:salam2:
As per my knowledge, Dinnar was known as “Gold” and Dirhams as “Silver”, which are over taken by paper currency. So my question is about use of paper currency money (any) whether it is permissible to use or not.
Any other information related to DD and PC will be appreciated.
Re: Dinnar & Dirhams vs Paper Currency
Any reason why would paper money NOT be permissible?
Re: Dinnar & Dirhams vs Paper Currency
Paper money originally started off as a way of saving the inconvenience of having to physically haul around your gold. For example, let's say if you were buying a property for 500 gold coins. Instead of having to physically carry your gold from the bank where you kept it to the seller, you would give it to the bank in exchange for a note from the bank (a "bank note") that would promise to pay the bearer of the note 500 gold coins. The person who sold you the house could either take the note to the bank and collect 500 gold coins....or he could trade it to another merchant in exchange for 500 gold worth of items. That merchant could either take it to the bank and collect the coins.... or use the note for trade again.
Eventually in the 20th century, most countries decided that rather than use gold as the basis of their economy, which was thus impacted the by ability of the country to collect gold, they would switch to "fiat money" where each country could decide by legislation how much money they had. This was mostly driven that market speculation was wrecking national economies (investors would buy up all the gold they could in the country because the price was going up, but that then limited how much money was available in the country. As gold more and more gold was being hoarded, it meant that less and less money was available as money to governments and companies to spend on salaries and projects and providing services, which made countries get poorer and poorer).
At one point before the USA went off the gold standard this problem was so bad in 1933 the US Government made it illegal for anyone other than the government to own gold coins - because so many people were hoarding the coins that not enough money was available for the government to spend.
Re: Dinnar & Dirhams vs Paper Currency
Peace MC,
But paper currency of those most countries are not redeemable to Gold/silver. It is like gold/silver given-away for buying/exchange of 'just paper', but doesn't allow or allow at higher cost.
In simple words: "Isn't like Riba"?
Re: Dinnar & Dirhams vs Paper Currency
Peace MC,
But paper currency of those most countries are not redeemable to Gold/silver. It is like gold/silver given-away for buying/exchange of 'just paper', but doesn't allow or allow at higher cost.
In simple words: "Isn't like Riba"?
Gold inherently has as much utility as paper, except that it looks good.
Value of something is equal to what society decides. Most of the stuff now doesn't have physical form. Most of money exchange takes place electronically now anyways. Please let's not get into the debate of whether exchanging bits and bytes of " money " electronically is permissible or not, since it wasn't a medium of exchange 1400 years ago.
If anything, Arab countries should grow a spine and sell oil in their own currencies, instead of dollar (non-Muslim currency, if you will).
Re: Dinnar & Dirhams vs Paper Currency
Peace Kakaballi,
In September 1971, USA was legally obliged in accordance with the Breton Woods Accord, to redeem for gold (at $35) per ounce of gold). USA did not had that much gold to redeem all the dollars which had printed and put in circulation both domestically and overseas, still he kept US dollar strength because of his imperial control over oil exporting client-states.
Point is that making a currency "paper currency" higher by fraudulent and then sell to others by charging extra amount isn't kind of "Riba"?
Re: Dinnar & Dirhams vs Paper Currency
Gold inherently has as much utility as paper, except that it looks good.
Value of something is equal to what society decides. Most of the stuff now doesn't have physical form. Most of money exchange takes place electronically now anyways. Please let's not get into the debate of whether exchanging bits and bytes of " money " electronically is permissible or not, since it wasn't a medium of exchange 1400 years ago.
If anything, Arab countries should grow a spine and sell oil in their own currencies, instead of dollar (non-Muslim currency, if you will).
And how did that turn out for Saddam or Gaddafi?
Re: Dinnar & Dirhams vs Paper Currency
...... Point is that making a currency "paper currency" higher by fraudulent and then sell to others by charging extra amount isn't kind of "Riba"?
Again, price of something is what the buyer and seller decide to exchange things at.
If the world is willing to buy US dollars at a given rate, then that's the value. I don't see where riba comes in here.
Why should gold or silver have any value? Why dirham and dinar could not be any other metal or even pieces of wood? It was just that gold and silver were relatively rare and society decides they were valuable. It would have been inconvenient to carry around large chunks of wood to pay for stuff. If gold and silver were used for convenience as currency, why not paa sort currency?
A paper dollar is just a promise by US government to give the holder right to buy things worth one dollar. Most of the financial assets now (money, stocks, bonds, etc ) are based on promise of future value and do not have physical form. The value depends on the financial health of the person making that promise. The financial health of US government is great enough for people to put their faith in it, hence keeping it's value higher.
People like Oria Maqbool and Zaid Hamid like to mislead us on this, without presenting an alternative system which can be equally efficient.
Re: Dinnar & Dirhams vs Paper Currency
I missed the replies here.
The issue isn't one of riba, since Riba is defined by hadith as a loan on which a profit is made.
Besides which, with gold standard currencies, the government chooses the value of gold by setting how much of the local currency you get.
For example, in 1934, the US government declared that the value of the US Dollar was increasing from $20 per gold ounce to $35 per gold ounce, making the government 75% wealthier immediately.
It therefore makes no difference whether you are gold standard or paper-based. The only thing that matters is whether your economy can actually reflect the amount of money that the government creates.
Re: Dinnar & Dirhams vs Paper Currency
So Saudi Arabia is probably about to react to the low price of oil by declaring that it's currency will be weaker vs the dollar (for which it sells its oil). This will give Saudi Arabia more Riyals per barrel of oil.
Even if Saudi Arabia was selling oil for gold, and linked it currency to gold, it would be doing the same thing by just declaring that every piece of gold is worth more riyals than before.