Riba as I understand
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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.
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Peace all,
Those who call paper money worthless have no idea of how the monetary system works. If paper money in a respective country where the respective currency is used is worthless then so are gems, silver and other such materials which have assigned value. Its the people who give things value always remember that. Paper money is like an accepatnce ticket which has been estblished through hard wrking scientists in the area and those have gained acceatnce amongst the vast public cause its they whove bettered their lives. GOD Bless! -
Peace "tanveer",
Peace bro JK,
It is not impractical; and it does not have to be difficult.
JK- That a bank runs after a million of customers who all themselves came to it is not impractical? What are you saying? And your claim that a bank should nly have as many customers as they can handle is ludicrous BECAUSE ITS THE PEOPLE WHO ALSO WANT THE BENEFITS OF THE BANKS. If the bank denied it to them it would also be trouble since then many people would be left in the lurch without any money at all to start a business. You gotta get this sunni/shia small village world thought out of your mind coz they think like tht n thts why come up with such irrational nosnense. GOD Bless!
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Peace all,
Those who call paper money worthless have no idea of how the monetary system works. If paper money in a respective country where the respective currency is used is worthless then so are gems, silver and other such materials which have assigned value. Its the people who give things value always remember that. Paper money is like an accepatnce ticket which has been estblished through hard wrking scientists in the area and those have gained acceatnce amongst the vast public cause its they whove bettered their lives. GOD Bless!We do know, but you're not seeing it from our POV.
so are gems, silver and other such materials
They are, actually. Anything that has no actual physical value is effectively worthless unless backed up by something else and guaranteed. Today, these materials would be oil, steel and silicon, things like that. Sulfuric acid, even. Diamond still has practical value - it has many purposes. Gemstones and jewelry have no practical value, their value is imaginary as with paper money. Their value depends on DESIRE. Oil, silicon, steel, etc, their value is based on NEED. If we traded in water...
Do you NEED paper money to live your life or work as an organisation? No. Depending on your field of work, the materials will vary but a bunch of notes physically have no value - they only carry a promise to pay the bearer. Which may or may not be filfilled. If you keep trading promises, all you will get is more promises.
JK- That a bank runs after a million of customers who all themselves came to it is not impractical? What are you saying? And your claim that a bank should nly have as many customers as they can handle is ludicrous BECAUSE ITS THE PEOPLE WHO ALSO WANT THE BENEFITS OF THE BANKS. If the bank denied it to them it would also be trouble since then many people would be left in the lurch without any money at all to start a business. You gotta get this sunni/shia small village world thought out of your mind coz they think like tht n thts why come up with such irrational nosnense. GOD Bless!
Stock market. To set up a "partnership", all that has to happen is that the bank is given a mutually agreed share of the company's profits.
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Peace "OPF",
We do know, but you're not seeing it from our POV.
They are, actually. Anything that has no actual physical value is effectively worthless unless backed up by something else and guaranteed. Today, these materials would be oil, steel and silicon, things like that. Sulfuric acid, even. Diamond still has practical value - it has many purposes. Gemstones and jewelry have no practical value, their value is imaginary as with paper money. Their value depends on DESIRE. Oil, silicon, steel, etc, their value is based on NEED. If we traded in water...
Do you NEED paper money to live your life or work as an organisation? No. Depending on your field of work, the materials will vary but a bunch of notes physically have no value - they only carry a promise to pay the bearer. Which may or may not be filfilled. If you keep trading promises, all you will get is more promises.
JK- Paper money's value doesnt depend on desire at all like i mentioned earlier and it is surely backed up by other goods like ive explained and this backing up has been calculated carefully by the scientific community. Paper money is there for EASY EXCHANGE. Eg a baker wants to buy a car but the car companies dont need any bread from him? So now how would he get one? Say the car company says they need steel so now the bakers customers are limited to those who can offer him steel only and it all gets very difficult. Hence scientists thought off how to solve this problem and paper money was invented which has extreme practical purposes as you can see.
Stock market. To set up a "partnership", all that has to happen is that the bank is given a mutually agreed share of the company's profits.
JK- Wer talking about a loan here. In a stock market you actually have to BUY the share of the product. Its not that your given a free loan and if you make profit with that only then the bank/company would take its profit from you. GOD Bless!
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As a student of Quran I strongly feel that the term Riba is INTEREST on money lent to others.
