Money grows on trees, but the banks take the harvest

Below is the text of an editorial by Common Sense editor Sahib Mustaqim Bleher for issue 23 on the topic of alternative economics.

We talk a lot about money in Common Sense, not because, like most, we haven't got enough of it, as we have got used to making do with little, but because in solving the money problem lies the key to resolving the greater part of the ills of modern society. This is not to say that all man-made problems are due to a lack of money. Often a lack of faith is the source of much evil in our lives, but for those who still believe the Qur'an to be true in its entirety, the forcefully expressed prohibition of usury and interest by a declaration of war from Allah and His messenger against those who persist in illicit usurious gain indicate that the attempt to establish a just economy is essential to the preservation of faith. Today's global society has become increasingly godless, and the unchecked exploitation of man by man is a clear symptom of this disease. As it has always been the task of believers throughout history to call to both faith and justice, the Islamic Party of Britain has made the attack against an unjust, interest-based monetary system a key element of its programme.

Readers of Common Sense are, therefore, familiar with many of the arguments in favour of a humane and equitable economic model. Issue nr. 2 of Common Sense had been entirely devoted to this subject, but has been out of print since long. This present issue is intended to be another compilation of valuable reference material for all those active in trying to convince others not only of the futility of the present finance system, but also of the viability of an Islamic alternative. Some of the earlier materials will be repeated, but a lot has been learnt over the years in the struggle present the Islamic view to Muslims and non-Muslims alike. Too many Muslims are still totally oblivious of the larger picture, too concerned with the own back gardens of cultural isolation, and too brainwashed by modern media-propaganda to sincerely believe that the alternative presented in the Qur'an can actually be applied to the workings of a modern economy.

It is for this latter reason that it is necessary to include the wisdom of many a non-Muslim, from Abraham Lincoln to Napoleon and John F. Kennedy, to show that an interest-free economy is not only Islamic, but also makes sense, whereas the present-day arrangements, besides all their sophistication, can only be described as madness, from the dumping of edible food in the sea to maintain price levels, whilst millions of people in the world are starving, to the instability of money markets which can plummet whole regions into deprivation over night. Events like the devaluation of currencies in south-east Asia have provided sufficient a shock to make many Muslims re-think their hitherto blind following of the inherited wisdom of Western economic theory. Malaysian prime minister Dr. Muhammad Mahathir had the commendable courage to challenge the International Monetary Fund and its Guru George Soros. Even the chairman of the Dallah Al-Baraka Group, Sheikh Abdullah Saleh Kamil has had to admit that so-called Islamic Banking "carries many of the features of the conventiional loans entailing interest and many of the disadvantages of the Western capitalist system". Quoted in the December issue of Impact International he goes on to say that we did not "cleanse our dealings of interest" and "were not able to overcome the effects of the conventional banking system". According to the article, Islamic Banks had become zero-interest windows for collecting Halal money which was then channelled into the international banking system. To lure the sceptic Muslim customer, ordinary high street banks had also begun to open "halal windows in their haram palaces".

This admission is gratifying in that we had warned for years of the unacceptable nature of these Islamic banks and Islamic investment schemes, trying to sell the halal pork chop to unsuspecting customers. Many more of these pretended alternatives are being produced all the time, including off-shore trusts with exclusively non-Muslim directors but an attachment of Sharia-advisers to placate the fears of the Muslim clientele targeted by them for the benefit of large banking corporations. An article in The Times of 17th January entitled "No-interest loan has poor take-up" seems to suggest, however, that Muslims are no longer stupid enough to pay the extra percent for having their interest-based mortgage declared halal by an Arab bank posing as Islamic. Increasingly the crude instrument of Murabaha is seen for what it is, an attempt to extract interest by use of a contract which simply circumvents the restrictions placed on such usurious dealings by Islam by fulfilling the letter of the law in a roundabout way, but violating its spirit.

During a recent seminar, a Western scholar of economics and writer for the Financial Times and other papers, David Cowan presented a paper in which he spelt out what most Muslims active in the field of Islamic finance conveniently ignore, that "if Islamic bankers are merely acting piously for the wealthy clients, then this strikes one as being somewhat self-serving, not a serving of the community of a duty of care to the community and God's earth. Looking around the Islamic banking scene I do not see too much evidence of Islamic bankers providing services to the blue collar or pooerer sections of the community, except for the obligatory Zakat thrown in the right direction. When broached on the subject, Islamic bankers respond that it is not always economically viable, a critical mass is required before services can be filtered down to the lowest levels of society. I don't recall the prophet using the term 'critical mass' anywhere, but that aside, there is still the question of intent matching action. One supposes that this is a question for personal reflection on why one is an Islamic bankeer, and what good intention one has. .Islamic banking is often reduced to a series of 'do's and don'ts', and Shariah boards are hired to making up such shopping lists, and each list is different, but who is examining the intent?" He says, that Shariah is applied to modern banking practices inadequately: "Islamic banking is not a pious veneer to cover Capitalist values. 'Where's the margin?' and 'What's the bottom line?' are not questions one hears being asked in the Qur'an or the hadith, but scratch away a little of the veneer of Islamic banking and I suggest that is what you will find."

It is a shame that it takes a non-Muslim to hold up the mirror and expose the self-righteous pretence of Muslims in stating that the scholar has not clothes! Muslim economists have consistently missed the point and served as Muslim Calvins in justifying the greed of their paymasters by permitting them to circumvent the prohibitions. Whilst the technicalities of Islamic banking are discussed at length in scholarly volumes, little attention is being paid to the issue of money creation. Again, it takes the effort of non-Muslims to point the way, and recently the Green Party has begun to discuss, and hopefully take on board, recommendations to change our interest-based and fraudulent monetary system.

