Taylor.
JCT: Sure, the gold bullion brokers will make a killing and the
Islamic world will run out of money and be at their mercy. Thank Allah
the Islamic Party of Britain hasn't been fooled by such "substance"
enticements and had officially endorsed LETS currencies.
>According to Taylor the organisation may soon be trading Islamic
>Dinars on the Internet through an organisation located at
>www.e-gold.com; although I saw no sign of that when I visited this
>site. You can read the full text of Jay Taylors article on
>www.gold-eagle.com/editorials_98/taylor112598.html.
JCT: I wish I had the time to check it out but I am of the firm
belief that basing one's money on any substance which can be cornered
and kept in short supply is a strategic error and fatal flaw. Remember
that a tactical error is like using the wrong club in golf so you'll
eventually get there but certainly not in the least stokes. A
strategic error is not aiming at the hole so you'll never get there.
>Since reading Taylor, I have searched through for information on the
>Islamic Dinar; to discover that the people of faith behind this new
>venture have been doing a lot of thinking and research, and they have
>come up with a vision for a world of Islamic trading that we would do
>well to take note of.
JCT: And all they have to do is read Astle's Babylonian Woe to
find out what being dependent on the gold bullion brokers really
means.
>There is a book by a radical Muslim, Umar Ibrahim Vadillo, called The
>Return of the Gold Dinar, on http://www.murabitun.org . The first few
>sentences read quite impressively: According to Islamic Law, when
>you buy this book it belongs to you. You can quote, reproduce, store
>in a retrieval system, or transmit this book, in any form or by any
>means, electronic, mechanical, photocopying, recording or otherwise,
>without the prior permission of anybody. You can lend, re-sell,
>hire-out, or otherwise circulate this book, without anybody's prior
>consent, in the new form that you want. Anything else is the creation
>of usurious monopoly, but you are not allowed, nevertheless, to
>falsify the authorship of the book.
JCT: Calling a monopoly "usurious" demonstrates a lack of
understanding of the "usury" which must create a "death-gamble" in
order to be truly usurious. Having a monopoly does not create a death-
gamble and does not technically qualify.
>In a foreword to the book Shaykh Abdalqadir As-Sufi, of Achnagairn,
>Scotland, writes, The end to the enslavement of the Muslim masses
>does not require a jihad in the traditional sense but a struggle to
>obey Allah, restore Zakat, the fallen pillar of Islam--- an empowered
>tax collection not a charity gift---and abolish usury. It is this
>author's achievement to indicate the necessary method for such a
>programme.
JCT: They're right about abolishing usury, they're just wrong
about what it is.
>Clearly the primary goal of Vadillo and company is not to mint gold
>coins for cash but to, in Vadillos words, establish a successful
>network of trading throughout the world, on the basis of traditional
>Islamic practice, which does not involve any form of interest-debt,
>control of products by speculative future and stock markets, or the
>mediation of any bank.
JCT: Of the three effects they avoid, only the first is a real
problem while the control of products by speculative future and stock
markets is not not is the mediation of a bank in any way harmful
unless it is an interest-debt bank. If it is a LETS interest-free
bank, then such mediation is certainly not wrong and the very
endorsement of the Islamic Party of Great Britain is an indicator that
mediation by LETS banks is good.
>The Islamic model being promoted is linked to a group called
>Murabitun. The model aims for a free-market-without-usury.
JCT: Which they'll never accomplish if they base their money on a
substance which can be kept in short supply by speculative stock
markets.
>It returns life to impoverished workers by rooting out the parasite
>of the banks, which live off the workers' work. Rather grandly, The
>Murabitun have raised the flag of Islam over the disaster of the
>usurious world.
JCT: I don't see how being at the mercy of the gold bullion
brokers for one's currency is any kind of freedom at all compared to
being dependent on no one for one's LETS currency which is based not
on gold but on human work, the true substance of value.
>I will go on to describe the alternative trading model being promoted,
>but first let me share something of Vadillo's critique of the
>prevailing Islamic banking system.
JCT: The Islamic Party of Britain also critiques current so-
called "Islamic banking" as being nothing more than an appendage of
the present system since it does not create any of its own new
currency units but is fully dependent on borrowing them from the
usury-charging banks.
>ISLAMIC BANKS ARE DISMISSED AS QUASI-ISLAMIC INSTITUTIONS
>Since Vadillo is obviously the main thinker behind the new 100
>percent gold Islamic Dinar, what he has to say about Islamic banking
>is going to be significant as well as interesting. In a 3 000 word
>essay Vadillo dismisses the Islamic banking system as usurious---in
>fact, nothing more than a typically degenerate and belated product of
>the so-called 'Islamic states'. So-called because the system is part
>of the western constitutional model, which is profoundly contrary to
>Islam.
