Author: 94naushad

94naushadhttps://naushad94.wordpress.com

Iceland

As many small countries in the world, Iceland was born in the 20th century. But it is an interesting small nation of 350,000 people.

Coming under the wings of a superpower, having its own resources and willingness to improve its lot has transformed Iceland, the land of mud huts in the 20th century, into a tourist hub in one of the coldest parts of the world.

The Beginnings

Iceland was settled only in the 9th century CE by the peoples of today’s Norway (men) and Gaelic lands (women, likely slaves). They were aligned with the Vikings, and practised paganism.

By 1000 AD, Iceland was Christianised under the threats of trade war from the new king of Norway who accepted Christianity. After the split of Byzantine church, in 1054, Iceland came under the sway of Roman Catholicism.

Politically, it remained aligned with Norway and its commonwealth till the early 19th century. During this time, in 1550, Iceland was forced to become a Lutheran nation by the orders of a Danish king who had beheaded Iceland’s Catholic bishop and his sons.

Modernity

In 1814, the victors of 2nd European War (Napoleonic War) split Norway and Denmark; Iceland was passed on Denmark. Soon, 25% of population immigrated to Canada.

In 1874, the Danish Constitution guaranteed religious freedom but proclaimed ‘Evangelical Lutheran Church is a national church and as such it is protected and supported by the State’. A new version of the Bible came out officially in 1912, and revised in 1981 – in keeping with the liberal, socialist atmosphere of the 20th century.

In 1944, despite being neutral, Denmark was invaded by Nazi Germany. Likewise, the neutral Iceland was invaded by Britain. In wars, there are no heroes. Iceland was made a republic; the Evangelical Lutheran Church became the Church of Iceland.

In 1949, after the 4th European War (World War-2), Iceland came under the fold of NATO which was organised to stem the growth of communism in Europe.

In 1994, after the collapse of communism, Iceland formally joined European Economic Union.

From huts to hotels

About a 100 years back, most of the Icelandic people lived in mud huts, though modernity began to take root with the advent of Napoleonic/secular struggles.

Despite its neutrality, given its strategic location, it was invaded repeatedly. The invaders tried to win its citizenry by helping out this isolated land – which is prone to earthquakes (500 small quakes per week) and raging unpredictable weather.

Self-sufficiency also came by sheer luck (presence geo-thermal energy and fyords) and hard work (willingness to harness that energy). Today, 85% of energy comes from these renewables. While Iceland invests large amounts of manpower and money in research and development.

Apart from fisheries and aluminium, tourism remains its main source of revenue. It receives three times its population as tourists, every year.

Interestingly, a small country like Iceland also needs migrants – who was mostly Polish Catholics.

Trivia

Iceland has the highest number of bookstores per capita in the world; ~10% of the population publishes a book in their lifetimes.

98% of Icelanders believe they know someone they could rely on in a time of need – the highest percentage in any advanced nation.

Iceland is among the ten countries with the highest proportions of atheists in the world; similar data for LGBT rights and safety of women.

Rather than using family names, Icelanders carry either their father’s or mother’s name. Like Naushad, son of Aziz (both names being first names). Thus a nation without surnames – all relating to liberal notions of equality.

Though 0.3% of Icelanders are Muslims, Icelanders are the first Muslims to think beyond the rules of classical Shari’ah. 

 

 

 

Our Debts – Monopoly to Manipulate

Bailed out by Oil 

Before 1973:  The trans-national oil companies of US, Britain and Netherlands (BP, Shell, Standard Oil, Esso, Gulf, Texaco and Mobil) managed to use their overwhelming financial power to keep the oil prices low, with low royalties to the producer governments.

The price of oil in 1947 was US$2.20 a barrel; production costs (including royalties) were 20 cents and western taxes were around 50 cents a barrel made a huge corporate profits while subsidising the growth of capitalist countries. By 1973, oil was still selling for less than $3 per barrel, way behind inflation.

Oct 1973: Protesting unilateral US support of Israel occupation, the Arab allies of US (led by Saudi Arabia) began the oil embargo for countries that supported Israel unconditionally. When it ended in March 1974, the price for oil rose to $11.65 per barrel.

