A Gold Standard is NOT the Solution - An Interesting take

[AsifAmeer]

Ur mixing Natural science with Social science. Lemme give u an example

We are taught this Supply/Demand curve

A simple chart showing an independent supply and demard curve, both dictating a price. Theek?

Now, if you have traded commodities, you'd say "what a load of crap!" coz there's no mention of
1. Expectation
2. Price Momentum
3. Demand becomes a function of supply & vise versa via expectation & price momentum.

Let me give you a real life example. If you know gasoline prices are being raised, you will fill up ur car tank even when you dont need gas right away, creating expectational demand which further feeds into the price momentum.

This is Econ 101!. I wont even go into Gaussian methods of calculating market volatility (beta) on which you have the Options pricing models, the CAPM, and Portfolio Management theory is based!

Its not like I want to break away the shackles. I just dont see the shackles... I only see apologists...

Innovativeness has to be beyond certain accepted norm of base standard. This has nothing to do with the shackles of education or current system. Many financial innovativeness has happened in the past working within this system.

If you want to break the shackles, then you have to be Agha Waqar who broke the shackles of Newton's second law of thermodynamics?

 

[AsifAmeer]

good stuff mate! good stuff!

Yaar who can help me translate this stuff in urdu?
http://blogs.thenews.com.pk/blogs/2012/08/an-open-letter-to-ulema/

Al Jazeera ran a programme on this I watched, also includes Islamic prespective and other possible alternatives... Very interesting topic looking forward to a lively deabte here

Here is a rather weak piece on Salon about the Gold standard in the American context:
http://www.salon.com/2012/08/31/the_gold_standard_delusion/

 

[Temojin]

[MENTION=24375]AsifAmeer[/MENTION]

Islam doesn't emphasize upon trading in only gold or silver. Even in Quran e Majeed, incidents are presented as a reference to something as the reference of gold and silver was for a stable currency and at that time, nothing was more stable than gold and silver itself. It is stable even today yet in those times, government used to take care of some issues like distribution of dirham o dinar from bait ul maal to even the poorest or even the older nations used to conquer other nations and everybody had their fare share of what they had after the battles and the war as every family somehow or other participated in that battle. Then the trend of extreme concentration of wealth started as nations expanded and then only the military or the governmental officers got hold of the most of what was obtained through battles and wars so it all started like it is going today and people suffered from the worst of conditions even then. Islam revived the concept of a stable currency and even barter (which surely wasn't in terms of gold or silver but the actual quality and worth of the product as judged by the experts, they surely needed a standard but it could be a stable rupee instead of a gold dinar). As if only metals were the only available option as a stable currency, then we should use platinum or even uranium or plutonium as even more stable currencies. It is too large a subject to be discussed and that was the reason I had asked if we should discuss it here or at the facebook. I will write a bit more but as the electricity is about to be switched off, I will write after you reply or like to reply here after tiring sessions of an endless discussion here :)

 

[AsifAmeer]

Gold worked well TILL the industrial revolution. Then exponential productivity causes spiraling deflation. Here lemme explain this. And this is something I struggled too for a long time before absorbing the argument.

Suppose a farmer produces 100 tons of wheat for a village on an island every season. That 100 ton of wheat is enough for the whole village which the farmer sells for 1 kg of gold. Theek?

Now suppose the Island gets caterpillar machinery for farming. and now the farmer is producing 800 tons of wheat during the year. Lekin he will not be able to sell 800 tons of wheat for 8 kgs of Gold because (suppose) there's only 10 kg of gold on the Island to begin with. The "marginal revenue" continues to decline for the extra wheat. The farmer would argue that he is being penalized for his new productive approach. He would argue that now with more wheat, they can grow corn, barley and other crops which inturn can be use to feed more cattle and provide a better protein diet for the Islanders. But due to the deflating wheat prices, he cant continue to buy fuel/seeds/water to produce the extra wheat.

This is where Gold or a Static money supply failed the humans. There is where Productivity became a double edged sword...

Temo, the more questions you ask me, the better I will understand where I fall short in explaining matters.

Now a bit of philosophical matters. Did you know "a stable currency" is only a perception? coz imagine that rent prices have stayed stable for 10 years but prices of chicken meat went up my 200%. Or Food prices stayed the same for 10 years but medicine prices went up by 500%... You cant define "stable". Its a quality in the human perception. We humans are slaves to our own perception of reality...

