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Ok, this is kind of fascinating. So interest is bad. Is rent bad? If I have a car or a house is it bad if I rent it out? How about if I had a bag of cash, i

by bertjk 6y ago

Ok, this is kind of fascinating. So interest is bad. Is rent bad? If I have a car or a house is it bad if I rent it out? How about if I had a bag of cash, is it bad if I rent that out? How are the two scenarios different?

gher-shyu3i 6y ago
Renting a car or house is very different from renting money. When you rent out a car, there are many logistics involved, and there needs to be work done to upkeep the car or house (maintenance, repairs, etc.). The asset itself is consumed. There is risk involved, and the "lender" (the asset owner) is not guaranteed profit (the house might burn down or the car might get totaled). Being a landlord is not easy. Compare that to money, which Islam sees as a means to an end, not as an ultimate goal in and of itself (that doesn't mean that Islam is against gaining wealth, on the contrary, as long as the wealth is gathered and spent in good, there is a lot of reward for it). Money when lent out is never consumed. It's an abstract thing that the lender is contractually owed it plus the lending fee (interest). For literally doing basically nothing, he's able to generate income while taking minimal risk, and exploiting the borrower at the same time. If the borrower defaults, the lender is able to go after him for not just the principal, but the interest as well. He'll go after his assets and sell them to make his basically guaranteed profit. Furthermore, it's possible to chain debt in a way that becomes a series of dominos, where if the first one topples, everything goes. We've seen this in 2008, it's inherently built into the system. You can't really do this with rent. While you can technically sub lease, there is a limit in practice, and because of fees, it isn't really feasible to go more than one or two steps. Not so with lending. You have borrowing on top of borrowing for instance, people take out loans against their partially paid for mortgages, to take out more mortgages, to buy property. Then the whole thing collapses at a moment's notice when the markets become finicky. Banks pool debts and sell them in packages, we've seen the end result of that.

by bertjk 6y ago

gher-shyu3i 6y ago

Renting a car or house is very different from renting money. When you rent out a car, there are many logistics involved, and there needs to be work done to upkeep the car or house (maintenance, repairs, etc.). The asset itself is consumed. There is risk involved, and the "lender" (the asset owner) is not guaranteed profit (the house might burn down or the car might get totaled). Being a landlord is not easy. Compare that to money, which Islam sees as a means to an end, not as an ultimate goal in and of itself (that doesn't mean that Islam is against gaining wealth, on the contrary, as long as the wealth is gathered and spent in good, there is a lot of reward for it). Money when lent out is never consumed. It's an abstract thing that the lender is contractually owed it plus the lending fee (interest). For literally doing basically nothing, he's able to generate income while taking minimal risk, and exploiting the borrower at the same time. If the borrower defaults, the lender is able to go after him for not just the principal, but the interest as well. He'll go after his assets and sell them to make his basically guaranteed profit. Furthermore, it's possible to chain debt in a way that becomes a series of dominos, where if the first one topples, everything goes. We've seen this in 2008, it's inherently built into the system. You can't really do this with rent. While you can technically sub lease, there is a limit in practice, and because of fees, it isn't really feasible to go more than one or two steps. Not so with lending. You have borrowing on top of borrowing for instance, people take out loans against their partially paid for mortgages, to take out more mortgages, to buy property. Then the whole thing collapses at a moment's notice when the markets become finicky. Banks pool debts and sell them in packages, we've seen the end result of that.