Muslim Banking

[Steve Consilvio]

My view of the world is rather simple: The Love of money is the root of all evil. Interest is the Seed, Fear and Pride fertilize the root. Profit and competition provide the fertile ground.


Muhammed says that one should not engage in transactions with interest, yet interest is everywhere in modern society. Every credit card transaction has the merchant paying interest to the bank.


I have traced the effect that I call The Interest Mechanism back to the Book of Leviticus. http://www.behappyandfree.com/pdf/TheInt...hanism.pdf


I spoke to some Iranian students about banking in Iran, hoping that they may have created an interest-free economy, but instead I discovered that they have also recreated the previous banking system with interest. This problem goes back thousands of years.


My question is this: Are there any Muslim communities practicing within an interest-free monetary system? It seems unlikely that there are any countries that are doing so, but I would like to know more about what is happening in any smaller communities if they exist.

[mohsie]

Yes interest-free economy does exist. For a fully-detailed answer, please watch the two-part video titled "Interest Free Economy" available on this page (and while you are there, you can watch some of the other videos too. They are really good) :


http://www.aswatalislam.net/DisplayFilesP....Name=Zakir_Naik


It is old, so there are many updates to it now. There are more Islamic Banks worldwide. In UK there is one fully functioning now. In fact, I have just opened an account with them and I am transferring over.

[Steve Consilvio]

Yes interest-free economy does exist. For a fully-detailed answer, please watch the two-part video titled "Interest Free Economy" available on this page (and while you are there, you can watch some of the other videos too. They are really good) :


http://www.aswatalislam.net/DisplayFilesP....Name=Zakir_Naik


It is old, so there are many updates to it now. There are more Islamic Banks worldwide. In UK there is one fully functioning now. In fact, I have just opened an account with them and I am transferring over.

He is wrong that interest to a business is different than interest to an individual. A "business" is just a piece of paper, there is still a person behind it.


Also, it is interesting that he spends so much time talking about intoxicants, since I call Interest an addiction. :-)


I've only watched half of it so far, will catch more later.


I could give a talk like that in my sleep. A recent breakthrough I had is that the problem is not just Interest, but also the concept of "profit" itself, (what Marx called Surplus Value.)


I look forward to watching the rest of Part I an Part II.


Please tell me more about your bank that you arte moving to. Do they have a website?

[mohsie]

He is wrong that interest to a business is different than interest to an individual. A "business" is just a piece of paper, there is still a person behind it.

Do you suppose you could give the context in which he said it, and I'll try to explain. I watched this some time ago so I don't remember everything.

Also, it is interesting that he spends so much time talking about intoxicants, since I call Interest an addiction. :-)

I agree. Interest is an addiction. It's easy to get too "interested" in it!

I could give a talk like that in my sleep.

so you are a sleep talker eh? My little sister is a sleep talker. Alhamdulillah I was a heavy sleeper so wasn't bothered too much, but my grandma (may Allah bless her) has had many sleepless nights!

Please tell me more about your bank that you arte moving to. Do they have a website?

Yes they do. Sorry I meant to mention it in my post above but forgot. It is http://www.islamic-bank.com

[Steve Consilvio]

Do you suppose you could give the context in which he said it, and I'll try to explain. I watched this some time ago so I don't remember everything.


I agree. Interest is an addiction. It's easy to get too "interested" in it!


so you are a sleep talker eh? My little sister is a sleep talker. Alhamdulillah I was a heavy sleeper so wasn't bothered too much, but my grandma (may Allah bless her) has had many sleepless nights!


Yes they do. Sorry I meant to mention it in my post above but forgot. It is http://www.islamic-bank.com

From the Banks website:

Investor Relations
Our shareholders are currently made up of certain leading Islamic Banks and other institutions from the Middle East, including Qatar International Islamic Bank, as well as individual investors who share our passion to create this bank. These individuals include some of the most senior members of dedicated Islamic Banks and finance companies in the UK, Qatar, Abu Dhabi, Bahrain and Saudi Arabia.