Money is man-made, and so are the problems connected with it. Except for the small change, it is made from paper and therefore produced at very little cost. As far as the paper pulp is concerned, money does grow on trees, and its supply is only limited by artificial reasons. Those who issue our money want to be paid for the privilege, and so they create the myth that if money was not kept artificially scarce, we would all suffer, when really the only harm that would come from an increased money supply is to their illegitimate harvest gained from people's needs. One would think that in a democratic society, the issue of the life-blood of our economy would be democratically controlled, yet the new government has elected to irresponsibly delegate all monetary decisions to the non-elected Bank of England, which really is a bank of the banks of England, not the people. It is there to bail banks out when they miscalculate, whereas ordinary folks wanting some tighter regulation of the money markets will be told of the free play of market forces. Banks have created the myths of merely lending depositors' money, but in the system of fractional reserve banking, these deposits only serve as a basis upon which they create credit, fictitious money, which represents no wealth and only exists because desperate borrowers are compelled to underwrite it with their promise of repayment at exorbitant rates. If the man in the street printed his own bank notes to pay for his purchases, he would be jailed, whereas a bank can freely issue money out of thin air to lend to him to pay for those very same purchases and demand even a fee for this macabre game of hocus-pocus. What is worse, governments, the representatives of the people, are forced to borrow those previously non-existent funds from the banks and forbidden to create their own.

Imagine the Bank of England were permitted to do precisely that, issue the money supply of the nation as and when needed at zero interest. It would not need to profit from money creation, because the nation would profit from the uses the funds were put to. No longer would we have to hear of school and hospital closures, because the funds cannot be found. The question: where is the money going to come from? would be answered thus: the government will issue the funds necessary for any projects deemed desirable and feasible, and any surplus can be returned via taxation. Of course, money, in this case must not be hoarded nor traded, but simply fulfil the function of representing real wealth in goods and services, providing a means of exchange that is more easily quantifiable than a direct exchange via barter transactions. At present, however, local and national government will have to make ever more devastating savings in all areas of government spending to be able to continue to pay the crippling interest levied on the monies borrowed from banks which did, what the economists paid by them deny the government to do: issue it upon demand.

The insanity of private credit creation has led to untold suffering of people at a time of fascinating technical advance. Previously unthinkable achievements have been made possible by technology, but are denied to us due to insane monetary restrictions. And so the short-comings of our civilisation are entirely man-made. God provides plenty, but man holds back. Power-greedy financiers and politicians will easily find the means to produce millions of pounds worth of destructive weapons to drop free of charge on top of innocent populations around the world, but refuse to find the means to alleviate totally unnecessary poverty at home and abroad. In His wisdom, Allah has linked usury with war when describing the harm which comes from it, as it creates both the strife that leads people to confrontation as well as the economic conditions which rely on the conquest of new markets and the production of self-destroying goods to further a valve by which to let off some steam from a system which is always near collapse. The equation is easy: for someone to become rich without effort, someone else will have to pay.

If a banker issues a certain amount of credit, let's say a hundred pounds, but wants it back with interest at the end of the loan period, then the extra amount of interest which is paid on top of the original loan must be found from somewhere else, for the banker did not create that money. A manufacturer will have to raise prices, causing inflation, to be able to keep up with the interest demands on the original loan taken out to finance production. Consumers who have over-borrowed to pay for the goods which were out of reach to them, will after some time no longer be able to afford as much as they were used to, as the burden of interest payments weighs them down. Consequently, some businesses will collapse for lack of sales, and the merchandise produced by them will find its way back in the economy as bankrupt stock, bringing some relief to the stretched capabilities of consumers and letting some pressure of this artificially troubled economy. Through bankruptcies, banks call in real wealth in exchange for the fake money they issued as loans. Thus the rich get richer, and the poor poorer.

This works on the global level, too, and soon the rich nations of the world, disproportionately exploiting the world's resources will see the need to protect themselves against the demands of the poorer nations through tight immigration controls, and more importantly, heavy defence budgets. Arms are a convenient way to get governments into debt. They will borrow plenty of money but not spend it on an increase of living standards which would appease their populations. To create the need for arms provides the finance houses with real power of control over governments. Therefore, the fear and threat of war must be kept alive. If the same funds necessary for the production of arms were spent on the needs of people, people would prosper and not see the need to fight nor to borrow. That may sound like paradise, but is bad news for bankers who are parasites, not benefactors. The greed for wealth and the greed for power go hand in hand, and it is not surprising that the big finance houses, like the Rockefellers and the Rothschilds are the prime movers behind the drive for global government. Multi-national companies, like oil conglomerates, are already far more powerful than individual governments, and in their partisan interest, governments are bullied into doing what is good for business, not what is good for the people who elected them. Democracy has become a farce.

If humanity is to overcome the curse of poverty, crime and exploitation, the big war will have one day to be waged: the war of people against the banks. To rid the planet of war, to achieve peace and prosperity, the usurer's control over the world economy will have to be curbed. Islam has so far withstood attempts at secularisation and commercialisation. Notwithstanding the attempts of so-called Islamic banks, the rules forbidding interest have not been cancelled, and never will. Is it surprising then, that Islam has become enemy number one for those who dream of controlling the world? The day Muslims wake up to reality - or those who are awake discover Islam! - we might see the light of liberation from the shackles of modern slavery. The Islamic Party of Britain and its publication Common Sense intends to continue to encourage such an awakening.