Lending of money can broadly fall into two categories. One is for philanthropic purposes and the other is for commercial use.
Fixed or loose percentage of interest is not mentioned in Quran.
Lending, borrowing, leasing and hiring are inevitable necessities of business. To ensure justice and equity in business the Society may make rules for commercial loans but a Society cannot undermine the sanctity of Riba-free plan introduced by Allah, for survival of the people deserving charity.
People were under the illusion that Riba is like profit in trading (2275) Allah said; these are different, I permit trade and prohibit Riba (2275) keep your past earnings and stop charging the interest from now onward (2275) and also if the debtor is unable to pay, wait for a better time. It would be still better If you give up the loan by way of charity, (2280) The debtor spoken of here is obviously a man of limited means who may not be able to pay off the loan.
Looking into the subject of spending money in the way of Allah we find that the word "Riba" is interwoven in 11 verses of Sura Baqarah (271 to 281). This definitely is not a coincidence that as many as 11 verses on one subject are put together. As also encapsulating the word riba in these verses is not without purpose.
A careful study of these verses indicate that Allah the Almighty has allowed trading but is not pleased with making money at the constraints of people deserving charity. This gives me a feeling that prohibition of interest is specific. It applies to the cases where help on charitable basis is called for and Allah want us to keep open an alternate door of charity by including in our economic system a package of interest-free loan for the people deserving charity.
Lending of money to such people shall be a matter of benevolence, It shall be free of interest without the question of inflation and devaluation . This according to Quran is obligatory and who ever refrain from it is the companion of Fire.
Question is Refrain from what? (1) Giving loan on interest or (2) refusing to give loan without interest. The second situation in my opinion is closing upon those the doors of help about whom Allah says
(a) Help them with loan and charge no interest (Riba)
(b) Do not press them for return of loan.
(c) Give up the amount of loan by way of charity if they are not able to paySurly Allah is not talking about traders, industrialists, jageerdars and the rich ones.
Looking into the aforementioned verses of Quran I am of the firm opinion that Allah want us to make a provision in our budget at all levels for giving charity or interest-free loan to needy ones without the consideration of gain, loss, depreciation, inflation or devaluation. Rest is business and a man is free to exchange money on mutually agreed terms. .
Allah know better.
Muhammad Latif Chaudhery
Senior citizen
18/2 Shalamar Town Lahore
Contact. 0321 402 1162I read the discussion in this thread and then went back to read the quoted Quranic Verse, i.e. 2275. Something struck me really peculiar which I would very much like some feedback on. The verse, as translated by Yusuf Ali, is as follows
(2275) - "Those who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness. That is because they say "Trade is like usury," but Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (The offence) are companions of the Fire They will abide therein (for ever)."
It states above that "they" say... I am assuming that "they" refers to people who devour usury... Now considering this in the present world scenario... I am sure everyone must have met a lot of people who are in the favour of interest-based deals/transactions and say that there is nothing "un-religious" about them. When you ask them for justification of that statement, "Why do you think that interest is un-religious?", what is their reply... Generally, their reply, in a nut-shell is because "interest of interest-based transactions is like profit from normal (trading) business", i.e. Interest-based transactions are like normal business transactions.
Now consider the above verse again... People who devour usury say/will say, "Trading is like Usury", but about interest, people are saying it the other way around, i.e. Interest is like trade. Comparing Interest to Trading, not Trading to Interest, as the verse says. ... not
Is it possible that interest may not be the Usury/Riba mentioned in the Quran in light of the above? I am fully aware that I may have gotten this wrong somehow, but I would definitely like to hear your views on it.
Peace
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Peace Sharp001,
Interesting question and nice reading your initial posts...
Now consider the above verse again... People who devour usury say/will say, "Trading is like Usury", but about interest, people are saying it the other way around, i.e. Interest is like trade. Comparing Interest to Trading, not Trading to Interest, as the verse says. ... not
Is it possible that interest may not be the Usury/Riba mentioned in the Quran in light of the above? I am fully aware that I may have gotten this wrong somehow, but I would definitely like to hear your views on it.
This falls in the same category with drugs and gambling both causes similar highs playing on human emotions ? refrain from such vices to be successful is God?s advice.
Think of it as operating a casino; the odds are against players in the long run.
Likewise, interest purchases befog the mind (i.e. give people a credit card and by stretching payments make things ?appear? affordable) in the long run favor bankers.
