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> The real effect has been to stabilize the economy. The economy only needed stabilization because it was running on usury. If you ban usury, as Islam does, th

by azth 5y ago

> The real effect has been to stabilize the economy. The economy only needed stabilization because it was running on usury. If you ban usury, as Islam does, then you wouldn't need fake money that can be printed at will, and these crazy periodic cycles won't happen. It's not like today is stable anyway, I've spoken to several people in finance and they admitted to me these things.

ericmay 5y ago
Just to be clear you’re suggesting high/predatory interest rates are the reason that the economy needs stabilization? If so, my frame of reference for predatory is like 15%, 27%, etc. numbers like that. Is that what you’re saying? If so can you expand on your thoughts here and link these two elements together better? I generally associate high interest rates with high risk. I’d loan my friend $500 for 0% interest. But some person I’ve never met who is sketchy? That would be a 25% rate with collateral. Ya know? Are you tying this into the Federal Reserve somehow? Is it interest rates for mortgages that you view as predatory? Small business loans?
- azth 5y ago
  I'm suggesting that any non zero rates are predatory. Loans should be reserved as acts of charity, as Islam dictates. Otherwise, it will open up to running the economy on debt, which is exactly what we see today. Debt fuels more debt, more inflation, it's a rolling snowball. It's no wonder we're in the mess we see today. Of course dissociating the currency from gold or other precious metals allows them to print more money to pay off their ever growing debts. This is how all these factors are connected. Not to mention immoral acts like gambling (aka put and call options) and selling what you don't own (shorting), all of which are prohibited in Islam, are contributing causes as well.
  - ctvo 5y ago
    Trying to roll back the clock to the golden age of Islam is not something you’d expect to find in HN’s comments section. Liquidity fits into your world view how? In its most simple form: A business or person needs money to buy resources to make things to earn money. Do they go to the Sultan and beg for a loan based on charity?
    - azth 5y ago
      > Trying to roll back the clock to the golden age of Islam is not something you’d expect to find in HN’s comments section. Why, because most people are not familiar with Islamic history? :) > A business or person needs money to buy resources to make things to earn money. Engage in a fundrise not dissimilar to what people do today with VCs and startups. The investor(s) contribute money in exchange for a portion of the business. If it succeeds, both parties make money, if it doesn't, the investor loses money, and the business owner loses money and effort he put into it. It's true risk sharing.
zozbot234 5y ago
Those people are quite wrong. An unstable unit of value like the gold standard makes bans on usury even less meaningful because you can get into deep debt-deflation even with 0% nominal rates (see "liquidity trap" for what that looks like). Investment cycles can be driven purely by equity investment, although there might be an argument that debt-driven cycles are worse. Anyway, the well-known workarounds that spring up when 'usury' is banned - basically ways of rephrasing 'interest-bearing debt' as 'senior equity'- leave you with practically no advantage over simply having well-designed bankruptcy laws.
- azth 5y ago
  The fallacy you're committing is not looking at how the Islamic world was run before the Western banks took over post WWI/II, as interest is prohibited in Islam. It is well documented that in Iraq during the Ummayyad period, there were no more people left to accept Zakat because everyone truly paid their fair share (not the trite slogans we hear today). There can be cycles due to issues beyond our control, however, the cycles we see today are built into the system because of usury and printing fake money to fuel it. As I said, financial folks I spoke with admitted it.

by azth 5y ago

ericmay 5y ago

Just to be clear you’re suggesting high/predatory interest rates are the reason that the economy needs stabilization? If so, my frame of reference for predatory is like 15%, 27%, etc. numbers like that. Is that what you’re saying? If so can you expand on your thoughts here and link these two elements together better? I generally associate high interest rates with high risk. I’d loan my friend $500 for 0% interest. But some person I’ve never met who is sketchy? That would be a 25% rate with collateral. Ya know? Are you tying this into the Federal Reserve somehow? Is it interest rates for mortgages that you view as predatory? Small business loans?

azth 5y ago
I'm suggesting that any non zero rates are predatory. Loans should be reserved as acts of charity, as Islam dictates. Otherwise, it will open up to running the economy on debt, which is exactly what we see today. Debt fuels more debt, more inflation, it's a rolling snowball. It's no wonder we're in the mess we see today. Of course dissociating the currency from gold or other precious metals allows them to print more money to pay off their ever growing debts. This is how all these factors are connected. Not to mention immoral acts like gambling (aka put and call options) and selling what you don't own (shorting), all of which are prohibited in Islam, are contributing causes as well.
- ctvo 5y ago
  Trying to roll back the clock to the golden age of Islam is not something you’d expect to find in HN’s comments section. Liquidity fits into your world view how? In its most simple form: A business or person needs money to buy resources to make things to earn money. Do they go to the Sultan and beg for a loan based on charity?
  - azth 5y ago
    > Trying to roll back the clock to the golden age of Islam is not something you’d expect to find in HN’s comments section. Why, because most people are not familiar with Islamic history? :) > A business or person needs money to buy resources to make things to earn money. Engage in a fundrise not dissimilar to what people do today with VCs and startups. The investor(s) contribute money in exchange for a portion of the business. If it succeeds, both parties make money, if it doesn't, the investor loses money, and the business owner loses money and effort he put into it. It's true risk sharing.

zozbot234 5y ago

Those people are quite wrong. An unstable unit of value like the gold standard makes bans on usury even less meaningful because you can get into deep debt-deflation even with 0% nominal rates (see "liquidity trap" for what that looks like). Investment cycles can be driven purely by equity investment, although there might be an argument that debt-driven cycles are worse. Anyway, the well-known workarounds that spring up when 'usury' is banned - basically ways of rephrasing 'interest-bearing debt' as 'senior equity'- leave you with practically no advantage over simply having well-designed bankruptcy laws.

azth 5y ago
The fallacy you're committing is not looking at how the Islamic world was run before the Western banks took over post WWI/II, as interest is prohibited in Islam. It is well documented that in Iraq during the Ummayyad period, there were no more people left to accept Zakat because everyone truly paid their fair share (not the trite slogans we hear today). There can be cycles due to issues beyond our control, however, the cycles we see today are built into the system because of usury and printing fake money to fuel it. As I said, financial folks I spoke with admitted it.