Realizing The World

Note (paper money) is not money in Islam

By: Saddam Husain

            There is no doubt that money is very important for human beings’ live. Money is a medium of exchange and it is a measurement of value. In other words, it is used as a way to pay for goods and services and to pay people for their work. Since money is used to pay, it must have value in order to make a just transaction. However, based on Islamic perspective, note that people use as money today has no value in it, and therefore it is not money in Islam. The following arguments will explain the reason why “paper money is not real money” taken from Syaikh Imran Hossein’s teaching.

            Firstly, note is out of nothing. It is created by debt. In “the confession of economy Hitman” by John Perkins, it is explained how money created from nothing. Let us see the illustration. When government of U.S.A. wanted to develop its country, it needed much money. Then the government published the letter of debt called LOAN. The LOAN was sent to Federal Reserve as the central bank. Next, Federal Reserve took some papers, drew some pictures, and signed those papers in order to make them legalized. After that, those papers were given to the government with interest. Eventually, government used those papers called U.S Dollars to buy goods, to develop the country. But, the mysterious thing happened. Where did the value of those papers come from? The answer was, the value came from ex-factor, from Federal Reserve.

           

Secondly, note cannot be a measurement of value. This is due to note has no value in itself and it does not store value. Again, this paper shows you the illustration. A father worked a whole month in a company. He worked from morning until evening. When the last day came, the boss of the company gave him his salary Rp. 2.000.000. The salary was enough to buy a cow, but the father planed another stuff to buy which had higher price. So he had his wife save that salary under a pillow. A week later, inflation happened and the salary that was enough to buy a cow could not buy it anymore. The salary was only enough to buy a goat. Why, because paper money doesn’t store value. The condition would be different if the boss used gold or dinar as salary, because the value of dinar exists in dinar per se. That is why, even though it is saved a hundred years the value of dinar will never collapse.             

Thirdly, money in Islam is mentioned in holy Qur’an related to the story of Prophet Yusuf A.S., gold and silver (dinar and dirham). Both metals can be functioned as money because the value exists in the metals themselves. That is what we call “intrinsic value”. Intrinsic value must belong to money so that it can be saved and it can be used to measure good value or service value. Moreover, it the era of Prophet Muhammad S.A.W. what people used as money in Medina, in market, was gold and silver.