Dinar & Dirham - Part 2

Part 2 Dinar Kelantan : Dah Silap Kira ‘Bang

By Syed Akbar Ali

“Tiada jaminan Kerajaan Negeri akan membeli kembali Dinar dan Dirham sekiranya pembeli ingin menjualnya. Pembeli hanya boleh menyimpan Dinar dan Dirham di Ar Rahn milik Perbadanan Menteri Besar Kelantan (PMBK) dan juga menukar atau membeli barangan di kedai tertentu.”

Here is some info about Kelantan Golden Trade Sdn Bhd (KGTSB), the company that is going to profit from all the gold “dinars” that will be issued in Kelantan.

“Kelantan Golden Trade Sdn Bhd (KGTSB) ditubuhkan pada 23 OKT 08 dan dimiliki sepenuhnya oleh PMBK. Tujuan penubuhan KGTSB adalah untuk menjalankan aktiviti jual beli Dinar dan Dirham di dalam dan luar Negara. “

Nama Ahli Lembaga Pengarah/Pegawai

Dato’ HUSAM bin MUSA

MOHD SABRI bin ABDULLAH

Nik MAHANI binti MOHAMAD

MUSTAFA bin SALLEH

AZIZAH bt DAUD

Wan ROSELAWATI binti Wan HASSAN

Nama Pemegang Syer

ABDUL ARIFFAHMI bin AB RAHMAN

Jumlah Syer : 1

MOHD SABRI bin ABDULLAH

Jumlah Syer : 1

Perbadanan Menteri Besar Kelantan (PMBK)

Jumlah Syer : 1,350,000

Ariffahmi is Nik Aziz’s Son In Law. Why does Nik Aziz son in law hold one share in this gold dinar company? Isnt there a conflict of interest? This guy has been embroiled in controversy already in Kelantan.

The Kelantan folks also say that the state civil servants may be paid in gold dinar. This is just a ‘menyusahkan manusia’ situation.

Lets say a fellow gets paid RM1500 worth in gold dinar. That is just two or three gold coins. He must convert it to Ringgit before he can use the money. Ini kerja 2 x 5. Menyusahkan manusia saja.

But here is the catch. Where does he go to change the gold coin into money? And will he get full value? Jewellery shops buy old gold from the public. But they discount between 20% to 30% from the market price. In other words if your gold is worth RM100, you may only get RM70 – RM80 when you sell the gold back to the jewellery shop. (This is because they in turn have to sell it back to the wholesalers / factories who also take a cut).

Some banks sell and buy back gold coins / gold wafers at market price (meaning you get full market price). But that is usually for 99.999 pure gold. Not for 916 or Kelantan’s “917” gold.

So if the Kelantan government pays its civil servants in gold coin, can they get full value when they exchange the coin for Ringgits? Will they suffer any price discounts? Or suffer “service charges”, “management fees” etc?

They say they have signed up 600 shops who have agreed to accept the dinar in Kelantan. In reality the number who have signed up is about 230 or less. Here is something else I received in the email:

“Tiada jaminan Kerajaan Negeri akan membeli kembali Dinar dan Dirham sekiranya pembeli ingin menjualnya. Pembeli hanya boleh menyimpan Dinar dan Dirham di Ar Rahn milik Perbadanan Menteri Besar Kelantan (PMBK) dan juga menukar atau membeli barangan di kedai tertentu.”

So even the Kelantan state government has not given any guarantee that they will buy back their dinars and dirhams. Pasal apa pula? You ask the people to buy the Gold Dinar but there is no guarantee that the Kelantan government will buy back the dinar and the dirham.

So if you pay the Civil Servants their salary in gold coin, where are they going to exchange the gold coin for full cash value? Nik Aziz sendiri tak mahu beli balik?

The human race has evolved quite advanced monetary, finance and exchange tools from a long time ago. For example the Persian Achaemenid empire of 500 BC (from the Indus to the Aegean sea, including economically developed countries like Egypt, Syria, Phoenicia, Babylonia and Asia Minor). As in many ancient empires, their economies consisted of the royal sector of the king's treasury, the religious temples and the private sector.

