Bretton Woods Agreement | They made haram what Allah has make halal

There has been talk of returning to the fixed exchange rate system established at Bretton Woods, back in 1944. Some call it returning to the gold standard. Bretton Woods was about as far from a gold standard as you can get. It failed miserably because of it. Any attempt to return to it will fail again.

The gold standard was abandoned in 1913 when the Federal Reserve System replaced it. The essence of the gold standard is that individuals use gold (and other metals) as money. The amount of money in circulation is limited by the amount of gold produced per year. In 1913, the Fed was put in charge of the supply of money. The result has been the continuous depreciation of the dollar for almost a hundred years.

In 1944, when the nations of the world convened to establish the Bretton Woods system, Americans were legally prohibited from owning gold. You can not have a gold standard while prohibiting the use of gold as money! Bretton Woods was a system where our competitors could convert their surplus dollars into gold, but the American citizen could not.

Worse, it established rules that allowed our competitors to devalue their currencies against the dollar up to 10%, if they ran chronic surpluses. It was called the "adjustable peg" system. Since most nations want to run surpluses by limiting imports and subsidizing exports, they ended up with huge trade surpluses. This led to inflation in their countries which made their goods more expensive and therefore, less desirable. They then devalued their currencies to make their goods cheap again. The result was hundreds of devaluations over the years of the Bretton Woods system.

First you would have chronic surpluses build up. Then you had "hot money" flights of capital out of some nations and into others, as speculators attacked nation's currencies. Then you would have vehement denials by the government that they would ever devalue their currency. And finally, you would have the inevitable midnight devaluation, usually on a Friday night, and the whole process would begin over again. No, Bretton Woods was not a gold standard. To revisit it would result in the same farce of the past, and gold would end up getting the blame again.

The gold standard requires free markets, free trade, and governments that abide by the rules they establish. When this is the case, money holds its value. Many claim that we had panics and recessions under the gold standard, and that the system failed to deal with them. This is true. But the gold standard was never intended to deal with economic fluctuations. All the gold standard claims to do, and did for centuries, is preserve the value of money.

Those that blame it in advance for causing economic and monetary problems, know nothing about the nature of the gold standard. They blame a sound currency for the government interventions into the economy that actually led to bank runs, recessions, and crises, during those years. At the root of all of these crises, you will find the heavy hand of government. The gold standard remained neutral during these times. It was neither a cause or an effect of economic matters. It simply resulted in sound money.

The critics claim that by creating the Federal Reserve System we avoid such problems as booms and busts. Yet, it only took the Fed 16 years to create the "roaring 20's", and the Great Depression, which put the smaller recessions under the gold standard to shame. It increased money and decreased money at rates no gold standard could possibly achieve. And yet, it is the gold standard that is said to cause booms and busts.

Under the gold standard you could buy approximately the same amount of goods at the end of the century as you could at the beginning of the century. Under the Federal Reserve System the dollar buys three cents of what a dollar bought a century earlier. Critics claim we have too little gold to be used as money, and that it will restrict growth. Yet, through the 18th and 19th centuries we experienced an Industrial Revolution that brought the world the greatest amount of growth ever known to man. The gold standard and prosperity does not require more money to exist; it requires stable money to exist.

Those that understand the virtues of a gold standard and the vices of the Federal Reserve System are demanding we return to the gold standard. I am not one of them -- at least not today. The gold standard requires fiscal discipline to exist. It requires free trade where nations do not demand the right to forever export more than they import. It demands the end of protectionism -- an end to subsidies and tariffs, quotas and capital controls. It requires free markets and free men and the protection of property rights.

When we have all of these conditions met, a gold standard, when implemented will thrive and survive as it did for centuries before. But not until then. The idea that we as a world, could graft a monetary system of integrity onto a system of irresponsible trade practices and disastrous fiscal and monetary policies is insane. In such a world a system of freely floating exchange rates is the only system that will work. Fixed exchange rates can only lead to trade imbalances, speculative flows of hot money and constant devaluations as it did before. It is an invitation to chaos.

The best we can hope for is a move toward saner monetary policies, a return to fiscal responsibility, an opening up of markets, and the reduction of protectionism. Bretton Woods died a well deserved death. Let us not make the mistake of reviving it again.

by Paul Nathan

Breetton Woods Agreement | They made haram what Allah has make halal

There has been talk of returning to the fixed exchange rate system established at Bretton Woods, back in 1944. Some call it returning to the gold standard. Bretton Woods was about as far from a gold standard as you can get. It failed miserably because of it. Any attempt to return to it will fail again.

