Riba as I understand
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Peace "wakas",
peace jk,
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You jump from 'al quran' asking us to ponder and thus promoting the scientific method to there are well established upper price boundaries when selling items and going out with these is "riba"? This is not what I call "Quranic evidence", in fact, nowhere near it.
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You go from "riba" means "increase" to "riba" means an increase in the set price which would be the upper bounadary and more than that would exploit ppls needs... and states this fits perfectly? This is not what I call "Quranic evidence", in fact, nowhere near it.
JK- Well IMO and from my understanding of the Quran it incldues tht as well and yes also if you take AN INCREASED AMOUNT OF INTEREST WHICH COMPOUNDED OVER AND OVER IS EXTREME tht too wld be "Riba" but nowhere is interest itself Riba. GOD Bless!
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peace brother Tanveer, all,
Lets say ANY/ALL increase above the rate of inflation is considered "riba", what do you make of 3130 and 3039 which both imply it is about "increasing/swelling/growing/rising", i.e. not static?
That is why I feel having a fixed repayment, agreed by the loan-taker, is not "riba". However, I do agree that in the present currency system that only asking for the original sum + inflation is the most righteous.
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Peace "wakas",
peace brother Tanveer, all,
Lets say ANY/ALL increase above the rate of inflation is considered "riba", what do you make of 3130 and 3039 which both imply it is about "increasing/swelling/growing/rising", i.e. not static?
JK- 3130 makes clear the fact tht a high %age of interest which is Riba can be devastating if compounden over and over. It doesnt say tht the compouning itself is Riba there. 3039 makes this clear also. Doesnt mean compound interest itself is Riba. Moreover by your definition od increase how come you defend simple interest. Doesnt tht add every year too? Ok it adds less but it does so there is an increase its only a linear increase.
That is why I feel having a fixed repayment, agreed by the loan-taker, is not "riba". However, I do agree that in the present currency system that only asking for the original sum + inflation is the most righteous.
JK- And then how would the lender profit? Remeebr wer not talking about charity here. The banks are not charity organizations per se. When somebody gives charity then its different he doesnt charge any interest nor does he necessarily ask for any return at all. Here wer talking abt when ppl wanna get into business and take loan. Why should i make them rich freely and lend them any currency? Doesnt make any sense. GOD Bless!
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Jonny_K, the supposed return on a loan is non-existant, because when you make a loan with ANY interest, as said by Tanveer, inflation occurs (if someone does not work their ass off for the value of the interest). If the "economy" consisted of only person A and B, and they made a loan, and person B could print off a few extra notes as "interest", you would notice person A has no return whatsoever on their loan. The only reason this isn't evident here is because the economy is stupidly huge (and corrupt in complex ways).
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Peace "OPF"
Jonny_K, the supposed return on a loan is non-existant, because when you make a loan with ANY interest, as said by Tanveer, inflation occurs (if someone does not work their ass off for the value of the interest). If the "economy" consisted of only person A and B, and they made a loan, and person B could print off a few extra notes as "interest", you would notice person A has no return whatsoever on their loan. The only reason this isn't evident here is because the economy is stupidly huge (and corrupt in complex ways).
JK- So that means when i rent out an appartment for a return the rent is non-existant, not for the first month but the next coming ones for there needs to be a contract of at least x months? Doesnt make any sense. First of all one only gets a loan if he 1) has propert which amounts to more value than the loan taken(so the money does exist) 2) he has job contract which is fixed and safe enough for the bank to lend the money out in advance. Here youll get the money if you keep working and dont quit your job yourself. GOD Bless!
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The return is non-existant if the goods aren't there to back it up, yes. You don't notice this on rent because the rate at which rent is paid is usually not as exorbitantly high as the rates of interest, nor is it as common.
Again, imagine it's Person A and Person B. Person A sells X, person B sells Y. Person A rents out his house to B. B prints out money as rent to A. A uses the money to buy Y from B - but B has jacked up the prices to keep with inflation!
