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In the Name of God بسم الله

Haji 2003

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About Haji 2003

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  1. “A high risk loan won't have many lenders lining up, increasing the leverage of the willing lender.” Yes in a society where interest charging exists and its availability is subject to free markets - groups of people can be disenfranchised by having credit withheld. Thanks for this. The site would benefit from more contributions by you.
  2. The qunoot works ok with the direct translation and I agree it's far more meaningful if you are aware of its content while saying it. Someone more knowledgeable will likely come along to confirm, but I am not sure that deliberate mistranslation is acceptable. Of course all translation will only ever be an approximation, but still.
  3. It's true that being able to borrow today in order to buy now what you could have bought tomorrow is a benefit of interest rates. The problem is what happens tomorrow? Do you settle today's debt, or take more? And if you borrow more tomorrow what happens the day after? The following is today's news story and one which will ultimately not have a happy ending, whenever that will be. https://www.ft.com/content/1a3172dd-22a8-4123-99c6-631cbf7f7e9f
  4. Thanks for a very full and clearly explained answer. There is an addendum to the above point that you have made. One of the causes behind the financial crash of 2009 was the sale of mortgages to people who obviously could not afford them. However since financial advisors and realtors etc. got a commission they did not care and banks could sell on the debt. The Islamic system neatly bypasses this obvious source of what economists call moral hazard.
  5. The big difference is that paying a mortgage also involves paying an interest component to the bank and our religion has an injunction against paying more to a lender than you originally borrowed. Just because a country has established rapacious universities who charge extortionate fees, for which loans are needed, does not invalidate the Islamic law. It's perfectly possible to have a first world, developed country education system where fees are not charged or if small loans are needed they are offered by government. Overall I think it's interesting that we have North Americans whose societies have been completely overtaken by a loan and interest culture and who are now unable to imagine a society without these.
  6. Especially for the North Americans here, it's worth noting that it's perfectly possible for an advanced western society which performs very well on all socio-economic metrics to have a very high aversion to debt. https://www.bbc.co.uk/news/business-31369185 This is borne out by the following chart which shows "Total household debt as share of GDP in selected countries worldwide in 2020". Rather than emulate the countries at the top of the list, if our religion tells us that interest is bad, we should be looking at the way the countries at the bottom of the list have achieved economic success without taking on as much personal debt as everyone else.
  7. Why not. If owners of capital have the choice of giving money away at 0% or investing in a range of assets varying in levels of risk - why would they not elect to put together a portfolio of assets varying in terms of their riskiness? If they are rational they will do this rather than put their capital under the mattress to be devalued by inflation. You are conflating 'finance' with charging interest. There are multiple ways that financing can happen without resorting to owners of capital gaining risk free returns. Indiegogo and kickstarter for example enable entrepreneurs to bypass banks and raise from customers the funding necessary to put new products into production. In this situation it's customers who now bear risk in a manner that they never did before. And more broadly there are crowd funding options for a variety of different purposes. Well. There was a point in time when I had the chance to get a mortgage and buy property the way people are supposed to. I decided instead to invest in equities (unleveraged). Would I have been better off today if I had taken out a mortgage and invested in property? Yes. Would I have been extremely well off if I had played the mortgage game very aggressively? Yes. My stock returns have provided a comfortable living. But there would have been a wider social cost had I aggressively gone down the property route. My acquisitions would have made it more difficult for someone else to own their own home. And this is one of the issues with credit markets - where money is lent with the use of interest rates as the pricing mechanism - they can exacerbate social/economic inequalities. As with a number of other Islamic injunctions - everything seems to point to social justice being the overall objective.
  8. I think you have answered your own question. In such instances the loan is can only be one of the following: an act of charity irrational Since charity is looked upon favourably in islam we can't discount that. There is of course a third option which is because a loan without interest is effectively charity anyone who is not minded to be charitable will not make a loan. They will go for some other option that offers a return and likely one where they have to bear some level of risk. To my mind Islam sees owners of capital as people able to take risks and so they should. Another item on my list is looking into Islamic views on risk-taking (I have a hunch it's looked upon favourably), based on hazy recollections of ayats referring to travellers. Islamic injunctions against riba make no sense if seen through the lens of the existing system that is very much based around riba. I've created a new thread here that shifts the focus away from the personal to the macroeconomic.
  9. Certainly well worth a watch. Thanks. Not many laypeople will have established reasons for either agreeing or disagreeing with him on all the points he raises.
  10. Salaam You should find the following useful: https://www.duas.org/mobile/ziyarat-shah-abdul-azeem.html And my blog (but it's getting a bit old): http://www.iranziarat.com/tehran.html
  11. This thread is not about individuals This thread is linked to the usury threads on Shiachat. The latter threads usually focus on whether an individual can put money in an interest bearing account or take out a mortgage, for example. Of course the Islamic injunction against riba has consequences for both individuals and nations. This thread is about the latter. Why macroeconomic effects matter So the unit of analysis here is the broader economy and understanding the impact at this level is important because it determines how practical a move to banning usury would be. Starting assumption Best make this clear at the outset. At my end this analysis will be based on the assumption that major religions having a poor view of usury means that it is bad and we need to look for evidence as to why and consider how it can be removed. I am not writing this with a view to possibly coming to the conclusion that it can be business as usual. Is the Islamic approach a theoretical abstract? It can be hard to consider what the macroeconomic implications of Islamic injunctions may be when adherence is patchy at best. The alternative What I thought was worth focusing on was the fact that in recent years various economies have experienced very low or even zero interest rates. So the effect of these could be assessed. It's not a perfect alternative, obviously, (as we shall see) but it's something. Source To kick off here is some material from the Federal Reserve Bank of St Louis (please no links to Youtube videos about how the Fed is a bad actor). Unlike other papers on this subject it's a relatively easy read, but obviously it only skims the surface of what are quite complicated concepts. Everything in quotation marks below is from the following source. https://www.stlouisfed.org/publications/regional-economist/october-2010/low-interest-rates-have-benefits--and-costs Benefits of low interest rates Stimulative here meaning that more money gets invested in economic activity. Not really applicable to a situation where you want to ban usury. Raising asset prices incentivises people to invest in those assets. Costs of low interest rates The above can lead to a problem though and its the first one the authors claim to be a cost of low interest rates: Noted. This impact would not matter in an Islamic context, I think. The Islamic injunction against usury is, in my understanding, designed to stop those who are well-off increasing the disparity between themselves and others. So if the Fed believes low interest rates penalise savers in an Islamic value system, this is not a problem. This point is valid, I think. But I see it as a positive. An Islamic economic system would also ban speculation, so certain risky assets would be excluded anyway. But other types of risky activity would be stimulated e.g. research and development in science and technology, which is overall a very good thing. There are some other criticisms cited, but I don't think they are a big issue. Conclusion As it stands I don't see anything here that is a deal-breaker to the banning of usury.
  12. You're a refugee fleeing war, but still have time to be racist towards people in the host country
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