The gold standard was abandoned in 1913 when the Federal Reserve System replaced it. The essence of the gold standard is that individuals use gold (and other metals) as money. The amount of money in circulation is limited by the amount of gold produced per year. In 1913, the Fed was put in charge of the supply of money. The result has been the continuous depreciation of the dollar for almost a hundred years.

In 1944, when the nations of the world convened to establish the Bretton Woods system, Americans were legally prohibited from owning gold. You can not have a gold standard while prohibiting the use of gold as money! Bretton Woods was a system where our competitors could convert their surplus dollars into gold, but the American citizen could not.

Worse, it established rules that allowed our competitors to devalue their currencies against the dollar up to 10%, if they ran chronic surpluses. It was called the "adjustable peg" system. Since most nations want to run surpluses by limiting imports and subsidizing exports, they ended up with huge trade surpluses. This led to inflation in their countries which made their goods more expensive and therefore, less desirable. They then devalued their currencies to make their goods cheap again. The result was hundreds of devaluations over the years of the Bretton Woods system.

First you would have chronic surpluses build up. Then you had "hot money" flights of capital out of some nations and into others, as speculators attacked nation's currencies. Then you would have vehement denials by the government that they would ever devalue their currency. And finally, you would have the inevitable midnight devaluation, usually on a Friday night, and the whole process would begin over again. No, Bretton Woods was not a gold standard. To revisit it would result in the same farce of the past, and gold would end up getting the blame again.

The gold standard requires free markets, free trade, and governments that abide by the rules they establish. When this is the case, money holds its value. Many claim that we had panics and recessions under the gold standard, and that the system failed to deal with them. This is true. But the gold standard was never intended to deal with economic fluctuations. All the gold standard claims to do, and did for centuries, is preserve the value of money.

Those that blame it in advance for causing economic and monetary problems, know nothing about the nature of the gold standard. They blame a sound currency for the government interventions into the economy that actually led to bank runs, recessions, and crises, during those years. At the root of all of these crises, you will find the heavy hand of government. The gold standard remained neutral during these times. It was neither a cause or an effect of economic matters. It simply resulted in sound money.

The critics claim that by creating the Federal Reserve System we avoid such problems as booms and busts. Yet, it only took the Fed 16 years to create the "roaring 20's", and the Great Depression, which put the smaller recessions under the gold standard to shame. It increased money and decreased money at rates no gold standard could possibly achieve. And yet, it is the gold standard that is said to cause booms and busts.

Under the gold standard you could buy approximately the same amount of goods at the end of the century as you could at the beginning of the century. Under the Federal Reserve System the dollar buys three cents of what a dollar bought a century earlier. Critics claim we have too little gold to be used as money, and that it will restrict growth. Yet, through the 18th and 19th centuries we experienced an Industrial Revolution that brought the world the greatest amount of growth ever known to man. The gold standard and prosperity does not require more money to exist; it requires stable money to exist.

Those that understand the virtues of a gold standard and the vices of the Federal Reserve System are demanding we return to the gold standard. I am not one of them -- at least not today. The gold standard requires fiscal discipline to exist. It requires free trade where nations do not demand the right to forever export more than they import. It demands the end of protectionism -- an end to subsidies and tariffs, quotas and capital controls. It requires free markets and free men and the protection of property rights.

When we have all of these conditions met, a gold standard, when implemented will thrive and survive as it did for centuries before. But not until then. The idea that we as a world, could graft a monetary system of integrity onto a system of irresponsible trade practices and disastrous fiscal and monetary policies is insane. In such a world a system of freely floating exchange rates is the only system that will work. Fixed exchange rates can only lead to trade imbalances, speculative flows of hot money and constant devaluations as it did before. It is an invitation to chaos.

The best we can hope for is a move toward saner monetary policies, a return to fiscal responsibility, an opening up of markets, and the reduction of protectionism. Bretton Woods died a well deserved death. Let us not make the mistake of reviving it again.

by Paul Nathan

Breetton Woods Agreement | They make haram what Allah has make halal

There has been talk of returning to the fixed exchange rate system established at Bretton Woods, back in 1944. Some call it returning to the gold standard. Bretton Woods was about as far from a gold standard as you can get. It failed miserably because of it. Any attempt to return to it will fail again.

The gold standard was abandoned in 1913 when the Federal Reserve System replaced it. The essence of the gold standard is that individuals use gold (and other metals) as money. The amount of money in circulation is limited by the amount of gold produced per year. In 1913, the Fed was put in charge of the supply of money. The result has been the continuous depreciation of the dollar for almost a hundred years.