The only two ways to repay that is either human labour, or physical goods. Money implies the existance of either, but does not guarantee. With interest, money is increasing at a rate too high for the physical goods or human labour to keep up with - there's only so much oil on Earth.
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Peace "OPF"
The return is non-existant if the goods aren't there to back it up, yes. You don't notice this on rent because the rate at which rent is paid is usually not as exorbitantly high as the rates of interest, nor is it as common.
JK- And i told you before the bank gives you any loan it makes sure you have that value in currency to back it up like property and/or a fiyed job where youll eventually earn upto the loan. They aint stupid.
Again, imagine it's Person A and Person B. Person A sells X, person B sells Y. Person A rents out his house to B. B prints out money as rent to A. A uses the money to buy Y from B - but B has jacked up the prices to keep with inflation!
JK- If inflation occurs in property so as to decrease its value with repsect to tghe lended currency beyond a certain limit then the bank would be forced to sell your property and get their loan back unless you pay them back from the profit youve made so far. This is ofcourse the risk one has to be aware of in advance whilst taking loan on ones property and most good banks inform the customers of this.
The only two ways to repay that is either human labour, or physical goods. Money implies the existance of either, but does not guarantee. With interest, money is increasing at a rate too high for the physical goods or human labour to keep up with - there's only so much oil on Earth.
JK- You mean with compound interest? Well tht depends on how well the debter has calculated how to utilize the loan. 2ndly as i said the banks calculate in advance the situation of the person before they give out loan. And any further interest has to stop if the debter proves insolvency. In tht case the bank has to take the loss but they at least made sure tht the person him/herself does his best not to cause his business to fall and as such most ppl wld handle it with care and both they and the bank would benefit as a result. Once again the bank doesnt run after you, youve to run after it. GOD Bless!
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Peace "OPF"
JK- And i told you before the bank gives you any loan it makes sure you have that value in currency to back it up like property and/or a fiyed job where youll eventually earn upto the loan. They aint stupid.
JK- If inflation occurs in property so as to decrease its value with repsect to tghe lended currency beyond a certain limit then the bank would be forced to sell your property and get their loan back unless you pay them back from the profit youve made so far. This is ofcourse the risk one has to be aware of in advance whilst taking loan on ones property and most good banks inform the customers of this.
JK- You mean with compound interest? Well tht depends on how well the debter has calculated how to utilize the loan. 2ndly as i said the banks calculate in advance the situation of the person before they give out loan. And any further interest has to stop if the debter proves insolvency. In tht case the bank has to take the loss but they at least made sure tht the person him/herself does his best not to cause his business to fall and as such most ppl wld handle it with care and both they and the bank would benefit as a result. Once again the bank doesnt run after you, youve to run after it. GOD Bless!
But the property is being used purely as "security", it does not change hands - unless the person becomes bankrupt. Again, I refer you to the Person A-B scenario, now just imagine A lending to B and B printing off a bunch of "promise to pay the bearer"s to give to A. That's all modern currency is - a promise. If someone manages to steal a banknote printer (purely hypothetical), they can have an endless money supply - but there is nothing backing it up. Meaning some poor sob is trading something of value for something that has no value. This is where I hate my memory - there are around 20 books I could refer you to if I had my bloody memory!
JK- If inflation occurs in property so as to decrease its value with repsect to tghe lended currency beyond a certain limit then the bank would be forced to sell your property and get their loan back unless you pay them back from the profit youve made so far. This is ofcourse the risk one has to be aware of in advance whilst taking loan on ones property and most good banks inform the customers of this.
That's true. But the thing is, with interest, the general thought is that the economy will grow - that is the ONLY way (aside from printing off bank notes and jacking up prices accordingly) it can be paid off. If it doesn't grow, we have the latter case. If the balance of money between rich and poor is disproportionate, we have the latter case. Now imagine millions of people taking out mortgates with a promise to pay back 2.5x the original amount - do you think that's healthy? No way in hell. In the short term, people may agree to it. But in the long term, it's not worth it.
