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.
Wait until these Einsteins flood the market with their dried camel dung coins. I’m shaking in my boots.
GIVE ME A BREAK! ISIS – or whatever/whoever created this fictional group – got this story idea from a Hollywood movie:
“The In-Laws” (1979) – staring Peter Falk and Allen Arken
CIA agent robs US Mint engraving plates in unsanctioned plan to crack a world-wide inflation plot hatched in Central America
https://en.wikipedia.org/wiki/The_In-Laws_%281979_film%29
http://www.imdb.com/title/tt0079336/
In addition to being a Scientist, I have minor in Film and Cinema Studies and Production – and a VERY LONG memory. Did ‘they’ REALLY think they could pull the wool over everybody’s eyes? BUSTED!
Mr. Wizard – several crimes have used films as their base. BTW, it is Alan Arkin
I take care of many people who have asbestos plaques on their chest X-rays, but they never get cancer.
Here’s a clue, though: cigarette smoking with asbestos. Necessary but not sufficient.
You’re not a doctor, are you phillyT?
It shows.
KCF,
The country suffered frequent economic slowdowns during the Gold Standard’s hey day. The point is that “economic slowdown” and “growth” are not the same. Recessions, by definition, are periods of restricted growth.
What these cyclical boom and bust periods did result in is a massive concentration of wealth in the hands of the very few. Make a bubble; burst a bubble. Sound familiar?
Interesting, perhaps you should inform Johns-Manville or dozens of other asbestos manufacturers who reorganized and declared bankruptcy establishing trust funds for the victims after their own knowledge of the risks was exposed. Or maybe you could inform the medical community which has recognized asbestos related disease for over 75 years. Or maybe you could advise the many lawyers engaged in continuing asbestos litigation. They might fight plenty over damages, an individual defendant’s relative liability, or even about causation as regards a particular plaintiff and defendant, but he fact that asbestos causes mesothelioma doesn’t seem to be at issue.
The “Panic of 1797” erupted as Britain waged war with France. As a result of a run on the Bank of England, funds were not available to pay depositors causing a depression throughout Europe as well as across the Atlantic Ocean. “Real estate markets crashed first in the coastal United States and then spread inland” (Lynch, 2008, para. 9). Land speculation that began in earnest in the 1790s in the West inflated property values with banks financing the speculation. By the turn of the century “bankruptcies proliferated throughout the land resulting in numerous American bankers and merchants being sent to debtor’s prison” (Lynch, 2008, para. 9). While the real estate bust of the early 21st century affected millions of people, it was not the first time the nation’s land values plunged.
19th Century Recessions
There were five “panics” and one “depression” in the 19th century which were brought on by events such as: failure of the Reading Railroad; failure of Jay Cooke and Company, the largest bank in the U.S.; a run on Knickerbocker Trust Company deposits; and runs on both gold and silver supplies. Certainly there were many other contributing factors, as there were when Lehman Brothers, Goldman Sachs, and General Motors had economic crises recently, but these were some of the leading causes of national economic failure.
Government interventions especially by the Republicans who loved to subsidies various railroads surely had nothing to do with these panics. Lincoln prior to his political career was one of the prominent attorneys for the railroads even having his own rail car at his disposal. Poor old Abe?
fiver – if you are going to condemn someone for changing their name all the time, Inga must be on your s**t list.
phillyT, “necessary and sufficient” were the issues that you yourself neglected in criticizing “correlation versus causation” in gold vs. fiat currency. A number of authors side with idea that fiat currency is inflationary per se, and limits productivity as compared to gold.
You’re welcome to show otherwise.
And no, glucose is not necessary and sufficient as a cause for diabetic retinopathy, since can be absent under high glucose a and present under normal glucose levels. High glucose is certainly not unrelated, but not explanatory alone.
Are you a medical doctor, phillyT?
If you are, then you must have skipped a few classes.
hskiprob, your understanding of the industrial revolution is shallow at best.
Had we had better government oversight, a stronger central bank sooner, and a more balanced playing field, we would have ended up with a more sustainable “revolution”, a cleaner environment and a stronger middle class. The development would have happened anyway–the time was right, the inventors and developers were all there. Just like the tech revolution. Just like the revolutions in medicine and a dozen other fields which happened long after the end of the gold standard. And our economy is subject to “reversion to the mean” as is every other thing in nature. Nothing grows at 20% forever–it is statistically impossible.