Opposite of a casino is trading stocks; in the long run buy and hold favors players.
Unless the trading is speculative gambling on margin (i.e. playing with borrowed money using leverage only putting 20% down) thus running a casino.
Some may argue 30 year interest mortgages enable home ownership which is really a fa?ade of enslavement ? live below your means; save and pay off things all at once else don?t purchase it type of economy keeps things from crashing every generation.
Watch as US deficit spending and housing bubble collapses; one can only reissue and postpone credit for so long until it catches up and bill comes due.
Peace
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Nun de plume,
Thanks for the response to my question. It is definitely a thought-provoking point of view.
About intoxicants and gambling/games of chance. Personally, I wouldn't go beyond the explanation provided by the Quran about their nature, i.e. in them is great harm, and a benefit for mankind; but their harm is greater than their benefit. In my view, the assumption that gambling and drugs have a similar high on human emotions seems subjective to me. Of course, one can further research out what are the harms and benefits of both and simply weigh them against each other. But I truly believe that we will reach the same truth that the Quran has provided. Please be assured that I am no way implying that one shouldn't research out the harms and benefits to quench his/her curiosity. I am just saying I believe that the end result will be the same. Anyway, the point that I was trying to make was in regards to operating a casino and the odds against players in the long run. I am not too proficient in Math or other relevant subjects but in any event involving chance, assuming it is not rigged somehow, the probability of occurence of all possibilities are the same in the long run, e.g flip a coin, two possibilities, heads and tails, 5050 chance... flip it five times and you may get any number of results, e.g (A) 4 heads and 1 tail, or (B) 2 heads and 3 tails, or maybe even (C) all 5 tails, etc.... but flip it infinite number of times or "the long run", the results would be half heads and half tails... so for the operating of the casino, where there are two possibilites of either the house winning or the players winning, the odds in the "long run" are not against any of the above possibilities but have an equal chance of occurence. But then that is just the "long run". The "short run" will probably have odds which favour one possibility more than the other.
I suppose my point of view from the whole discussion was that I can't equate interest purchases to gambling/games of chance, simply because interest purchases do not have any element of chance, and indicating that credit card is favourable to the banker in the longer run seems no more different than saying that a certain product is favourable to its manufacturer in the longer run.
All the rest of the examples of your post again appear subjective and would be different points of view. Like you said, some may argue one fact and some may argue the other, which only implies that it may be suitable for some & not suitable for the next, e.g. credit cards taken by people who have the means to pay them off actually facilitate their day-to-day life (like not carrying cash around when travelling the world etc.) but credit cards acquired by the people who do not have such means, say, just for the sake of having them, is just a recipe for trouble.
In fact, this discussion just opened up another door of possibility. The Quran informs us to spend from what Allah provides us. So, isn't spending from beyond your means, e.g. from a loan which you have no reasonable means of paying off, actually spending from what Allah has not provided you? You have gotten an "Increase" in your spending power which you don't actually have the means to. I mean let's think about this. Who are the people most harmed by loans and interest-based transactions? The people who do not have the means to pay them off but still take out a loan. Why? Maybe to keep up appearances, to show that they have a high place in society, to gamble etc.
Now I am sure that the next question that people would ask to this discussion is that if people had the money, why would they even need take a loan? The same question popped up in my head as well. Why do people (who are sane, at least) take a loan? Any kind of loan, whether it be interest-free or interest-based? Because they need the money, the spending power. For what purpose? Either Commercial or Personal.
Commercial loan is for financing one's business needs. When a loan is applied for by a person for business purposes, to further his business. His business is his source of income. So the loan facilitates it.
Personal Loan is for, what else, personal needs. Ranges from Credit Cards to House Loans/Mortgages. Neither of the reasons for personal loans is for generating income (at least legal income, that is) but more to facilitate life-style. Now here is the thing to ponder about. One needs to have a life-style first to facilitate it. If you are taking a loan to "make" a life-style, then you are just going beyond your means and adding to/increasing your wealth with what is not yours and neither have the means to begin with.
