What’s a Holy war without a few gold dinars to fight the evil Crusaders?
The gold standard has a group of new advocates — the Islamic State of Iraq and the Levant.
In its latest video released on Aug. 31, the group, which bestrides parts of Iraq and Syria, reveals a new currency that, it claims, will be the death knell for petro-dollar system and corruption on earth.
The video does not tell when the currency will become operational. But it will consist of gold dinars and silver dirhams designed to reflect the group’s ideology of re-establishing a global caliphate.
The five dinar coin depicts a map of the globe denoting the territory the ‘Ummah’ (Arabic word for nation) which includes Constantinople (Istanbul), Rome and America.
The one dirham silver coin has a spear and a shield symbolizing jihad (spiritual struggle/war).
The hour-long video titled ‘The Rise of the Khilafah and the Return of the Gold Dinar’ uses charts and sound bites to explain how the group is going to set up a new, interest-free financial system that will take the world back to the golden age of the Islamic empire.
The group’s plan to re-introduce gold coins may be to connect itself to the history of Islamic coinage when, according to the documentary, “the Arab world was at peak imperial strength.”
But is this quixotic idea going to work? Not likely.
For one thing, just like the rules governing the gold standard, the new dinar’s worth will be determined by the supply and demand for gold.
This means the currency will be subjected to price fluctuations. If supply of gold falls short, it could lead to recession.
Next is the question of credulity. Who will have trust in a currency circulated by a group which does not have any legitimacy?
Dollar has its ups and downs. But the world still trusts it and many currencies are pegged to the dollar. So the IS dream of ending the hegemony of the dollar is far-fetched.
Most Arab countries have come a long way. They are integrated well with the global financial markets and it is unlikely they will go back to the 7th century to recapture a glory.