The Bank

[Sha]

Peace

I am going to send this to a national newspaper here. Am looking for ideas, corrections, anything. Anyone?

Btw...I don't see much activity on the forums. I guess we are all occupied in life.



Banking with the Parasites

We all suffer a collective woe: Dearth of cash to meet our obligations. Our toil and sweat take us nowhere, our machinations and furor come to naught. We pass through our lives in a state of suspended animation: never really penetrating the circle of bliss and prosperity.

Man was meant to aspire for higher ideals but life has become a meek struggle for bread and butter. Why are we in such a mess? What has gone wrong? Have we sinned and the gods are angry at us?  

Unlike greater men, we suffer not out of conviction and for some great ideal. We suffer because we refuse to think, question, analyze and finally discern light from the darkness that pervades ours senses. We suffer because we refuse to challenge what is wrong, to be courageous and to be someone significant in a larger human sense. We are a new breed of men which has chosen to endure great pain in the name of ? in the name of what?

You might have lived docilely and never imagined that a ?Great Conspiracy Against Mankind? could exist ? but it does. Fortunately, we have been warned again and again, by God and man alike, if only we listen.

The parasites

Imagine a parasite persistently munching on your house structure. No matter how much you struggle to give your house final shape, it doesn?t finish. Every day you construct a little more, the parasite eats a little more. Each week a few more parasites are born and you need to endeavor more just to keep up with their eating. This slowly and then rapidly develops into a hopeless struggle for survival. You face a choice: die of meekness (struggling, toiling and sweating), or change the rules. If you are smart and noble, you fight back.  

There is a parasite constantly eating away the income of your hard labor. Something is going on behind the scene which nullifies your efforts and makes you even more subservient to this parasite every passing day. Can there be any other way to end this tyranny then to wage war against this criminal of human society? By every rule, of God and man alike, they must be stopped from this oppression. Man must be set free to aspire for ideals that suit his stature.

The money-lenders

I have a firm conviction (and a strong case) that the tall and strong buildings of the banking establishment that demand our trust are a bunch of thieves robbing us in broad daylight. Something is wrong not with me or you in the way we work (toil, labor, sweat and struggle); but something is unquestionably wrong in our servile acceptance of the economic system that has been imposed on us by the mutual consent of gullible governments and greedy bankers.

Let us say that there is a Bank and I am a person with Rs100 which I carry around in my pocket. The Bank places an advertisement in the newspaper informing me that this money is unsafe in my pocket and I should keep it with them for safekeeping. The Bank also promises to pay an annual interest of 2% on this deposit.

This is what I get. What does the Bank get? The Bank keeps my money safe and pays me for it too?

This is an absurd proposition unacceptable to a profit-seeking organization. Looking a bit closely we notice that according to an arrangement between the greedy banker and the gullible government of your country, the Bank follows a ?fractional reserve? policy. This means that the Bank has to keep a fraction of the deposits in liquid cash to meet its obligations, and it can credit the rest.

Let us say that the government has set this reserve ratio at 10%. If the Bank was reasonable it would keep Rs10 (10% of Rs100) and credit the rest (Rs90) to a borrower on interest (lets say 5%). That would give it an income statement looking like this:

Gross income:       Rs4.5 (5% of Rs90 that was amount loaned)
Interest paid to depositors:    -Rs2 (2% of Rs100 deposited with the Bank)
Bank expenses:      -Rs1
Net profit:         Rs1.5

But the Bank is not reasonable. The Bank knows that when it credits money to a Borrower, it is actually just creating a Deposit in the name of the Borrower. So what it does is this: It keeps Rs100 as liquid cash, and creates Deposits in the name of Borrowers to the amount of Rs900.