In 1944, when the nations of the world convened to establish the Bretton Woods system, Americans were legally prohibited from owning gold. You can not have a gold standard while prohibiting the use of gold as money! Bretton Woods was a system where our competitors could convert their surplus dollars into gold, but the American citizen could not.

Worse, it established rules that allowed our competitors to devalue their currencies against the dollar up to 10%, if they ran chronic surpluses. It was called the "adjustable peg" system. Since most nations want to run surpluses by limiting imports and subsidizing exports, they ended up with huge trade surpluses. This led to inflation in their countries which made their goods more expensive and therefore, less desirable. They then devalued their currencies to make their goods cheap again. The result was hundreds of devaluations over the years of the Bretton Woods system.

First you would have chronic surpluses build up. Then you had "hot money" flights of capital out of some nations and into others, as speculators attacked nation's currencies. Then you would have vehement denials by the government that they would ever devalue their currency. And finally, you would have the inevitable midnight devaluation, usually on a Friday night, and the whole process would begin over again. No, Bretton Woods was not a gold standard. To revisit it would result in the same farce of the past, and gold would end up getting the blame again.

The gold standard requires free markets, free trade, and governments that abide by the rules they establish. When this is the case, money holds its value. Many claim that we had panics and recessions under the gold standard, and that the system failed to deal with them. This is true. But the gold standard was never intended to deal with economic fluctuations. All the gold standard claims to do, and did for centuries, is preserve the value of money.

Those that blame it in advance for causing economic and monetary problems, know nothing about the nature of the gold standard. They blame a sound currency for the government interventions into the economy that actually led to bank runs, recessions, and crises, during those years. At the root of all of these crises, you will find the heavy hand of government. The gold standard remained neutral during these times. It was neither a cause or an effect of economic matters. It simply resulted in sound money.

The critics claim that by creating the Federal Reserve System we avoid such problems as booms and busts. Yet, it only took the Fed 16 years to create the "roaring 20's", and the Great Depression, which put the smaller recessions under the gold standard to shame. It increased money and decreased money at rates no gold standard could possibly achieve. And yet, it is the gold standard that is said to cause booms and busts.

Under the gold standard you could buy approximately the same amount of goods at the end of the century as you could at the beginning of the century. Under the Federal Reserve System the dollar buys three cents of what a dollar bought a century earlier. Critics claim we have too little gold to be used as money, and that it will restrict growth. Yet, through the 18th and 19th centuries we experienced an Industrial Revolution that brought the world the greatest amount of growth ever known to man. The gold standard and prosperity does not require more money to exist; it requires stable money to exist.

Those that understand the virtues of a gold standard and the vices of the Federal Reserve System are demanding we return to the gold standard. I am not one of them -- at least not today. The gold standard requires fiscal discipline to exist. It requires free trade where nations do not demand the right to forever export more than they import. It demands the end of protectionism -- an end to subsidies and tariffs, quotas and capital controls. It requires free markets and free men and the protection of property rights.

When we have all of these conditions met, a gold standard, when implemented will thrive and survive as it did for centuries before. But not until then. The idea that we as a world, could graft a monetary system of integrity onto a system of irresponsible trade practices and disastrous fiscal and monetary policies is insane. In such a world a system of freely floating exchange rates is the only system that will work. Fixed exchange rates can only lead to trade imbalances, speculative flows of hot money and constant devaluations as it did before. It is an invitation to chaos.

The best we can hope for is a move toward saner monetary policies, a return to fiscal responsibility, an opening up of markets, and the reduction of protectionism. Bretton Woods died a well deserved death. Let us not make the mistake of reviving it again.

by Paul Nathan

Tentang Duit Kertas Lagi

I saw that u do not regard paper money as being haraam, but please respond to the following, in detail: Moulana Imran Hosein (who studied under Moulana Fazlur Rahman Ansari) says the following: 1. Modern paper money is a branch of riba. He gives the following reasons: A. Modern paper money is “fiat” money i.e. it is not redeemable for any precious metal (gold/silver) or other commodity. Therefore, the value assigned to it, e.g. R100, is not convertible into actual value – it can only be used to buy some other good or stored as useless paper. B. The international system of exchange rates allows certain individuals/companies/countries to devalue a currency within minutes i.e. speculatory attack on a currency. Also, exchange rates are set arbitrarily. This means that the value assigned to a paper note is constantly changing, and wealth can be created or destroyed merely by virtue of exchange rates. This facilitates the transfer of wealth from poor to rich, without any effort on the part of the rich, and paper money is a mechanism of riba. C. Paper money has no intrinsic value – value is arbitrarily assigned (unlike gold, which has historical, universal value).