The US allowed the OPEC (Organisation of Petrol Exporting Countries), led by Saudi Arabia, to raise oil prices but on one conditions: that oil will be sold only in US dollars. Since then, the petrodollars are being recycled backed into the US (to buy US debts, arms and goods) to help its economy.

Since oil is the engine of production of worldly goods and comforts, it remains the bedrock of human civilisation. Having control over its spigots got the US unlimited powers on how it wants to run the world.

Preying the Hunts

1973: The Hunt family of Texas, who played a very significant role in the discovery and development of the oil fields in Libya, began buying silver as a hedge against inflation. Gold still could not be legally held by private citizens at that time.

1979: The Hunt Brothers, together with wealthy Mid-East investors, controlled a pool of more than 200 million ounces of silver, equivalent to half the world’s deliverable supply! The price of silver rose from $1.95/ounce in 1973 to $5 in 1979. Within a year, it was around $50. With gold hitting at $850, the silver/gold ratio was 15.74/1, very close to the historical ration of 15/1. Once the silver market was cornered by the Hunts, outsiders joined the chase.

1980: The New York Metals Market (COMEX) and the Federal Reserve intervened and, changed trade rules which punctured the speculative bubble – silver dropped to 50% value and later settled at $10.80. The Hunt brothers declared bankruptcy; their investors were hung dry. By 1987, the Hunt liabilities had grown to nearly $2.5 billion against assets of $1.5 billion. Next year, the Hunts were convicted of conspiring to manipulate the silver market.

Every US taxpayer was warned in no uncertain terms: only the US government has the monopoly on manipulating the markets. This has remained the ultimate mantra of economics since; the science is only a means to justify such a mantra.

With its house in order and oil in its pocket, the US spread across the world despite reversals like loss in Vietnam Invasion and spread of socialist creeds in its society.

Globalisation and Manipulation

By 1980s: The relatively cheap petrodollars went to NICs (Newly Industrialised Countries – Singapore, Hong Kong, Taiwan and South Korea). This first pangs of globalisation was called ‘inter-dependence’, as half of the world was still under communist rule. To their citizens, the slowdown in domestic growth in both US and Europe was explained as ‘overseas expansion’ and that the economy is not shrinking but growing beyond its borders.

To its trade partners, the US government (convinced by its financial companies) forced them to recycle their trade surpluses (in US dollars) by buying US Treasuries that always yield low returns; the low returns were appreciation of US security against the communist Soviet Union.

US Treasuries (bills, notes, bonds, securities) are US government debts that are issued by simply printing dollars on paper or creating money on computers (called Quantitative Easing – QE).

The Great Party Time

1991: After two years of the fall of Berlin Wall and liberation of Eastern Europe, the Soviet Union collapsed. The great human experiment in dunyavi (materialist) ideology, that results in more than 100 million deaths across the world, failed – no doubt hurting the sentiments of many of its beneficiaries and ideologues.

1992: However, the post-Soviet economic reform produced an inflation was 2,520%, as the prices were decontrolled suddenly in the most appalling manner. The rouble devalued from 40:1 US dollar in 1991 to about 30,000:1 in 1999. Massive amounts of wealth shifted across the Atlantic, just as it did in the 19th century, seeking safe haven in the US shores.

All this wealth, from easily picked investments (from mining projects to supplying computers) and money deposited in US banks, from Eastern Europe and Russia began the great party time in US. It was indeed a celebration worthy.

No ethics, No science – just Materialism

The fall of communism, and disappearance of its threat, did not bring in the sense of rule of law or fair play into US economic and financial institutions.

US institutions continue to print money with impunity and no responsibility, while its corporations continue to take these digit dollars to gullible or semi-literate societies selling their materialist dream in exchange of paper money. At home, they sell the same dream that keep people ever in debts to these institutions. For the resourceful countries in the Middle-East, Canada and Australia, it is not a problem; they have deep pockets to comfort their poor and buy their opponents. For the rest of the world, such practices are a source of instability and wanton destruction of our societies.

Winning the geopolitical battle, the US seems to have lost the cultural war.

