18 November 2009

Currency of Ransoms: Gold vs Fiat

The Times has an interesting story in "Army tells its soldiers to 'bribe' the Taleban", where it describes some aspects of a newly published counter insurgency manual.

According to the article from the Times,

"British forces should buy off potential Taleban recruits with “bags of gold”,"
.
This story reminded me of one of the aspects of the invasion and subsequent occupation of Iraq by coalition forces. Following the collapse of the Iraqi regime there was and is continuing a series of kidnappings - see, for example, "Foreign hostages in Iraq."

As this turn of events began to unfold, I began to notice that some kidnappers would demand a ransom to be paid in gold; others would demand the ransom to be paid in US dollars. Also, the journalist or news organisation reporting these stories would tend to convert the ransom demand into national currency: a pernicious example of Gonzo journalism. When the story was just breaking it would give an accurate report; as the story was re-written throughout the day, it would give the conversion and then simply give the national currency equivalent as though that was the demand.

This may explain why the internet doesn't yield the results of ransom demands denominated in gold. However, my memory tells me this is what happened.

When I noticed this anomaly, I wondered why and who. Why would a particular group of kidnappers demand US dollars; why would a particular group demand gold.

As to who: I imagined that the US dollar kidnappers were CIA proxies whilst the gold kidnappers were bona fide kidnappers (if that isn't a contradiction). I have no other evidence for this statement; I just remember it being very strange that in what was a failed state, anyone would dealin such large sums in US dollars rather than gold.

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