Before this question is answered, it is important to understand what the proper ‘supply’ of money means.

As many Western economists incorrectly point out, the benefits of fiat currency is the ability to for the money supply to ‘expand’ or ‘grow’. Many sorts of criteria have been put forward: that money should move in accordance with the population, with the ‘volume of trade’, with the ‘increase in GDP’, so as to keep the ‘price level’ constant etc. The reason for this rests on the understanding that when the supply of any other goods in society increases, this will generally confer a societal benefit. But money differs from other commodities in one essential fact. Grasping this difference furnishes the key to understanding monetary matters.

When the supply of consumer goods increase, there is general rejoicing. When new natural resources are discovered, there is the promise of increased living standards, present and future. But the same does not apply to the supply of money. Consumer goods are used up the consumer; capital goods and natural resources are used up in the process of producing consumer goods. But money is not ‘used’ up; its function is to act as a medium of exchange – to enable goods and services to travel more expeditiously from one person to another. It is a startling fact to some, but money is only useful for its exchange value. Other goods have various ‘real’ utilities, so that an increase in their supply satisfies the consumers’ wants. Money though is valued according to its ‘purchasing power’. Where increasing the supply of money acts on reducing the effective purchasing power of money itself, meaning that no societal benefit is conferred. It said we all want more money, but it really means is that we want more money that has more value. After all, I can give you a billion Dollars in Zimbabwean currency, but you are not richer than if you were holding a hundred Dollars in US currency.

So to answer the question ‘is there enough supply of gold and silver to establish a gold and silver standard?’ The answer is not an issue of constantly increasingly supply to match the growth of societies (in attempting to do so, we would likely mine all of the earth’s stock of gold and silver), but in seeing whether the current stocks of gold and silver are sufficient for currency to be effective. This means whether there is enough gold and silver to be utilised in trade by a nation. Importantly the consideration here is gold and silver. Both metals globally exist as large stocks and should be used in the form of a parallel or bimetallic standard. In fact, it was the British in the 1800s, who in an effort to placate the independence of the US, banned the use of silver dollars, making it easier for them to monopolise the gold in circulation.

Both gold and silver by their nature are durable metals that are rarely consumed. Largely the same amount of gold and silver that was first mined many thousands of years ago still exists today. Both gold and silver do not only exist as bullion stored away in the vaults of central banks, but also in various guises of jewellery and ornaments. It is only the form of gold and silver that changes.

Why in modern times is Fiat and not Gold the currency in use?

There is little to describe in terms of the benefits of paper currencies, apart from mentioning the obvious fact that they are the dominant mode of exchange for all nations in the world. This sometime skews the view of an individual to believe that if fiat is official currency, then it surely must have been superior to the gold standard to take its mantle?

Fiat is a new innovation, one that cannot afford the stability of neither gold nor silver. Since its establishment there has been no parallel to excessive inflation in the peacetime history of man. Gold, unlike fiat can never overstate its earnings, understate its liabilities or declare bankruptcy. But fiat, unlike gold, can be controlled. Where governments have coveted money, they have coveted the ability to control the supply of money. Whereas in the past with a metallic standard they failed miserably – indeed the attempts of Roman emperors to debase coinage led to the fall of the Roman empire – the establishment of fiat currency have allowed modern governments power and control of which only their forbearers could dream of.

It was in the post World War 2 environment in which the US slowly effaced the practical implementation of the gold standard, to achieve dominance of its own unit of legal tender – the Dollar. Even though in the decades running up to the 1970s, the gold standard was still in use. It was not the real gold standard, but a pseudo gold-backed standard. In this pseudo standard, the Dollar was arbitrarily backed by a certain amount of gold (1/35 ounce). Conventionally this may appear sound, but critically the US undertook two steps that led to the loss of faith in gold: restricting the ownership of gold and making the Dollar the only form of legal tender.

