When LaRouche meet's Mahathir it can only mean big trouble in little crawford.
Gold Dinar: An Economic and Strategic Response to Chaos
uploaded 16 Nov 2002
Gold Dinar: An Economic and Strategic
Response to Chaos
Mounting concern around the world that the Bush Administration is madly
threatening to drive the world into perpetual warfare, while doing nothing
to address the global financial-economic collapse, has led to the
introduction of a number of defensive measures by nations and groups of
nations acting in concert. One such measure is the proposal for creation of
a Gold Dinar, intended as a replacement for the dollar as the currency of
trade among nations. With a war against Iraq looming on the horizon, and
U.S. threats against Saudi Arabia escalating in the establishment's
institutions and publications, it is increasingly probable that the Gold
Dinar policy will be implemented in the near term, among certain Islamic
nations at first, and potentially expanding to include non-Islamic nations.
Malaysian Prime Minister Dr. Mahathir bin Mohamad hosted a two-day seminar
in Kuala Lumpur on Oct. 22-23, called "The Gold Dinar in Multilateral
Trade." This was the second major conference in Malaysia on this subject
involving representatives of members of the Organization of Islamic
Conference (OIC). The first conference, "Stable and Just Global Monetary
Systems," held in August, announced that the Gold Dinar would be
implemented as a bilateral arrangement between Malaysia and certain
unspecified partners by the middle of 2003, and extended to multilateral
agreements over time. At the more recent seminar, Bijan Latif, the head of
Iran's Central Bank, offered to support the establishment of a secretariat
in Malaysia to coordinate the development of the Gold Dinar policy. Dr.
Mahathir supported the idea.
Not a Gold Standard
In his speech to the October seminar, Dr. Mahathir made clear that the
proposal was not intended to establish a gold standard (as put forth by
fixated "gold bugs" around the world), but to return to the Bretton Woods
policy of a gold-reserve system, which was destroyed when President Richard
Nixon removed the dollar from a fixed peg to gold on Aug. 15, 1971,
allowing currencies to float at the whim of speculators. Dr. Mahathir
reminded the participants, that after World War II, "when the Allied
nations met in Bretton Woods to determine the principle for the rate of
exchange of international currencies in order to facilitate trade, they
decided to use gold as a standard." This worked until 1971, when "the
market claimed that it could determine the exchange rate through the demand
and supply of currencies freely traded in the market. But the profiteers
moved in and manipulated the value of the currencies so that there was
chaos in terms of exchange rates of currencies."
The Gold Dinar policy intends to return to the former, superior policy. Tan
Sri Nor Mohamed Yakcop, an economic adviser to Dr. Mahathir, explained the
system at the August conference as follows, using trade between Malaysia
and Saudi Arabia as an example: "Malaysian exporters will be paid in
ringgit [the Malaysian currency] by Bank Negara [the Malaysian National
Bank] on the due date of exports.... Similarly, the importers will pay Bank
Negara the ringgit equivalent of their imports. The Saudi Central Bank will
do the same for its exports and imports. Say, at the end of a three-month
cycle, the total exports from Malaysia to Saudi Arabia is 2 million Gold
Dinar, and the total exports of Saudi Arabia to Malaysia is 1.8 million
Gold Dinar. Therefore, for that particular three-month cycle, the Saudi
Central Bank will pay Bank Negara 0.2 million Gold Dinar. The actual
payment can be by way of the Saudis transferring 0.2 million ounces of gold
in its custodian's account in the Bank of England in London, to Bank
Negara's account with the same custodian. The important point to note here,
is that the relatively small amount of 0.2 million Gold Dinar is able to
support a total trade value of 3.8 million Gold Dinar."
The weakness of the system as it is now proposed is that gold, too, is
subject to speculation, especially if it is pegged to a currency such as
the dollar, which is heading for a plunge due to the collapse of the U.S.
banking system. Dr. Mahathir is aware of the problem: "Gold prices can also
be manipulated," he said, "but not as easily as the U.S. dollar or other
currencies.... Speculation and manipulation will not be as easy as when
local currency is valued against the U.S. dollar."
EIR Founding Editor Lyndon LaRouche has proposed that the necessary return
to a Bretton Woods system of fixed exchange rates must also peg currencies
to a "basket of commodities" rather than to gold, as a means of basing
currency valuations to the real economy, rather than tying the real economy
to a speculative entity (see Documentation). Although the Gold Dinar
proposal assigns a value to gold in terms of dollars, Dr. Mahathir
suggested in his speech that he is thinking along the lines of a "basket of
commodities": "The value of one Gold Dinar is one Gold Dinar, no matter
what the exchange rate of a currency is against the Gold Dinar. If the
value of goods and services is expressed in Gold Dinar, the value remains
the same, no matter which country is involved in the trade."
MORE ON
http://www.khilafah.com/home/category.php?DocumentID=5556&TagID=2
For the sad tale of the Bush Crime Families precise opposite of the Midas
touch See...
bushboys over at Mother jones.