Trying to pin the industrial revolution on ONE thing, is just plain silly. It is a huge complex web of factors, some decent, some indecent, some magnificent, some pretty awful.
Research strongly suggests that the greater the protections of property rights, the wealthier the society. It’s why very few people, except the ruling oligarchs, actually like living under communism and why they always fail. What you socialists refuse to understand its that most social policy is really a benefit to special interests at the expense of everyone else. You seldom are willing to acknowledge the negative ramifications of the social policies you embrace. Isn’t this a good definition of ignorance; ignoring some of the facts.
It’s rather simple concept to understand and like I pointed out in one of my other posts, million of people and thousands of economists disagree with you. Take the time to read. There are a voluminous number of books that go into great detail on this subject. How Capitalism Saved America by DiLorenza is a good one to start.
We aren’t the greatest nation in the world anymore phillyT except in one category. Our military budget is larger the then next 11 highest countries “combined”. You think this is good. We’re recovering? BS
Really a stronger central bank? They are so strong already, that not one central banker has gone to jail for what they did, fraud, stock and insurance manipulations, etc. during the real estate boom and bust cycle that ended in the monetary collapse of 2008.
Your living in la la land. You should keep reading Krugman.
I really get sick and tire of having people like you write constant logical fallacies as if you really understand what you are saying. Just another government pinko that is probably cutting and pasting comments from some website to counter logical arguments that are presented by others. The crap you comment on to KCFlemming is an example. I guaranty phillyT you are a tax consumer and have never produced anything worth while in you life. I could be wrong, but I’m usually not.
KCFleming. Sorry, Wrong again. You need to understand the phrase “necessary and sufficient” when it comes to asbestos, lead paint, smoking, etc. Asbestos is not merely correlated with lung cancer, it has been proven “necessary and sufficient”.
And the mechanism for diabetic neuropathy and retinopathy is very well understood.
You are pretty far out of your depth. Want to try again?
PhillyT
Serum glucose is only correlated with diabetic neuropathy and retinopathy.
Indeed, sufferers can get progressive disease even with good control of serum glucose.
And yet, still we advise diabetics to control their blood sugars.
Similarly, asbestos is merely correlated with certain lung cancers and mesothelioma, and yet, I can no longer manufacture or purchase it.
Fiver, wickepedia Is for SJW chumps.
Regardless, naming recessions and panics is meaningless.
The obvious question is….AND???…
What’s your point?
The answer is that nevertheless, the US saw massive growth in that interval, which was my point. Since human existence has “pretty much sucked” for tens of thousands of years before 1870, no one is surprised that capitalism didn’t fix our lot in those few decades.
But no one claimed they did.
Very weak sauce, Fiver.
Gotta love the good old days, which, according to a
snake oilprecious metals salesman, were between 1870 and 1914.Ahhh, good times:
First we had the Panic of 1873 and the Long Depression from Oct 1873 – Mar 1879;
Then we had the 1882–85 recession from Mar 1882 – May 1885;
Then the 1887–88 recession from Mar 1887 – April 1888;
The 1890–91 recession from July 1890 – May 1891;
The Panic of 1893 from Jan 1893 – June 1894;
The Panic of 1896 from Dec 1895 – June 1897;
Then the 1899–1900 recession from June 1899 – Dec 1900;
Then 1902–04 recession from Sep 1902 –Aug 1904;
The Panic of 1907 from May 1907 – June 1908; and finally
Panic of 1910–1911 from Jan 1910 – Jan 1912.
Not to put too fine a point on it, but that’s not a very impressive economic record.
The good old days did result in fabulously wealthy people becoming fantastically wealthy and all the glories of The Guilded Age, but, for most people it just pretty much sucked.
https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States
fiver – don’t depend on Wikipedia. You have a 50/50 chance of being correct. And it is the “Gilded Age” not “Guilded Age”
KCFleming does not seem to understand the distinction between correlation and causation. There is not one iota of evidence indicating that the gold standard and the industrial revolution are in any way related, except that they occurred at roughly the same time.
You also forgot to mention the number of bank runs, bank failures, and other busts that happened like clockwork during that period.
Very weak argument. Totally unsupported.