JK- You mean with compound interest? Well tht depends on how well the debter has calculated how to utilize the loan. 2ndly as i said the banks calculate in advance the situation of the person before they give out loan. And any further interest has to stop if the debter proves insolvency. In tht case the bank has to take the loss but they at least made sure tht the person him/herself does his best not to cause his business to fall and as such most ppl wld handle it with care and both they and the bank would benefit as a result. Once again the bank doesnt run after you, youve to run after it. GOD Bless!
It depends. If the value is fixed, then there is only a fixed amount that people need to work towards. With compound interest, you get into economic slavery because the bar raises exponentially as interest compounds on interest compounded on interest compounded on interest, etc. In this way, I don't think fixed interest is that bad.
"2ndly as i said the banks calculate in advance the situation of the person before they give out loan. And any further interest has to stop if the debter proves insolvency"
Is this mechanism in the Quran?
"Once again the bank doesnt run after you, youve to run after it."
After a given period of time, you don't run to the bank, the bank's agents kidnap you and send you on a one-way train to the bank. Only the rich can buy a house interest free nowadays. That just should not be the case whatsoever. This is where we can learn from Sunnism, definitely.
Now if only my memory was working (
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Peace "OPF",
But the property is being used purely as "security", it does not change hands - unless the person becomes bankrupt. Again, I refer you to the Person A-B scenario, now just imagine A lending to B and B printing off a bunch of "promise to pay the bearer"s to give to A. That's all modern currency is - a promise. If someone manages to steal a banknote printer (purely hypothetical), they can have an endless money supply - but there is nothing backing it up. Meaning some poor sob is trading something of value for something that has no value. This is where I hate my memory - there are around 20 books I could refer you to if I had my bloody memory!
JK- It's not just a promise. Stating as such would be an oversimplification. The bank actually sees to it i.e. calculates aforetime whther the debter would be able to pay or not otherwise it would make loss anyways. Perhaps i should better have given you an example of renting out a car instead of an appartment which is immobile. Now in case of a car what if the person demlishes it beyond repair. Where will the money come from? So again security especially in case of renting big luxurius cars is required. Same is with the currency, the more you take the higher the security.
That's true. But the thing is, with interest, the general thought is that the economy will grow - that is the ONLY way (aside from printing off bank notes and jacking up prices accordingly) it can be paid off. If it doesn't grow, we have the latter case. If the balance of money between rich and poor is disproportionate, we have the latter case. Now imagine millions of people taking out mortgates with a promise to pay back 2.5x the original amount - do you think that's healthy? No way in hell. In the short term, people may agree to it. But in the long term, it's not worth it.
JK- First of all the banks ensure that most of the people will be able to pay that amount of money. 2ndly these people know in advance how much theyd have to pay. 3rdly now your saying paying back 2.5 times the original amount even if it be after yrs aint healthy but it is so since now those people would be able to pay it nback if they calculated everthing properly. Moreover if they pay their interest on time then thered be no compunding either and the end amount theyd have paid back would be significantly less than 2.5 %, like i mentioned earlier. Say one takes a loan of $100,000@5% p/annum. Tht means $5000 per yr. Now say he pays those $5000 every yr, keeps those $100,000 in his business and makes extra profit but pays $5000 evry yr on time. Then the amount to return would always remain@$100,000.
It depends. If the value is fixed, then there is only a fixed amount that people need to work towards. With compound interest, you get into economic slavery because the bar raises exponentially as interest compounds on interest compounded on interest compounded on interest, etc. In this way, I don't think fixed interest is that bad.
JK- As i said it only gets into tht exponetial stuff when you dont pay your interest on time. And even then if you declare insolvency and prove it the bank also loses all tht otherwise exponetial profit.
Is this mechanism in the Quran?
JK- Does everything have to be in the Quran? And yes the Quran does promote the scientific method and this surely seems to be the case here.
After a given period of time, you don't run to the bank, the bank's agents kidnap you and send you on a one-way train to the bank. Only the rich can buy a house interest free nowadays. That just should not be the case whatsoever. This is where we can learn from Sunnism, definitely.
