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Why don’t we just stop printing money?

Why don’t we just stop printing money?
By Syed Hasan Shirazi
Short Answer: This can only be done if we reintroduce gold and silver as the standard for monetary system. However, this will cause US Dollar to lose its status as the world reserve currency, and hence is not favored by the USA and other Capitalist countries who are reaping the benefits of fiat currency, at the expense of rest of the World.

Long Answer: Currency was based on gold and silver, since recorded history up to WW1. Ancient Greek, Persia & Rome used the gold and silver currency. Since, Islamic currency is the Gold Dinar (4.25g of gold) and the Silver Dirham (2.975g of Silver)[1], hence, all the Islamic Caliphates (Rashidun, Umayyad, Abbasid, and Ottomans) used gold and silver based currencies. This means that currency was fully backed by gold or silver. Thus the exchange rate for each currency was fixed in terms of gold and silver. For example, Ottoman Lira was equivalent to 6.61519 grams of pure gold, while US Dollar was equivalent to 23.22 fine grains of gold. British Pound Sterling, which was the de-facto reserve currency prior to WW1, had a fixed exchange rate of £4.25 per fine ounce of gold. This exchange rate had remained fixed since 1717, when Isaac Newton, the Master of Mint, had standardized it.

Similarly, all currencies of the world had fixed exchange rate with gold and silver, and were in fact fully backed by gold and silver reserves. Thus a country would only issue the amount of currency for which it had equivalent reserves in gold and silver. This meant that no country could “print” money at will, as is the practice nowadays.

Gold standard was abandoned during WW1 because the warring nations (Russia, France, Austria & Germany) did not have enough gold to fund their war efforts, so they resorted to abandoning the gold standard to be able to print money to fund the war. Due to excessive printing of money there was massive inflation, and when the war ended it became impossible for these countries to go back to the gold standard. Britain also abandoned gold standard in 1931 because after WW1, it was not able to restore the supremacy of the Pound-Sterling as the unchallenged reserve currency. Now USA was in a position to dictate the financial policy of the world as US Dollar had emerged as the strongest currency of the World. Thus, many countries fixed their exchange rates in terms of US Dollar, while USD had an exchange rate of $35 per ounce of gold. However, in 1933 USA abandoned redemption of Dollars into gold (for individuals and firms) thereby abandoning gold as a currency, and making USD de-facto reserve currency of the world. However, Central Banks of other countries could still exchange their dollar reserves for gold.

In 1971, under pressure from Vietnam War, and continued French conversion of its dollar reserves to gold under Charles de Gaulle (1959–1969), which was undermining the Dollar, USA abandoned international convertibility of the US Dollar to gold. In 1976 USA officially changed the definition of dollar by removing all references to gold, thereby completely abandoning the gold standard.

After abandoning of gold and silver standard, all the countries can freely print money as much as they want, however, this is the cause of inflation, financial speculation and unstable exchange rates all over the world.

Since the mid 1970s, US has enjoyed monopoly over international monetary system due to its military, economic and political dominance over rest of the world. Hence, US Dollar is the global currency for purchase of oil (a fact notoriously termed as Petrodollars). Therefore, all the countries have to maintain USD reserves to buy oil from open market. This is the reason that USA has been able to maintain its hold over global monetary system, as it has only to print dollars to buy oil (and other items), while all other countries have to earn each and every dollar to pay for the oil they want to buy. So why would America want to revert back to gold and silver standard? One can see how much the USD has depreciated with respect to gold, in the following table:

main-qimg-43e22e1d63d9409edde07e35a86e9057-pjlq

It is evident from the above table that prior to WW1 there was virtually ZERO inflation, however, after completely abandoning the gold standard in 1971, USD has lost its value many folds, which shows how wealth has been drained from rest of the world by USA. Every dollar earned by rest of the world and kept as reserve, loses its value with time due to inflation. This is the real face of neo-colonialism implemented by USA, which has replaced pre-WW2 direct colonialism of Britain and France.