In respect to the restriction of ownership of gold, the US government outlawed the possession of gold for its citizens, and made the Dollar only redeemable for gold to foreign governments. With gold no longer available for domestic use as currency, the effect of this is to ensure that demand only exists for the Dollar. Eventually the effect of doing so, is to displace in the minds of the people that the Dollar – merely the paper tale – is currency and not gold. Henceforth, substantial demand for the Dollar existed which in reality could not in practicality redeemed for gold. When the public could not redeem their gold, then there would be no check on the US government for increasing the production of US Dollars, for previously if the public sensed that Dollars were being produced without backing of gold, they would withdraw gold from banks in fear of currency devaluations.

The US throughout the 1950s and 60s continued inflating the production of US Dollars, it was the enviable position of being one of the dominant superpowers, and thus left relatively unaccounted for its abuse of the gold-backed standard, which it clearly was not adhering to. Eventually, hard currency favoured nations such as the French, Germans and Swiss sensing that the real value of the Dollar was depreciating fast, began to redeem their Dollars for gold. This led to an exceptional outflow of gold from the US, which in a surprise to most of the world, led the US in 1971 to collapse the link of gold to the Dollar via abolishment of the Bretton Woods Accord.

With the US now in total control of its money supply, it began fervently producing Dollars. The natural outcome was to devalue the Dollar, thus making the Dollar cheaper, giving substantial price advantages to the export of US goods. To prevent other national currencies being hugely overvalued compared to the US Dollar every other nation in the world had no choice but to drop whatever hard currency backing they had and adopt a fiat standard. This was the global end of the gold and silver standard.

Governments though learned very quickly that the ability to print money freed them from accountability of their citizens’, and would thus oppose the return of hard currency which would curtail their new found freedoms.
The US ensured that its currency, being the de facto reserve currency of the world, would be used to price international commodities. Through this, it could unreservedly call on the printing presses to finance its imperial ambitions, whilst exporting its inflation across the world to prevent the effects of inflation being felt at home. The US Dollar, as a monetary instrument, would thus become an unhinged political weapon against any nation attempting to resist the ambitions of the US.

Much of the same existed across most of the Western nations. The politicians of the so called liberal democracies could practise a new level of demagogy, where they could make grandiose promises to the electorate and finance these through expanding the money supply. Inflation in its truest guise is just another form of taxation, but because it operates as a stealth tax, it would go unnoticed by the general public, until they realised that the ‘nest egg’ they were building was practically worth nothing. By the time this deception would be discovered, the term of the previous politician would have passed, and conveniently for them to.

As for the Muslim world, its leadership was lost to an alliance of dictators and barely functioning governments after the fall of the Islamic Caliphate. Given that most of these rulers had a penchant for tyranny and abuse, there would be no real wish for them to return to the real Islamic Dinar and Dirham. If its people were kept in a permanent state of weakness, then they would be unwilling or unable to challenge the authorities over them. Controlling the money supply was another tool to the torturers set that the rulers of the Muslim world used to subdue their citizens; they could print money to benefit themselves and their abhorrent power structures, all the while the general public would be drained by increasing living costs though inflation and more often than not – hyperinflation.

In summary, the realisation of the fiat standard in modern times is a construct of governments and especially of those of the West. It was built by slowly destroying the functional credibility of the gold and silver standard, and falsely building a perception of strength in fiat. Now with the current status quo, despite the terrible costs that fiat has bought, these governments are unwilling to abandon the fiat standard, because such a standard has brought them power and control, one which a gold and silver standard would curtail.

Fiat is simple daylight robbery, one though most are still blind to.

Isn’t it wonderful to work for a broken system? Or even more pertinent question, to vote for Right Honourable candidates to represent us (more like milk us of our money and spend it). These past few weeks have been a revelation for all those workers who spent hours scratching their heads trying to come up with a reasonable excuse for why they put in that claim for that extra 10 quid of fuel for their car when they were on holiday or why the missus was travelling on a company subsidised ticket. Watching some of these MPs (OK I admit, Hazel Blears in particular) flash their stupid grins whilst otherwise keeping a straight face and lecture us on morality has been agonising. Hazel, or lets call her Ms KitKat (no prizes for guessing why) proudly announced to the nation that she had done nothing wrong in her claims but she agreed the system was broken and she understood why the public felt angry.