We had £14 million in start-up capital from them, raised from Private Placement. We have increased this amount substantially through an Initial Public Offering in the UK and by another Private Placement in the Middle East, by which we raised between £40-50million – sufficient for our medium term business development objectives.


It is our intention to make our shares available to all interested individuals – we intend to create an inclusive bank that reflects a more inclusive society, and welcome applications for shares from anyone, both Muslim and non-Muslim alike.


The additional capital will enable us to rapidly implement our plans for the expansion of our service, which include a much wider branch network, new customer propositions and the provision of an Internet banking facility.

OY! This is the same old crap with a new wrapper.


You know what the great joke is, Mohsie? We are all Jews!


The Jews pay for their sins seven times for not obeying God, and when we fail to obey God we pay for our sins seven times over, too. Do you know how that happens?


Our children pay.


The mistakes we make last for generations, just as the mistakes our ancestors made are what we pay today.


Did you read my flyer called The Interest Mechanism? It's all about understanding the nature of a geometric progression. Like a ripple in a pond. Do the right thing, and it ripples out. Do the wrong thing, and it ripples out.


Note, I am not suggesting you not use the bank. Use it, and pressure them gently to think deeper. The video linked the idea of charity and usury. Lending without interest is not charity, because you get your principal back. Giving charity when it is based on the gains from interest is not charity either, because you are simply profiting from the poor and giving to the poor.


Currently, many banks in America have formed 501-c3 non-profit organizations. So they pretend to be charitable, and get a tax-exemption, when in fact they are causeing the problem to get worse. (I call it 501c3 hegemony.)


The reason there are rich and poor in society is because the system AUTOMATICALLY divides the wealth. That is why God banned interest and profit. A small change is all it takes for there to be peace and wealth on Earth, but people's various forms of bigotry blind them to the possibility.


I can document this, too. There is a book called The Great Wave which shows wherever there is a pricing equilibrium (no inflation) there is a renaissance, and where there is inflation, eventually there is social unrest. (class struggle in various forms of blame.) God's commandments are for real, but we really need to follow ALL of them, and not make exceptions or water them down. He traces the effect from the year 1208, but like most economists he blames the wrong things. (He thinks it is population growth and monetary policy.)


Ultimately, the rules of society reflect people's understanding of the commandments. If we poorly understand the commandments, then we poorly construct laws and personal habits. If everyone followed the commandments, we wouldn't need any laws. Or money for that matter. Money is an intellectual agreement, once it is used in a predatory way, the pebble is dropped. The New York Stock Exchange and international currency is just the other end of the wave. Osama attacked the obvious (the rich) on 9/11, but he missed the subtle: There is no difference between financial predatory behavior and physical predatory behavior.


I bring Osama up because puzzling through what he was thinking is what filled in some missing pieces in my own understanding of things. Later I discovered a letter he wrote that confirmed what I suspected he was thinking. His complaint about Interest is valid, but he doesn't grasp the importance of it in history. He blames America when he should be blaming himself. As we all should. We are all a partner with the Devil in some way, that is what "the struggle" (jihad) is really about. It has nothing to do with which religion one belongs to, we are all equal in that regard. We need to trust the Spirit.


This is such a huge problem. I think the only way to truely correct it is a Worldwide Jubilee.


peace

[mohsie]

Business and finance and economics is so totally not my cup of tea, so I can't answer most of your questions simply because I don't know. Hopefully someone who knows this field better will be able to respond.

Did you read my flyer called The Interest Mechanism?

Sorry not yet. My Adobe Acrobat is messed up!

Lending without interest is not charity, because you get your principal back.

Well, depends on your definition of charity. If a smile can be charity, why can't lending money without interest not be charity. If the person you lend the money to can benefit from it, then that is charity. Of course you have to have the correct intention.

That is why God banned interest and profit.