Our Debts.3 – Dollar, doldrums and floating

Our Debts.2 – The Gold Standard

Our Debts.1 – The ‘Moderate Interest’

Our Debts – Dollar, doldrums and floating

1939-45: The net effect of fierce rivalry between Fascism and Communism was the involvement and consolidation of Constitutional Democracy of Britain and US. Europe and Russia burned again, consuming some 50 million men to the 3rd European War. US, fighting a distant war, remained safe and secure from the ravages of that war. Clearly, the days of unchallenged European Imperialism were over.

The US economy emerged as the strongest, the most productive and the most dynamic in the world. Not because Europe, Japan and the Soviet Union and were all in ruins, and the rest of the world was barren from a century of imperialism, but because the US model was operatively superior: 1) constitutionalism and willing to follow the rule of law, 2) high socio-economic mobility (from creative entrepreneurship, innovation) and relatively equality of income, 3) heavy public investment (in infrastructure projects like transportation, education and research and public health).

Birth of Dollar Hegemony

1944: With the victory in sight, more than 700 delegates from 44 Allied Nations met. Led by the US, the conference created the International Monetary Fund and the World Bank which were given the roles of police and ambulance respectively.

IMF would oversee bankrupt poor nations to prevent credit abuse while WB would keep systemic poverty from turning into political instability. For the next 30 years, this system forced the member nations to deny their citizens the right to buy and own gold, and ban the import and export of gold ( gold control policy).

The Marshall Plan

1947: Europe, devastated by the war and facing the harshest winters on record, had nothing to sell nor had currency with which to buy food and fuel. The postwar socialist governments were unwilling to adopt the draconian proposals for recovery while the US was keen to keep the pre-war socialist European society from mutating into populist communism through elections. Post-EW3, the US manufactured more than half of world’s goods, and controlled it too.

The European Recovery Program (the Marshall Plan) offered the Europeans and Soviet Union a relief up to $20 billion (10% of US’s GDP) but only if they drew up a plan to act as a single cooperative economic unit. The money came out of US sovereign credit – the US government guaranteed the US investors in Europe to exchange their profits (denominated in weak European currencies) back into dollars at guaranteed fixed rates, backed by gold at $35/ounce.

Thus, the new international trade was to be denominated in dollars, fully backed by gold in US banks, if the Europeans were to take such an offer. They did.

Soviet Resistance to Marshall Plan

1947: A Hungarian expatriate in Russia, Evgenii Varga, proposed the notion of the ‘Third World’. The First World was occupied by the two superpowers (US and Soviet Union); the Second World by the major powers that were allies of either the two superpowers (Europeans). The Soviets turned to the Third World which was the colonised countries of Asia, Africa and Central/South America.

1947: Soviet Union denounced the US humanitarian gesture as a trick to spread market capitalism, and refused to participate. ComInform was founded to counter the Marshall Aid and to coordinate actions between the communist parties across the world, including the Third World. In response, the US avowed to resist, by force, the establishment of communist governments worldwide. The Cold War began.

1948: Moscow tried to counter the creation of the Organization for European Economic Cooperation (OEEC), to be funded by the Marshall Plan, by proposing the establishment of a ‘committee for the development of economic relations between European states’, under the auspices of the UN Economic Commission for Europe. The OEEC later became Organization of Economic Cooperation and Development (OECD), with representative democracy and free market economies.

1947: Soviet Union re-denominated its currency to reduce the amount of money in circulation. This only affected paper money. Old roubles were revalued at one tenth of their face value.

1949: The USSR inaugurated the ‘Council for Mutual Economic Assistance’ (ComEcon) hoping to pull US allies, particularly Italy and France, by the lure of Soviet supply of raw materials. ComEcon hoped to replace ComInform which was received with great suspicion in Imperial countries.

With the loss of India to the socialist democrats and China to the communists, Europe was firmly divided between the capitalist West and the communist East.

1961: Re-denomination was a repeat of the 1947 reform, with the same terms applying. Rouble was formally equal to 0.987 gram of gold, but the exchange for gold was not available to the Soviet public as per 1944 agreement.

Dollar Doldrums

1946-71: Though the trading countries settled their international payments balances in US dollars, pegged to gold at $35/ounce, persistent US balance-of-payments deficits steadily reduced US gold reserves.

By 1960, many were buying gold at an artificially low price of $35, set in 1944, and sold it in the black market for easy profit. France was the first to see through: the US was printing more dollars than its gold holding could support, and was dumping the dollars in world markets.