Firstly, you use the word ‘proof’ in your question, yet there was no proof ever mentioned by the claimant that paper money is Haraam. By proof we mean Shar’ee proofs, not simply disadvantages. To make something Haraam one has to have Dalaa-il (sound shar’ee proofs).

We accept that paper money is not the Islamically ideal means of exchange. It definitely has its elements of deception, and has been easily manipulated by western powers to subjugate economically weaker nations. The ideal would be to deal in gold and silver, which have real and intrinsic value. Therefore it would be the duty of a true Islamic State to revert to gold and silver as the standard means of exchange, which could then be represented by paper money.

However, it does not follow that under the present circumstances it is Haraam to use paper money. Islam is a practical way of life, and the Fuqahaa (jurists) of Islam have laid down guidelines by means of which we can practice on this Deen in every age. They have explained that if any commodity becomes the means of exchange in any society, and this is the norm, then value will be attributed to that commodity based on the norm of that society. A simple example would be that in some societies in the past shells were used as the standard means of exchange. Although shells in themselves do not hold intrinsic value, since the society attributed value to it, such items may be used as a means of exchange.

The fact that paper money has been manipulated by certain powers, and they have designed their system of Riba around it, does not render paper money Haraam. It is the transaction of Riba and the act of manipulation that are Haraam, and not the currency itself. If tomorrow they design their schemes around metals, are we then going to say that dealing in metals is Haraam. Certainly not! In fact, one who is aware of the detail rules of Riba would be aware that gold and silver are more susceptible to the contract of Riba than currencies are.

On a practical level, one can understand that it would be virtually impossible to do without paper money. Now that this so called Maulana considers paper money as Haraam, one wonders what he would do if, for example, he had to go for Hajj. Does he take trunks full of coins along because paper money is Haraam. One has to be realistic.

For details on the development of paper money, and the Shar’ee rulings of its usage, refer to “Al Qadhaayah al fiqhiyyah al muaasirah” by Mufti Taqi Uthmaani Saheb. This is an excellent work on the subject.

and Allah Ta'ala Knows Best

Moulana Imraan Vawda
FATWA DEPT.

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Kebijakan orang barat terserlah. They created money with their own system around it. A system where we can rip off others 'legally'. And which we accepted that it is supreme.

Hubungan Malaysia - Israel | Read paragraph 9

MUSLIM COUNTRIES' TRADE WITH ISRAEL -

BUILDING COMMON INTERESTS FOR A BETTER

FUTURE

By Emanuel Shahaf

Ever since Israel signed the Oslo agreements with the Palestinians 1993, most

Muslim countries have overcome their traditional reluctance to trade with Israel

despite the ongoing conflict. To no small degree, the commercial relations that have

been established contribute to improving relations between Israel and the Muslim

world and thus will also help, in the final analysis, resolve the issue of Palestine.

If it is with Saudi Arabia, Bahrain, Qatar, the UAE, Kuwait, Tunisia, Morocco,

Mauritania or Lebanon, if it is a few million Dollars with Syria, or 2 Billion USD with

Turkey, trade between Muslim countries and Israel is increasing every year.

Following is a list of the bigger partners, in addition to the Palestinians themselves

who did almost 2 Billion Dollars worth of business with Israel in 2004.

The most formidable example of flourishing trade between Israel and a Muslim

country is that of Turkey. It is probably no coincidence that commercial relations

with the first Muslim country to recognize Israel (in 1949) are the best and most

highly developed of all the relationships with the Muslim world. These close, mutually

profitable and balanced relations (total civilian trade in 2005 was close to two Billion

USD in 2005, shared pretty much evenly) include Israeli participation in large civilian

infrastructure projects in Turkey, Turkish involvement in construction projects in

Israel, and considerable Israeli investments in Turkish agriculture and industry. The

commercial ties are accompanied by well established political and military ties

(including, over the years, more than 1 Billion USD worth of Israeli defense

contracts) which have stood the test of some serious crises, including tough Israeli

actions against the Palestinians (which resulted in Turkish protests) and the rise to

power in Ankara of the Islamic AKP party of Prime Minister Erdogan which at times,

is highly critical of Israel. The relationship has reached a degree of maturity and

mutual understanding that permits each country to voice its views and criticisms

without stepping over the lines. Israel is careful not to make a topic out of Turkey's

continued, if weakening disavowal of the Armenian Genocide, a charged issue in a

Jewish nation sensitive to holocaust denials and hosting an Armenian minority, while

Turkey will not go beyond issuing, occasionally, symbolic notes of protest over

Israel's episodic mishandling of the Palestinian issue.

