Posts Tagged ‘dirham’

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Slick ad tells Muslim youth to use gold coins

May 11, 2012

A new commercial uses images of Muslim young ladies buying food at a halal cafeteria with silver coins.  Viewers are urged to use the silver dirham coins and gold dinars in order to “revive the Sunnah”:

The Islamic world is replete with examples of the move toward silver and gold coins, and this is just the latest.  Indonesia recently introduced a standardized dinar and dirham system to run alongside their paper currency as an option for Indonesians.

Gold advocates and Muslim financiers make repeated claims of gold and silver having “intrinsic value.”  Pardon me, but can you eat gold and silver?  Can you drink it?  Will it keep you warm in winter and dry in the rain?  No—only the things you can buy with gold and silver can do that for you.  And guess what?  You can buy the same things with paper currency.

In this sense, “fiat” currency isn’t much different from “fiat” metal.  But metals are susceptible to fluctuations in the global market (like oil) and could potentially be a less stable system upon which to base a national monetary system.

Turning back the financial clocks to the dinar and dirham may make some Western nostalgists, goldbugs, and paranoiacs envious or concerned that the Islamic world is taking what they feel is a more sensible approach to money.

But there is nothing to be envious about.  Returning to gold and silver will not help the economies of the Islamic world.  If anything, it will make them even less efficient and less competitive in today’s currency-based financial world.

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Paper money “utterly haram”

September 18, 2011

Islamic “philosopher” Imran N. Hosein isn’t done talking about the evil of Western paper money.  During a live audio linkup from Trinidad to South Africa during Ramadan last year, Hosein lectured a Capetown mosque on the wickedness of “bogus and fraudulent and utterly haram paper currencies.”

Hosein argues that Western nations are “playing God” by creating money.  In order to protect the ummah (Muslim community) from this “storm” of infidel currency and shirk (Arabic for idolatry), Allah has metaphorically put the ummah to sleep in a cave.  Hosein concludes that, one day, the ummah will awake to a world that uses only gold dinars and silver dirhams.

Here’s a four-minute excerpt about the money.  Take a listen:


The full, bloated 72-minute lecture (covering everything from Muslim dress codes, last year’s floods in Pakistan, and the sinking of some island in Dubai) is here for those with enough patience to listen to this bizarre yet colorful Islamist nutjob.

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Islamic economics: cut zeroes to stop inflation

January 21, 2010

Nobody likes inflation.  But Muslims really don’t like inflation.  They have a saying that one silver dirham (coin) during the time of Muhammad would buy one chicken, and that one dirham today would buy you… one chicken.  That is why the movement within the Islamic world to buy gold coins has skyrocketed, as I have blogged about here.

Iran’s rial is supposedly pegged to the dollar, so the mullahs can’t quite figure out why they would experience inflation.  No matter.  Just behead the zeroes from the currency itself.  That will solve it.  Here’s the news from AP, via MSNBC:

TEHRAN, Iran – President Mahmoud Ahmadinejad said Wednesday his government is planning to lop off zeros from its currency in an apparent fight against Iran’s double-digit inflation.

Ahmadinejad’s government is preparing to enact a law in April that would sharply slash energy and food subsidies. The move could provoke more unrest in a country already struggling under international sanctions, high inflation and a government crackdown on the opposition.

“It is planned to remove zeros off currency and make the rial value real,” Iran’s government website quoted Ahmadinejad as saying. “The value of rial, under the law, is calculated on the basis of the price of gold. For some reason, the rial has been devaluated and we have to return its value to the one existing in the law.”

The Iranian rial is now traded at 10,000 rials to one U.S. dollar. That compares to 70 rials against the dollar in 1979, the year an Islamic revolution toppled the pro-Western Shah Mohammad Reza Pahlavi.

The governor of Iran’s Central Bank, Mahmoud Bahmani, last month said three or four zeros will be removed from the currency, depending on the results of the government’s subsidy cuts.

