New ISIS Video Presents the Gold Standard as Religion, Offers Ersatz Austrian Analysis

Zero Hedge reports today (with The Daily Mail) that ISIS has allegedly released a video extolling the virtues of a gold standard and denouncing the Federal Reserve System. What's more, the video parrots numerous arguments and assertions made by opponents of central banking and fiat money among Austrian economists and others. The video even features Ron Paul in one section that attacks the Fed.

The Zero Hedge article suggests that the video, rather than being a sincere effort by ISIS, is really an effort by some other group “to pitch an anti-Fed, anti-fractional reserve, pro-gold standard ideology, and make it equivalent to the evil terrorist thoughts spread by the Islamic Jihadist group.”

That may or may not be true, but it's pretty clear that only the most unsophisticated consumers of these ideas will be convinced by this video.

Indeed, I can tell you that if you like corny infomercials that air at 3 AM, you'll love this video.

The ostensible purpose of the video is to establish that ISIS will base its monetary system on gold, which therefore makes ISIS morally superior to the “satanic financial system” that is currently employed in the West. As the Zero Hedge article notes, however, none of these gold coins, the “gold dinar,” have actually been observed being used anywhere. The economic system of gold money described in the video is likely a purely hypothetical construct coming out of a dirt-poor regime and economy. 

The video itself is certainly interesting, nonetheless, in its own way. Making liberal use of overwrought sound effects and visuals, the video attempts to portray ISIS as plucky freedom fighters struggling against the “satanic” Federal Reserve system and Western governments. ISIS, according to the video, is “surg[ing] into the global financial system.” Then, at the climax of the introductory section,  to swelling music, the narrator announces with painfully earnest (and totally un-ironic) drama that “this is the return of the gold dinar.” Then the screen just lingers on the phrase for a long time before fading to the intertitle that reads: “”the Shariah of Allah came with the purpose of protecting the five fundamental matters that are essential to the people. Among them is the protection of their wealth.”

Now, there are many ways I might describe the ISIS regime, but “protection of wealth” isn't exactly one of them.

Nevertheless, the video goes on to make the case that the (purely hypothetical) use of the gold dinar is best because “Allah created [gold and silver] as the standard medium of exchange for goods and services.” Moreover, “Man is inclined toward the allure of precious metal commodities. It was Allah who beautified them.” 

The video frequently quotes texts that it claims are from the Koran and which supposedly say that gold- and silver-based money are the only religiously acceptable medium of exchanges. It also attempts to establish the case that a gold-based economy is not simply the most efficient economy, or the most conducive for capital accumulation, but is in fact ordained by Allah.

At this point, it becomes apparent that the video isn't making an economic argument at all. It's making a religious argument, and thus it becomes abundantly clear, that for all its usage of buzzwords from the American anti-Fed, sound-money movement, this video is about ISIS's bizarre politico-religious ideology. It's a creative mix of sound economic ideas with theocratic ideology that may sound sophisticated to the uninitiated, but is really just a case of a salesman using lots of impressive-sounding words to try and pull one over on the customer.

Will some people, thanks to this video, conflate Austrian economics and ISIS-style Islamism? Some media outlets will no doubt give it a try, but intellectually, the two movements could not be further apart.

After all, Austrians do not defend the gold standard because God commands it. We merely support sound money based on commodities of some kind. It certainly doesn't have to be gold and silver. Good commodity money usually is based on gold and silver for practical reasons, but that doesn't have to be true until the end of the time. Other useful and sound non-fiat currencies may arise. This certainly is not based on a mandate from heaven. Moreover, if some people or groups want to circulate fiat money, they'd be free to do so in a free economy. They'd simply have to compete with other monies without the benefits of government monopolies. Thus, divine intervention is not necessary to keep unsound money under control. The market can do that at least as well.

Austrians also understand the sound economic systems rely on much more than a system of sound money.  ISIS has created a quasi-state that oversees a basketcase economy with little to no respect for private property, plus widespread expropriation, murder, and other lesser violations of property rights. Thus, ISIS could be sitting on the world's biggest gold mines, and that wouldn't lead to a prosperous economy. For an economy to prosper, one needs low time preference, capital accumulation, respect for private property, predictable and light-handed civil government, and a variety of other variables. And virtually all of these are lacking in any place ISIS is in charge.

Assuming that ISIS actually made this video, we then have to ask ourselves: “Do these guy actually believe the sound-money and anti-fractional-reserve case they're making in the video?” It's impossible to say, but we can take this latest effort at global propaganda as just another case of ideologues having noticed that opposition to the Fed and fiat money is increasingly popular. In turn, they've attempted to score a few rhetorical points by jumping on the bandwagon, although in ISIS's case, they're likely to be disappointed with the results on their end.

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