It is clear that the successful and mutually beneficial relations between Israel and

Turkey have encouraged some other Muslim countries in the neighborhood, notably

Egypt and Jordan, to take note and follow the same track.

The economies of Egypt and Jordan, two other Muslim countries with an embassy in

Tel-Aviv, have abundant and low cost manpower and make an excellent match for

Israel's manufacturing industries which seek to increase production and expand their

markets. International encouragement, notably strong US engagement, has helped

establish joint Israeli-Jordanian and Israeli-Egyptian Qualified Industrial Zones

(QIZs) whose products have tax-free status in the US. The QIZ idea is simple: As a

long as Jordanian QIZ products have at least 8% Israeli content (for Egyptian QIZ

products it has to be at least 11.7% ), the products can be exported tax and customs

free to the US. With Jordan, the QIZ agreement was signed in 1997 and the 11 QIZs

that have been established since then have helped catapult Jordanian exports to the

US from a paltry 15 Million USD in 1997 to 1 Billion USD (!) in 2004.

The agreement with Egypt was signed only in 2004 but the 10 QIZs that were

established there have already increased their exports to the US between 1st and

2nd quarter 2005 by 50% (QIZ exports by now amount to about half of Egypt's

exports to the US) and the trend continues. Not only have the QIZs hugely increased

exports to the US but they have also increased Jordan's and Egypt's bilateral trade

with Israel to reasonable numbers - around 250 Million USD with the former and

close to 200 Million USD with the latter for 2005.

The success of the QIZ concept in fostering bilateral trade and exports to the US has

encouraged Israel and Jordan to approach Canada and the European Union for

similar arrangements that are likely to be approved in the near future.

Malaysia, while maintaining a cold shoulder in its foreign policy and continuing to refrain from establishing diplomatic relations, nevertheless decided a long time ago that it is in its best interest to give businessmen a relatively free reign. Malaysian exports to Israel increased by almost 40% between 2003 and 2004 and 3rd quarter 2005 results show another 25% improvement over last year's results so that by years end they will top 200 Million Dollars. Imports from Israel will remain close to last year's 203 Million USD. More than 400 Million Dollars in combined direct trade isn't bad when considering Malaysia's frosty disposition towards the Jewish state. Let's not forget that there is also a fair amount of indirect trade going on - not all of Israel's more than 340 Million Dollars exports to Singapore stay there.

Indonesia, despite its avowed policy of diplomatic abstinence, has a long history of

doing business with Israel while not owning up to it publicly to prevent flak from

Arab countries (who meanwhile do thriving business with Israel themselves) and, off

course, to avoid trouble with it's own Islamist opposition movements.

All legal impediments to direct bilateral trade with Israel were removed by the Wahid

administration in 2001 and not surprisingly, exports to Israel have increased

substantially, by almost 60% between 2003 and 2004 and by another 25% by end of

3rd quarter 2005. The 2005 sum total of exports to Israel will come to around 170

Million USD while imports from Israel, which increased by 12% between 2003 and

2004 and have since then already increased by more than 25% (correct to end 3rd

quarter 2005), will nevertheless be only a very modest 13 Million USD, indicative of

the considerable difficulties Israeli exporters continue to face in Indonesia. Again, the

indirect trade via Singapore or via US subsidiaries of Israeli companies probably adds

some tens of Millions USD to the tally but the numbers are low, much too low when

considering the enormous potential.

Muslim countries that have opened up to Israel, if only with hesitation, have quickly

discovered the considerable synergies imparted by trade relations with the Jewish

state notably an often astonishing improvement in trade with the US. Those that

have established embassies or trade representations have gained the most and at a

fast pace as well.

A sustained effort to improve trade relations between Israel and Muslim countries will

not only improve the economies of the countries involved but also contribute to

better mutual understanding and help lower the considerable enmity that is still, not

infrequently part of the public discourse. Giving these developments a public profile

is in the best interest of all concerned.

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Jangan terkejut kalau sape-sape perintah lepas ni, Malaysia akan ada hubungan diplomatik secara langsung terus dengan Israel. Masing-masing dah boleh buat passport baru dah pastu gi melancong ke Tel Aviv, orang Israel pulak boleh melancong ke Malaysia lepak2 kat KLCC. without written permission..