18
Aug
10

Your money’s no good here

On Pulau Kecil

Hard as it may be to believe, I was not always a land-locked farmer who seizes up at the mere thought of an airport. In fact, I was once something of a globe-trotter. It seems so like another life. And indeed it was.

One  of my most off-the-beaten-track escapades took me (and Heather) in a big circular trip around Malaysia in the mid-nineties. We have very fond memories of a week spent on Pulau Kecil, the smaller of the Perhentian Islands, where we stayed in a tiny little shack (they were called chalets, but see photo…), got that kinky salt-water hair, snorkled, trekked through the rain forest, napped, drank smoothies, played backgammon and volleyball,  read other people’s musty old paperbacks (Moby Dick!) , and generally had an idyllic time of it.

The commerce of the island, at least in those days, was conducted in a decidedly utopian manner.  You never had need to use money. You wrote whatever you ate or drank in a book, and settled up with the hostel-keeper at the end of your stay. (The sole exception to this arrangement was the Chinese guys who came ashore to sell beer on the beach under cover of night. That was cash-only, understandably.)

The industrious Chinese merchants had to keep it on the down low because the Perhentian Islands are off the coast of Kelantan province, known then and now as the most conservatively Islamic part of Malyasia. (In our current Islamophobic state, living more or less under sharia sounds like something awful and oppressive, but at the time it simply required a slight adjustment in behavior and dress.  And a little sneakiness with the beer.)

This morning, I came upon the  fascinating news that the authorities of Kelantan have taken the first step to turning their backs on the West’s money. From Friday’s Financial Times:

In a move applauded by some local Muslims, the state government of Kelantan said it was introducing a new monetary system featuring standardised gold and silver coins based on the traditional dinar and dirham coins once used by the Ottoman Empire.

Nik Abdul Aziz, the state’s chief minister, spoke in visionary terms of an economy in which state civil servants would be paid in the new sharia currency, and the poor would be protected against inflation by the intrinsic value of the precious metals used to produce it.

This in itself is not earth-shaking news.  “The chief minister … admitted that there were ‘many technicalities’ to be overcome before the scheme could be significantly extended.” But it’s enough to raise an eyebrow or two at the Financial Times, and especially with the Zero Hedge crowd. Here is “Tyler Durden’s” take:

Whether the transition from paper to a hard-backed currency will be the first spark in social upheavals as government slowly realize all their printer-induced leverage is slipping away, is still unknown. What is, however, is that many more will soon follow Kelantan’s lead to abolish an endlessly dilutable thought experiment, which has no intrinsic value, and whose purchasing power is decimated by the minute, as hundreds of billions in new money are printed every month by the world’s central banks.

Really, those folks tend to see many small news items as harbingers of the total collapse of the world economic system (the “endlessly dilutable thought experiment” or more simply, “the ponzi”).

But with enough kooks pounding the table, and pounding it hard, for attacking Iran, against all reason (and against all evidence for the pretext), this scenario is not totally out of the question:

if the Islamic world, in retaliation for a possible Iran invasion or otherwise, decides to issue a fatwa against the usage of non-Sharia compliant forms of monetary exchange, watch what happens as the developed world wilts overnight. With the bulk of world commodity extraction arising from the Muslim crescent, and wholesale ban on using USD and EUR, a move already underway in Iran, would make for the second coming of von Havenstein very, very difficult.

I have no frigging idea if this is any kind of big deal (and I had to look up von Havenstein, “The Central Banker Responsible For Germany’s Hyperinflationary Collapse (And Ostensibly WWII)”). And that last sentence doesn’t really make sense….

But whatever. For me this news is personally fascinating, allowing me to take a mental journey back to a magical world without money. At least in a pretend sense. Wouldn’t it be a laugh if Kelantan becomes famous for something other than pretty rain forest islands and a glorious ayam percik (butterflied grilled chicken with a spicy coconut sauce)? If our little island utopia turned out to be the place where the interconnected global world of finance starts to crumble?

Wouldn’t that be a laugh? Wouldn’t it? Not a huge guffaw, but a nervous little chortle, anyway, maybe?

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