Saturday, 17 April 2021

Inflation and riba




What misguided Muslims who use the inflation argument to justify riba should do, is to calculate the value, in gold, of the sum borrowed from a bank, then calculate the equivalent value, in gold of the sum which is to be repaid to the bank. If there is any difference between the two such that the sum to be repaid is greater than the sum borrowed, that would be evidence of the riba which Islam prohibits.

We may also note that when the Prophet (s) ordered gold for gold and equal for equal the implication is that the lender who lends 100 gold dinars in 1984 is entitled to the return, in 1994, of no more than the same 100 gold dinars (i.e. an equal amount of gold) from the borrower. But the value of one hundred gold dinars lent in 1989 may change by 1994 so relation to the quantity of wheat, for example, which can be bought with it. The price of wheat may increase by 1994 because of a shortage of wheat in the market. The same 100 gold dinars can no longer purchase in 1994 the amount of wheat which could have been bought in 1989. Despite that, the law would still remain unchanged; ‘gold for gold - equal for equal’! Finally it is time for us to understand that inflation is itself a form of riba. It is, in fact a creeping riba which robs us of our wealth without our being even aware of the fact that we are being robbed. The "smart-men’ in the economy, who know how to use the system for their advantage make windfall profits, through inflation. at the expense of the dumb innocent ‘suckers’ who keep on working harder and yet harder for less and less as artificial paper money continuously loses its value.

It is a matter of absolutely critical importance that Muslims should carefully study the prophecy of the Prophet (s) in which he has prophesied the collapse of artificial secular currency (i.e. paper. plastic and electronic money, etc.):

Abu Bakr bin Abu Maryam reported that he heard the Messenger of Allah say: A time is certainty coming over mankind in which there will be nothing (left) which will be of use (or benefit) save a dinar and a dirham (gold and silver coins).
(Ahmad)

That prophecy of Prophet Muhammad (s) is about to be fulfilled. Today’s monetary system uses paper to make gold. That is fraudulent! Paper-money is riba. Let us explain.

Suppose your grand-father died in 1971 and left an estate of 100 gold coins which you inherited. And suppose further, that since you wore a baby the money was kept securely stored away for you. Twenty-five years later, in 1996, you asked for your money. The box in which it was stored was opened and you were given the 100 gold coins. Your money had neither increased nor decreased. It remained the same. Gold had functioned successfully as money! It had succeeded in performing one of the most important functions of money, i.e. to be a store of value! It has faithfully performed this function for all of recorded human history.

And now, let us suppose that in 1971 those who were entrusted with the 100 gold coins decided to convert them from real money into artificial money. They fell that paper was a more appropriate and reliable form of money than gold. They were highly impressed by the strength of the American dollar. And they trusted because the American dollar itself proclaimed: In God We Trust. And so they converted the 100 gold coins (i.e. 100 ounces of gold) into American dollars and obtained US$3,500. That was 1971. They put the money away very securely. It could not have been invested because your grandfather had left specific instructions prohibiting such.

In 1996 you asked for your money and they then brought you the American dollars. You declared that you wanted the money which your grand-father had left for you. They then went to the market to reconvert the dollars, to gold and, of course, they continued to believe in the dollars since it declared: In God We Trust. But, to their great surprise, the market gave them only 8 gold coins for the US $3,500. A great tragedy had occurred during those 25 years. 92% of your wealth had been lost. Paper had failed miserably as money. It did not function as a reliable store of value. In fact your low was someone else’s gain. Predators had struck. They had tipped you off by deception. That is riba.

Artificial money is quite different from real money. Real money has intrinsic value, paper money has none. Its only value is that conferred upon it by market forces. The market value of paper-money will last only for as long and to the extent that there is demand for it in the market. Demand is based on confidence. The currency market is now controlled by the most vicious of all speculative forces, forces fueled by compelling greed with no loyalties and no patriotism. Anything which seriously disturbs market confidence will cause the speculative stampede which will fulfill the prophecy of the Prophet (s).

