Tuesday, May 26, 2009

Gold Dinar as an Alternative for the World Financial Problem

Gold Dinar as an Alternative for the World Financial Problem

The Introduction
United States economic downturn recently has effected around the world including Malaysia. We are a trading nation which trades with all countries of the world. The United States among the biggest of our trading partners. Roughly 20 per cent of our total trade is with them. If our buyers cannot pay for what they import from us, we would not make the profit we had expected. In fact we would lose a lot of money as we will not recover the cost of the goods we sell.
The financial problems of the United States have spilled over to the Asian countries including Malaysia.
The US Dollar is going to shrink further as countries unload their dollar holding, refuse to buy dollar bond, and use other currencies for trading. The international financial regime will then collapse. If United States collapse what would happen to the world economic.
Cause of the crisis was US dollar is not backed by anything. It sustains it value because it is used as a trading currency.
The United States already suffers from the deficit. When the dollar becomes useless the United States will go into deep recession. What we going to stress hire is whatever United States recession will affect the whole world
Realize the influence of United States in the whole world now is the right time to find an alternative in order to replace US dollar as international currencies.
With respect to the effort, Gold Dinar has been proposed as an alternative and the best solution to settle the world economic problems.
The idea to use of gold dinar as an alternative key trading currency was among 29 resolutions adapted at the Third Islamic economic congress. The idea of use Gold Dinar is the best alternative for more stable economic especially among the Muslims countries.
The ideas believed that with Gold Dinar, speculation and manipulation could be avoided and thus the international trade would be safe from being undervalued. With the Gold Dinar system we believed that would promise a much more stable.

The Issue
Chairman of DDRG, Professor Madya Dr.Zulhaimy Ismail from Malaysia Technology University has mentioned that Gold Dinar is the best solution for world economic problem with list up several issues that will be faced if we going to implement the Gold Dinar as international currencies. (Berita Harian 12.1.2009)
He said among the issues are
• Differences between current monetary system and Dinar system
• How Gold Dinar really can help economic crisis
• Can Gold Dinar solve the trade problem among the Islamic countries
• How to Gold standard
• How to implement the Gold Dinar

The Fact
Differences between current monetary system and Dinar system
Current monetary system

• Money creation would cause a gradual shift of power into the hands of those who control the financial system. With foreign financial institutions like banks operating, gradual loss of sovereignty is likely to be seen in the land.” (Ahmad Kameel Mydin Meera, The Islamic Gold Dinar, 2002)

• Paper money quantity can be increased at will any time since there will always be demands from the public to increase the quantity of money which would cause inflation = manipulation of paper money

• Floating rate exchange is the currency rate that is unstable which can be easily fluctuating
Gold Dinar system

• fixed exchange rates resulted the absence of exchange rate instability and thus exchange rate risk where this may encouraged world trade by eliminating the uncertainty when exchange rate fluctuate

• Islamic countries will not need reserve of foreign currencies to finish commercial trading

• The principle of the Islamic economy in the light of the Qur’an and the sayings of the Prophet Muhammad S.A.W. is to improve the quality of the economy by encouraging good and forbidding the harmful

How Gold Dinar really can help economic crisis
• The gold prices are indeed relatively stable compared to other commodity prices, exchange rate movement and the stock market index

• Manipulation of currencies and the impact toward one economy could be reduced because of the fact that gold does not inflate in value as it is a commodity and, thus, has an intrinsic value

• If gold coin were used, then counterfeiting would also be checked
• With dinar and elimination of interest, we would have a stable currency and monetary system, money supply growth (from new discoveries of gold) can be expected not to overshoot growth in the real sector, thus eliminating the inflationary pressure in the economy

• If all these exchange rates are eliminated by means of a single currency like the Gold dinar, then speculation, arbitrage and manipulation will be very much removed if not eliminated

Can Gold Dinar solve the trade problem among the Islamic Country?

• Organization of Islamic Conference (OIC)
International organization grouping to pool their resource together, combine their effort and speak with one voice to safeguards progress and well being of their people and all Muslims in the world
• implementing part-by-part of the Gold Dinar reflects on how our Prophet Muhammad S.A.W. started to introduce Islam
• the successful implementation of the Islamic Gold Dinar is the level of acceptance among OIC members
• The Gold Dinar could be an important facilitating mechanism to help the smaller countries of the world move away from an inherently unstable and ultimately unjust global monetary system

How to Gold standard
• A monetary system in which the standard economic unit of account is a fixed weight of gold
• gold standard may also be viewed as a monetary system in which changes in the supply and demand of gold determine the value of goods and services in relation to their supply and demand
• often been viewed as ensuring long run, though not necessarily short-run, price stability via the operation of the classical commodity theory of money
• its rarity and durability, gold has long been used as a means of payment

How to implement the Gold Dinar
• Implementing the Gold Dinar in Domestic Transactions.
As the beginning of the implementation of Gold Dinar better implement it first in domestic transaction.

• The other way of implementing gold dinar
Collection and Distribution of Zakat
Minting, Buying and Selling Coins/Kiosks
Opening an e-Dinar Account
Trading with Dinars and Dirhams
Establishing an Open Market
Donating in Dinars

We have spent a good part of the last two decades in establishing Islamic financial systems in our respective countries
Now is the right time to complete or complement the domestic systems with an international system - a system that will allow each Muslim country to reach out to one another and strengthen the level of trade - a system that will also allow the Ummah to use its collective surpluses to fund each other, and help each other.
Posted by penhijau at 1:04 PM

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