Is Paper Money Islamic?
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Paper money is used all over the world today and the Shariah rules, which were supposed to be applied on Gold and Silver money, are now applied on Paper Money in the Muslim World. The Paper money can be of two types; one that is issued against gold and the other, that is not issued against gold but has value, because of a government regulation or law-- known as the Fiat money. The US dollar or for that matter most of world currencies, are infect nothing but Fiat money. Fiat or against gold; paper money is un-Islamic and at least there should be no doubt regarding the Fiat paper money. As the awareness increased; Fatwas (Verdict from Islamic Scholars) started to come.The Granada Fatwa is mentioned here for reference.
THE FATWA
Therefore we declare a Fatwa in Granada, for all the Muslims, by which:
“After examining all the aspects of paper-money, in the Light of the Qur'an and the Sunna, we declare that the use of paper-money in any form of exchange is usury and is therefore haram. It is not permitted for the Muslim to accept or to give paper-money in a commercial transaction. It is an obligation on the Muslims to abandon usury and to introduce new media of exchange, or money, and the best way is to follow the sunna of the Messenger of Allah (Peace be upon him), by using gold and silver, or any other merchandise commonly accepted as a medium of exchange.” http://www.bogvaerker.dk/fatwa.html
SHAYKH ABDULQADIR AS-SUFI
In this regard the work of 'Shaykh Abdulqadir as-Sufi' is worth reading. Born with the name Ian Dallas, a Scottish national who is vigorous in recommending the Islamic economic system by using the gold and silver in daily lives and abandon the “less useful” paper currency.
Abdulqadir is an ex-playwright and actor who embraced Islam in 1960, in the history of his life, he had strived in fighting the capitalist system of the West and called for a return to the Islamic laws
"The current economic crisis, which began with the collapse of the American economy showed that now is the time that the Islamic financial system should be replacing the system of capitalism which had been in use for quite a long time," Shaykh Abdulqadir said confidently. Shaykh Abdulqadir has written hundreds of articles explaining this. http://theunjustmedia.com/Islamic%20Perspectives/April10/Shaykh%20Abdulqadir%20as-Sufi%20Replace%20Paper%20Currency%20With%20Gold%20Dinar.htm
HADITH REFERENCE
Bay al-Sarf is a contract of exchange of money for money.
The rules of bay al-sarf derive largely from the well known Hadith:
"Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt - like for like, equal for equal, payment being made on the spot. If the species differ, sell as you wish provided that payment is made on the spot".
(Hadith--- Muslim).
From the above Hadith, clear conclusion can be derived that the currency has to be something material—any commodity, if not Gold.
THE MIRACLE OF GOLD
It would be inappropriate to apply Interest/Usury/Riba rules on Paper Money due to inflation factor. The miracle of Gold is the fact that ‘one could have got the same amount of food grain with same amount of gold some 1400 years back as uptill recently’. Thus we see that gold suffered no devaluation in around 1400 years and in recent years it appreciated, making it the ideal currency.
But that is no coincidence, infect a very well planned Monetary Policy by The Lord. The scarcity or price of Gold is infect controlled by Almighty as iron, copper, zinc and other metals failed to maintain the same value. Iron became so cheap that all buildings today use tons of iron. But its a miracle in itself, that the value of Gold remained constant for centuries, in-spite of the astonishing advancement in mining and exploration technology.
The miracle was required as the Islamic System of Zakat (Tax) is based on the financial status of a person measured in terms of Gold. The nisab (amount) of money is the price of 85 grams of 999-type (pure) gold, on the day in which Zakat is paid. If the gold had become cheap like most other metals, the system of Zakat would have failed to deliver. A person may have had above 85 grams of gold, but not enough money to feed his children and also had to pay Zakat instead to receive it making the Islamic Zakat System to collapse completely.