JK- Your obviously talking about credit sharks here. Banks cant just storm into your home. Yes if you dont contact them whilst your debt is due they may call the law enforcement agency and those will then send a letter to your home as to where and when ud have to appear in court. If you keep delaying the date then also its not the banks agents wholl come but a specially assigned governement agency who comes to your home and after giving many warnings for you to come out finally knowcks the door down. They then continue to call you Sir and gently ask you to come to to court along with them treating you with repsect all the way even if you might get angry. Ofcourse theres a limit to tolerance. Then in court it's settled how much you could still pay and its all scientifically evaluated and the excess is dropped. Thts how it works unless ur into credit shark mafia. GOD Bless!
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Peace JK,
Here wer talking abt when ppl wanna get into business and take loan. Why should i make them rich freely and lend them any currency? Doesnt make any sense.
If the borrower is taking a loan to start some business, then the lender should be made a partner in that business. The lent money should be paid back by the borrower from the profit of the business without interest but taking inflation into account, and the net profit or net loss should be shared according to a mutually agreed formula. This way the lender is also taking the risk. If the business goes into a loss, then depending on the lost amount, it can be subtracted from the original loan.
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JK- It's not just a promise. Stating as such would be an oversimplification. The bank actually sees to it i.e. calculates aforetime whther the debter would be able to pay or not otherwise it would make loss anyways. Perhaps i should better have given you an example of renting out a car instead of an appartment which is immobile. Now in case of a car what if the person demlishes it beyond repair. Where will the money come from? So again security especially in case of renting big luxurius cars is required. Same is with the currency, the more you take the higher the security.
No, I mean that money, or bank notes, or coins are a promise to pay the bearer. They have no intrinsic value. Don't you think it is in a bank's best interest to check the borrower's background, regardless of interest?
Now in case of a car what if the person demlishes it beyond repair. Where will the money come from?
This is what the "credit rating" system attempts to address - the paradox of borrowing to pay an existing debt. If this man-made system did not work at all, then we'd have people borrowing more and more, interest compounding more and more. Nations tend to do this. Security, again, is always required - regardless of interest.
JK- First of all the banks ensure that most of the people will be able to pay that amount of money.
There are organisations that do the polar opposite, actually. In the UK, this is quite a problem. People know no better. Personally, I don't believe the concept of renting is all that ethical either, for the long term. If ever I rent something, and the person pays off the full price of that something in rent, I hope my greed won't stand in the way of handing over to them what they have earnt.
2ndly these people know in advance how much theyd have to pay
Actually, as with the above example, a lot of people just do not have the foresight to calculate anything - they fall prey to those cited above.
3rdly now your saying paying back 2.5 times the original amount even if it be after yrs aint healthy but it is so since now those people would be able to pay it nback if they calculated everthing properly.
But overall, that will lead to inflation, come on. EVEN if they calculated everything properly, there still needs to be material goods or human labour greater than the initial value. Someone HAS to work for this, otherwise we will get inflation - and the value of the loan interest is depreciated. To combat this, banks will raise the interest rates. And the value of the interest is depreciated again as the inflation sets in. And banks will increase the interest rates. To combat this new inflation. You see where I'm going here...
Moreover if they pay their interest on time then thered be no compunding either.
But banks also charge for paying early to avoid interest! If that isn't injustice, please tell me what it is. The only way to fit to the ideal is to be perfect in your calculations and hope that everything goes as planned. Rarely occurs. My extended family are learning the hard way. Though, God bless, they still have a far higher standard of living than the majority of this world can aspire for. I have pretty much vowed to not touch an interest-loan with a 10ft bargepole, it's just made my family go into effective economic slavery. No way in hell. I think I'll play by the safest interpretation here. And no, they were not irresponsible either. But that depends on your definition of irresponsible - from yours, they could not be held so - they did all the calculations and worked hard. Yet it just didn't go to plan, nature is so poetically just. From my definition of "irresponsible", I would certainly say so - they bought into interest.
Now say he pays those $5000 every yr, keeps those $100,000 in his business and makes extra profit but pays $5000 evry yr on time. Then the amount to return would always remain@$100,000.