They were all quite developed with monetary systems, pawn shops, systems of exchange and basic instruments of credit and trade.

Pawnbroking and pawn tickets were present 3000 years ago in China and also known to the Greeks, Romans and even earlier. Pawnbroking also had given birth to pawn tickets and also the buying and selling of pawn tickets. Pawn tickets became “negotiable instruments” meaning if you are in a hurry, you can “sell” your pawn ticket at a discount to someone. These were early types of fiat money.

In the ancient days the king’s treasury (khazanah) was also the king’s grainery. Egyptian hieroglyphics mention the kings treasury and “gifts to the temple priests” going back to the Pharaohs. During the time of Akhenatun the Monotheist Pharaoh there was a tussle between the king’s treasury and the temple priests for grain.

When the kings were able and good, people could even deposit their excess grain with the treasury and get a receipt from the treasury showing how much grain they had deposited. Then they could “cash out” on the receipts anywhere in the kings realm.

If you could not claim the grain by yourself or you were in a hurry, you could sell your “receipt” to someone else for a discounted price. Just like selling pawn tickets today. You get ready cash or payment in kind. The receipts became a form of “fiat money”.

Those who did not have grain deposit receipts could trade other goods they may have had to get grain at the king’s treasury. So all these systems existed from a long time ago.

Some one called Adam Smith said “The practice of drawing and redrawing is so well known to all men of business that it may perhaps be thought unnecessary to give an account of it.”

Here is an economic and financial system that is alluded to in the Quran. This involves the story of Nabi Yusuf or Prophet Joseph in Surah 12.

Surah 12:47 – 48 "He said, "What you cultivate during the next seven years, when the time of harvest comes, leave the grains in their spikes, except for what you eat. "After that, seven years of drought will come, which will consume most of what you (the king) stored for them (the people)”

Joseph advised the king that Egypt would have seven years of good harvest followed by seven years of drought. The solution was the king’s treasury should store half the peoples’ harvest (wheat, barley, rice etc) in the first seven years to tide the people over for the second seven years. The king would actually help store the country’s gross domestic product.

Joseph’s prediction of the drought seems to have happened. The Quran tells us that the people went to the kings treasury to get grain. The Quran tells us that Joseph became expert in managing the king’s treasury (equivalent to the finance ministry or khazanah). He had asked to be appointed in charge of the kings treasury.

Surah 12:55 He said, "Make me the treasurer, for I am experienced in this area and knowledgeable."

When Joseph says “Make me the treasurer, for I am experienced in this area and knowledgeable” it tells us that there was already an established system from which Joseph had gained experience and had become expert. This was the monetary and trade system, including running the king’s treasury. This was nothing new at that time. Egypt at that time was an advanced economy.

Then in the story of Joseph, his brothers who came to the treasury were embroiled in the matter of the “king’s cup” - which sounds like a measuring cup (al kaylu 12:59 and 12:63).

Surah 12:72 They said, "We lost the king's cup. Anyone who returns it will receive an extra camel-load; I personally guarantee this.

The kings had developed systems to weigh and measure as well.

There is no gold or silver mentioned in the story of Joseph. They definitely must have had gold and silver but the all important king’s treasury reflected the products of Egypt, mainly grain, fruits and wine.

And from this treasury they managed a sophisticated system of returning grain (and wealth) back to the people, on whose behalf the king had stored the grain for seven years (Surah 12:48 above). Not unlike our EPF today.

This was most definitely a fiat system where people could make claims on the king’s treasury. More importantly what I am pointing out is that the system was based on the Gross Domestic Product of Egypt (wheat, barley, rice, wine).

Surah 12:49 "After that, a year will come that brings relief for the people, and they will, once again, press wine."

The system of fiat, whereby paper or some instrument represented claims on assets or wealth existed from a long time ago. Joseph was a prophet of Allah. However there is nothing “religious” or “Islamic” about the king’s treasury where Joseph worked or the system that he managed. It was just a system that worked. Joseph was able to preserve the people’s wealth and feed them too.