The diabolical practice of “flipping” or declaring a second home to be the main residence to enable specific 2nd property expense claims (which were supposed to be for MP’s which live far from London), claims for a second residence which in fact was a room in her sisters home (Home Secretary Jacqui Smith), a plethora of claims for dog food, cleaning the moat of the family castle, 100 pounds a pop for changing light bulbs and even repairs to the family tennis court. All while the man in the street is under threat of losing his job, suffers from below inflation wage increases, or salaries (such as Nurses) significantly lower than some of the MP expense claims. At least you can rely on the Tories for a high class of claims. Several Tory MPs claimed for items which I would love… a swimming pool, a helipad (double check). Even the House of Lords was not exempt, with our very own Baroness Uddin claiming for a second home in Kent which neighbours say nobody lived in.

Isn’t it interesting that despite the different backgrounds of these politicians such as race, religion, sexual orientation or indeed even political allegiance everyone has engaged in thoroughly plundering the trough in which their collective noses have been buried? Ms KitKat’s claims would hold some legitimacy perhaps if all, nay even one of these MPs had actually reported this so called ‘broken system’ earlier instead of oh so helplessly suffering its brutal tyranny of handing out free cash for years. Thanks Ms KitKat, have a break, you deserve it after all your efforts.

I don’t know about you, but for me this sorry episode just goes to show how self-serving, selfish and downright corrupt these politicians are. What is remarkable that people in the Muslim world look up to these guys, who claim to work in the ‘The Mother of all Parliaments’ for inspiration as to how to run their own countries. Kudos to some people like Zardari though, not only did he learn how these guys do things he has actually outdid them in the corruption rankings. Notch up another victory for Pakistan against Britain; Pakistanis learnt more than just cricket off their colonial masters.

Perhaps I am being a bit too harsh on Ms KitKat, after all this is not just one MP doing it, it’s everyone. She has correctly identified that when you have a problem that affects such a large number of people, there is clearly a systematic failure occurring somewhere. However what our Queen of Confectionary can’t get away with is the fact that she and her fellow trough dwellers are the ones responsible for creating, approving and managing the system which she is happily trying to wash her hands off. Whilst there maybe some special ‘independent-I-am-holier-than-thou-with-multiple-surnames-ethics-committee’ in charge of the actual expenses policy, the greater point is that these MPs are free to legislate any laws as long as there is a majority present. Whilst I may be committing sacrilege against democracy by saying this, how sound can a system which relies on the good judgement of a majority such as this to establish a criterion of right and wrong be? Or more specifically, a majority which has clearly shown itself to be of a greedy money grubbing nature that had no moral qualms about taking hard earned tax payers cash to live the high life. Guess the idea of big business owning legislators doesn’t sound too far fetched now does it seeing the kind of disposition our Right Honourable MPs have.

Hardly surprising, that the public in the UK are turning off politics when their elected representatives have been so badly exposed. The democratic idea of assuming the people (or the elites dominating public opinion) will objectively and independently decide right from wrong to the benefit of all is fundamentally flawed. The Muslim world too has suffered from this corruption and is high time these rulers are removed (which conveniently the West helps prop up). But it is this very failure of democracy which is leading to seek an alternative system throughout the Muslim world – the West has long lost any form of leadership whether moral, economic or political.

I guess I’m just an extremist Muslim who should simply be grateful for being taught the word ‘opinion’ and not actually try to have one of my own by this country. I mean, forget BNP type skinheads yelling at me to ‘go back to your country!!’ I would have the likes of Shahid Malik to worry about who would gladly come out and tell me that I’m an extremist. I’m sure Shahid would warn me to be a good British Muslim and shut up if I know what’s good for me (42 days wink wink). To be honest I would love to speak to him right now about this sort of thing, the only problem is that I think he might be a wee bit busy trying to explain to everyone why he has racked up the most expenses out of all MP’s. Don’t worry Shahid, I’ll be crying £66,827 worth of tears for you all the way out of your justice ministers office. Free of charge by the way, no need to lodge a claim.

Terrific Atimes article, on the Islamic solution for Pakistan…

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Ideas before bullets
By Asim Salahuddin

http://www.atimes.com/atimes/South_Asia/KE01Df02.html

The current crisis of militancy gripping Pakistan is the most serious threat to the integrity of the state since the loss of East Pakistan in the war of 1971 that led to the creation of Bangladesh.

