Last Updated on October 2, 2021 by Constitutional Militia
PART FOUR of this commentary warned that the Islamic world could precipitate a monetary and banking crisis in the West by reintroducing gold and silver coin as the media of exchange among Muslims. Continuing that analysis…
e. Even were circumstances propitious for the use of both silver and gold as media of exchange, would not Muslims, no less than Americans, suffer from the same disincentives against employment of specie coins in everyday transactions? No. Indeed, quite the opposite—because at least two “large players” exist for catalyzing the transition throughout Dar al-Islam from fiat currency to silver and gold coin (or electronic variants thereof).
(1) The first “large player” could be the Islamic oil reserve, on access to which the continued economic functioning, let alone prosperity, of the West depends. If major Islamic oil-producing nations began to demand payment for their oil in gold and silver (specie), rather than some fiat currency such as Federal Reserve Notes (FRNs), Western countries would have no choice (short of invasion of those nations and expropriation of their oil) but to pay in specie. To obtain that specie, they would have two choices: (i) to exchange their own products for specie, to that extent returning directly to a “specie standard” and demonetizing FRNs in their own economies; or (ii) to remain strictly on the FRN standard and exchange FRNs for specie as needed. If they exchanged FRNs for specie, however, the value of specie as against FRNs would rise, because (all other things remaining equal) if the supply of specie remains constant, but the demand for it increases, the “price” of specie in the medium of exchange used to purchase it must go up. Eventually—and most probably quite soon—parties that found themselves constantly exchanging the FRNs they received in other economic transactions for the specie necessary to purchase oil would start demanding to be paid in specie in those other transactions, so as to eliminate the cost of exchanging FRNs for specie. This would depreciate the value of FRNs even more. Gradually, this process could drive the entire economic systems in those countries dependent upon Islamic oil in the direction of a new “specie standard.”
This scenario depends, however, upon operation “from the top down:” that is, the leaders of various Islamic oil-producing nations must decide to demand specie for their oil. These leaders form very small parts of Islamic society. Some of them are the Western Establishment’s clients, collaborators, or quislings. Others are susceptible to bribery, blackmail, or the ever-present threat of being Saddamized with “regime change.” Few would be likely to risk the loss of their own power, prestige, and perquisites for the speculative general welfare of common Muslims.
(2) The second “large player” could be Islam—the religion—itself. This scenario is more likely, because its operation comes “from the bottom up:” that is, through the great mass of Muslims themselves—who, to a very significant degree, have nothing to lose and everything to gain.
The generally acknowledged “five pillars” of Islam include:
- bearing witness that there is no God but Allah, and that Muhammad is His Prophet;
- daily prayers (salaat);
- fasting in Ramadan;
- the hajj, or pilgrimage to Mecca; and
- paying zakat (variously, zakaat or zakah), what non-Muslims might call a tithe.
The tithe is mentioned along with daily prayers over seventy times in the Qur’an. A commonplace analogy is that, just as prayer is an act of worship Muslims perform with bodily actions, the tithe is an act of worship Muslims perform through economic transactions. It is religiously obligatory charity, amounting to 2-1/2% of a Muslim’s wealth above a certain exemption, that the faithful must pay year around, in money or in goods, directly to the poor or to some charitable agency. Those who fulfill this duty are promised rewards in the world to come; those who evade it are threatened with eternal punishment. Most importantly in the context of this Commentary, Islamic law holds that: (i) mere debt cannot function as money; and therefore (ii) the tithe, if paid in money, must be paid in silver or gold. So typical Western fiat currencies, which are all nothing but debts politically privileged to circulate as currency, cannot be used to pay the tithe.
Little insight is necessary to realize why a religious-cum-political movement that restored the Islamic tithe in the full strictness of Islamic law could be the motivation and the catalyst for reintroduction of gold and silver coin (the dinar and dirham) as common media of exchange throughout the Muslim world:
- The tithe is religiously required of all Muslims.
- If paid in money, it must be paid in silver or gold.
- It must be paid regularly (at least yearly) as proceeds are earned.
- Because the tithe must be paid in silver and gold, and regularly, Muslims would soon require that silver and gold coin also be received in the underlying transactions on which the tithe is assessed. For Muslims would not want to incur the added expense of resorting to specie brokers to make the necessary exchange from fiat paper currency to precious metals. Moreover, the tithe not only would be paid in by the productive, but also would be paid out to the needy, who would then themselves immediately spend it back into the Islamic economy, completing the cycle of circulation. So the Muslim world would increasingly, and perhaps soon exclusively, operate with silver and gold coin as its common media of exchange in day-to-day transactions (that is, on the basis of what Americans know as “gold-clause contracts”).
