Robert Zoellick, President of the World Bank, has created a furore in economic circles by suggesting that world economies should adopt gold as a reference for anchoring national exchange rates. He said: “The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

Why did the Prophet (saw) demand that transactions involving Gold and Silver and other key commodities be traded on the spot market, ie. Immediately – hand to hand? 

As expected the US Federal Reserve this week began the next phase of Quantitative Easing (QE). With $600 billion announced in addition to the $1.7 trillion of last year and $300 billion in train, markets are worried over where this will end and what the full ramifications will be not only in the US but also globally. 

This is an essay by Dr. Mohammad Malkawi first published in March 2008 addressing the root causes of the current financial crisis.