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Events like these make it clear why the vast majority of Wall Street practices are banned in Islam (including shorting). It's a terrible predatory practice that

Events like these make it clear why the vast majority of Wall Street practices are banned in Islam (including shorting). It's a terrible predatory practice that is not just gambling, but also creating artificial risk that does not correspond to the value being created from such transactions. This can easily collapse the entire market as we already saw in 2008 and many times before. The sooner we prohibit these terrible exploitative practices (lending money with interest being the first to go), the better and stronger and more fair the economy will become. Unfortunately most people don't know, and they jump to things like "tax the rich" which has no meaning really.

whiddershins 6y ago
I am under the impression that Islam technically bans loans. So one would have to do an investment instead of a loan with interest. Do you know if I have this right?
- einarfd 6y ago
  My understanding is that it isn't the loan that is banned but charging interest. A fairly simple workaround would then be to charge a monthly fee instead, and you would then end up with something that in practice is more or less the same.
  - npteljes 6y ago
    This is my takeaway with religious practice. If something is desired, but banned, people will find something that is practically similar enough, and technically allowed by the religion.
    - gher-shyu3i 6y ago
      Except with Islam, since its texts are clear enough to warn about and prohibit what you're describing. Don't lump all religions together.
    - whiddershins 6y ago
      In practice, religions tend to have institutions that parse and interpret the text, and make a clear, unambiguous interpretation for a given situation. So people might tell themselves they are doing a workaround, but it is not really valid from the point of view of the organized religious body.
  - gher-shyu3i 6y ago
    > A fairly simple workaround would then be to charge a monthly fee instead, and you would then end up with something that in practice is more or less the same. No. Islam bans all these workarounds. What you describe is still a money for money exchange. Interestingly enough, Islam does not just ban interest, it has a concept of Riba, which includes interest/usury, but encompasses other transactions as well. What you describe falls squarely under Riba.
- gher-shyu3i 6y ago
  In Islam, loans are purely an act of charity. A person lends another person a certain amount of money, and they are not owed anything in return (tangible or intangible) other than that same amount of money. In general, you're correct. People invest their money, with the possibility of profit or loss. One reason interest is prohibited is that the lender is contractually obligated to a profit regardless of the outcome.
- fzil 6y ago
  So I grew up in a traditional muslim household, here's my understanding of things as they've been taught to me. generally there are 2 types of loans, 1. Kharz Hasan (Loan of goodwill) given out to people/institutions without any collateral, sometimes even without a term limit. Its up to lender to decide if they want their money back or forgive the loan which then turns this loan into a "Sadqah" (charity). 2. Loan with a collateral: this is the standard loan where the two parties agree on a collateral and lend money based on that. Neither of these above loans involve any kind of interest. (My) Islamic Understanding of Mortgages: The risk profile is different compared to normal. Normally what happens is that institutions loan the amount of money and you buy the property and pay interest on the money. In the Muslim Model, the institutions BUY the property and you pay money. The money you pay goes partly towards buying the property and the partly towards paying "fees" to use the property that you don't completely own. You can see why people would say things like, "oh, they are skirting the rules by changing the name from interest to fees". However, a "proper" implementation would put more burden on the banks in case of a crash. Hope that clears up few things.
  - gher-shyu3i 6y ago
    > In the Muslim Model, the institutions BUY the property and you pay money. The money you pay goes partly towards buying the property and the partly towards paying "fees" to use the property that you don't completely own. Check out what the Companions Ibn Abbas and Ibn Mas'oud said about such a transaction. It's still Riba (usurious) because the price of the house or asset is raised in exchange for postponing payment. It's only relatively recently with the heavy influence of Western banks that this "model" has gained some traction, but it remains a usurious transaction and many scholars have spoken against it.
sudosteph 6y ago
It's crazy to think that I was raised going to church every Sunday, and I had never even heard the word "usury", or even the idea that lending money at interest might be morally wrong, until I started reading gnostic christian texts. It's there, the ancient church used to talk about it, but we don't anymore. It's weird to think that this entire piece of morality, which was taken seriously in the past, has just been erased from western culture.
- gher-shyu3i 6y ago
  Exactly. They change the names to something more palatable. "Usury" became "interest", so it's all good now. In reality, it's all the same parasitic morally bankrupt garbage.
scatters 6y ago
Ah, because countries with Islamic finance are renowned for the strength of their economies. The Catholic Church prohibited usury across Europe until the invention of the contractum trinius, allowing the economic revolution that powered the Renaissance and the transition to modernity.
- gher-shyu3i 6y ago
  Correlation vs causation. If you look at Iraq during the Ummayad dynasty (Umar II), there was a period of time when there were no poor people left to take charity (Zakat). Would be nice to see that again in "modern" financial economies.
- hh3k0 6y ago
  > Ah, because countries with Islamic finance are renowned for the strength of their economies. As opposed to the Western world and its traditional decennial world-threatening financial crisis? And the ever-widening gap between rich and poor?
  - scatters 6y ago
    The fact that the West's economic crises - which, viewed in the long term, are bumps in a continual upward trend - can threaten the economy of the world as a whole is testament to the strength of its economic model. And the gap between rich and poor is ever-shrinking, not widening, as poor countries develop by adopting modern technologies and institutions.
    - gher-shyu3i 6y ago
      It doesn't change the fact that the modern financial and economic system are morally bankrupt. We don't learn from our mistakes, and it becomes normal to have these cycles of collapse then build back. These cycles are caused by interest/usury being at the core that drives the system (why did the government move away from the gold standard? because they want to be able to print their way out of their usurious debts, it's all related). Look up Iraq during Umar II's rule, how there were no people left to take Zakat because there was a proper economic system.
kleer001 6y ago
I really love the way they do home buying. Basically no-interest, but also no opportunity for mortages. The bank owns the house until you've completely paid it off. I looked a little but couldn't find a longer article explaining it in more detail, but it should be easy enough to search out for interested parties.
- gher-shyu3i 6y ago
  To be fair, those transactions are also usurious, because they increase the price of the asset in exchange for postponing payments. There are several Hadiths (narrations) that prohibit that transaction.
  - kleer001 6y ago
    Nice. I guess I only love it in theory. Humans gunna human.
    - gher-shyu3i 6y ago
      It's very tempting to deal with interest that's for sure, but we have to sacrifice for the greater good. We already see around us what's happening due to parasitic economic practices.