Here is a verse in the Quran that speaks of gold and silver:

[Surah 9:34] O you who believe, many religious leaders and preachers take the people's money illicitly, and repel from the path of GOD. Those who hoard the gold and silver, and do not spend them in the cause of GOD, promise them a painful retribution.

So there will be the religious leaders who will cheat people of their money so that they (the religious leaders) can hoard gold and silver. Is it a coincidence that in Kelantan, Nik Aziz who is now selling gold and silver coins, is also a religious leader?

(I run a gold jewellery business but may I be excused from this verse? Firstly I am certainly not religious. And then we don’t hoard gold – we try to sell it off, as fast as possible. If we don’t sell our gold quickly, we cannot eat. Gold is not edible, or even chewable)

There is even more wisdom in this verse. “Hoarding gold and silver” is the same as ‘cornering the market’. The Jews already control gold, diamonds (please check up Harry Oppenheimer, Anaconda etc), copper, silver and most metals in the world. They do this all the time.

If Kelantan and other like minded “countries” change their currency to gold and silver, wont it be easier for them to be manipulated by the Jewish, Zionist and Wall Street conspiracies (which abound in the minds of the religious folks) who have already hoarded the gold and silver (through their control of the world’s mineral resources?)

Do think about this angle too. With so many Jewish conspiracies around, how do we know this whole idea of gold dinars and silver dirhams is not another Jewish or Zionist conspiracy – to control the wealth of the ‘islamic’ countries?

The Kelantan dinar has nothing Islamic about it, especially the gold dinar. It is just coinage. Even the name ‘dinar’ is a ciplak from the Roman denier and the Christian dinero – all of which predated the so called ‘Islamic dinar.’

During the time of Joseph (Nabi Yusuf), the ‘treasury’ functioned on the Gross Domestic Product or GDP of Egypt which consisted of wheat, barley etc – which are perishable commodities. A fiat system was successfully managed based on perishable commodities. No gold or silver involved.

What does that mean? Currency can be based on the “domestic product” found in any economy. If you have wheat, your currency can be based on wheat. If your economy has palm oil and rubber, your currency can be based on that too. If your economy has manufactured goods, your currency can be based on that. You base your currency on your “gross domestic product”.

(Err may I ask a simple question? What if your economy does not have gold? For example the Inuit Eskimos in Greenland. How are they going to trade or develop financial systems?)

This is why the United States Dollar, Japanese Yen, Chinese Yuan, Malaysian Ringgit etc still work. No matter what we say or what are the complaints, the United States remains the worlds largest and most technologically advanced economy. Their biggest asset is of course their freedom (from many things including freedom from overbearing religion and from conformity). And the country is stable, predictable and will most likely be there for the next 50 years or more. This awesomeness still gives strength to the US Dollar.

If there are weaknesses in the US monetary system, it is not due to the philosophy behind fiat money but it is due to greedy people, the thieves and the corrupt. It is the exception rather than the rule.

No matter what system we have (dinar, fiat money, Islamic, Buddhist etc) there will always be the manipulators and the conmen. Lets not miss this little point. You don’t throw the baby out with the bathwater just because there are some crooks who abuse the system. Get the crooks, not the system.

And switching to gold and silver does not guarantee there will not be anymore inflation, profiteering (riba) or financial oppression. Which dunggu said that?

However it is true that some systems are more easily abused than others. The gold dinar in Kelantan is definitely not a good system. People cannot cash out the gold easily. The Kelantan gold coins can be easily counterfeited, because they have a very high value yet are easy to mint. Little sophistication is involved.

There is nothing Islamic about Kelantan’s gold coins or silver dirhams. This entire gold dinar issue in Kelantan is just political bullshit by PIS. First they tell the unthinking supporters that their dinar is Islamic. (It is not. The dinar comes from the Romans and Christians).

Then the PIS will say they “memperjuangkan ajaran agama.” They also want to provoke Bank Negara and the Federal Government into taking action against their dinar. Then they can accuse the Government of being zalim, secular and other such rubbish. Why? So that the kaum bebal will cast their votes for them. Its as simple as that. It is just a political gimmick. Which is also maybe why Bank Negara will not be taking action against them.

Last Updated (Monday, 30 August 2010 17:09)