All throughout the history, international gold and silver standard facilitated the flow of goods and capital among countries and promoted international price stability over the long run. However, during the last century US has exerted its dominance through the introduction of fiat currency, whereby other countries have to keep dollar reserves for international trade, while USD has no intrinsic value like gold and silver. The strength of gold and silver as primary currency of the world is evident from the fact that all major world powers still keep substantial amount of gold in their reserves:

main-qimg-a2cb2a81e02c93cced4b49b51f92512d-lq

World can only be freed from the clutches of Capitalism and American hegemony, by reintroduction of gold and silver standards. This will end the USD dominance, and exchange rate will be stabilized based on the actual value of money, not its speculative value.

Based on problems faced due to fiat currencies, there have been calls for re-establishing the gold and silver standard. Dr. Mahathir Muhammad was a strong proponent of Islamic Dinar and Dirham to replace Dollar in international trade. However, for this to be implemented successfully, Islamic countries have to unite and follow the policy of self-sufficiency. As other countries like China and Russia are trying to free themselves from the clutches of “Petrodollars”, it is now the time for them to re-establish gold and silver standards as the basis of their currencies too.

Footnotes

[1] Syed Hasan Shirazi's answer to In the time of Mohammad (PBUH) and later, what was the currency policy?
 

jamahir

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I am ready for uniting with socialists. I am starting a political party Green Peoples Movement in Pakistan. Its principles are Islam, Socialism and Environmental/Agricultural Activism.

Salutes, comrade ! And I like your flag though it can be simplified to look like : a green-background Libyan Jamahiriya style, a red star near the top left and the leaf in the middle as usual but in black. This is much better I will say. :)

You should speak to the Pakistani Socialist group of the wonderful "Leather Jacket Girl" Arooj Aurangzeb and her intelligent comrades. And for agriculture you can consult @ps3linux who had been building a vertical farm.

Laal Salaam.

LOL.
World is moving to cryptocurrency which makes current fiat money look like solid gold.

All these crypto-shipto things work within the same NATO Capitalist environment, they are nothing new, so they are useless.

On the plus side, you can rent a one-bedroom apartment for your All-Pakistan party conventions.

Why are you denigrating his ideas and efforts ? He is starting something. What are you ?
 

WotTen

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All these crypto-shipto things work within the same NATO Capitalist environment, they are nothing new, so they are useless.

NATO?
Some of the biggest crypto mining operations are in China.
The whole entire point of crypto is to evade government control.

Why are you denigrating his ideas and efforts ? He is starting something. What are you ?

Sorry, just having fun. I always vote for the Green Party candidate in Australia even though they have no chance of winning.
 

chinasun

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In the initial stage of national industrial development, a large amount of start-up capital is needed. Europe depended on colonies and slaves. China, Japan, South Korea and other East Asian countries rely on land reform. In the early stage, the state collected taxes on agriculture in order to obtain funds for industrial development, while agricultural subsidies and tax exemption were implemented in the later stage. In order to increase the overall income of farmers and increase their purchasing power. Everyone in the rural family has land and can bear the short-term losses caused by unemployment.The land reform has greatly reduced the welfare burden on the country. These funds are used for industrialization and the development of education and science and technology. Industrialization has also retained scientific and technological talents, so that the national investment in training scientific and technological talents will not be too wasteful.

Men and women are like the two hands of a country. It is difficult for one hand to compete with both hands.
 
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jamahir

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NATO?
Some of the biggest crypto mining operations are in China.
The whole entire point of crypto is to evade government control.

1. OK I should have said Capitalism. NATO is just the biggest enabler and protector of Capitalism.

2. But at the end the ecosystem that crypto is used in is a Capitalist ecosystem. It's not like you by using cryto magically get surrounded by a leftist welfare-based society. :)

Sorry, just having fun.

:tup:

I always vote for the Green Party candidate in Australia even though they have no chance of winning.

I don't know about the Australian Green Party so you should tell me but the German one is phull sapport saar for NATO assistance to the Ukrainian Nazis against Russia. I think Green Peace is also an agent of Capitalism.
 
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WotTen

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1. OK I should have said Capitalism. NATO is just the biggest enabler and protector of Capitalism.

2. But at the end the ecosystem that crypto is used in is a Capitalist ecosystem. It's not like you by using cryto magically get surrounded by a leftist welfare-based society. :)

The ideology of crypto is to give power to the people and free them from The Man. You should be supporting crypto!

P.S. On second thought, you want the government to control everything, so maybe crypto is the anti-thesis of your ideology. Very confusing. LOL.
 

jamahir

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The ideology of crypto is to give power to the people and free them from The Man. You should be supporting crypto!

