One of the most popular posts on this site has been David Pidcock’s View on the State of Islamic Money, Banking, and Finance, which was posted in January of 2008. Over the past few years, these subjects have continued to draw increasing attention, and interest in interest-free financing has continued to grow in both the east and the west. It is not only on the basis of religious belief that the subject of usury is once again being debated (mainly in the Islamic world), but increasingly on account of the obvious and overwhelming expansion of debt throughout the world.
In November of last year (2010) the First World Conference on Riba was held in Kuala Lumpur, Malaysia. (Riba is the Islamic term for usury). In recent correspondence from David, he argued that there still are no truly Islamic banks. He also sent along one of his papers that he presented at the Riba conference. Whatever your preconceived opinions about the subject might be, I think you will find his paper to be interesting and informative. I have made it a permanent part of this website, which can be found in the sidebar under Other Resources, or just click on the title here, Riba? Part 1.
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When money was a stable repository of value, interest was getting something for nothing. Now that money is fiat, and that inflation is standard governmental policy, it is necessary to charge interest to maintain the value of the money. An alternative is for all loans to be linked to something else, such as gold.
Money is not a repository of value, but such repositories (bonds, CDs, savings account balances, etc) are denominated in monetary units. The problem is legal tender laws which make the currency of the Fed and the measure of value one and the same. I’ve argued for more than two decades that legal tender laws need to be repealed and an independent value standard be reestablished. This is in my books. See e.g., Money and Debt (http://circ2.home.mindspring.com/money_and_debt.htm), especially Part III.
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Interesting paper from David Pidcock. Thanks for the pointer.