Bretton Woods system
By the early 1970s, as the Vietnam War accelerated inflation, the United States as a whole began running a trade deficit (for the first time in the twentieth century). The crucial turning point was 1970, which saw U.S. gold coverage deteriorate from 55% to 22%. This, in the view of neoclassical economists, represented the point where holders of the dollar had lost faith in the ability of the U.S. to cut budget and trade deficits.
In 1971 more and more dollars were being printed in Washington, then being pumped overseas, to pay for the government's military expenditures and private investments. In the first six months of 1971, assets for $22 billion fled the U.S. In response, on August 15, 1971 Nixon unilaterally imposed 90-day wage and price controls, a 10% import surcharge, and most importantly "closed the gold window," making the dollar inconvertible to gold directly, except on the open market. Unusually, this decision was made without consulting members of the international monetary system or even his own State Department, and was soon dubbed the "Nixon Shock".
The surcharge was dropped in December 1971 as part of a general revaluation of major currencies, which were henceforth allowed 2.25% devaluations from the agreed exchange rate. But even the more flexible official rates could not be defended against the speculators. By March 1976, all the major currencies were floating—in other words, exchange rates were no longer the principal method used by governments to administer monetary policy.
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Digital gold currency
Exchanging fiat currency
Some providers, like e-gold, do not sell DGC directly to clients. In the case of an e-gold account, currency must be bought and sold via a digital gold currency exchanger. According to their website the reason they do this is so there can be no debt or contingent liabilities associated with the business, making e-gold Ltd. absolutely free of any financial risk. DGCs are known as private currency as they are not issued by governments.
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Precious stones
Synthetic and artificial gemstones
Some gemstones are manufactured to imitate other gemstones. For example, cubic zirconia is a synthetic diamond simulant composed of zirconium oxide. The imitations copy the look and colour of the real stone but possess neither their chemical nor physical characteristics. However, true synthetic gemstones are not necessarily imitation. For example, diamonds, ruby, sapphires and emeralds have been manufactured in labs, which possess very nearly identical chemical and physical characteristics to the genuine article. Synthetic corundums, including ruby and sapphire, are very common and they cost only a fraction of the natural stones. Smaller synthetic diamonds have been manufactured in large quantities as industrial abrasives for many years. Only recently, larger synthetic diamonds of gemstone quality, especially of the coloured variety, have been manufactured.
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Islamic Golden Age
From the very beginning, the foundation of Islamic civilization was urban and business oriented, and its growth in population and agriculture is mirrored through its global trade network. Muslim cities grew unregulated, resulting in narrow winding city streets and neighborhoods separated by different ethnic backgrounds and religious affiliations. These qualities proved efficient for transporting goods to and from major commercial centers while preserving the privacy valued by Islamic family life. Suburbs lay just outside the walled city, from wealthy residential communities, to working class semi-slums. City garbage dumps were located far from the city, as were clearly defined cemeteries which were often homes for criminals and prostitutes. A place of prayer was found just near one of the main gates, for religious festivals and public executions. Similarly, Military Training grounds were found near a main gate.
While varying in appearance due to climate and prior local traditions, Islamic cities were almost always dominated by a merchant middle class. Some peoples' loyalty towards their neighborhood was very strong, reflecting ethnicity and religion, while a sense of citizenship was at times uncommon (but not in every case). The extended family provided the foundation for social programs, business deals, and negotiations with authorities. Part of this economic and social unit were often the tenants of a wealthy landlord.
State power normally focused on Dar al Imara, the governor's office in the citadel. These fortresses towered high above the city built on thousands of years of human settlement. The primary function of the city governor was to provide for defence and to maintain legal order. This system would be responsible for a mixture of autocracy and autonomy within the city. Each neighborhood, and many of the large tenement blocks, elected a representative to deal with urban authorities. These neighborhoods were also expected to organize their young men into a militia providing for protection of their own neighborhoods, and as aid to the professional armies defending the city as a whole.