whiddershins 6y ago

I am under the impression that Islam technically bans loans. So one would have to do an investment instead of a loan with interest. Do you know if I have this right?

einarfd 6y ago
My understanding is that it isn't the loan that is banned but charging interest. A fairly simple workaround would then be to charge a monthly fee instead, and you would then end up with something that in practice is more or less the same.
- npteljes 6y ago
  This is my takeaway with religious practice. If something is desired, but banned, people will find something that is practically similar enough, and technically allowed by the religion.
  - gher-shyu3i 6y ago
    Except with Islam, since its texts are clear enough to warn about and prohibit what you're describing. Don't lump all religions together.
  - whiddershins 6y ago
    In practice, religions tend to have institutions that parse and interpret the text, and make a clear, unambiguous interpretation for a given situation. So people might tell themselves they are doing a workaround, but it is not really valid from the point of view of the organized religious body.
- gher-shyu3i 6y ago
  > A fairly simple workaround would then be to charge a monthly fee instead, and you would then end up with something that in practice is more or less the same. No. Islam bans all these workarounds. What you describe is still a money for money exchange. Interestingly enough, Islam does not just ban interest, it has a concept of Riba, which includes interest/usury, but encompasses other transactions as well. What you describe falls squarely under Riba.
gher-shyu3i 6y ago
In Islam, loans are purely an act of charity. A person lends another person a certain amount of money, and they are not owed anything in return (tangible or intangible) other than that same amount of money. In general, you're correct. People invest their money, with the possibility of profit or loss. One reason interest is prohibited is that the lender is contractually obligated to a profit regardless of the outcome.
fzil 6y ago
So I grew up in a traditional muslim household, here's my understanding of things as they've been taught to me. generally there are 2 types of loans, 1. Kharz Hasan (Loan of goodwill) given out to people/institutions without any collateral, sometimes even without a term limit. Its up to lender to decide if they want their money back or forgive the loan which then turns this loan into a "Sadqah" (charity). 2. Loan with a collateral: this is the standard loan where the two parties agree on a collateral and lend money based on that. Neither of these above loans involve any kind of interest. (My) Islamic Understanding of Mortgages: The risk profile is different compared to normal. Normally what happens is that institutions loan the amount of money and you buy the property and pay interest on the money. In the Muslim Model, the institutions BUY the property and you pay money. The money you pay goes partly towards buying the property and the partly towards paying "fees" to use the property that you don't completely own. You can see why people would say things like, "oh, they are skirting the rules by changing the name from interest to fees". However, a "proper" implementation would put more burden on the banks in case of a crash. Hope that clears up few things.
- gher-shyu3i 6y ago
  > In the Muslim Model, the institutions BUY the property and you pay money. The money you pay goes partly towards buying the property and the partly towards paying "fees" to use the property that you don't completely own. Check out what the Companions Ibn Abbas and Ibn Mas'oud said about such a transaction. It's still Riba (usurious) because the price of the house or asset is raised in exchange for postponing payment. It's only relatively recently with the heavy influence of Western banks that this "model" has gained some traction, but it remains a usurious transaction and many scholars have spoken against it.