JCT: Right. Since they don't create their own interest-free money
but are dependent on lending out interest-free currency which has been
created by the usury system, all it does is manage to have its system
absorb a loss of interest and put it at a disadvantage compared to
other financial systems.
>The western model, which Vadillo says has arisen out of the French
>Revolution, is unacceptable to Islam because it is based on the
>establishment of artificial and unnatural boundaries, the creation of
>a repressive ministerial bureaucracy, the exacting of taxes, the
>imposition of artificially legalised money and the legalisation of
>usury through the banking system.
JCT: As we've learned in the Babylonian Woe, the "western model"
did not arise out of the French Revolution but has been enslaving
mankind since the dawn of money.
>Yet the state functionaries and bureaucrats who represent 'Islamic
>modernism' remain fascinated by their years of education in the West
>enough to support the western model. Even though the foundations of
>economics are now shattered as a science and in practice in the very
>Europe which saw it come into existence, the 'neo-bureaucrats' still
>place their trust in the 'Islamic economics' that has emerged from
>the American and European universities to justify the Islamic
>banking system.
JCT: The very fact that Economics has suppressed all mention of
interest-free systems and only advertises interest-free lending of
interest-created money proves the point.
>Three reasons are given why the Islamic bank is a totally
>crypto-usurious institution", which "must be rejected and fought".
>1. The use of credit to artificially expand the monetary resources is
>emphatically forbidden in the Sharia (Islamic Law).
JCT: That's a sad prohibition because LETS uses 100% credit to
expand its monetary resources and credit is actually the perfect
substanceless medium of exchange.
>The Sharia also prohibits the commercialisation or multiplication of
>a debt without the means to guarantee it, as in fractional reserve
>banking. Thus, the banking business as such cannot exist in Islam;
>the only function it could have would be to restrict itself to being
>an institution for transferring money, but without the capacity to
>expand the amount of credit, writes Vadillo.
JCT: Again, LETS had the capacity to expand the amount of credit
without any usury which has proven to be of great benefit to all.
>2. The Islamic principle of co-ownership, enshrined in the Shari'a,
>is usurped. In the Islamic model, all members in an enterprise are
>co-owners and enjoy the same status (the fulfilment of the contract
>which they have agreed to) even though they participate to different
>degrees (by which the profits are distributed proportionally). In the
>Islamic banks this principle cannot be strictly adhered to. The
>structure of the Islamic banks is based not on the strictness and
>exactness of the Shari'a, but rather on the model of the corporation
>in the West in which the exercise of property is not carried out by
>those who---nominally---are the owners but is carried out by means of
>a system of usurpation which we can call by the majorities, writes
>Vadillo.
JCT: In a true interest-free system, there is no principle of co-
ownership and sharing of profits. Only he who works the fields scores
that profit though he is beholden to use any of his crop abundance to
lend to others under the same conditions. So when you lend to someone
in an interest-free system, you are doing it not for a share of what
he made by accepting a share of what he may lose, you are guaranteed
your positive in your account at the bank and you are doing it to help
your neighbor become rich and prepared to help you with his abundance
should you later need it.
So as stated in Paul Corr. II, 8:14, your only reward for lending
your neighbor some of your abundance now is to have his abundance
made available to you should you need it later but you get no share of
his enterprise nor do you share any of his loss.
Of course, should you choose to agree with your neighbor that
he'll take a shot and share winnings and losses is okay too.
It's much like gambler's credit. I have a friend who also is a
professional gambler and when he needed funds 15 years ago, I lend
some to him. A few years later, I needed some funds and he paid them
back. A few years later, he needed them again. Just last year, I was
in Los Angeles and had just endured a huge negative swing and with one
phone call, he sent it back to me. How this works I call social
credit.
Also, some gamblers would have said "Here's the five thousand and
we'll go partners on how you do, sharing both the wins and the losses.
I'm sure this would have been just as acceptable to my friend as the
simple loans though I prefer social credit rather than social risk-
taking.
But both the Islamic co-operation method and the Christian credit
method are both honorable in God's eyes.
>3. In terms of the Islamic Law forbidding usury, a loan cannot be
>made of a commodity whose value is changeable, yet in banking
>everywhere fluctuation in value is generated and this effects the
>individual transactions the bank makes. Every time the bank borrows
>paper money for a time, it gains the devaluation suffered by this
>money during the time of the loan, writes Vadillo. It is like the
>typical usurious trick which consisted of the loaning of wheat when
>it has limited value (during harvest) and stipulating that it be
>given back when wheat has attained a better price on the market
>(several months after the harvest).
JCT: Fortunately, when the value of the currency is based on
human time worked, there is no fluctuation possible and the criticism
does not apply. And I don't call the different prices for wheat
usurious because it does not create a death-gamble. Vagaries in the
prices do not usury make.