The head of the family was given the position of authority in his household, although a qadi, or judge was able to negotiate and resolve differences in issues of disagreements within families and between them. The two senior representatives of municipal authority were the qadi and the muhtasib, who held the responsibilities of many issues, including quality of water, maintenance of city streets, containing outbreaks of disease, supervising the markets, and a prompt burial of the dead.
Another aspect of Islamic urban life was waqf, a religious charity directly dealing with the qadi and religious leaders. Through donations, the waqf owned many of the public baths and factories, using the revenue to fund education, and to provide irrigation for Orchards outside the city. Following expansion, this system was introduced into Eastern Europe by Ottoman Turks.
While religious foundations of all faiths were tax exempt in the Muslim world, civilians paid their taxes to the urban authorities, soldiers to the superior officer, and landowners to the state treasury. Taxes were also levied on an unmarried man until he was wed. Instead of zakat, the mandatory charity required of Muslims, non-Muslims were required to pay the jizya, a kind of poll tax.
Animals brought to the city for slaughter were restricted to areas outside the city, as were any other industries seen as unclean. The more valuable a good was, the closer its market was to the center of town. Because of this, booksellers and goldsmiths clustered around the main mosque at the heart of the city.
Guilds were officially unrecognized by the medieval Islamic city, but trades were supervised by an official recognized by the city. Each trade developed its own identity, whose members would attend the same mosque, and serve together in the militia. Slaves were often employed on sugar plantations and salt mines, but more likely as domestic house servants or professional soldiers.
Technology and Industry of Islamic civilization was highly developed. Distillation techniques supported a flourishing perfume industry, while chemical ceramic glazes were developed constantly to compete with ceramics imported from China. A scientific approach to metallurgy made it easier to adopt and improve steel technologies from India and China. Primary exports included manufactured luxuries, such as wood carving, metal and glass, textiles, and ceramics.
The systems of contract relied upon by merchants was very effective. Merchants would buy and sell on commission, with money loaned to them by wealthy investors, or a joint investment of several merchants, who were Muslim, Christian and Jewish. Recently a collection of documents were found in an Egyptian synagogue shedding a very detailed and human light on the life of medieval middle eastern merchants. Business partnerships would be made for many commercial ventures, and bonds of kinship enabled trade networks to form over huge distances. Networks developed during this time enabled a world in which money could be promised by a bank in Baghdad and cashed in Spain, creating the check system of today. Each time items passed through the cities along this extraordinary network, the city imposed a tax, resulting in high prices once reaching the final destination. Regardless, the Muslim world never completely relied on foreign markets, remaining completely self sufficient throughout this period.
Transport was simple yet highly effective. Each city had an area outside its gates where pack animals were assembled, found in the cities markets were large secure warehouses, while accommodations were provided for merchants in cities and along trade routes by a sort of medieval motel.
Apart from the Nile, Tigris and Euphrates, navigable rivers were uncommon, so transport by sea was very important. Navigational sciences were highly developed making use of a rudimentary sextant known as a kamal to altitudes of stars, and a magnetic compass. When combined with detailed maps of the period, sailors were able to sail across oceans rather than skirt along the coast. Muslim sailors were also responsible for reintroducing large three masted merchant vessels to the Mediterranean. The caravels used by Italian explorer Christopher Columbus were in fact, based on designs by earlier Muslim Andalusian vessels. An artificial canal linking the Nile with the Gulf of Suez was constructed, conversely linking the Red Sea with the Mediterranean although it silted up several times.
A tradition from Muhammad advises his followers to "even travel to China if it means obtaining knowledge." And not long after Muhammad's death, during the Islamic Golden Age, one can observe such travel and exchange with far away lands taking place.
For example, Ala'eddin, is honoured in the official history of China's Yuan Dynasty, for having constructed the Counterweight Trebuchet for Kubilai. (see p119)
And we now know that in fact Islam learned paper making from China as a result of this contact, but made the crucial decision to use linen as the raw material for paper, rather than mulberry bark, or other organic matter. The transfer of Chinese technology and the innovation in the use of linen provided a writing material more economical than parchment and more durable than papyrus. It was from Islam that the rest of the world learned to make paper from linen. (from the digital archives of The National Library of Medicine)
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