P.S. On second thought, you want the government to control everything, so maybe crypto is the anti-thesis of your ideology. Very confusing. LOL.

No, I support people's governance. Please read this post of mine from yesterday in the section that starts with "1. True Communism aka progressive direct democracy".

Crypto continues traditional Capitalism. For a truly liberating socio-economic system please read my post# 7 on this current thread.
 

WotTen

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all the non-basic goods and services in the society are potentially equally available to everyone.

Why should I bother getting out of bed and going to work if I will have the same living standard as the bum who sleeps all day?
 

jamahir

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Why should I bother getting out of bed and going to work if I will have the same living standard as the bum who sleeps all day?

There won't be any bum who sleeps all day for no reason at all. Every citizen will contribute physically or intellectually or both. "From each according to capacity, to each according to need". Work will not be mindless or harmful like some "fintech" company or some needless software company or a personal vehicles showroom and so on but something beneficial to society whether it be your sculpture studio or a vertical farm or your turn in the neighborhood's security patrol or doing the rounds to feed the neighborhood cats or maintaining the scientifically-arranged sewage system and so on. A scientific and harmonious society.
 

Thinker3

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Why don’t we just stop printing money?
By Syed Hasan Shirazi
Short Answer: This can only be done if we reintroduce gold and silver as the standard for monetary system. However, this will cause US Dollar to lose its status as the world reserve currency, and hence is not favored by the USA and other Capitalist countries who are reaping the benefits of fiat currency, at the expense of rest of the World.

Long Answer: Currency was based on gold and silver, since recorded history up to WW1. Ancient Greek, Persia & Rome used the gold and silver currency. Since, Islamic currency is the Gold Dinar (4.25g of gold) and the Silver Dirham (2.975g of Silver)[1], hence, all the Islamic Caliphates (Rashidun, Umayyad, Abbasid, and Ottomans) used gold and silver based currencies. This means that currency was fully backed by gold or silver. Thus the exchange rate for each currency was fixed in terms of gold and silver. For example, Ottoman Lira was equivalent to 6.61519 grams of pure gold, while US Dollar was equivalent to 23.22 fine grains of gold. British Pound Sterling, which was the de-facto reserve currency prior to WW1, had a fixed exchange rate of £4.25 per fine ounce of gold. This exchange rate had remained fixed since 1717, when Isaac Newton, the Master of Mint, had standardized it.

Similarly, all currencies of the world had fixed exchange rate with gold and silver, and were in fact fully backed by gold and silver reserves. Thus a country would only issue the amount of currency for which it had equivalent reserves in gold and silver. This meant that no country could “print” money at will, as is the practice nowadays.

Gold standard was abandoned during WW1 because the warring nations (Russia, France, Austria & Germany) did not have enough gold to fund their war efforts, so they resorted to abandoning the gold standard to be able to print money to fund the war. Due to excessive printing of money there was massive inflation, and when the war ended it became impossible for these countries to go back to the gold standard. Britain also abandoned gold standard in 1931 because after WW1, it was not able to restore the supremacy of the Pound-Sterling as the unchallenged reserve currency. Now USA was in a position to dictate the financial policy of the world as US Dollar had emerged as the strongest currency of the World. Thus, many countries fixed their exchange rates in terms of US Dollar, while USD had an exchange rate of $35 per ounce of gold. However, in 1933 USA abandoned redemption of Dollars into gold (for individuals and firms) thereby abandoning gold as a currency, and making USD de-facto reserve currency of the world. However, Central Banks of other countries could still exchange their dollar reserves for gold.

In 1971, under pressure from Vietnam War, and continued French conversion of its dollar reserves to gold under Charles de Gaulle (1959–1969), which was undermining the Dollar, USA abandoned international convertibility of the US Dollar to gold. In 1976 USA officially changed the definition of dollar by removing all references to gold, thereby completely abandoning the gold standard.

After abandoning of gold and silver standard, all the countries can freely print money as much as they want, however, this is the cause of inflation, financial speculation and unstable exchange rates all over the world.