The fallacy here is assuming they will ALWAYS make that extra profit. This is not the case. And the net paid amount will still be higher. The amount to return will be some number disproportionately large compared to the original sum, depending on the number of years. I remember calculating for some "minor" (2%? 5%?) interest rates a while back and finding the overall rates to be horrendous.
JK- As i said it only gets into tht exponetial stuff when you dont pay your interest on time. And even then if you declare insolvency and prove it the bank also loses all tht otherwise exponetial profit.
Greedy people have exploited things to force it into the exponential stuff. Compounded interest is ALWAYS exponential. The exponent is rased when you do not pay it off. This is by far the worst form of usury.
JK- Does everything have to be in the Quran?
In this context, a resounding YES!!!
004.010
YUSUFALI Those who unjustly eat up the property of orphans, eat up a Fire into their own bodies They will soon be enduring a Blazing Fire!004.011
YUSUFALI Allah (thus) directs you as regards your Children's (Inheritance) to the male, a portion equal to that of two females if only daughters, two or more, their share is two-thirds of the inheritance; if only one, her share is a half. For parents, a sixth share of the inheritance to each, if the deceased left children; if no children, and the parents are the (only) heirs, the mother has a third; if the deceased Left brothers (or sisters) the mother has a sixth. (The distribution in all cases ('s) after the payment of legacies and debts. Ye know not whether your parents or your children are nearest to you in benefit. These are settled portions ordained by Allah; and Allah is All-knowing, Al-wise.004.012
YUSUFALI In what your wives leave, your share is a half, if they leave no child; but if they leave a child, ye get a fourth; after payment of legacies and debts. In what ye leave, their share is a fourth, if ye leave no child; but if ye leave a child, they get an eighth; after payment of legacies and debts. If the man or woman whose inheritance is in question, has left neither ascendants nor descendants, but has left a brother or a sister, each one of the two gets a sixth; but if more than two, they share in a third; after payment of legacies and debts; so that no loss is caused (to any one). Thus is it ordained by Allah; and Allah is All-knowing, Most Forbearing.004.013
YUSUFALI Those are limits set by Allah those who obey Allah and His Messenger will be admitted to Gardens with rivers flowing beneath, to abide therein (for ever) and that will be the supreme achievement.Allah sets limits where limits are needed! In this case, there are no limits. The only limit is that you shall not adhere to usury! I hope you can see this relatively clear point.
And yes the Quran does promote the scientific method and this surely seems to be the case here.
And the Quran states we should follow the best of what God has revealed, and the best is not "interest" in this case.
JK- Your obviously talking about credit sharks here. Banks cant just storm into your home. Yes if you dont contact them whilst your debt is due they may call the law enforcement agency and those will then send a letter to your home as to where and when ud have to appear in court. If you keep delaying the date then also its not the banks agents wholl come but a specially assigned governement agency who comes to your home and after giving many warnings for you to come out finally knowcks the door down. They then continue to call you Sir and gently ask you to come to to court along with them treating you with repsect all the way even if you might get angry. Ofcourse theres a limit to tolerance. Then in court it's settled how much you could still pay and its all scientifically evaluated and the excess is dropped. Thts how it works unless ur into credit shark mafia. GOD Bless!
No, I didn't mean that literally! Yes, it does happen literally - such is the power of men with greed - but I was talking about the more opaque form of slavery. Name me one possible way for a poor man to get a house in this day and age WITHOUT ANY INTEREST. It is nigh on impossible - to do this, you have to push the example of a mu'min to its furthest bounds, you REALLY have to strive for this. Even then you may not get what you want. To date, I have yet to hear of someone earning their way to a house without touching interest, in the Western world. Not one of those novelty things like "one red paperclip" by the way. I want to see a consistent method, guaranteed to work as far as can be so.
In the Eastern world, it's simple - you live as an extended family. Family ties are so strong in the East because there is no need for moving out into a new house of your own at marriage, everyone looks after each other. Interest is avoided wholesale. But this is an example of a chicken <=> egg scenario. If there's one thing those in the East got right, it's the family values and the eradication of interest. Combine this with the Western ideals of freedom, equality and liberation, and open mindedness and we will be so far on the path to a truly Islamic society.