With just Rs100 in deposits the Bank creates credit amounting to Rs900! Just look at the new income statement:

Gross income:       Rs45 (5% of Rs900 that was amount loaned)
Interest paid to depositors:    -Rs2 (2% of Rs100 deposited with the Bank)
Bank expenses:      -Rs1
Net profit:         Rs42

So on a deposit of Rs100 the Bank earned Rs42 ? a 42% return on deposits. 100% guaranteed return since the Borrowers pledge their property and assets to secure the loan. What business could be better?

But I really wish this was all. Maybe a great lawyer can argue even this to be unjust and illegal in an honest court of law. But the Banks are not simply unjust. They are complete thugs and thieves of the worst kind, as you will just see.

The Rs900 that the Bank loaned was not money that previously existed. It was literally, to quote a bankers? term, ?created out of thin air?. Let?s say this money was returned to the Bank within a year with interest. How does the Banks income statement look now?

Interest earned:       Rs45 (5% of Rs900 that was amount loaned)
Actual repaid:      Rs900
Gross income:      Rs945                                                                                             
Interest paid to depositors:    -Rs2 (2% of Rs100 deposited with the Bank)
Bank expenses:      -Rs1
Net profit:         Rs942

Just look at that figure. Rs942! That is a 942% return on a deposit of just Rs100! And guess what ? the bank did not earn this money by giving back anything of value! It just guzzled it greedily. It stole it from smart, hard-working, value-creating people like me and you. The Bank made money out of currency itself ? whose sole purpose, to begin with, was to serve as a ?medium of exchange?.

Why doesn?t the government provide this same service at zero interest?

If you think Rs942 isn?t important ? think again. At a 10% reserve rate, 90% of the currency we use is what is called ?checking deposits?. Roughly, just to understand, we can say the Banks take way more then 50% of what we earn just for creating ?money out of thin air? which could have been done as easily by the government at no cost!

It?s the greatest swindle of all times and it just doesn?t end. And you know why not? Because they take away more then half our income and we all stay quiet and numb and stuck in the drudgery of daily living. They are the merciless feudal lords and we are the docile peasant slaves.

Lessons from history and religion

Let us look to what history and religion (Islam: Submission) teach us about interest.

Remember that religion is a ?system? and not a set of rituals. The Book of God guides you to the ?true system?, the one that will propel you to prosperity and success in this world and in the next one.  

This is what God has to say about interest:

2:276 - God wipes out financial interest and He grants growth to charities. And God does not love every wicked sinner.

God does not say things in vain and God does not make mistakes. ?God wipes out financial interest?. If you are a Muslim this should compel you to think. If you are not you can still consider it and see if there is a rational basis for this claim. We have been taught in economic textbooks and the business pages of newspapers that interest makes the world go round. That modern economy could not exist without this interest-based banking system. That denying interest is the same as denying modernism.

Careful and honest evaluation will prove that technological progress and economic development is despite the existence of interest, not because of it. Interest is the exploitative element pervading our ?modern civilization? afflicted with an old disease historically notorious by the name usury. Interest is inherently parasitic. It is profit from trading in currency itself. And the Banks are eating away wealth that rightly belongs to the common man (after all, he worked for it!)

Interest is, literally, wiping out real wealth. Whereas the institution of interest accumulates wealth in a few hands thus destroying it, charity distributes it back to the majority thus multiplying it. Even modern economics argues the existence of a large middle-class as an essential ingredient for growth. No wonder God said that He wipes out financial interest and grants growth to charities.

This is not the place to discuss this verse with the detail it deserves. It will probably serve as a philosophical pillar when we begin to unravel the perfect economic system God gave to man.

Aquinas, Plato, Aristotle and others have this to say about interest (or usury):

Thomas Aquinas talks about the injustice of interest in these words: ?To take interest for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality, which is contrary to justice. Now, money was invented chiefly for the purpose of exchange. Hence, it is by its very nature unlawful to take payment for the use of money lent, which payment is known as interest.?