Since the mid 1970s, US has enjoyed monopoly over international monetary system due to its military, economic and political dominance over rest of the world. Hence, US Dollar is the global currency for purchase of oil (a fact notoriously termed as Petrodollars). Therefore, all the countries have to maintain USD reserves to buy oil from open market. This is the reason that USA has been able to maintain its hold over global monetary system, as it has only to print dollars to buy oil (and other items), while all other countries have to earn each and every dollar to pay for the oil they want to buy. So why would America want to revert back to gold and silver standard? One can see how much the USD has depreciated with respect to gold, in the following table:

main-qimg-43e22e1d63d9409edde07e35a86e9057-pjlq

It is evident from the above table that prior to WW1 there was virtually ZERO inflation, however, after completely abandoning the gold standard in 1971, USD has lost its value many folds, which shows how wealth has been drained from rest of the world by USA. Every dollar earned by rest of the world and kept as reserve, loses its value with time due to inflation. This is the real face of neo-colonialism implemented by USA, which has replaced pre-WW2 direct colonialism of Britain and France.

All throughout the history, international gold and silver standard facilitated the flow of goods and capital among countries and promoted international price stability over the long run. However, during the last century US has exerted its dominance through the introduction of fiat currency, whereby other countries have to keep dollar reserves for international trade, while USD has no intrinsic value like gold and silver. The strength of gold and silver as primary currency of the world is evident from the fact that all major world powers still keep substantial amount of gold in their reserves:

main-qimg-a2cb2a81e02c93cced4b49b51f92512d-lq

World can only be freed from the clutches of Capitalism and American hegemony, by reintroduction of gold and silver standards. This will end the USD dominance, and exchange rate will be stabilized based on the actual value of money, not its speculative value.

Based on problems faced due to fiat currencies, there have been calls for re-establishing the gold and silver standard. Dr. Mahathir Muhammad was a strong proponent of Islamic Dinar and Dirham to replace Dollar in international trade. However, for this to be implemented successfully, Islamic countries have to unite and follow the policy of self-sufficiency. As other countries like China and Russia are trying to free themselves from the clutches of “Petrodollars”, it is now the time for them to re-establish gold and silver standards as the basis of their currencies too.

Footnotes

[1] Syed Hasan Shirazi's answer to In the time of Mohammad (PBUH) and later, what was the currency policy?
Excellent post.
 

WotTen

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There won't be any bum who sleeps all day for no reason at all. Every citizen will contribute physically or intellectually or both. "From each according to capacity, to each according to need". Work will not be mindless or harmful like some "fintech" company or some needless software company or a personal vehicles showroom and so on but something beneficial to society whether it be your sculpture studio or a vertical farm or your turn in the neighborhood's security patrol or doing the rounds to feed the neighborhood cats or maintaining the scientifically-arranged sewage system and so on. A scientific and harmonious society.

This is wishful thinking and it goes against human nature. In any society, there are crap jobs that need to be done, and there are fun jobs that everyone would rather do.

In your society, who gets to clean the toilets and work in sewers? who gets to write symphonies? is the state going to tell people which job they should do? on what basis?
 

jamahir

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This is wishful thinking and it goes against human nature. In any society, there are crap jobs that need to be done, and there are fun jobs that everyone would rather do.

In your society, who gets to clean the toilets and work in sewers? who gets to write symphonies? is the state going to tell people which job they should do? on what basis?

It is not wishful thinking but how it should be done. Do you mean to say the sociopathic and anti-human nature of the unthinking few or many should allowed to impose itself on the rest of humanity ? You are being callous in saying that the 3000-year-old caste system in India that relegated a few to clean the gutters while the priests wouldn't touch a broom and the gutter cleaners being politically, socially and socio-economically oppressed and poor not getting their higher due compensation despite doing a work that is actually useful to society but the priests not being useful to society yet they being properous socio-economically and powerful socially and politically, this caste system is against the law of natural justice, rationality and balance of Nature and must be eliminated with extreme prejudice.