In Hong Kong, a British territory since 1841, trading firms bought gold legally on the London gold market at a pegged price of $35/ounce. They then passed it along to Macau gold syndicates. Britain was a signatory but Portugal, and its colony Macau, was not. The gold was then smuggled back to Hong Kong, where it was sold at above-peg prices for use in financial transactions around the world, out of range of Bretton Woods regulations.

The London Gold Pool

1961: US, Britain, France, Germany and other European nations pooled their gold resources to prevent the commercial price for gold from exceeding the Bretton Woods mandated rate of US 35/ounce. The ‘London Gold Pool’ was set up.

Again, France pulled out and began to send the dollars, earned by exporting to the US, back to the US and demanded gold rather than US Treasury debt papers in return. Under the terms of the 1944 Bretton Woods Agreement, France was legally entitled to do just that.

1971: France redeemed its dollar holdings in gold; Bank of France eventually increased its gold holding to 92% of its reserves. Even Britain, converted its $3 billion into gold. US gold reserves had dropped from 20,000 tons to 8,500 tons (32,150 troy ounces = 1 metric ton).

Floating the Currencies

1971: To fight domestic inflation, the German central bank suspended the fixed exchange rate of its Mark and allowed it to rise against the dollar. Netherlands did the same.

As the dollars returned in massive numbers back to the US banks, the US announced that it would no longer redeem its dollars for gold. The dollars could now be redeemed only by trading with the US.

US was still the origin of most of the manufactured goods in the world; it still controlled the large depots of world oil; it had the largest military in the world. For the Western Europe, which manufactured and controlled the rest of the world trade, the choice was clear: accept the dollar hegemony and US promises of fair play, or succumb to the communists and Soviet dictatorial power which was held bend to distribute the hard-earned European money to the inferior races of the world.

Western Europe submitted their financial sovereignty to the US, fearing the communist menace from the East.

Financial Colonisation of Soviet Union

The Soviet Union continued to engage the capitalist markets, denominated in dollars, not understanding the fact that the US could print its dollar at will, while the Soviets and the rest of the world (including China and India) will have to earn their money through trade. As the Soviet economy fell into the trap of needing dollars to achieve their planning goals, it was a matter of time for the socialist system to collapse. It did in 1989.

With the victory of dollar over communism, celebrations and party time began in the US. It’s allies in Europe thought they too were invited. Or, so they thought!

Stay in the caravan: avar dets.4 – monopoly to manipulate

avar dets.2 – gold standard

avar dets.1 – modrate intrest’

Our Debts – The Gold Standard

The 1st European War

In 1790s, Britain was isolated by the Continental Blockade imposed by Napoleon, the revolutionary dictator/emperor of France. Soon, England suffered a massive shortage of silver coinage and began minting  ‘token’ silver coins and over-struck the loaned foreign coins.

By 1797, paper money was legalised as an increasingly confident Britain promised it would reimburse the businesses with gold once the war is over. Until that time, the business would take paper bills as certificates of gold. One use of such money was this: Napoleon and his zealous army could seize paper money from those doing business with Britain; it was paper to the enemy, gold to a friend! yaaahooo!!

Introduction of ‘Gold Standard’

For millennia, almost all civilised human societies traded their goods in two currencies – gold and silver (poorer societies used other easily degradable metals like copper, nickel, etc). Such a system where two highly precious metals with distinct intrinsic value was called Bimetallic System.

1815: When Britain won the 1st European War, the Napoleonic continent was at its mercy. With all the treasure at its disposal, England began a massive coinage program that standardised the gold sovereigns (7.98 gm coin) and circulated even more silver crowns (28.2 gm) and half-crowns (14.1 gm).

Britain then declared to the world its intention to apply a Gold Standard into effect – an economic policy where all trade was to be done in gold only, and silver coins were pegged to the gold as any other commodity. The policy effectively flattened silver of its intrinsic value as a precious commodity. In Britain, silver coins were declared legal tender only for sums of money up to two sovereigns (or two pounds)!