God banned interest, not profit. Allah tells us in the Glorious Qur'an:
Those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. That is because they say: "Trading is only like Riba (usury)," whereas Allah has permitted trading and forbidden Riba (usury). So whosoever receives an admonition from his Lord and stops eating Riba (usury) shall not be punished for the past; his case is for Allah (to judge); but whoever returns (to Riba (usury)), such are the dwellers of the Fire - they will abide therein.



<i>( سورة البقرة , Al-Baqara, Chapter #2, Verse #275)</i>


Why would trading be permitted if not for profit? What's the sense in buying for example a bag of rice for £5.00, and then selling it again for the same price? Why even bother? Even a little child will tell you that doesn't make any sense.

We are all a partner with the Devil in some way, that is what "the struggle" (jihad) is really about. It has nothing to do with which religion one belongs to, we are all equal in that regard.

I agree there. If only more people understood that! The first Jihad compulsory upon every human being (notice I didn't say Muslims... but every human being) is the jihad against oneself, and against one's own desires and lusts, and against our biggest enemy, Satan! As Allah says in various places in the Glorious Qur'an:
O you who believe! Enter perfectly in Islam (by obeying all the rules and regulations of the Islamic religion) and follow not the footsteps of Shaitan (Satan). Verily! He is to you a plain enemy.



<i>( سورة البقرة , Al-Baqara, Chapter #2, Verse #208)</i>


And say to My slaves that they should (only) say those words that are the best. (Because) Shaitan (Satan) verily, sows disagreements among them. Surely, Shaitan (Satan) is to man a plain enemy.


<i>( سورة الإسراء , Al-Isra, Chapter #17, Verse #53)</i>


Did I not ordain for you, O Children of Adam, that you should not worship Shaitan (Satan). Verily, he is a plain enemy to you.


<i>( سورة يس , Ya Seen, Chapter #36, Verse #60)</i>


And let not Shaitan (Satan) hinder you. Verily, he (Satan) to you is a plain enemy.


<i>( سورة الزخرف , Az-Zukhruf, Chapter #43, Verse #62)</i>

This is such a huge problem. I think the only way to truely correct it is a Worldwide Jubilee.

You mean like a financial Empire? or is that some economics term that I wouldn't know about?

[Steve Consilvio]

Trade is not the same as profit. It took me a long time to figure this out. Worse, it was in front of me the whole time, and I didn't see it.


Money is a way for everyone to trade their time, regardless of what their skill or talent is, since all services are necessary for the whole. Profit puts one person at an advantage of another person, thus it is no longer trade. This imbalance results in inflation, since the person who asks for more forces everyone else to ask for more, too. The ripple effect (geometric progression) begins from taking profit, just as much as it does from taking usury.


In modern times, we have now done the same thing to land. At one time land was very abundant and inexpensive, now it has been surveyed and marked on paper and cut into tiny little pieces. Interest causes the land to appreciate, regardless of if the land has any value in creating food, etc. People then want to sell the land for more to cover the interest they paid and to "get even" with all the inflation.


It is a really bizzare thing, but profit makes everyone poorer. But it is not surprising when you think about it. Why would competition be better than cooperation?


Interest greatly distorts the value of land and the marketplace. Franklin wrote an essay on the need for paper currency at age 23 which really became the foundation of the modern world, unfortunately he misdiagnosed the problem, but he was extremely close. His solution (paper currency) extended the ability of everyone to engage in interest. Rather than reducing the problem, it spread it.


A Modest Enquiry into the Nature and Necessity of Paper Currency by Ben Franklin


It's short, and a rather remarkable piece of writing for someone so young in a world of little technology. Obviously people must have been having deep verbal conversations regularly, of which no record exists.


http://www.behappyandfree.com/index.php?op...id=74&Itemid=42

[mohsie]

Trade is not the same as profit.

Of course they are different. Trade is done with the AIM of making a profit. And sometimes, you don't get that profit. You could just break even, or even go into a loss. In the latter case, you have traded goods and/or services but not made a profit. So trading does not necessarily mean making profit.

