By Darren Smith, Weekend Contributor
Though as further evidence ISIS is establishing a form of structuralized government, ISIS claims it will undermine Western currency markets with its minted bullion coins. It is using such to establish internal payments and as a hard currency to fund its black marketeering in illegal trade items. Since ISIS lacks a recognized currency, gold provides an intrinsic value in trade in foreign commerce.
However its reliance on bullion coinage can also make it vulnerable to economic countermeasures.
ISIS released on August 29th a propaganda film touting its return of the gold dinar, claiming it will displace the United States from international financial transactions by replacing dollars with bullion coins such as gold, silver, and copper. The film titled “The Rise of the Caliphate: Return of the Gold Dinar” describes how the United States created the Federal Reserve, promising to make payments in gold upon demand accompanied by surrendering dollars. However, the United States then deceived the world by switching to a fiat currency with paper dollars and eventually removing the dollar as payable in gold. The US then maintained dollars in a “satanic way” by using oil, forcing other countries to buy and sell oil in dollars through the petrodollar system.
A site dedicated to the ISIS coinage makes the following claim:
Declaration of the Islamic State launching its own currency
In the name of Allah, the Most Gracious, the Most Merciful! Praise be to Allah, Lord of the Worlds, and peace be upon Muhammad and his family and companions…
Under decree of caliph Ibrahim (May Allah bless him!), ruler of all faithful Muslims of the Islamic State, proclaiming the Islamic State to produce its own currency to prevent blind and tyrannical monetary system that was imposed on the Muslims and was a reason for their enslavement, impoverishment and the wasting of national wealth, making it easy prey in the hands of the Jews and Christians. For this purpose the Islamic Financial House has examined the issue and developed a project (Praise be to Allah!) dedicated to minting gold and silver coins according to the domestic value of these metals.
This site (ISIS-Coins.com) tracerouts to a hosting company in Luxembourg, and has its domain registration made private by a company in Russia. It might be proxied.
The ISIS now claims replacing dollars with gold will cause major economies such as Russia and China to sell US T-bills, leading to a collapse of the economy in America.
Al-Monitor reports during an interview with a former jihadist and Islamic commentator Najeh Ibrahim who stated:
“The fact that [ISIS] is monetizing its currencies carries more than one message. The first message is addressed to the world, in which IS confirms that it has become a [legitimate] state. The second is addressed to Muslim youth, in which IS asserts that the Muslims’ dignity and economic power, lost since the era of the caliphate, have returned.
Each coin has its own connotation. The first is a 1-dinar coin of pure gold weighing 4.25 grams [0.15 ounces], and this is the same weight as the first gold dinar of Umayyad Caliph Abd al-Malik ibn Marwan. On its reverse side, the 1-dinar coin has a symbol of seven wheat stalks, representing the blessing of spending in the path of Allah. The second coin is the 5-dinar coin and weighs 21.25 grams [0.75 ounces]; it is imprinted with a map of the world, representing the extent of territory [the Prophet] Muhammad’s reign would reach.”
There are economic, political and scientific relations between the countries [that cannot be overlooked]. To be recognized as a state, [ISIS] must be accepted by others. There are 192 countries in the world and none of them recognizes [ISIS] as a state, and therefore its currency will not be recognized.” He added, “Any currency must be accepted by the transaction parties. The holder of a currency must not feel threatened by using this currency. An Egyptian worker in Libya working in an area controlled by [ISIS] will not accept his salary in [ISIS] gold dinar, because he knows that he cannot transfer this amount to his children in Egypt. If this worker is caught carrying this dinar in Egypt, he may be subject to legal prosecution. People will not use this currency, even if [it is] made of gold.”