By 1820, gold sovereigns were used in exchange for goods all over the British colonies. In the international market, 1 British Pound was fixed at 4.85 US dollars, 5.25 Canadian dollars, 12.10 Dutch guilders, 26.28 French francs (or Latin Monetary Union currency), 20.43 German Marks or 24.02 Austro-Hungarian Krones.

1821-44: Britain introduced a series of laws that made the Bank of England issued paper Notes as the legal tender, as they were fully backed by gold. The British Pound became established as the full gold standard. BoE also acquired the monopoly of printing and issuing bank notes, with an ability to charge interest more than 5%. The Protestant rule of ‘moderate interest’ was ignored in the name of progress and pragmatism.

The empire was ready to dominate the world, economically.

Challenging the Gold Standard: Latin Monetary Union/Euro-1

1867: In Europe, the International Monetary Conference, which shunned by Britain, formed the Latin Monetary Union. France, Belgium, Italy and Switzerland standardised their national currencies where 1 Franc was equal to 4.5 gm of silver or 0.29 gm of gold (in a ratio of 15.5 to 1), and freely interchangeable between these countries. LMU promised to practice Bimetallism (dual standard of gold and silver).

Next year, Spain and Greece joined LMU, and later by Romania, Bulgaria, the Papal States (ruled by Pope), Venezuela, Serbia, Danish West Indies and Albania.

However, France and Papal States did not honor the purity of their coins they were producing, making profits at other’s expense. In addition, the witty German traders brought cheap silver from Britain, minted them into LMU silver coins and then exchanged those silver coins for gold coins, making huge profits.

1871: By defeating France, the Protestant Prussia (which later became Germany after unification) became a major European player. Soon, it accepted the Gold Standard and forced France to pay its war indemnity only in gold.

In the years 1871 and 1872, the French government mint received 5 million francs of silver for conversion to coins. In 1873, it received 154 million francs of silver for coin conversion. In 1874, free conversion of silver to coins was temporarily halted by france. By 1878, minting of silver coinage was suspended.

The Latin Monetary Union became a de facto gold standard.

Scandinavian Monetary Union

1871: The newly founded German Empire had accepted the British created Gold Standard. And Germany was Scandinavia’s main export partner – supplying it with iron ore.

1873: The Scandinavian Monetary Union was created by Sweden where one krona was fixed at 0.40 grams of gold. Denmark joined it by debasing its currency (rigsdaler) by half and Norway lost 25% of its (speciedaler)’s value on joining the SMU. Unlike LMU, it was the Gold Standard.

Later, all three countries lost their peg, one to one, with the outbreak of 2nd European War (World War-1) in 1914 when Sweden untied its krona to gold.

In United States

Before the Revolutionary War, European coins freely circulated as legal tender in the American colonies. The most common was the Spanish silver dollar coins, minted mostly in Mexico from silver mined from Central and South America.

After the war, in 1785, the United States adopted a silver standard based on the Spanish dollar, from where US dollar derives its name.

1792: US accepted Bimetallism (at 15:1 value; at $1.29 troy of pure silver and $19.39 troy ounce of fine gold). Also, it allowed free coinage of these metals by its mint – anyone could exchange these metals for government coins.

As there was precious little gold available in the US (required to trade with Britain after introduction of Gold Standard), only silver circulated as money in the Americas.

1791: The First Bank of the United States was created, licensed for  20-year, by the US government for accepting deposits, issuing bank notes, making loans.

1816: After 5 years without a central bank, the Second Bank of the United States was formed. For its corrupt practices and constant frauds, the United States did not renew its license in 1836.

To weaken the effect of bank Notes which depended on silver coins, US increased the value of silver to 16:1, effectively ending the rein of silver in US. No silver was coined in US till its Civil War. The small business had beaten the big banks. The US was without a central bank for the next 40 years.

Domination of Gold Standard

1861-65: During the US Civil War, paper money in the form of ‘greenbacks’ were issued, without the promise of they being redeemed for either gold or silver. In fact, US suspended payments in silver. Post-Civil War, the ‘greenbacks’ had to be taken out of circulation to introduce standardization.

1873: Following the British deed of 1816, the new Coinage Act standardized gold coins in US but not the silver coins, effectively adopted the Gold Standard and ‘demonitizing’ the silver: now silver was pegged, just like any other commodity, to gold.