Pakistan today is surrounded by hostile neighbors, is crippled economically and is slowly being crushed under the weight of world public opinion that it is a terrorist state, which is being generated by its supposed ally America. With Balochistan province already rumbling with a separatist insurgency which has not yet thankfully gained popular traction, the armed conflict which is being fought with Taliban forces in Swat, Buner and Dir is threatening to roll back the writ of the Pakistani state to just the provinces of Sindh and Punjab.

A solution must urgently be found to prevent further bloodshed on both sides of this conflict. The problem, however, requires a detailed analysis and also a solution that provides a lasting fix and not just another short-term truce or treaty that will be broken.

The roots of the current conflict between the Pakistani armed forces and Taliban fighters can be traced to the American invasion and occupation of Afghanistan in 2001. This conflict is a direct spillover from the fighting in Afghanistan against the Americans and a reaction against the support of the Pakistani state for America’s war and its actions of bombing and killing its own Pakistani citizens at America’s behest.

The opponents of the Pakistani armed forces, the Taliban, are not a coherent or unified group. Made up of various factions known collectively as the Taliban you have Central Intelligence Agency Taliban, Afghan Taliban, Russian Taliban, Punjabi Taliban, Pakistan’s Inter-Services Intelligence Taliban, Tehrek-e-Taliban and others.

These numerous factions have varying agendas, with some being armed resistance to US occupation, some being armed resistance to Pakistani attacks, others still being those who are funded and equipped by foreign intelligence agencies to create unrest and strife in Pakistan.

Varyingly, apart from those foreign-sponsored groups using the following reasons as cover, these groups are demanding an end to the bombing of Pakistani territory by American and Pakistani armed forces and an end of Pakistani support for the American occupation in Afghanistan. Some groups, failing this, want an end to interference from a Pakistani state which has proven itself incapable of looking after both the needs and security of its people.

In origin, the demands of the Taliban do not constitute a military threat to Pakistan. These groups are not foreign invaders seeking to control land or territory as part of some imperial adventure, as America is in the Muslim world. The principle grievances of these groups are political. The challenge to the Pakistani state therefore is from Pakistanis, civilians who have taken up arms against the nature and policies of the state.

This problem is further being driven by America in collusion with the Asif Ali Zardari government of using force to wipe out any resistance to the American occupation of Afghanistan, as it lost the battle for hearts and minds a long time ago.

It is interesting to note that this is actually a complete continuation of the policies of the General Pervez Musharraf era, and that the popular change which people were expecting with the departure of the military dictator nearly two years ago has not materialized.

America and the Zardari government are actually instrumental in creating and perpetuating this crisis in order to turn Pakistani public opinion in favor of America’s imperial campaign in Afghanistan and the wider Muslim world by repackaging this conflict from being America’s war to Pakistan’s war, as the people have rejected the colonial ambitions of the US and its “war on terror”.

This was one of the key sound bites issued by Zardari as he came to power, which was a pledge for Pakistan to adopt America’s “war on terror” as Pakistan’s own war.

The fact is that this is America’s war, not Pakistan’s. Pakistan is being pushed into a conflict with its own people and neighbors. Pakistan is being directed towards civil unrest and ultimately breaking point, and this is in accordance with the American plan for Pakistan.

Lieutenant Colonel (retired) Ralph Peters, in his article “Blood borders: How a better Middle East would look” for the US Armed Forces Journal, proposed a new map of the Middle East which showed the breakup of country, with only Sindh and Punjab remaining as Pakistan. It is now well established that both America and Britain are trying to fragment or Balkanize Pakistan for four principle objectives.

Media conditioning tends to play havoc when trying to judge a book by its cover. I always thought the book ‘Catch-22′ by Joseph Heller would be a complex spy thriller, with the protagonist stuck in a no-win save-the-world-or-save-the-girl type situation. After all, that’s how the pundits always frame the term ‘catch-22′. In fact I continued to believe that even after reading 1/3 of the book – before I finally realised it was a satirical book about a crazy guy.