Money is a way for everyone to trade their time, regardless of what their skill or talent is, since all services are necessary for the whole.

Exactly. That is what the profit is... it is a payment of the time you spent in for example, going all the way to the supplier to buy the goods, then bring it to your shop and make it available in smaller quantities for the consumers. So the profit is simply the payment for the time spent. Of course this profit shouldn't be extortionate, and should be justifiable, taking into consideration the expenses incurred, like transporting the goods from the warehouse to the shop.... as they say Time is Money

Profit puts one person at an advantage of another person, thus it is no longer trade.

Seems like you have a different definition of trade than what I learnt in school. Trade is the buying and selling of goods and/or services with the aim of making a profit. You may be involved in processing the goods/services in one way or another between the buying and the selling, even if it is just transporting it. The profit that one asks for is the payment for this processing. Again, of course it should be a reasonable amount.

It is a really bizzare thing, but profit makes everyone poorer.

How? Interest is the one that causes inflation. But in profit/loss sharing, there would be no inflation at all if everyone was honest enough to charge just the right amount of profit for their time.
... and dude, you are getting your stuff from a website titled "Be Happy and Free" ... what kind of info do you expect to get there? No offence, the guys there probably know what they are talking about... but the name seems to give a picture of a few guys who made a loss in business, and are p***ed off at the whole idea of trade and profit! That's the picture I get in my head!

[Steve Consilvio]

LOL That site is my site. And there is some truth to what you said. I am "p--- off" about the idea of profit (not trade.) The system doesn't work.


What you described is Marx's theory of Capital, which is Adam Smith's theory of Capital. Amazingly, they both say the same things, but people think of them as opposites since Smith was on the side of the "producer" and Marx was on the side of the worker. Smith reeks of bigotry and self-righteous superiority (Indians were savages with no "civilized" system.) Marx has the same bigotry and self-righteousness, but it is directed at the Robber Barons.


Not only is their economic theory wrong, so isn't their cultural pride.


I am an entrepreneur and a capitalist. I've won and lost, and am poised to win again, but I don't want to win. "Win" is a facade. The numbers are meaningless. What matters is how we treat each other. The easiest way to be rich, however, is to sell fear or pride.


but i am not fretting. I am "happy and free" and doing my best (however unsuccessfully) to serve the Lord.

[mohsie]

LOL That site is my site. And there is some truth to what you said. I am "p--- off" about the idea of profit (not trade.) The system doesn't work.

sorry didn't mean to offend there. Anyways, the system may not have worked for you but the whole world lives on profit. Yes, even those that are based on interest. For example, the bank will charge a higher interest rate on money lent than on money deposited with them. The difference is the profit.

What you described is Marx's theory of Capital, which is Adam Smith's theory of Capital. Amazingly, they both say the same things, but people think of them as opposites since Smith was on the side of the "producer" and Marx was on the side of the worker. Smith reeks of bigotry and self-righteous superiority (Indians were savages with no "civilized" system.) Marx has the same bigotry and self-righteousness, but it is directed at the Robber Barons.
Not only is their economic theory wrong, so isn't their cultural pride.

Not a single word of all that made any sense to me!! Hehe. Not your fault.

What matters is how we treat each other. The easiest way to be rich, however, is to sell fear or pride.

Don't sell your fear of God though! Otherwise you will be the poorest of the poor!!
ok, just wanted to address the topic of inflation. In Islam, the issue of inflation is totally avoided by measuring the value of everything against the value of gold or silver. These two commodities have a fixed value. i.e. a gram of gold 1400 years ago is still worth one gram of gold now, and will remain worth one gram of gold in 50,000 years inshaAllah. So, when making a long-term contract or giving a long term loan, it is best to specify the amounts as weights of gold or silver. In this way, inflation is not an issue any more, and neither party can be potentially at a disadvantage since the value of money changes by the minute, whereas the value of gold... or rather, the weight of gold stays the same.