But don’t worry.  Sharia finance and Islamic economics are more ethical, equitable, and sustainable than Western capitalism.  That’s what we’re told, anyway.

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The Zakat: Part II

November 7, 2009

Leaving aside the profound flaws of the zakat for the moment, this second post in Money Jihad’s zakat series will address the legal and administrative details of zakat collections.

Who pays & when:  Muslim men and women pay the zakat.  Paupers who are eligible to receive the zakat do not pay the zakat.  However, there are numerous statements in the Hadith to the effect that giving just one date fruit is better than giving nothing.  Payment is due annually at Ramadan.

How much:  The Sahih Bukhari says “For silver the Zakat is one-fortieth of the lot (ie 2.5%)” (2.24.534).  In this passage “silver” has been interpreted throughout Islamic history as liquid monetary wealth, whether it’s in cash, gold, or silver.  The zakat tax rate of 2½ percent should be carefully distinguished from the Christian tithe of 10 percent, or American marginal income tax rates of 10 to 35 percent.  The zakat taxes wealth, not income; that is, it counts against everything a Muslim possesses at the end of their lunar year after paying any debts or expenses.  It is not a tax on profits or net revenues (which are subject to different tax rates, especially among Shiite Muslims).

Just to give you a sense of what the zakat tax rate means, multiply your net worth by 2½ percent.  Compare the result to what you paid in income taxes last year.  If your personal finances are like mine, the two figures are comparable.

Deductions:  With the zakat (somewhat similarly to taxes on personal property such as commercial inventory or privately owned boats in the United States), there is an established threshold value under which no goods are taxed.  In Arabic, this threshold value is known as the “nisab.”  For example, Sahih Bukhari 2.24.534 establishes that no zakat is due on less than 200 silver dirhams (which today would be several hundred U.S. dollars).

Animal wealth:

  • Animal nisab:  Apart from the 200 dirham nisab on monetary wealth, the Hadith outline nisab for animal wealth.  A Muslim pays no zakat on less than five camels or less than 40 sheep.  For animal wealth in general, the zakat is paid with a smaller number out of your animals or an animal of lesser value.  For example, if a Muslim owns between five and 24 camels, he pays the zakat with one sheep.  The larger your herds, the higher animal zakat you’ll pay. 
  • Camel taxesI’m trying to convey the animal tax as simply as possible, but the Hadith’s arcane rules on camel wealth are beyond my powers to condense.  Strikingly, Islam’s tax on money is explained in just one sentence, while the tax on camel wealth goes on for paragraphs after paragraphs.  I suppose this is what happens when a tax system that is supposed to endure for eternity is established in 8th Century Arabia.
  • Horse exemption:  The zakat is not due on horses (Shahih Muslim 2.24.542).  I cannot find a Koranic explanation for the exemption, but I have read elsewhere that it was granted because horses help carry holy warriors in jihad.

Read the rest of this entry ?

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New gold fund unpopular; coin demand high

November 3, 2009

Dubai fund managers are surprised that Muslims would rather buy gold coins than a gold fund.  I’m not.

DUBAI, Oct 28 (Reuters) – The Gulf region’s first gold exchange traded commodity (ETC), a new investment vehicle launched earlier this year, is seeing only modest growth due to regional unfamiliarity with the product.

Grant Collins, senior managing director of the Dubai Commodity Asset Management, said the security was also hampered by a trend for bullion investment in the Middle East to come from individuals rather than institutions or funds.

Collins told the Reuters Middle East Investment Summit that the group may not have realised just how much people preferred to have the the gold rather than a gold-backed product.

For fun, google “Islamic gold.” You’ll find roaring sales pitches for gold coins that would put G. Gordon Liddy to shame.  Why the push to sell Muslims gold?  Old-fashioned gold-buggery plays its part, but these Islamic legal arguments have played a role:  Read the rest of this entry ?

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