@AsifAmeer

Islam doesn't emphasize upon trading in only gold or silver. Even in Quran e Majeed, incidents are presented as a reference to something as the reference of gold and silver was for a stable currency and at that time, nothing was more stable than gold and silver itself. It is stable even today yet in those times, government used to take care of some issues like distribution of dirham o dinar from bait ul maal to even the poorest or even the older nations used to conquer other nations and everybody had their fare share of what they had after the battles and the war as every family somehow or other participated in that battle. Then the trend of extreme concentration of wealth started as nations expanded and then only the military or the governmental officers got hold of the most of what was obtained through battles and wars so it all started like it is going today and people suffered from the worst of conditions even then. Islam revived the concept of a stable currency and even barter (which surely wasn't in terms of gold or silver but the actual quality and worth of the product as judged by the experts, they surely needed a standard but it could be a stable rupee instead of a gold dinar). As if only metals were the only available option as a stable currency, then we should use platinum or even uranium or plutonium as even more stable currencies. It is too large a subject to be discussed and that was the reason I had asked if we should discuss it here or at the facebook. I will write a bit more but as the electricity is about to be switched off, I will write after you reply or like to reply here after tiring sessions of an endless discussion here :)

 

[Heart]

The english translation of Arabic word for "Deen is not Religion. Religion is perhaps, as you said, just a mere framework of morality. Deen on the other hand is a complete way of life which includes "Economics". People are free to think beyond "Deen" but then they should rethink if they have "Submitted to the Will of Allah" more commonly known as "Islam"

Also when we realize that we are not able to comprehend the absolute truth, why not accept what the creator says. There are just too many variables for us to take account of. We will miss out the effects of many. Nasem Taleb and George Soros may not be believers in God, hence they may have said what they have said. For a Believer, what they say is in contradiction to the belief.



QUOTE=AsifAmeer;1006269]You have to think beyond religion here. I was convinced that Gold Standard IS the answer after studying it and finally reading a hit of it in Surah Kahf when a "righteous man" saved his wealth for his soon-to-be orphan kids in gold and silver. Then I studied the Industrial revolution, the great depression and why the modern money theory was developed. Phir andaza huwa tha the human race is so much more complicated. Religion is a framework of morality. If you expect more out of religion, it will have diminishing returns till you starts to play havoc socially and economically.

Mein bohot soch ker ye likh raha houn. The basic needs you speak of, does not include electricity or ultrasound or a gasoline engine. nor a cellphone or internet. Its a self-defeating argument.

Economics is not a problem of religion. Economics is a problem of HUMAN Interaction and perception. And the problem is by nature we humans are not capable to comprehend absolute truth. Read up The Black Swan by Nassim Taleb and Alchemy of Finance by George Soros.

There is alot more to learn and I know I will die with a thirst for knowledge. I just hope if God's pleased with me, that Heaven is a big Library! lol.
@Temojin[/QUOTE]

 

[AsifAmeer]

Do this, Read Taleb then we'll talk. Coz here you are talking as a Born Muslim. For you your religion is right.. like every believer. For me, I wasnt a born muslim but a convert. To truly appreciate the beauty of Islam, you have to step out of the dogma 1st.

Ever wondered why the Kalima starts with "LA Ilaha" ?

Its best I do not involve myself in religious affairs as its too philosophical to be discussed on an internet forum.

The english translation of Arabic word for "Deen is not Religion. Religion is perhaps, as you said, just a mere framework of morality. Deen on the other hand is a complete way of life which includes "Economics". People are free to think beyond "Deen" but then they should rethink if they have "Submitted to the Will of Allah" more commonly known as "Islam"

Also when we realize that we are not able to comprehend the absolute truth, why not accept what the creator says. There are just too many variables for us to take account of. We will miss out the effects of many. Nasem Taleb and George Soros may not be believers in God, hence they may have said what they have said. For a Believer, what they say is in contradiction to the belief.



QUOTE=AsifAmeer;1006269]You have to think beyond religion here. I was convinced that Gold Standard IS the answer after studying it and finally reading a hit of it in Surah Kahf when a "righteous man" saved his wealth for his soon-to-be orphan kids in gold and silver. Then I studied the Industrial revolution, the great depression and why the modern money theory was developed. Phir andaza huwa tha the human race is so much more complicated. Religion is a framework of morality. If you expect more out of religion, it will have diminishing returns till you starts to play havoc socially and economically.

Mein bohot soch ker ye likh raha houn. The basic needs you speak of, does not include electricity or ultrasound or a gasoline engine. nor a cellphone or internet. Its a self-defeating argument.

Economics is not a problem of religion. Economics is a problem of HUMAN Interaction and perception. And the problem is by nature we humans are not capable to comprehend absolute truth. Read up The Black Swan by Nassim Taleb and Alchemy of Finance by George Soros.

There is alot more to learn and I know I will die with a thirst for knowledge. I just hope if God's pleased with me, that Heaven is a big Library! lol.
@Temojin

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