The same conditioning applies to the use of the term ‘Islamic State’. When thought of in its historical narrative, we automatically assume ‘The Rise and Fall’ of the Islamic State.  Read the title closely though (I’m sure you’ve already re-read it). Yes, your eyes don’t deceive you, it reads ‘The Fall and Rise‘ of the Islamic State.

Wow, so a book talking about the rise of the Islamic State, coming from someone described in many circles as one of the leading intellectuals of our time? I had to go buy it.

I’m not really up for a detailed review of the book, it would take me too long to think up all those pithy statements that would make it sound like a real review. In summary though, if you want a penetrating and concise answer to why Muslims around the world call for a restoration of the Islamic State, when in the perception of Western minds this is equated with medieval barbarisms – then you should read this book.

Noah Feldman has the scholarship (and the honesty) to know that the history of the Islamic State is not one where a civilisation is only characterised by stonings and amputations. The shari’yah is the law for Muslims, and how sad it is, that law for Muslims only exists in the narrow gallows of punishments? So Feldman at least begins with the correct premise: that the call for the Islamic State, is the call for shar’iyah – this is the call for law itself. Incidentally, this is what Feldman was attacked for in the New York Times Magazine for indirectly promoting Islam as the basis of a political order.

Anyways, the book is divided into three main parts: What Went right? Decline and Fall; and Rise of the New Islamic State.

Again read the book, if you want to know all the details. What I want to concentrate on though is a very common theme that transcends over the whole book – which is the discussion of the role of the ‘ulema in the Islamic State.

As the book describes, for what went initially right, was that the ‘ulema maintained their central role as the guardians of shar’iyah. This seems like a well known point, but we often lose sight of a very distinguishing fact of the Islamic State – that the State is subservient to the shar’iyah, and not the shar’iyah being subservient to the State. In Feldmans words the ‘ulema were the ‘gatekeepers’ of the shar’iyah. Ultimately this meant the State was kept in check by the ‘ulema. Any volition by the State not according to the shar’iyah would be answerable to the ‘ulema, who in effect were the counterbalance to the State.

Next the book continues with Feldmans analysis of why the Islamic State declined. Continuing with the discussion of the ‘ulema, Feldman postulates that the specific steps the Ottomans took with the Tanzimat reforms and the establishment of the Mecelle, led to the resounding loss of power for the ‘ulema. For while the Tanzimat reforms were then viewed in a positive light to modernise the Ottoman State, nobody apparently had the prescience to realise that it took the role of understanding the shar’iyah away from the ‘ulema and had given it to the State. The codification of Islamic Law, would mean that judges from the non-scholarly class would be heirs to legislation. Eventually, this allowed the likes of the Young Turks to grow, whose fruits bore the likes of Kemal Attaturk (may Allah curse him). With the ‘ulema no longer in the position of acting as a counterbalance, the final death blow to the Islamic State was given by Attaturk in 1924.

In the final part of the book, Feldman takes a look at both Saudi Arabia and Iran, two states with a functioning ‘ulema class, neither of which are really Islamic though (my words). He seemingly also gives a great deal of currency to the Muslim Brotherhood (MB) as an example of an Islamic group working for the return of the Islamic State. I may disagree here, but he raises an interesting point. The MB may advocate for the supremacy of the shar’iyah, but are they advocating for the elevation and the supremacy of the ‘ulema? In Feldmans view, this is seemingly not the case since such groups have inadvertently also assumed the role the ‘ulema, since they have now become the ‘gatekeepers’ of the shar’iyah. The book pretty much concludes with the question of the role of the ‘ulema still in debate for the foreseeable Islamic State.

Overall, the book has really got me thinking. Despite our admiration for the ‘ulema, we don’t tend to think of them as an entity with any real power. They have become religious figureheads, overseeing our ‘otherworldy’ affairs. In contrast view the recent turmoil in Pakistan, where there had been uproar over the dismissal of the Chief Justice Iftikar Choudhary – a man who holds the law in one hand and the panic of the goverment in the other. Rarely would you see such consideration given for the ‘ulema. Who sadly no longer hold any noble positions in society, with no approbation or even esteem for their diminished roles.