sudosteph 6y ago

It's crazy to think that I was raised going to church every Sunday, and I had never even heard the word "usury", or even the idea that lending money at interest might be morally wrong, until I started reading gnostic christian texts. It's there, the ancient church used to talk about it, but we don't anymore. It's weird to think that this entire piece of morality, which was taken seriously in the past, has just been erased from western culture.

gher-shyu3i 6y ago
Exactly. They change the names to something more palatable. "Usury" became "interest", so it's all good now. In reality, it's all the same parasitic morally bankrupt garbage.

scatters 6y ago

Ah, because countries with Islamic finance are renowned for the strength of their economies. The Catholic Church prohibited usury across Europe until the invention of the contractum trinius, allowing the economic revolution that powered the Renaissance and the transition to modernity.

gher-shyu3i 6y ago
Correlation vs causation. If you look at Iraq during the Ummayad dynasty (Umar II), there was a period of time when there were no poor people left to take charity (Zakat). Would be nice to see that again in "modern" financial economies.
hh3k0 6y ago
> Ah, because countries with Islamic finance are renowned for the strength of their economies. As opposed to the Western world and its traditional decennial world-threatening financial crisis? And the ever-widening gap between rich and poor?
- scatters 6y ago
  The fact that the West's economic crises - which, viewed in the long term, are bumps in a continual upward trend - can threaten the economy of the world as a whole is testament to the strength of its economic model. And the gap between rich and poor is ever-shrinking, not widening, as poor countries develop by adopting modern technologies and institutions.
  - gher-shyu3i 6y ago
    It doesn't change the fact that the modern financial and economic system are morally bankrupt. We don't learn from our mistakes, and it becomes normal to have these cycles of collapse then build back. These cycles are caused by interest/usury being at the core that drives the system (why did the government move away from the gold standard? because they want to be able to print their way out of their usurious debts, it's all related). Look up Iraq during Umar II's rule, how there were no people left to take Zakat because there was a proper economic system.

kleer001 6y ago

I really love the way they do home buying. Basically no-interest, but also no opportunity for mortages. The bank owns the house until you've completely paid it off. I looked a little but couldn't find a longer article explaining it in more detail, but it should be easy enough to search out for interested parties.

gher-shyu3i 6y ago
To be fair, those transactions are also usurious, because they increase the price of the asset in exchange for postponing payments. There are several Hadiths (narrations) that prohibit that transaction.
- kleer001 6y ago
  Nice. I guess I only love it in theory. Humans gunna human.
  - gher-shyu3i 6y ago
    It's very tempting to deal with interest that's for sure, but we have to sacrifice for the greater good. We already see around us what's happening due to parasitic economic practices.