I have to agree with Wakas and Tanveer - inflation is really the ONLY thing that allows for usury. It's still suspect even then because it upholds a dodgy concept.
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Peace "tanveer",
Peace JK,
If the borrower is taking a loan to start some business, then the lender should be made a partner in that business. The lent money should be paid back by the borrower from the profit of the business without interest but taking inflation into account, and the net profit or net loss should be shared according to a mutually agreed formula. This way the lender is also taking the risk. If the business goes into a loss, then depending on the lost amount, it can be subtracted from the original loan.
JK- MAN this is exactly the same crap sunnis claim. As if the banks could make joint ventures or partnerships with millions of customers running after everyone of them. Dont you see how impratical this is? This is even difficult enough if you have only 10 people. The bank is definitely not your business partner. If you want that then you need to intensely spend time with people get their trust and much more. Its the same with renting cars. Do you thinki anyone who rents out a car would say "Ill only charge you if you make profit from the business meeting you attend". Total nonsense. GOD Bless!
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It's not impractical, Jonny_K, it's called the stock market.
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Peace JK,
JK- MAN this is exactly the same crap sunnis claim. As if the banks could make joint ventures or partnerships with millions of customers running after everyone of them. Dont you see how impratical this is? This is even difficult enough if you have only 10 people. The bank is definitely not your business partner. If you want that then you need to intensely spend time with people get their trust and much more.
Firstly, the lender should not get involved with more borrowers in business than it can handle.
Secondly, just because it is difficult does not mean it is not the right way.
Its the same with renting cars. Do you thinki anyone who rents out a car would say "Ill only charge you if you make profit from the business meeting you attend". Total nonsense. GOD Bless!
It is not the same; your analogy is what is nonsense. When one buys some cars and rents them out to others, one is attempting to profit out of one's own business and not lending property to others.
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Peace "OPF",
No, I mean that money, or bank notes, or coins are a promise to pay the bearer. They have no intrinsic value. Don't you think it is in a bank's best interest to check the borrower's background, regardless of interest?
JK- They do check the borrower's situation ofcourse. Otherwise it would be stupid to give them loan. Reg the background if he has property as security than tht is not required otherwise yes it would be. Reg bank notes, coins etc there is actualy work behind it, scientific, natural resources, labor, etc. Thts why priting fake money or more than there is work force or acceptance leads to chaos if detected and the law enforcement agencies take care tht tht doesnt happen. Money is like an acceptance ticket. It tells or rather should tell how much acceptance a person has gained through trade or otherwise and hence is able to get other things in exchange in accordance to that. This means if you posessed all the currency of a country you shld be able to buy all things produced or contained within in it which have been dicovered/are owned by the ppl there. Thts how it works. Paper money starts off in central banks and there is STRICT CONTROL there that no extra or less currency is printed than there needs to be and tht no currency for which no balance has been shown leaks out. Ofcourse nothing is perfect and theres fraud everywhere but thts a whole other issue. So now anyone can exchange any of his goods accordingly into the countrie's currency which he could mroe easily exchange for another medium. At that point the currency which now acts as a replacement for his/her original good, produced or owned by the person, DOES HAVE VALUE.
This is what the "credit rating" system attempts to address - the paradox of borrowing to pay an existing debt. If this man-made system did not work at all, then we'd have people borrowing more and more, interest compounding more and more. Nations tend to do this. Security, again, is always required - regardless of interest.
JK- How can you borrow to pay an existring debt? From where? Which bank would give you a loan for which no security can be offered?
There are organisations that do the polar opposite, actually. In the UK, this is quite a problem. People know no better. Personally, I don't believe the concept of renting is all that ethical either, for the long term. If ever I rent something, and the person pays off the full price of that something in rent, I hope my greed won't stand in the way of handing over to them what they have earnt.
JK- Yes there are as their are balck sheep in everywhere but tht doesnt turn interetst/compound inzrerest into Riba.