So, in summary, is it possible, however remotely, that Al-Riba may mean the Increase in one's wealth, for which no means were provided by Allah? Now I know that this implies more than just loans. It would include stolen wealth as well. To me, this make sense as Allah deprives Al-Riba of any blessing (2276). I suppose it also puts another question in my mind, with regards to translation of "Al-Bay
a" as "The trade"... wouldn't trade more appropriately translate from "Tijara(t)" rather than "Baya"? Just a question. Could "Al-Bay`a" stand for lawful dealings or something similar?I apologize for taking so much space with my post. Thanks for being patient for reading the whole post. Feedback, as always, would be appreciated from you, Nun de plume, as well as, from anybody from the forum.
Peace
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Peace Sharp,
Anyway, the point that I was trying to make was in regards to operating a casino and the odds against players in the long run. I am not too proficient in Math or other relevant subjects but in any event involving chance, assuming it is not rigged somehow, the probability of occurence of all possibilities are the same in the long run, e.g flip a coin, two possibilities, heads and tails, 5050 chance... flip it five times and you may get any number of results, e.g (A) 4 heads and 1 tail, or (B) 2 heads and 3 tails, or maybe even (C) all 5 tails, etc.... but flip it infinite number of times or "the long run", the results would be half heads and half tails... so for the operating of the casino, where there are two possibilites of either the house winning or the players winning, the odds in the "long run" are not against any of the above possibilities but have an equal chance of occurence. But then that is just the "long run". The "short run" will probably have odds which favour one possibility more than the other.
The above is incorrect. Casinos have designed the games and made their rules in such a way that in the long run, the odds are always in their favor. You can verify this by studying the various casino games and their rules and mathematically analysing them.
In addition to that, stock market is also similar to gambling, because
- Stock prices are based on PURE SPECULATION.
- The bid ask spread is always in favor of the market maker, hence the market maker ALWAYS wins.
- High ranked corporate officers have the advantage of insider information and potential insider trading.
Thus, the game of stock trading is designed in such a way that the odds are stacked against the general public, thus being similar to gambling.
So, in summary, is it possible, however remotely, that Al-Riba may mean the Increase in one's wealth, for which no means were provided by Allah? Now I know that this implies more than just loans. It would include stolen wealth as well. To me, this make sense as Allah deprives Al-Riba of any blessing (2276).
Thank you for the excellent understanding.
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Peace Sharp,
The above is incorrect. Casinos have designed the games and made their rules in such a way that in the long run, the odds are always in their favor. You can verify this by studying the various casino games and their rules and mathematically analysing them.
In addition to that, stock market is also similar to gambling, because
- Stock prices are based on PURE SPECULATION.
- The bid ask spread is always in favor of the market maker, hence the market maker ALWAYS wins.
- High ranked corporate officers have the advantage of insider information and potential insider trading.
Thus, the game of stock trading is designed in such a way that the odds are stacked against the general public, thus being similar to gambling.
Tanveer,
I appreciate you for imparting the knowledge of casinos to me. As for stock trading, I assume that you mean stock trading involving speculation, as mentioned by Nun de plume. About the post of my mine that you quoted, I didn't that I suggested anything in favour of gambling/games of chance. My discussion on "5050" or "long/short run" was only directed at not equating it to interest purchases
I suppose my point of view from the whole discussion was that I can't equate interest purchases to gambling/games of chance, simply because interest purchases do not have any element of chance, and indicating that credit card is favourable to the banker in the longer run seems no more different than saying that a certain product is favourable to its manufacturer in the longer run.
Please understand that I do not believe by any stretch of imagination that gambling/games of chance are allowed, no matter how the odds play out, whether against the public or even in their favour. I was just trying to differentiate them from interest purchases.
And thanks again for reading my post.
Peace.
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Peace Sharp,
Please understand that I do not believe by any stretch of imagination that gambling/games of chance are allowed, no matter how the odds play out, whether against the public or even in their favour. I was just trying to differentiate them from interest purchases.
I did not mean to imply that you believe that gambling is allowed. I was just trying to correct your misunderstanding about the odds inherent in casino games.
I assume that you mean stock trading involving speculation.
What I meant was that ALL stock trading involves speculation, whether short term, or long term, because the stock price itself is based on PURE SPECULATION. Look up P/E ratios for details. The stock price at which someone buys the stock is not the ACTUAL price of the underlying shares, but only a SPECULATED price based on future speculation about its potential value. That is why when those speculations do not come true, for example when the company fails to meet its projected/expected earnings for a quarter, there can be dramatic swings in its stock price, causing people to lose millions, even though the company made a huge profit for that quarter.
