ABSTRACT
This chapter involves an empirical investigation of monetary performance in Turkey over 530 years (1469–2009), up to the global financial crisis, and in Malaysia over 45 years under the fiat standard from 1970–2014. It adopts a full population study of gold, silver, and commodity or wholesale price indices to establish which medium of exchange satisfies the objectives of the Shari’ah (maqasid al-Shari’ah) and protection of wealth (hafiz al-mal) by retaining its store of value function of money. The findings discovered that prices expressed in pure gold and silver were stable over the long term, whilst under the fiat standard prices have increased exponentially. The findings also present empirical data that aggregate interest on deposits and loans are the primary determinants of the growth in money supply under the fiat standard. With library and content analysis on the accounting view of money and related admissions by practitioners, this study also affirms that bank lending is counterfeiting credit into existence under the banner of money creation (alchemy) and interest (usury). The impact of this is that not only are regulators failing in their primary objectives of price and financial stability, but regulatory requirements have actually misdiagnosed the mechanics of banking in a modern economy. This requires monetary reform in order to protect our wealth from confiscation through inflation and further financial instability.
