Usury Part 1

There is a reason why usury is forbidden in Islam as it used to be forbidden in other religions. There is record of usury being forbidden in the religious scriptures. The Quran is the clearest and strongest in that regard, but it is man who refuses to obey what is in the scriptures. Let no one be deceived into thinking that interest is not part of usury. Usury is inclusive of interest. In fact interest is the very foundation of usury. It does not matter that John Calvin legalised interest in a justified manner and Muhammad Abduh followed suit more than three hundred years later. The understanding of usury is not dependent on the exegeses of Calvin and Abduh. There was no dispute, ever, that any amount of interest on a loan was considered usury until the attempt by Calvin and Abduh to distort the meaning of usury to refer to only something more than a justified additional charge on a loan. The result was the culmination in the French Revolution, the appearance of the Central Bank, the Assignat, the National Debt and the fiscal state so that every citizen of the state was thenceforth born in debt. Instead of being prohibited, usury has now loomed into a full-blown economic science. However, in the very beginning, the reason for its prohibition was really quite simple.

The phrase in the last revelation of the Quran, i.e. the revelation on ribā (usury)

– وَ ذَرُوا مَا بَقِيَ مِنَ الرِّبَا – simply means, without any ambiguity, that anything above the capital sum in a debt must be given up; that there is no legal validity to any claim on such charges, neither in this world nor in the hereafter. It is not only that, any such claim incurs the wrath of God and a declaration of war from Him and His Messenger, blessings be upon him. There is no room in that phrase for the interpretation of a justified amount and a justified charge above the capital sum in a debt. If there was any doubt concerning a justified charge above the capital sum, the Quran went on to declare that Allah has prohibited usury and permitted trade; that they are not equal; that there is no mithāl (similitude or analogy) between the two. The Quran in fact clarified further in a subsequent phrase:

فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ – that (only) your capital sum is rightfully yours, so do not demand anything above it thereby oppressing the borrower, and your demand should only be your capital sum so that you on your part as the lender is also not wronged. This confirms that anything above that principal sum must be given up. The first lesson and injunction here is not to treat a loan as a means of profit like unto trade.

Well now, why is usury forbidden in Islam as it was forbidden in other religious communities? Why did people in the past curse and condemn the usurer to damnation and hell? Why was usury always considered a crime against humanity? If this was the consensus amongst the ancient and historical civilisations of the world, and its prohibition had remained undisputed, until certain historical processes distorted the meanings, then the reason behind the prohibition must have been quite simple and easy to understand. The crime of usury is one of the clearest things all religious communities agreed upon. It is one of the many things known as munkar, generally understood by people, regardless of religion, to be an evil deed. There is no complex philosophy behind its prohibition. Anyone should be able to understand it without having any need to think too much. On the contrary, those who wanted to legalise riba, it is they who had to concoct a complex logic that made no sense in order to sound sophisticated and turn it into a complex philosophy to make the unsuspecting masses seem ignorant and uneducated so that they could steal from them and the resources of their lands. In other words, those who always considered it an evil deed have no genuine necessity to defend their view; it is those who argue that usury is not an evil deed, rather a necessity in the economy who are under obligation to defend their view. It is this sophisticated logic that surpass common sense, which people cannot understand.

That simple reason is, to ensure that money in the population will not circulate only amongst the rich; so that money will not flow in only one direction like rivers and streams that eventually end up in the same sea. Man must either rightfully earn money, as in through trade and labour or gratefully receive it as in zakāt, sadaqah, infāq or any kind of gift. He cannot expropriate, embezzle, or even cheat and steal, knowingly or unknowingly, noticeably or unnoticeably, in the light or in the dark, in the open or hidden. He cannot demand what is rightfully not his. One way of consuming what does not rightfully belong to him is usury. Another way is theft. The former is legalised theft, the latter is criminal theft. Not a birdbrain will see a difference.

There must be order in the economy, and there must be justification in the supply and flow of money. By supply, the intended meaning had always been availability not creation. Money must be available and cannot be created.

There is another reason, equally simple as the above. Usury is forbidden so that nobody can reap without sowing. If one wants to reap, one must first sow, otherwise, one must not be allowed to reap what others have sown. The immediate result of reaping without sowing is that the flow of money will eventually turn, in a magnetic force as it were, in only one direction. When this occurs, the rich will remain permanently rich, and the poor will remain permanently poor, and not only that, the rich will eventually become lesser and the poor will eventually become more. Today, economics and business, devoid of cow sense, say one can reap even while nothing had been sown.

The irony of it all is that usury today is not merely part of economic science, it has become the very heart of monetary policy, that is, usury today is the driving force behind the decision-making process of the authorities who control the money supply of a people–today the entire world–and who determine how much money should circulate in the economy and how money should flow in the economy. Remove usury from the equation and they will lose all control over the supply of money and its direction of flow.