Actually, as with the above example, a lot of people just do not have the foresight to calculate anything - they fall prey to those cited above.
JK- That is true but this is partly the individuals own fault then and doesnt turn interest into Riba.
But overall, that will lead to inflation, come on. EVEN if they calculated everything properly, there still needs to be material goods or human labour greater than the initial value. Someone HAS to work for this, otherwise we will get inflation - and the value of the loan interest is depreciated. To combat this, banks will raise the interest rates. And the value of the interest is depreciated again as the inflation sets in. And banks will increase the interest rates. To combat this new inflation. You see where I'm going here...
JK- Yes the material goods is the property the borrower offers as security and/or the job security meaning he/she has to have a fixed contarct with such and such amount so he would be able to pay it back. If he foolishly instead of puitting tht moeny aside wastes tht on other luxurious goods thts when prbs start. And yes to combat inlfation banks i.e. CENTRAL banks, raise interest rates(within certain scietifically evaluated bounds) so as to increase a foreign demand of the currency and hence raise its value again with respect to other currencies and products. All this needs to be done because many people dont know how to manage their money properly and/or human errors.
But banks also charge for paying early to avoid interest! If that isn't injustice, please tell me what it is. The only way to fit to the ideal is to be perfect in your calculations and hope that everything goes as planned. Rarely occurs. My extended family are learning the hard way. Though, God bless, they still have a far higher standard of living than the majority of this world can aspire for. I have pretty much vowed to not touch an interest-loan with a 10ft bargepole, it's just made my family go into effective economic slavery. No way in hell. I think I'll play by the safest interpretation here. And no, they were not irresponsible either. But that depends on your definition of irresponsible - from yours, they could not be held so - they did all the calculations and worked hard. Yet it just didn't go to plan, nature is so poetically just. From my definition of "irresponsible", I would certainly say so - they bought into interest.
JK- Yes reg the charge for paying early because you want to avoid compound interest is not right IMO, i agree. But there maybe some reason for tht too.
The fallacy here is assuming they will ALWAYS make that extra profit. This is not the case. And the net paid amount will still be higher. The amount to return will be some number disproportionately large compared to the original sum, depending on the number of years. I remember calculating for some "minor" (2%? 5%?) interest rates a while back and finding the overall rates to be horrendous.
JK- A good business should yield at least more than 25% of the amount borrowed per annum. However even if tht fails to happen the banks cant just say "ok well he had bad luck so should we". Its just not practical with so many customers unless the debter him/herself provesd to the bank his situation and then if its seen tht hes done everything possible and been lazy then the bank should and in many ases must forsake any interest. Infact with interest banks only ensure tht its the debters who prove their situation to the banks and not the banks running after every individual.
Greedy people have exploited things to force it into the exponential stuff. Compounded interest is ALWAYS exponential. The exponent is rased when you do not pay it off. This is by far the worst form of usury.
JK- As i said the compunding effect only occurs if the interest is not paid every year for then that interest becomes boroowed money too. How many times do i have to repeat this?
In this context, a resounding YES!!!
JK- I do not agree. The Quran always gives the basic initial principles around which we need to scientifically cerate the rest of the details. The Quran as a small sized book does not eleborate all details.
Allah sets limits where limits are needed! In this case, there are no limits. The only limit is that you shall not adhere to usury! I hope you can see this relatively clear point.
JK- And as i said interest, compund or simple, within the limits is not usury.
And the Quran states we should follow the best of what God has revealed, and the best is not "interest" in this case.
JK- Heh? Interest is not revealed at all neither are so many things we have in our daily lives. As i said the Quran doesnt detail all of what it addresses to the dead end. It just aint feasible for such a small book. GOD knows reasonable ppl would employ the scientific method on the intitial commands and then formulate reasonable laws and systems around them.