The demand for gold resulted in increased availability of silver worldwide, resulting in dramatic rise of gold prices when compared to silver: from 15.5:1 in 1870 to 16.5:1 in 1880 to 30:1 in 1896.

Effects of Gold Standard: Economic Imperialism

By 1880, the European banking elite had accepted the Gold Standard, while the colonized countries of the world, including India and China, and rising Japan were not on the Gold Standard.

By 1896, the value of gold rose to 30:1 vis-a-vis silver in the capitalist countries. The colonized world still traded their gold in the ratio of 15:1. The net effect was drain of gold from the colonised world, while silver flooded the colonies and Japan.

From 1879 to 1889, the share of US gold increased from 7% to 20% of world gold. Rest of the gold went to European empires.

As more industrial goods, including railways, came to the colonized world, the Europeans demanded payment in gold. Lack of gold and silver at 30:1 in these colonised lands meant devaluation of their currency. That resulted in devaluation of Indian Rupee by 25% of its value, while Japanese Yen, Chinese Yuan, Philippine and all Latin American Peso (all pegged to Mexican Peso) lost 50% of their value!

This meant that the colonized nations imported good at double the rate while their exports were discounted by 50% in Europe. For investments too, the poor natives had to double their capital as a head-start to compete with the Europeans.

The other effect was worse: the debt and interest owed to Europeans by non-Europeans, due to wars or royal shoppings or just public necessity (railways to roads), simply doubled in a decade.

Economically, it was the Gold Standard that kept the colonised people poor and dependant on their European masters. While militarily and cultural imperialism was quite obvious to the natives, the economic policies of colonisers were unknown to the barely literate people.

Effects of the 2nd European War

Before 1914, Britain held 40% of the world’s overseas investments which was regarded as the safe haven for any money – hard earned or otherwise. It came from European monarchies, plundering politicians of South America, businessmen from Africa and Asia, even Russia.

1914: With the outbreak of 2nd European War, Britain suspended the gold standard – it declined to pay gold to depositors/investors in return of its paper Notes. The moneyed world had no choice but to hope for Britain’s victory, to get their money back.

By 1918, Britain itself was in debt, mostly to the US, with interest costing Britain’s 40% of all government spending. This was also the case for all of the European empires.

After the wanton destruction of life and property in the 2nd European War, Europe decided it will not part with its gold to its debtors. Various measures were introduced to avoid the money owed to the others.

Revised Gold Standard

1925: Britain returned to the gold standard, its currency fixed to gold at its pre-war peg value (£1:US$4.86), even though it was in huge debts and its economy had contracted. The US patiently swallowed the injustice meted out to it.

This Gold Standard was slightly modified: the government withheld issuing gold coins (gold specie) though paper money was allowed to be exchanged for at least 400 ounces troy (12.5 kg) of fine gold (gold bullion). However, the elite business saw through the weakness of British fiscal policy and gold began to be shifted from the vaults of Bank of England to that of France and US.

Corruption and Failure of Confidence 

1929: The Stock Market in New York crashed. However, it effected only 16% of the US population, and only 10% of wealth was lost.

On August 24, 1921, the Dow Jones Industrial Average (an index of Stock Market) stood at a value of 63.9. In a week, it had risen more than sixfold, touching 381.2. After the Crash, it would not regain this level (381.2) for another twenty-five years!

1930: Britain had enforced high tariffs (around 25%) on good imported from other nations. The American Tariff Act imposed high tariffs on goods imported from Europe (some were up to 50%), forcing other countries of the world to enact a similar protective tariff on imported goods. While interest rates were cut from 6% to 4%.

U.S. imports and exports decreased by some 2/3rd from 1929 to 1933. However, the effect on its GDP was trivial and Europe remained its net importer of goods. Meantime, decrease of world trade by 66% in Europe had a devastating impact as Europe attempted to build itself after its foolish war.

American business, politely, demanded due shift of power across the Atlantic.

‘Run’ on Austrian Bank, end of Gold Standard

1931, May: Austria’s largest commercial bank, Credit-Anstalt – founded by Rothschild family in 1855, went bankrupt. After the 2nd European War, CA was propped up and managed by loans from the Great Powers since 1923. Bad loans were taken and given, year after year with little supervision.