Borrowing and lending money with a charge or even renting money, which means there is a charge for using money–a negative charge or a positive charge–is the foundation for all usury. Bonds, Treasuries, Securities, Futures, Equities, Shares, Stock, public debt, internal debt, external debt, and all such terms in one way or another relate to financing, that is, lending or borrowing with a charge. The fundamental act in all of these transactions is finance, not trade. In a financial transaction with a charge on the debt, there is no trade. In financing a trade, there is no charge but only trade in which both parties are ready to share profits as well as losses. There is no protecting one party, the financier, from losses. If there is such a protecting clause in an agreement, it becomes a financial contract (which simply means lending money) not financing a trade. Fundamentally, finance and trade are two different things. To distort the meaning of riba, the world today continues to do what the usurer had done in ancient times. He legalised usury by justifying that even trade is like usury, so he said, why not forbid trade too if you forbid usury. Allah, Most High, replied to their argument–flimsy  as a spider’s web–Allah has permitted trade and prohibited usury. It is Allah who lays down the law not man. But alas, it is man who refuses to obey what is in the scriptures.

What has this man, oft given to argumentation, done? He has transformed the forbidden to necessity. Usury now is a necessity. To understand the incomprehensible, we are now required to dedicate many academic years and continue to break our heads in a damned cycle of fiscal and monetary policies that justify usury so that the money supply is created and controlled by an elite and its flow is determined to be in one particular direction. If anyone begins to simply pull usury out of the study, the entire science will collapse leaving out only the permissible and the obvious to be standing. That will expose and simplify the true nature of the economy. The banks cannot exist, the central bank cannot exist, the state cannot lend and borrow, money cannot be created, its supply cannot be increased or reduced, inflation will cease to exist, there will be no local or foreign investment except directly into a real business that will not be a financing investment promising returns but a real investment done with the trader sharing his profits and his losses. The economy that they believe in, which has usury as a necessary element, will become bare and naked, as Shakespeare said, sans teeth, sans eyes, sans taste, sans everything.

Remember, that it was lending promissory notes–in other words, instruments of debt–that allowed the banker to practice fractional reserve banking. All those who defend the gold standard today continue to accept interest on a loan, they continue to accept an instrument of debt to be used as money. They are fundamentally uneducated on the supply of money and its direction of flow in the economy. They will continue to accept fractional reserve banking with a limit. That is equivalent to Calvin and Abduh accepting a reasonable and justified charge on a loan. Abduh of course learnt to defend it and argue on its behalf from his British masters and the money lenders. There is no gold or sterling standard, there is only gold and silver, and there is only commodities traditionally considered sound to function as money. They were, to mention only a few: wheat, barley, salt, sugar, dates, rice and such like. They were food with intrinsic value, and like gold and silver, they cannot cause monetary inflation even while they had a shelf like that allowed them to be stored away without their value depreciating. I save some rice I received as payment for some labour from my part, I went back home and placed the rice in a sack and a year later, I took out the rice and cooked some of it and ate and fed my family and the poor. I use it as payment and the one who receives it as payment goes home with it, cooks it and consumes it. It has real material value. Commodity money does not lose its value. It would be the same with coffee and even with tobacco. This is why, simply because it was used as money, that the Prophet sallallahu alayhi wa sallam forbade the unequal exchange of such commodities. The narrations concerning the prohibition is well known.

The moment the money lenders saw that the door to interest was opened and allowed, even while it was restricted, and severely so in the early stages of banking history, they could nevertheless initiate the use of the instruments of debt, or promises of payment, as money itself. That in turn allowed them in the name of security and convenience and efficiency, the shamefully fraudulent practice of fractional reserve banking. It was then that they began creating money out of nothing. Stop lending and borrowing money on interest, and you will close the door for a debt to be used as a means of payment; you will stop fractional reserve banking. It was Zayd bin Thabit and Abu Hurayrah, radiyallahu anhuma, who made it clear that using a debt or a promise of payment–in Arabic, sukuk–as the very means of payment, is itself riba. They closed that dangerous door, but the Young Turks opened it and the Kaime was the immediate result. Shame on them for having opened the door that the companions of the Prophet sallallahu alayhi wa sallam closed. Perhaps the Young Turks could open it because cash waqf had already been established as an Ottoman practice against Civizade and Birgivi, and perhaps their rival, the unsuspecting great scholar of Islam Abu as-Su’ūd. But remember, it was the Ottoman Central Bank that issued the Kaime and how could they have issued the Kaime if Mahmut II did not agree to borrow money on interest on behalf of the Caliphate?

The Bank of Constantinople became the Ottoman Central Bank, which transformed into The Central Bank of the Republic of Turkey. This is the very heart of riba: lending money on interest. It gave birth to the Kaime, and then the Lira, inflation, hyperinflation, revaluation of the Lira with the removal of six zeros and continued inflation. Monetary and fiscal policies are both driven by the force of loans on interest. With this riba-based economy, it was not difficult to rope the Republic of Turkey into NATO in a matter of a few years. This is the militarisation of riba. With riba, it is easy to make someone obey. The clearer example of the militarisation of riba was the Marshall Plan. When Europe borrowed money on interest from the United States, the immediate result was firstly the formation of NATO, and secondly, granting control over the oil resources of the world and its supply routes to the Seven Sisters and within direct reach to NATO countries. The immediate effect of usury was its militarisation. Modern history is filled with examples.