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.