No, I didn't mean that literally! Yes, it does happen literally - such is the power of men with greed - but I was talking about the more opaque form of slavery. Name me one possible way for a poor man to get a house in this day and age WITHOUT ANY INTEREST. It is nigh on impossible - to do this, you have to push the example of a mu'min to its furthest bounds, you REALLY have to strive for this. Even then you may not get what you want. To date, I have yet to hear of someone earning their way to a house without touching interest, in the Western world. Not one of those novelty things like "one red paperclip" by the way. I want to see a consistent method, guaranteed to work as far as can be so.
JK- If you dont have the money to pay for a house all at once, how acn you expect to wanna pay it off in stages over many years and yet only wanna pay the amount which would be taken if youd pay it all at once? Dont you get the fact tht time is money? No owner of any house would sell his house without getting all the money at once and it is his right.
In the Eastern world, it's simple - you live as an extended family. Family ties are so strong in the East because there is no need for moving out into a new house of your own at marriage, everyone looks after each other. Interest is avoided wholesale. But this is an example of a chicken <=> egg scenario. If there's one thing those in the East got right, it's the family values and the eradication of interest. Combine this with the Western ideals of freedom, equality and liberation, and open mindedness and we will be so far on the path to a truly Islamic society.
JK- Man you really have so much trust in the east. In my home in Pakistan this lead to hell of fighting and siputes until finally all families(and they were relatives) were fedup and went off to other countries.
I have to agree with Wakas and Tanveer - inflation is really the ONLY thing that allows for usury. It's still suspect even then because it upholds a dodgy concept.
JK- Ok so now your saying that high out iof bounds interest rates=usury. Well yes i agree with tht but not with every inflation do the interest rates go out of bounds. Infact they dont because it is regulated by the scientific community who evaluate these things. GOD Bless!
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Peace "tanveer",
Peace JK,
Firstly, the lender should not get involved with more borrowers in business than it can handle.
JK- Where in the Quran does it say that a lender has to personally take care of all borrowers? Man this is complete nonsense. Its equivalent to saying that one who rents out anything has to get involved with those people personally. Does not make any sense.
Secondly, just because it is difficult does not mean it is not the right way.
JK- Not only is it difficult its totally impratical.
It is not the same; your analogy is what is nonsense. When one buys some cars and rents them out to others, one is attempting to profit out of one's own business and not lending property to others.
JK- And when one "lends" out ones currency to others is one not attempting to profit out of one's own business? Wht are you saying? GOD Bless!
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Peace "OPF",
It's not impractical, Jonny_K, it's called the stock market.
JK- In the stock market you actually buy a a share of the product(s) so then ofcourse you own it and can sell it anytime. Here everyone has to take responsibility for themselves as when to sell or buy too. Nobody comes up for anothers loss. GOD Bless!
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Peace bro JK,
JK- Where in the Quran does it say that a lender has to personally take care of all borrowers? Man this is complete nonsense. Its equivalent to saying that one who rents out anything has to get involved with those people personally. Does not make any sense.
Straw man brickwall
JK- Not only is it difficult its totally impratical.
It is not impractical; and it does not have to be difficult.
JK- And when one "lends" out ones currency to others is one not attempting to profit out of one's own business? Wht are you saying?
What are YOU saying ? brickwall
I think it will be best just to agree to disagree, because this is going nowhere !
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Peace OPF,
inflation is really the ONLY thing that allows for usury. It's still suspect even then because it upholds a dodgy concept.
I agree that it is a dodgy concept; that is why I stressed the corruption of the paper money system and the need to revamp it by backing the currency 100 % with a natural resource of value.
The problem is that if the extra money is not paid back to the lender to compensate for the inflation then it is unfair to the lender. On the other hand, the borrower is returning a higher amount of WORTHLESS paper money to compensate for the inflation, but the salaries of the working class do not increase proportionately, and thus the employed borrower has to work harder to return the loan than if there was no inflation. This is unfair to the borrower. Even if one is self-employed and can thus raise the prices of one's services or products to compensate for the inflation, one can still suffer due to less services or products sold and decreased net profits.
The system itself is unfair and results in a vicious cycle with eventual total collapse; the only solution is to revamp it by introducing currency which is 100 % backed by natural resources of value.