The ISIS arguments fail on many macroeconomic fronts. Any given national currency is backed by local governments and the gross domestic product of that nation, goodwill, and economic strength; not just the holding of precious metals. ISIS coinage lacks any recognition by other states and therefore other than its intrinsic metal value fails in the ability to convert it to other currencies. It likely also will be a closed system in with regard to international black market trade because those engaging in illicit trade with ISIS can only return such currency to those recognizing the ISIS. Nations also can ban possession and trade in this currency, severely limiting its demand and encouraging its devaluation.
The metal value of these coins will fluctuate and will be inversely proportionate in many ways to rises in economies of other nations, as investors sell gold abandon a traditionally perceived safe haven during bear markets. The copper coins are for practical purposes entirely valueless due to the value of copper and the small quantities for which the coins are available.
Yet another worrying factor is where ISIS obtains its gold. With the raping of important historical artifacts and world heritage sites it only seems logical ISIS will turn to extracting gold from irreplaceables and robbing citizens of gold held privately.
One method that the West can engage in economic warfare against ISIS could be found in a similar front prosecuted against Great Britain during the Second World War by the Nazis–See Operation Bernhard for more information.
In the operation the Nazi Government attempted to crash the British Economy by forging millions of pounds of banknotes and releasing these counterfeits into the world economy. While it did lead to disruptions, failures to fully execute the plan and other factors made the operation largely unsuccessful. It did however force the Bank of England to deprecate the notes subject to counterfeiting and reissue new banknotes.
A similar approach could be taken against ISIS currency. The coinage is easier to forge, save for weight. The West could dump large quantities of counterfeit coins having no intrinsic bullion value in an effort to undermine confidence in the currency and lead to inflationary pressures. Whether such actions would can have a positive cost / benefit remains to be seen however.
By Darren Smith
Source: Al-Monitor
The views expressed in this posting are the author’s alone and not those of the blog, the host, or other weekend bloggers. As an open forum, weekend bloggers post independently without pre-approval or review. Content and any displays or art are solely their decision and responsibility.
Fiver, as usual, is wrong.
As Nathan Lewis, hardly a religious nut, wrote (and thereby debunking Krugman):
“Between 1870 and 1912 (the classical gold standard period), a period of forty-two years, industrial production in the United States rose by 682%.
…
Today, we live in an environment of floating fiat currencies, which began in 1971. Conventional academic wisdom is that this period has been a wonderful example of how economic management via currency manipulation can solve the terrible problems of the bad old gold standard years.
How did the United States do in the 42 years of floating fiat currencies, between 1970 and 2012? Industrial production rose by 159% over that time.
Even that mediocre result reflects some pretty good times in the 1982-2000 period, when the dollar’s value was crudely stable vs. gold around $350/oz. If you look at the periods where the dollar’s value fell significantly vs. gold — 1970-1982 and 2000-2012 — the picture looks a lot worse. During the twelve years of the 1970s (until the end of the 1982 recession), U.S. industrial production rose a meager 21%. Yes, 21% in twelve years.
During the 2000-2012 period, it rose by — get this — 7%. Not seven percent per year. Seven percent total!“”
And most of that was probably government and/or military contracting.
What is it with religious nuts and metal currency? Does the religious portion of the brain simply overwhelm any capacity for economic thought? Does Glen Beck really have such cross-cultural appeal? Is it really just about the shiny?
https://www.youtube.com/watch?v=S8ly0c0_Rnk – This is a video of an ex-wife of a military assassin who tells some very interesting stories that she has been privy to.
I would like to see what everyone thinks. She appears credible. Pay attention to the people involved. Many of them Navy.
My uncle William Bill Robinson was an Annapolis grad, commander of special forces for the Navy and a Seal Team commander in Viet Nam. He was murdered in San Diego after his retirement and the case is still unsolved. It was as if he was set up. He was asked by a professor for the University in San Diego to go with him to look at a piece of real estate on the edge of town. The professor has plead the 5th. He reportedly left to go get keys but the keys were in my uncles pocket. They killed him but did not rob him so it appears to have been a hit.