When the corruption came to fore, the depositors withdrew their gold. When the Austrian government stepped in to guarantee all the bank’s deposits and other liabilities, its own credit-worthiness came into question. Credit-Anstalt went bankrupt.

The depositors then withdrew gold from a large German bank which too went bankrupt. The German central bank lost substantial amount of its gold reserves. The scare then touched Latvia, Turkey and Egypt. By July, Germany adopted exchange control, and went off the gold standard.

Then, depositors turned on the overvalued British Pound, withdrawing large amount of gold from the Bank of England’s vaults. Loans of £50 million from French and American banks became inadequate. By September, Britain went off the gold standard – betraying its promise to redeem gold for its currency.

The New York Fed had loaned over $150 million (over 240 tons of gold) to various European Central Banks. Now, these loans became questionable once England went off the gold standard.

1934: The US made it a criminal offense to own gold. It forcibly nationalized all gold, held by individuals or banks, to fill its Treasury (it was lifted only in 1975; ask why?). Any contract done in gold was also declared invalid (reinstated only in 1977). Public’s refusal to part with gold meant going to jail for 10 years and a fine, or both.

Instead of the market rate of $20.67 per the troy ounce of gold, the public were offered $35/troy ounce. In reality, the dollar was devalued at international markets from $20.67 to the troy ounce to $35 to the troy ounce (40% devaluation). With no gold to hoard money, the public and banks were forced to invest in the nation building (US still has 8,000 tons of gold, more than world’s 25% gold reserves).

By 1937, no country in the world was on the full gold standard. However, international debt settlement was still done in solid pure gold.

Effects of Going ‘Off the Gold Standard’

The Central Banks, which were allowed to print notes in the name of its people, were required by law to have the backing of gold for the Notes they were printing. So, in the US, the Federal Reserve was required by law to have 40% gold backing of Federal Reserve demand notes.

By ditching the gold standard, the central banks could print as much money as they could without any regard to the amount of gold reserves they held in their vaults, though some were smart enough not to cause hyperinflation.

International trade took a beating, the less well-off countries saw hyperinflation, and societies demanded food and jobs. Socialism, nationalism and fascism came to dominate the politics of Europe. Europe was ready for a third war. And, US was ready to fund them, for the 2nd time.

First, usury was accepted as ‘moderate interest’ in the name of growth and progress. Then, an artificial ‘gold standard’ was applied so as to earn off your accumulated gold. In testing times, with an opportunity to earn easy money, even gold will not be enough.

Stay in the caravan —> avar dets.3 – dollar, doldrums and floating

avar dets.1 – ‘moderate intrest’

The Hijri Calendar

We all follow the Hijri Calendar, for Ramadan and for the celebration of Eid. However, how much do we know about the practices of other cultures? Indeed even ours?

Humans have been time keeping since millennia, mostly for commerce but also for rituals too. The first reported civilisation to keep time were the Sumer Civilisations (around today’s Iran) which introduced the Sexagesimal System (with number 60 as base).

Luni-solar Calendar

Luni-solar calendars were common to all ancient cultures of the world (Chinese, Buddhist, Jewish and, pagan worlds of Greeks, Romans, Arabs and Indian Subcontinent). The Chinese, Romans and Jews used it to track seasons and to celebrate the onset of spring, while the Subcontinent cultures used it to keep the track of stars, sun and planets – an important element in their worship and beliefs.

The Luni-solar calendar used a new-moon to start a new month. An year was composed of 354 days or 12 months. Ten days short of solar calendar, a month was added to an year (inter-calary month) every two or three years to synchronize the lunar calendar to the seasons, which are based on the rotation of earth around the sun.

Julian calendar

BC 46: Julius Caesar, the Roman dictator, changed luni-solar calendar to a Solar Calendar by fixing January as the first month and abolishing the inter-calary month. A day was added to few months and, a day was added after a couple of years (leap year) to compensate for inter-calary month.

As the pagan Romans became the dominant world power, the Julian Calendar spread across the known world. It was used not only for religious festivals but also for secular purposes: collecting yearly tributes or seasonal taxes for the empire.

Persian calendar

226-41 CE: The Sassanid king, Ard-ashir, instituted the solar calendar based on a fixed 30-day 12-month calendar. It was aimed to rival the Roman domination. After the 12th month, five more days were added and inter-calary month was discarded.