Hillaire Belloc sums up the definition of usury to be: ?a claim to increment, or extra wealth, which is not there to be claimed. It is a practice that diminishes the capital wealth of the needy and eats it up to the profit of the lender - so that, if Usury goes unchecked, it must end in the absorption of all private property into the hands of a few money brokers.?

The famous Greek philosopher Aristotle says: ?The trade of the petty usurer is hated with most reason: it makes a profit from currency itself, instead of making it from the process which currency was meant to serve. Their common characteristic is obviously their sordid avarice.?

In 1921 Nobel Prize winner Frederick Soddy said: ?There is nothing left now for us but to get ever deeper and deeper into debt to the banking system in order to provide the increasing amounts of money the nation requires for its expansion and growth. An honest money system is the only alternative. Starting with nothing whatever of their own, bankers have got the whole world into their debt irredeemably, by a trick.?

Sir Josiah Stamp, President of the Bank of England in the 1920s, then the second richest man in Britain said: "Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it all back again. However, take it away from them, and all the great fortunes like mine disappear, and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create deposits."

Mayer Rothchild: ?Let me issue and control a nation's money and I care not who writes its laws.?    

President James Madison: ?History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.?
                   
Rothchild Brothers: ?The few who understand the system, will either be so interested in its profits, or so dependent on its favors that there will be no opposition from that class. The great body of people, mentally incapable of comprehending the tremendous advantages will bear its burden without complaint.?
                             
Plato: ?There must be no lending at interest.?

In conclusion

We exist at a time in history when the world is reaching the inevitable conclusion of great greed: destruction. Why must we commence a civilisation from the ashes of an old one only to be led astray by bankers once again? Why not confront the money-lenders now and begin forcing change? Why not interrupt the devastating future from ever happening? Why not live in a better, humane and just world?

Let us be significant in a larger human sense. This struggle is vital to humanity?s meaningful survival. We owe it to our children to pass them a world free of money-lenders and their craving for a ?Pound of Flesh?.

To end: I thank God for the mercy he has shown in guiding us and showing us The Straight Path. For without His guidance, we would surely be lost.


Sha
auzyoyo@hotmail.com

[AaRoN]

peace

the only suggestion i have for editing is:

pervades ours senses

should be changed to pervades our senses.

that was all i could find that needed fixing.

other than that, i think this is an excellent article.

absolutely beautiful, maa shaa al LlaH.

[zenje]

Salaam Aaron,

the only suggestion i have for editing is:

pervades ours senses

should be changed to pervades our senses.

hmmm... :?

[Layth]

Peace Sha,

I commend you on the effort to expose the unethical practicies of banking worldwide and the system of 'fractional lending'.

However, if you allow me a comment, you are mixing two things in your article which are very much unrelated...

1. Fractional banking. Which is the practice of banks lending what they don't have, and thus making money from thin air (as you rightly pointed out).

2. Interest. Which is forbidden because it is a logical fallacy to repay what was never created (i.e. using a closed model:  $100 being lent out, yet the bank expects $105 in return...Who will create the $5?).

There is also the 3rd issue of detaching money from the gold/silver base which was done in the 1970's and simply adds to this unfolding drama of financial theft (now they really create money out of nothing!).

Some articles that might help:

http://www.free-minds.org/articles.htm#money

Layth

[Sha]

Peace Layth,

Before I say anything else a BIG thankyou for the work you have done!

I agree that the argument in the article is...not too strong...that I have mixed up the two...fractional reserve & interest...hmm maybe I could restructure the thing...but I think the two (interest & reserve) will stay...because the issue isn't just interest...its the financial (banking) system...

If you allow, I have a question regarding what you wrote here...

2. Interest. Which is forbidden because it is a logical fallacy to repay what was never created (i.e. using a closed model: $100 being lent out, yet the bank expects $105 in return...Who will create the $5?).

Let us say that I have a hundred rupees (And I did not create them. I earned them by baking bread, or something)...A shopkeeper asks me if he can use them to buy ten pieces of iron which he will sell in a few days...I ask him only if he pays me Rs5 as interest...he figures he will be making a profit of Rs10...so he agrees to my proposition...