Here is an example: If Muslims gain control over their oil resources and demand that they be paid for their oil sports with gold rather than dollars made of non-redeemable artificial paper money, there will be significant loss of confidence in paper currency. Why should this be so? Non-redeemable paper, plastic or electronic money has value only to the extent that people are prepared to recognize it as possessing value. When public confidence in a currency is shaken, its value will collapse. A demand for gold, as payment for oil, will have the effect of shaking confidence in paper money. Speculative forces in the currency market will greedily seize that opportunity to make the killing of a lifetime. That in turn can cause the collapse of today’s fraudulent international monetary system based on non-redeemable paper money. Money is the very foundation of capital. The collapse of money in what may best be described as a money melt-down, will witness the collapse of riba-based capitalism. Those who have real money will survive while those speculators who successfully exploit the collapse will make the greatest profits ever. The masses will lose their wealth. They will be caught with worthless paper parading as money. That is a financial holocaust which is just waiting to occur. And it has been predicted by others as well, besides the Prophet (s)

Judy Shelton, for example, uses the term: ‘Money Meltdown’ as the very title of an excellent book which she has written in international monetary economics..

We should not forget, nor allow the world to forget, the dramatic ominous and unprecedented collapse of the US dollar in January 21, 1980, when the value of the dollar relative to gold fell to $850 an ounce! In 1970 it was $35 an ounce. Its present value is about $380 an ounce. This collapse of the dollar look place in the immediate wake of the successful anti-western Islamic revolution in Iran which gave control of the vast oil resources of Iran to an anti-systemic Islamic government. Iran’s government is anti-systemic since It is based on non-secular foundations and it challenges the secular model of society and the political and economic world order produced by modem Godless European secular civilization. The stabilization of the price of gold at its present level is the result of the success of policies were designed to contain the Islamic revolution to Iran.

Why should an Islamic revolution in Iran threaten a collapse of the international monetary' system? The experts in international monetary economics are silent! The predatory speculative forces which precipitated that collapse are even more silent. This is because they are aware of the prophesy of the Prophet (s). They feared that the prophesy was about to be fulfilled. In fact, it was not the moment. It was only the first whiff of smoke from the fire which is coming!

There is perhaps, no other medium through which more of mankind are touched by riba today than through paper currency issued by corrupt unscrupulous governments. Today's paper currency no longer functions as receipts redeemable for gold and silver, i.e., precious metals which were created by Allah, the Most high, to serve as currency (among other things). Paper currency is entirely artificial wealth and as such, is most certainly fraudulent. And fraudulent transactions which damage the entire structure of the free and fair market are a form of riba! It is through the universal prevalence of fraudulent paper currency today (i.e. paper currency which cannot be redeemed for real value) as well as through the fact that tending and borrowing, on interest constitute the very foundation of the capitalist economy which now dominates mankind, that the prophesy of the Prophet (s) regarding riba has now been fulfilled. In fact it has been fulfilled within the lifetime of some who are still alive today:

Abu Hurairah reported that the Messenger of Allah said: A time will come over mankind when not a single person will remain who does not consume riba, and if one does not consume it, its vapor (or alternatively its dust) will reach him.
(Ahmad, Abu Daud, Nasai, Ibn Majah)

The world of Islam was still largely free of riba and of fraudulent artificial paper currency up to the moment when the Ottoman Caliphate was abolished. The abolition of the Caliphate in 1924, and its replacement with secular nation States all over the Muslim world, opened the floodgates for the wholesale incorporation into the body of the Ummah of all the evils of secular western capitalist economy including the total corruption of the free market. The Islamic Movement will have to take the initiative, wherever it is possible to do so, to try to restore the free market, and this requires the reintroduction of gold and silver coins as the medium of exchange. We should not only recall but also deliberate seriously over the prophecy of the Prophet (s) quoted above:

Miqdam bin Ma’adikarib said that he heard Allah's Messenger say: A time is certainly coming to mankind when only the dinar and the dirham will be of use.
(Ahmad)

This indicates a prophecy of Prophet Muhammad (s) of truly momentous importance to the effect that the entire monetary system of artificial money in the form of paper, plastic and electronic money will collapse one day. On that day and henceforth all paper currency will be worthless paper.

to be continued . . . . 

The Prohibition of Riba (Interest) by Imran Hosein



The Prohibition of Riba (Interest) (Q&A) by Imran Hosein



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