Here one more thing is interesting that during the times of Prophet Mohammad (PBUH), there was no functional utility of gold unlike today when gold is used in the mother-boards/integrated circuits of almost all hi-tech electronic items. The reason is another miraculous quality of gold that it offers least resistance to electric current. Gold has now become the most important metal in the World and is no longer precious because of its scarcity. It has even turned into a very essential commodity as anybody who uses a cell phone, practically uses gold like any other commodity.
THE FUNDAMENTAL MISTAKE
The paper money is considered legitimate by almost all the Islamic Scholars and the interest (Riba) rules were applied on Paper Money. Strangely enough here in Pakistan; if we put our money in the Saving Account, we get 9% interest/profit while our money loses its value at the rate of around 18-20%(Inflation). Even if we take the so called ‘haram’ interest, we still lose around 10% per Annum in value of our money; and on top of that, pay another 2.5% Zakat--when Allah only wanted a mandatory 2.5% out of your savings that you kept intact for one year. Don't anyone notice; how much confusion is created here. Due to inflation, the paper money loses its purchasing power and in Pakistan, it loses more than half its value every five years. All this infect; even contributes to a negative impact over the minds of people about Islam-- a religion that is neither imperfect nor unfair.
Since nobody ever noticed the fundamental mistake therefore; more framework changes were made by the Islamic Scholars; for Shariah Laws to be applicable to existing Banking system. Naturally all such efforts, could have only created more confusion. The Meezan Bank was infect, the first Islamic Bank to open in Pakistan with Mufti Taqi Uthmani as the Chairman of its Shari'a Board. This bank offered all the same loans and same percentage of interest on savings but the names were changed to Islamic (interest = profit). Allah knows better; but it always bothered me that how can Islam be applied to the existing system by giving Islamic names to the old Schemes and interest structure? This to me was just an attempt to fool ourselves. This was amazing that the foreign banks followed the same and introduced a parallel banking system called 'Shariah Compliant'-- which off-course served as a marketing gimmick.
INCREASE IN GOLD PRICES-- INDICATED IN HADITH
Interestingly enough; there is evidence in Hadith (found in Bukhari and Muslim with a little difference) about Gold becoming more and more precious as we move closer to the end of times. It says that; Allah will make a mountain of gold to appear in the bed of River Euphrates and people will fight among each other over it such that, 99/100 people will die. Muslims are advised not to take any gold from it. The question is; why would anyone take part in such a bloody war unless gold must be extremely precious and expensive at that time. Following video over 'Islamictube' shows that Gold has already started to appear on the banks of River Euphrates (Wallah O Alam).
http://www.islamictube.com/watch/8374f22b1be5980afae5/Hadith-fulfilled---Gold-in-the-Euphrates
All financial holdings are loosing value against Gold. The price of Gold is moving up sharply since 2009 (Picture # 3), which is very unusual. By the way; JP Morgan predicted that the price of gold in the international market will rise from $1760 to $2500 an ounce by the end of 2011 this might be a bit late but very much possible.
The fall of dollar may become a reality as predicted by many economists all over the world. And if Pakistan had gold and silver currency, we could have been in a secure financial position as the fall of dollar would have devastating impact on countries like ours. No nation likes to be insecure or totally dependent, but that is how may be the Illuminati planned to control the world. The one Eye of Anti Christ on the first One Dollar Note is still a mystery.
A QUICK REVIEW OF BENEFITS
- Gold suffered no devaluation against the Food grains in more than 1400 years, making it the ideal currency.
- Use of Gold and Silver coins is Sunnah (something practised by the Prophet-- PBUH)
- No person, group, country or group of countries; can cancel or alter the value of Gold and Silver Coins, whose value is controlled by the market forces--unlike the paper money that is governed by the Monetary Policy of country/group of countries.
- Gold and Silver coins cannot be over produced, like the case of overprinting of paper money, which causes a number of problems like; inflation/devaluation of currency or of even a false sense of wealth.
- Use of gold and silver may also curb corruption of leaders in some third world countries, who steal and then print more money to meet the country’s expenses, leaving common man unaware of the corruption that is going on-- until its too late.
- Having gold and silver coins; both for public use currency as well as national reserves, provides more security to countries.