C-
phillyT – The industrial revolution was caused by free enterprise, of which gold and silver were a part of so you are incorrect in you assessment. It was restrained government interventions with low taxation and regulation that ushered in the industrial revolution. As the America, French, English and others revolutions shut down their aristocracies, people were then free to pursue their own futures with minimal government interventions. Sadly, we have fallen “prey” to greater and greater government interventions over our history where today everything is taxed and regulated. How’s that working for us? The stats are not good and they are getting worse because we have failed at stopping the oligarchs from taking control of government through greater and greater central planning.
This is not rocket science and millions of people understand it. The problem is “what can you do about it”? The good news is that central planning sooner or later defeats itself through excessive monetary printing.
Hint: Pseudonym ≠ Sock puppet.
Shall I google that for you as well?
You seem unaware what “float” refers to, which is currency untethered to gold or silver.
Geez Louise, are you getting these definitions from a cereal box?
And you do not seem to know what a sock puppet is, much less what “fiat” means.
Yeah, Fiver, the quote was from Forbes, that notable site for suckers.
http://www.forbes.com/sites/ralphbenko/2013/04/15/paul-krugman-v-david-stockman-the-great-debate-over-gold-continues/
And you are again wrong, because fiat currency specifically refers to money not backed by a physical commodity.
Fiat currencies and gold do of course get traded and fluctuate in value, but that makes them no more equivalent than a house and picture of a house.
Gold has historically maintained it purchasing power. Say “what” for Fiver’s and the rest of his cartel, for their crappy fiat? I believe the number is somewhere in the -97% +/- range. I remember a gallon of gas being in the low $0.20s.
Politicians can never stop themselves from running the printing press once they have found the switch. First you create a central bank, then you try to confiscate the gold, then you make fiat money legal tender, then you create an income tax to bring most of the money back to the treasury where you can then repeatedly dole it out to the government and military industrial contractors until such time as your society becomes in debt up to its eyeballs. Do tell, another government shutdown?
This debate has long been over, except that the sociopaths will never admit defeat. Not much further to go before it reaches its intrinsic value which they “always” have historically done. When is the only remaining question; “D day”, the day it dies? Coming sooner than we think to a theater near you.
The U.S. knows where all the ISIS oil wells are. The U.S. wants more terror from ISIS so that the next President will go to real War. THAT is something I learned on the cloud through the secure emails of the State Department.
If you are referring to the 2000-2012 interval, that’s likely true.
KCFleming (or Pogo or Grand Inquisitor or whichever sock-puppet has been humiliated away… yet),
All currency is “fiat.” Using the term as if you’ve said something profound is a marker of economic ignorance (or an attempt to dupe the economically ignorant). Also, metals float too. A lot. Been checking the price of your metal holdings since you fell for all those Glen Beck endorsements? How has that been working out for you?
I get problems with the Fed. It’s a highly exclusive group of bankers with inherent conflicts of interest in how it controls the money supply. But those problems are only exacerbated by transferring control of the money supply to an even more exclusive group with similar conflicts of interest.
Finally, is the Nathan Lewis you’re speaking of the semi-conductor expert and professor of chemistry at Cal Tech? It seems doubtful.
My guess is that he’s just some investment “adviser” selling precious metals to suckers.
Please, give us a link.
All currencies float against the value of gold, not the other way around. This is because gold maintains it purchasing power (value) as compared to the constantly depreciating values of the fiat currencies. The central bankers cannot help themselves either, from first expanding the money supply than contracting it to cause the various boom and bust cycles. It is the “value” of the USD that is really fluctuating. The sell assets during the boom and buy them back after the bust. Since the control the supply they can then know exactly when the time is best to buy or sell. It’s really not the complex. Why would any society grant such powers to a small cartel of some of the most wealthy families on the planet and why a central bank is the 5th platform of communism? FYI: The Communist manifesto was written to assist the oligarchs, providing them the propaganda, to foster in greater central powers. Boy did Marx really fool the workers or what.
You should always take Deep Throat’s from Watergate, advice and always follow the money. Almost every boom and cycle in our history has been caused by the central bankers. The politicians are only their puppets and why we are only given two final choices between evil 1 and evil 2, both of them from the cartel. I personally cannot tell which ones are lying to us the least.