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What I meant was that ALL stock trading involves speculation, whether short term, or long term, because the stock price itself is based on PURE SPECULATION. Look up P/E ratios for details. The stock price at which someone buys the stock is not the ACTUAL price of the underlying shares, but only a SPECULATED price based on future speculation about its potential value. That is why when those speculations do not come true, for example when the company fails to meet its projected/expected earnings for a quarter, there can be dramatic swings in its stock price, causing people to lose millions, even though the company made a huge profit for that quarter.
Hmmm... good point... I never thought about it in along those lines. But what if you purchase shares of a Company upon its incorporation at its offer price (implying share of its ownership) and receive a share of its dividends (share of profits)? Is that okay? If so, how does sell one sell those shares in the market if one want to dispose of those shares? Aren't market demand/supply forces in effect which are what is really affecting the prices? I mean one can't help if the other person wants to buy something from you at a higher price than what the good is worth? And this is not only limited to the share market. I mean if I am willing to sell the share at Rs. 10 in a market but the next person is willing to buy it for Rs. 15, my guess is that the equilibrium price would be Rs. 15 at which both the buyer and seller would be happy to make the trade. How much value the buyer is attributing to the shares are his own prerogative, no matter how he calculates that value.
At least that is my take on that. I am open to any input on this matter.
Peace
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Peace Tanveer,
The above is incorrect. Casinos have designed the games and made their rules in such a way that in the long run, the odds are always in their favor. You can verify this by studying the various casino games and their rules and mathematically analysing them.
In addition to that, stock market is also similar to gambling, because
- Stock prices are based on PURE SPECULATION.
- The bid ask spread is always in favor of the market maker, hence the market maker ALWAYS wins.
- High ranked corporate officers have the advantage of insider information and potential insider trading.
Thus, the game of stock trading is designed in such a way that the odds are stacked against the general public, thus being similar to gambling.
Agree with casino games are not a 5050 coin toss and rigged with a certain percentage going to the house which ?in the long run? (one person playing indefinitely or the aggregate play of numerous individuals) will earn a certain percentage of total wagered.
They have gaming simulators which predict winnings depending on rules/policies if traffic is known (amount of bets wagered) with almost certainty before building a new Casino same as money lenders are almost certain about their return. Vegas billion dollar investments are due to house advantage.
Agree there is always risk although long run stock investments have corrections are steady rising?
http//chart.finance.yahoo.com/c/my/_/_gspc
This is similar to long run investment in real estate which have similar up slopes?
http//www.andongkim.com/media1/2005/06/NYC.JPG
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Peace Sharp,
But what if you purchase shares of a Company upon its incorporation at its offer price (implying share of its ownership) and receive a share of its dividends (share of profits)? Is that okay?
The problem is that the offer price itself is partly based on speculation. In an ideal society, in which the offer price is based purely on actual earnings, and the demand/supply forces, then I guess your scenario would be ok.
The whole financial system is corrupt nowadays, based on worthless fiat currency, and needs to be entirely revamped. You might wanna take a look at this video which will blow your mind if you are not already aware of the truths you are about to see !!
http//video.google.com/videoplay?docid=-9050474362583451279&q=money+as+debt&total=1775&start=0&num=10&so=0&type=search&plindex=0
If so, how does sell one sell those shares in the market if one want to dispose of those shares? Aren't market demand/supply forces in effect which are what is really affecting the prices? I mean one can't help if the other person wants to buy something from you at a higher price than what the good is worth? And this is not only limited to the share market. I mean if I am willing to sell the share at Rs. 10 in a market but the next person is willing to buy it for Rs. 15, my guess is that the equilibrium price would be Rs. 15 at which both the buyer and seller would be happy to make the trade. How much value the buyer is attributing to the shares are his own prerogative, no matter how he calculates that value.
The problem, again, is that the stock price is not determined only by actual earnings and demand/supply forces, but also by pure speculation in the form of speculated P/E ratios, which forms a significant chunk of the stock price, and can adversely affect it even when the company makes a huge profit, as I explained earlier. If that speculation component is taken out, then I think it would be ok, but for that, the whole system needs to be revamped.
The steady rise in stock prices over years mentioned by Nun also has a speculation component, which can still cause the prices to artificially crash in case of an unforeseen failure to meet the expected/projected speculations, despite the company still making large profits. Just because stock prices are steadily rising over years does not necessarily mean they will continue to rise.