There is no 'logical fallacy' since the money 'was not created'. Money earned from work was lent for a period of time (7 days). The next person (borrower) made a profit from it and returned the original plus interest.

The 'logical fallacy' would exist only if the issuer of currency...in our case the banking system...issued money and then expected back more then it gave...105 for 100...

So you cannot argue away 'interest' on the basis of this logical fallacy because it doesn't cover interest between non-issuers of currency...

A better argument can be the exploitative element in interest...a person who has money charging more money from somebody who hasn't any...

That could be the essential moral argument...

The secondary would be economic...since interest accumulates wealth in the same hands that already have it...it confines the poorer man to a circle of money-lessness...slowing growth, progress and prosperity...

Just some thoughts...

Sha

Ps. Thanks AaRoN for going through it. I just corrected the mistake.

[Layth]

Peace,

Let us say that I have a hundred rupees (And I did not create them. I earned them by baking bread, or something)...A shopkeeper asks me if he can use them to buy ten pieces of iron which he will sell in a few days...I ask him only if he pays me Rs5 as interest...he figures he will be making a profit of Rs10...so he agrees to my proposition...

There is no 'logical fallacy' since the money 'was not created'. Money earned from work was lent for a period of time (7 days). The next person (borrower) made a profit from it and returned the original plus interest.

If we look at the small transaction, then you are correct, nothing appears to be wrong. However, the issue of interest needs to be viewed in the 'big picture' to see how Islam attacks the problem at the root once and for all...

Many people who do not care to look at the big picture think it is about greed and how much money the bank (or lender) will make...What is missed in this case is that 'greed' is not dissalowed in Islam and that you can sell a product for 1000% profit and that is perfectly acceptable (even if your goods are commodities like food which people must have)...Therefore the issue of interest has never been about 'greed/profit' but about a more fundamental issue which is stealing peoples wealth through a twist in the process.

Layth

[Gentile]

Hail. Don't you think generally though that charging for lending money will inevitably end up in exploiting the one seeking a loan? After all, they don't have enough in the first place and thats why they have sought a loan, so charging on top of this will make them your financial slave wouldn't it?

I think there is a much better political solution to the 'necessity' of banks anyway.

[shamsul-arefin]

I find Sha's arguement quite logical...though I am not expert on banking.


What I been thinking about this whole issue is.........

How can bank make money which doesnt exist...? How can anyone make money which doesnt exist...?

As sha pointed out...Banks are not issueing/creating money. They are just manipulating as far as I understand. Banks invest in big companies thru giving loan and obviously those company knows that they can pay the interest which bank demands from their profit. Its just that whoever is taking the loan should be smart enough to know that he/she can pay back the interest. Isnt it same as sharing profit..?

Its like my friend is good in business but he doesnt have money while I have money with no good strategy. So I lend the money to my friend under condition that he/she will share the profit with me. So what is wrong in it..? Arent the banks doing the same..? To me it seems like they are just a hub for the money to flow....

Most islamic banks call their interest "munafa/profit". Obviously Good banks and companies has all the most skilled people in business world. Defenitly they know how to pull a stable profit and I think thats why they can assure a set amount of profit to share (which we call interest).  

I think if it was really possible to create money out of no where than no banks or company would go down. But we still have big companies and even banks facing strategical and financial problem.

I think what layth is saying is possible if the money issuers/makers demand such return. And it would be very stupid to ask something in return like that as they are the only one who is creating it. So if anyone is to blame than they are the ones I guess, not the bank.

So who are the money makers..??(stupid question) sorry, I had to ask this as I donno..

May be the world bank and Government banks cant ask for interest but private banks can..


What do you people think about   Share business..? Forex market..? Gold business..?

Sorry if I made any stupid point.. Whatever I said is from my general ovservation...

peace