The system was imperfect, even causing much confusion in Zarthosht (Zoroastrian) faith’s religious requirements.

In the 10th century, the Persian Calendar was improved by Malik Shah but was never implemented. Only in the 20th century, did today’s Iran perfected it. It is now the official calendar of Iran since 1925 CE.

Indian Subcontinent Calendars

Indian and Buddhist calendars are luni-solar calendars, just like the Greeks. More than thirty calendars exist today, based on regions and sects – with differences in the beginning of the days, the start of the month, day of the new year, and naming of years. The age of these various calendars can range from year 5000 to year 500.

Since 1952, regional calendars are being standardized but no agreement on ‘Hindu’ calendar has yet been agreed to.

Buddhist calendar, used in Sri Lanka, Burma, Thailand, Cambodia and Laos, is uniform except in naming the years, which has national variance.

Logging the Years

The Arabs logged the years based on major events. Abraha’s [the governor of Yemen, then a province of the Kingdom of Aksum (now, Ethiopia)] unsuccessful attempt to destroy the Ka’ba was named ‘Year of the Elephant’; the Prophet was born in this same year.

The more civilized Chinese, Romans and Zarthosht associated their ‘year’ with the rein of their kings. A new cycle of years began with the ascension of a new king. The Subcontinent had a diverse system (each sub-culture has its own method) of naming years.

Jewish Calendar

160 CE: The Jewish Calendar [by Hosey Ben Halafta] calculates its years from the date of creation of Aadam, the first human. Hosey calculated it was 3761 years before him. So, in 2013 CE, according to the Jewish calendar (Rosh Hashanah), the world is only 5,773 AM (anno mundi~the year of world) old.

‘Christian’ Calendar

284 CE: As Christianity replaced the pagan Romans, the new rulers dropped 1st January (of pagan significance) as the start of its year. Instead, the birth of Jesus or Mary was used as the starting day of the year.  For naming years, the Christians followed (after 284 CE) the Roman culture of naming the year after the reign of kings until 888 CE.

731 CE: Christian historians (like Bede of England) introduced the concept of writing the equivalent of Before Christ (BC) and After Death (AD) while copying Jewish history of creation of world. Soon, official patronage was given to this concept from 888 CE onwards but it took another 800 years for the whole of Catholic Christians to accept this method of dating years.

1582 CE: An Italian fixed the leap year of the Julian Calendar, and standardized it. Soon, it was sanctioned by the Pope Gregory (the representative of God for Catholic Christians), during the height of Catholic and Protestant wars. It took more than two hundred years for the Protestant Christians to accept the ‘Gregorian’ Calendar as a universal means of Time Keeping.

19th Century: During the colonization of the world by the Europeans, the ‘Gregorian’ Calendar became the standard way to keep time across the world.

Due to changing polemics and politics, this calendar is today called as ‘Christian Calendar’. The Orthodox Christians still use the ‘Era of Martyrs’ calendar, based on Julian Calendar, but starting from 284 CE when Christianity took over pagan religion in Europe. Both of these ‘Christian Calendars’ has pagan roots going much farther in history, to Roman Emperor, Julius Caesar.

1949: China accepted the standardized ‘Julian/Gregorian’ Calendar and logged the years as Common Era (CE) instead of AD, and BCE instead of BC. As the European world becomes more globalised, the CE and BCE are bound to gain increasing legitimacy.

Hijri Calendar

The Prophet, in his lifetime, did away with intercalary months when Pagan Makkans manipulated the calendar to wage war in the ‘forbidden months’.

638: After the spread of Islam, in a multicultural world mired with multiple calendars, Khaalif Umar adopted the ‘Year of Hijrah’ as the first year of new calendar for for his subjects – the Hijri calendar was born.

Unlike Julian calendar, Hijri calendar was local and observation based. And, with only 355 days a year, 10-12 days short of solar calendar, the Hijri calendar drifted with the seasons.

In drifting with seasons, the Hijra Calendar affectively obliterated the pagan festivals of spring, harvest and fertility. It was a radical idea, that aimed to banish superstitions and ignorance. It was the symbolic of rational monotheism.