Well, it appears that even ISIS knows that the Federal Reserves only job is as a perpetual bubble blowing machine so that the Wall streeters can rape the “sheeple” (I think that’s what Goldman traders call mom and pop investors) on the way up and then again when the market crashes. Wash, rinse, repeat.
It’s all a big rigged casino for us small investors. The problem is that when I go to a casino in Vegas, I know the odds are stacked against me…I know there is a lot of luck involved, and that application of knowledge (card counting, choosing games with better odds) will give me a few % points in my favor, but ultimately, if you hang around long enough, you’re gonna lose.
I think (hope) people are starting to awaken to the fact Wall st is just another casino (and the Fed IS Wall st, and Wall st IS the Fed), and the house doesn’t give a damn about your pitiful portfolio, just keep it active so they can continue skimming from you account. The Fed lowers interest rates to near zero, devastating retirees who have large %’s of their savings in safe, low volatility instruments(bonds, savings accounts), while inflation diminishes purchasing power. Wall st borrows the Fed money, and then uses it to buyback their own stock, driving up the market and the company’s stock, which then triggers large bonuses for the CEO’s and upper management…wash, rinse, repeat.
Wall st skims the money…Main st goes further into national debt.
We must abolish the Fed, and overturn Citizens United if we are to straighten the mess that has been created. Corporations are NOT people, but they do OWN our Congress critters.
ISIS may be onto something?
@Isaac
Oh, I see.
No, I have been posting as Pogo and Chief Consort. Got tired of that, the latter because it’s hard to parody the left anymore.
Interesting General Patton video Hollywood version Vs. real Patton 1945.
I don’t want to get any messages that we are holding our position.
Maybe I haven’t had enough coffee yet, Isaac, but I don’t quite get what you’re asking.
KCFleming
Are you a private eye as well?
Prof. Turley, you must know that ISIS is a creation of the military-industrial complex. This particular move is orchestrated to demonize goldbugs in the U.S. by subtly linking them to ISIS. This is a propaganda move by those who which to remain in charge of our fiat currency supply. A gold standard is the enemy of the currency manipulators.
Jefferson, T.: “If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.” You are seeing this happen before your very eyes.
Throw the moneychangers out. End the Fed. Bring back sound money.
Anyway, Obama was doing a fine job undermining our economy all by himself.
He doesn’t need some Middle-eastern JV squad’s help.
Ah, I was planning on undermining the world’s economy with coinage made from pop cans. They beat me to it.
Is Obama’s face on any of the coins?
Founding father of ISIS and all.
ISIS gets its funding from oil. Oil comes from oil wells. Oil wells are visible from satellites and can be bombed. Bomb the oil wells. Nuff said.
Nope. While you are at it: Bomb, bomb, bomb, …. bomb bomb Iran! Oh, Bomb Iraaan! I’ll take my staaand! Rockin and a rollin … rockin and a reelin bomb Iran! (Saturday Night Live 30 years ago)
This is one heck of a story, thought you might enjoy. Theresa
http://www.timesunion.com/local/article/Jerome-Johnson-gun-charges-dismissed-during-3rd-6529312.php
Chinggis think ISIS lose money and cannot make a prophet. Make coin but can’t coin a phrase. Mint coins from chocolate at chocolate mint. Freeze chocolate and make hard currency.
From the linked Al-Monitor article:
“…some experts say the coinage will not catch on.”
Kerry, LOL! Maybe depictions of artifacts they destroyed in rubble on coins.
Will American universities fight over who gets the opportunity to partner with ISIS? Money seems to make all things palatable …see the many American Universitues and cultural entities that have dumped their ethics at the door of Dubai and others for a slice of the oil pie.
I do some currency and postage stamp collecting. Did ISIS come out with new postage stamps yet?
I know it is forbidden to use picture of Muhammad, maybe beheading commemorative stamps will do.
I would think they would have a numismatic value. The face value would, of course, move with the market.