Use of specie throughout Islam would
- stimulate productive economic activity;
- promote the elimination of usury (which is inherent in modern fractional-reserve banking and fiat currencies);
- reduce, and perhaps eliminate, the circulation of Western fiat paper currencies in Dar al-Islam, thereby curtailing the economic power and influence of the Western central banks that emit them;
- create economic, and thus engender political, unity among Muslims; and overall
- strike a blow at Western economic imperialism—which operates through and in conjunction with politically privileged fractional-reserve banks—and therefore at Western political and cultural imperialism, too.
In this process, the religious aspect would be the central, compulsive, driving, and rewarding force. Muslims would turn to gold and silver coin, not simply in spite of any attendant economic costs, but even because those costs would become part and proof of their sacrifice and service to Allah. Thus, “Islamic fundamentalism” would overcome economic transaction costs. Faith would prevail over the materialistic scramble for profit. Spiritual man would prove superior to economic man. And the increasing benefits from the expansion of the use of silver and gold coin as media of exchange would provide religious, as well as economic, confirmation of the wisdom of this course: Allah blesses those who obey Him. Not only in Dar al-Islam proper, either, but also in non-Islamic countries where Muslims constitute sizeable segments of the populations.
f. Into this process would doubtlessly intrude, sooner rather than later, what most scholars recognize as, if not the sixth pillar of Islam, at least tangential to all five: jihad.
(1) In Arabic, jihad means simply to strive or to struggle. Specifically in Islam, jihad imports dedication of a believer’s total resources and application of his utmost efforts to the promotion of Islam and against its enemies. This effort ranges from the believer’s inward, personal, perhaps invisible jihad to perfect his own faith, to his outward, overt, and collective participation in various worldly jihads to defend, advance, and even expand Islam across a hostile globe.
Today, “the inner jihad” increasingly merges with “the outer jihad,” because Muslims quite rightly understand Western political, economic, cultural, and especially military incursions into the Islamic world as designed to defame, subvert, corrupt, and ultimately destroy “Islamic fundamentalism”—hat is, true Islam—and to replace it with pseudo-religious modernism, then indifferentism, and then the apostasy and even atheism that rampant materialism and hedonistic consumerism depend upon and foster. So, whatever Muslims can, in justice, do in self-defense to deter, resist, and defeat such subversives, aggressors, and oppressors, and preserve their freedom to live in their own lands according to the tenets of Islam, they can hardly be faulted for wanting, and trying, to do.
(2) Besides, to Muslims the use of silver and gold as means of self-defense in a jihad against Western imperialism and neo-colonialism would satisfy the fundamental criteria of a just war. First, in Muslims’ eyes the struggle is both unavoidable and purely defensive. They see the West as having launched political, economic, cultural, and military aggression against Dar al-Islam, and as promising more of the same, if not worse, in the misnamed but perpetual “war on terror.” (In principle, this war will never end while a single Western soldier sets his foot on Muslim ground.)
Second, Muslims can expect to win the monetary battle—because, in any fair competition, silver and gold will inevitably triumph over fiat paper currencies and bank credit.
Third, an Islamic victory would not entail Muslims’ conquest, oppression, or exploitation of the West, but instead the economic and then political and cultural liberation of Western peoples from their own domestic deceivers, exploiters, and oppressors. The economic freedom that silver and gold provide would encourage, enable, and empower Western peoples themselves to overthrow the corrupt and corrupting regimes that propagandize, plunder, and persecute them. So, rather than dividing Muslim from Western peoples, this jihad would forge a new solidarity amongst them all.
Fourth, Muslims would wage this jihad not merely for their own personal gain, but also on behalf of universal principles of truth and justice, for the benefit of all humanity. Their truth would prove to be everyone’s truth, because the laws of economics apply universally.
Thus, on any theory, Muslims could, and probably will, embrace the use of silver and gold as fully justifiable means of “outer jihad.” At base, too, such use does not depend even upon Muslims’ invoking the right of self-defense against alien aggressors, because it is required in any event by the Islamic pillar of zakat: that is, it is already part and parcel of every believer’s “inner jihad.”
(3) True, Muslims’ adoption of silver and gold as their exclusive media of exchange would have profound economic, and then political, effects on the West—all of them negative from the Establishment’s point of view. But if the West’s monetary and banking systems did suffer crises, or even collapsed, it would be the Establishment’s own fault for foisting such inherently flawed and dishonest schemes on the people, and the people’s own fault for allowing themselves to be so misled and misused—and, if the truth be told, set up for the fall.
Crises in and the collapse of the West’s monetary and banking systems might ultimately be all to the good of everyone concerned, however, not only because they would impede the Western Establishment’s incursions into Dar al-Islam (and thereby reduce the threat of endless world war), but also because they might inspire Western peoples to take back control of their own countries.