Please watch this Indian discussion called Shut Up Ya Kunal ( that includes the lovely and brilliant Shehla ) at 22:07 mins when young Indian Dalit leader Jignesh Mevani ( who was recently arrested by police from a faraway BJP-ruled state for speaking against Modi, Godse and RSS ) speaks of a 2009 book that expounds "philosophy" by our Dear Leader Narendra bhai Modi that says that the lower caste Shudra and Dalit gutter cleaners clean the gutters because they find "Aadhyatmik anand" ( Spiritual happiness ). Jignesh then rightly invites Modi ji to also get down into the gutters and experience that spiritual bliss. Jignesh asks, and I ask you too, what prevented governments from bringing in machinery to clean the drains and the gutters ? There are so many gutter cleaners in India who drowned by drowning, gas poisoning and snake bite. Why are these artificial deaths necessary ? A company in Kerala ( South India ) called Genrobotics developed a machine called Bandicoot that is computerized and cleans manholes. What is the problem in the Indian government, and Pakistani, in obtaining such machines in the thousands and cleaning the gutters in a modern, scientific way instead of forcing an artificially-created, socially and socio-economically oppressed class to spend their lives in cleaning the shit that you, WotTen, also generate ? Since you generate the shit too you should also participate in the cleaning of it. There is no reason why you WotTen cannot go to your airship factory for five days and then the sixth day be your society responsibility day that through rotational duty assignement can include maintainance of the sewage system using machines ? Don't you clean the shit and the urine of your baby and your elderly ill health father ? If there why not in the larger society you live surrounded by ? You are a Muslim, you are supposed to be better than supporting the maintainance of anti-human, irrational and unscientific class systems whether social or socio-economic or political. Such removals are among the desires of Communism.
 
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WotTen

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It is not wishful thinking but how it should be done. Do you mean to say the sociopathic and anti-human nature of the unthinking few or many should allowed to impose itself on the rest of humanity ? You are being callous in saying that the 3000-year-old caste system in India that relegated a few to clean the gutters while the priests wouldn't touch a broom and the gutter cleaners being politically, socially and socio-economically oppressed and poor not getting their higher due compensation despite doing a work that is actually useful to society but the priests not being useful to society yet they being properous socio-economically and powerful socially and politically, this caste system is against the law of natural justice, rationality and balance of Nature and must be eliminated with extreme prejudice.

Please watch this Indian discussion called Shut Up Ya Kunal ( that includes the lovely and brilliant Shehla ) at 22:07 mins when young Indian Dalit leader Jignesh Mevani ( who was recently arrested by police from a faraway BJP-ruled state for speaking against Modi, Godse and RSS ) speaks of a 2009 book that expounds "philosophy" by our Dear Leader Narendra bhai Modi that says that the lower caste Shudra and Dalit gutter cleaners clean the gutters because they find "Aadhyatmik anand" ( Spiritual happiness ). Jignesh then rightly invites Modi ji to also get down into the gutters and experience that spiritual bliss. Jignesh asks, and I ask you too, what prevented governments from bringing in machinery to clean the drains and the gutters ? There are so many gutter cleaners in India who drowned by drowning, gas poisoning and snake bite. Why are these artificial deaths necessary ? A company in Kerala ( South India ) called Genrobotics developed a machine called Bandicoot that is computerized and cleans manholes. What is the problem in the Indian government, and Pakistani, in obtaining such machines in the thousands and cleaning the gutters in a modern, scientific way instead of forcing an artificially-created, socially and socio-economically oppressed class to spend their lives in cleaning the shit that you, WotTen, also generate ? Since you generate the shit too you should also participate in the cleaning of it. There is no reason why you WotTen cannot go to your airship factory for five days and then the sixth day be your society responsibility day that through rotational duty assignement can include maintainance of the sewage system using machines ? Don't you clean the shit and the urine of your baby and your elderly ill health father ? If there why not in the larger society you live surrounded by ? You are a Muslim, you are supposed to be better than supporting the maintainance of anti-human, irrational and unscientific class systems whether social or socio-economic or political. Such removals are among the desires of Communism.

I don't have time to watch the video but you seem to be saying two things:
1. machines will do all the dirty work so humans can become philosophers and artists.
2. everyone will take turns doing the dirty work.

Item #1 is science fiction for now. There are lots and lots of crap jobs that need to be done and, until we have machines to do them, they will need to be done by humans. It is also uneconomical in most parts of the world where human labor is much cheaper than expensive to maintain machines.

Item #2 is wishful thinking if you think the top members of the ruling elite and their families will do the same dirty work and have the same living standards as the poorest person in the country. It hasn't happened in communist/socialist countries until now and it will never happen. As I mentioned before, the elite in Cuba, North Korea and elsewhere live a far better life than the slum dwellers. If you believe otherwise, you are living in denial.
 

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