Its strange given that the ‘ulema were men who did not command armies, have huge wealth at their disposal, and rarely did they hold government posts. Yet they carried incredible eminence in the Islamic State. They were the heirs of the Prophets, the guiding light for the Ummah and the restraint that held down hands of the rulers. There is no comparable class of people in any other society or civilisation. One that we pray is brought back to its rightful place with the return of the Islamic State.

What a dumb question to ask!

This question and similar ones are usually thrown into the political and media circles to re-visit the exhausted subject of integration. Ever since 9/11 and more particularly after 7/7, the debate about being British and its ramifications have started to become more imposing and trying to shape a dominant  public opinion on the matter. However, for the government, there is a risk of  being so stringent with a definition about Britishness. The very fact that these question are being discussed in light of a community who live according to a different value system, they risk alienating them further and reducing the likelihood of ever integrating them successfully into a liberal democratic society.

British or Britishness is an invented political identity, its roots originating from the Union of the Crowns in 1603 when James VI, King of Scots, ascended to the thrown of England, thus uniting Scotland and England under one monarch. Ever since then in British History it has been used to assert an identity on other communities. An example would be in 1607 large tracts of land in Northern Ireland fell to the crown. A new settlement was started, made up of Protestant settlers from Scotland and England. Over the years the settlers, surrounded by the hostile Catholic Irish, gradually cast off their separate English and Scottish roots, becoming British in the process, as a means of emphasising their ‘otherness’ from their Gaelic neighbours.

Many commentators have stated what they feel it means to be  Brtish in Modern Britain. Starting with Scottish Prime Minister Gordon Brown, he has mentioned several measures to promote Britishness, one of them being recapturing the Union Jack from the Far Right. “All the United Kingdom should honour it, not ignore it. We should assert that the Union flag by definition is a flag for tolerance and inclusion.”  A report commisioned by Gordon Brown on British Citizenship suggested that all school leavers should take an oath of allegiance to the Queen in order to develop a “sense of  belonging.”                                                                                                  

 Jeremey Paxman, a well known journalist and authour comments that  “I am more comfortable with my English identity. There are important residual values there, such as respect for the rule of law and for democracy and, I suppose, religious overtones too.”  Sharmi Chakrabarti, Director of Liberty feels it’s about underlying values that are capable of embracing not just British people but the best aspirations of democrats around the world. Another audacious view is from Michael Boyd, Artistic Director of the RSC, “The thing I like most about Britishness is its messiness and incompleteness. I am a good example of it myself: I was born in Belfast, brought up in London and educated in Edinburgh. I like the unfinishedness of the idea of Britishness and I think that’s what is shaping about it. It is part of our problem, but it is also defining.”

Having briefly highlighted the current context of discussion and its historical roots, is it a commendable way to engage with the Muslim Community in discussing or imposing such a controversial term? People who go on and on about it are usually the people trying to force the Muslim Community to behave a certain way based on their perception of best values for humanity. The government, ministers and certain think tanks that provide fodder to government legislation are usually the source  to stoke up what intended to be a harmless issue of having a cohesive society to a divisive topic where the people of influence try to impose their agenda on the Muslim Community in Britain.  

I think the first step in any conflict resolution is to talk to one another. It is given the problem today is that the British Society is unable to be fully inclusive of all the migrant or indeed some indigenous people. The majority being those who share a faith in Islam. So, ultimately to become fully inclusive what does the British Society need or to be brazen, deficient in, in order to resolve some of the problems faced in society? Quoting a 14yrs old boy at high school in response to school leavers taking an oath to the queen, ” It’s kind of dumb. Most people have proper faith in their own country, trying to get them to have allegiance to this one gets in the way. It’s more important to create better housing for people with youngsters. Getting rid of tower blocks would stop things like gang culture.” 

A recurrent theme in this subject is the issue of values. The notion of shared values is one of the conerstones of being British. I think there lies the answers to the questions asked earlier. A proper debate should ensue on what exactly are British Values and its validity. Starting from here will allow a level playing field where people on opposing sides will be able to air their views without being labelled as extremists or Anti – British.

 Right, enough on advertising Britishness, as Boris Johnson says “it’s quite unBritish to keep bashing on about Britishness.”