>Umar Ibrahim Vadillo concludes: The 'Islamic bank' is a Trojan horse
>which has been infiltrated into Dar al-Islam Usury has corrupted the
>market, transforming it into a usurious system. There is no way of
>establishing an EQUITABLE market without going outside of the modern
>monetary and financial systems. All attempts to recuperate an
>EQUITABLE Islamic market with EQUITABLE Islamic business and
>transactions must be based on the Qur'anic principle of EQUITY
>(al-'Adl){Qur'an 2, 282} which is also defined in the Shari'a.
JCT: And yet LETS does go outside the usurious system by creating
its own currency. So this criticism of a LETS Islamic Bank does not
apply and it's for that reason that the Islamic Party of Great Britain
is correct in designating LETS as a true Islamic Banking System.
>THE RENEWED ISLAMIC TRADING MODEL
>Alongside the new gold and silver Islamic dinar and dirham, Murabitun
>promises the re-emergence of the once flourishing world of Islamic
>trading. This involves the restoration of two of its most
>representative but lost institutions: the marketplace, which will
>replace supermarkets, and, the caravans, which will replace
>monopolistic distribution. There will also be a return to the guilds
>of independent, intelligent work teams, in which the relationship
>master/apprentice will replace employer/employee.
JCT: All these things would happen with a LETS banking system but
without any of the drawbacks of being at the mercy of the gold bullion
brokers who have, as history has shown, been very adept at
manipulating prices by manipulating gold stocks. For this reason, any
system dependent on their scarce supplies is totally inferior to the
LETS system which is dependent on abundant supplies of "substanceless"
credit.
>According to tradition, the Islamic Market was once placed alongside
>the Mosque as a space freely accessible to everybody, with no
>divisions (such as shops) and where no taxes, levies or rents could
>be paid. And, as in a Mosque, whoever got to a market place first had
>a right to it until he got up and went back to his house or finished
>selling.
JCT: This sounds nice though I seen no problem with renting
out stalls in flea markets and shopping malls.
>The same flexibility/fluidity, for a free flow of trade, is
>associated with caravans. The caravan brought more than merchandise
>from one market to another, they brought the whole city that they
>represented. The caravan represented by its volume and the quality of
>their produces the reputation of the town of origin as well as their
>honesty and good behaviour. Towns naturally competed with each other
>to receive the caravans.
JCT: And as David Astle shows, caravans which travel from one
nation to another are the ones who need an international currency
which gives the gold and silver bullion brokers their first inroads
into getting nations dependent on their substance upon which to base
their monetary units.
>In his book The Return of the Gold Dinar, Umar Ibrahim Vadillo
>contrasts the open distribution system with our situation in which
>all these things happen in the darkness of big warehouses where
>merchandise is accumulated out of the sight of the people and then is
>distributed to exclusive and selected places of sale. There are no
>traders any more. They have been replaced by exclusive selling agents.
>In addition the futures market allows them to hold sufficient volume
>to manipulate the prices even beyond their physical grip. The result
>is that millions of producers and millions of consumers are
>manipulated by the sophisticated control of monopolistic distribution
>networks.
JCT: Sure but controlling the stocks of money is far more
effective in manipulating prices than controlling stocks of goods.
>The market collapsed when it became the privilege of an elite. The
>fact that we are now full of supermarkets is the most clear
>indication that Islamic markets will come and will flourish again. It
>is the natural cycle. It is similar with the guilds. In the middle of
>a hostile environment the guilds emerge out of a strong spirit of
>brotherhood and they flourish. Then privileges are introduced which
>replace partnership, and soon apprentices are transformed into
>employees and unemployment becomes inevitable. We are now in that
>situation which is hostile to the individual. The individual is not
>necessary because it is possible to make more money out of money than
>out of genuine work.
JCT: None of these can thrive if we remain dependent on their
scarce gold. Throughout most of the last two centuries, gold, not
paper money, has been the money of preference and all the financial
plagues were still upon us. Yet, making money out of money is still
the real problem which is solved by LETS but not solved by a gold
standard.
>There is a follow-up, second e-mail posting on The Renewed Islamic
>Trading Model.) Boudewijn Wegerif
>Project Leader, Monetary Studies Programme -
>A Research Project of VrdingeBy Folkhgskola.
>monetarystudies@hotmail.com
>Postal Address: Idaberg, S-153 92 Hl, Sweden. Tel: +46-(0)8-551.57841.
>The Monetary Studies Programme is a Research Project of VrdingeBy
>Folkhgskola,to prepare material for study groups and seminars on
>Understanding Money and Moneys Role in History from a religious,
>psychological, political and economic perspective.
JCT: Tom, I'll be publishing the last chapters from the
Babylonian Woe on the lets@onelist.com listserv so there's no reason
for anyone to fall into the same gold and silver traps we have
throughout all of history.
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