It's kind of amazing (and a bit eerie) that I've got to the age of fortywhatever, had years-and-years of education, read news and am generally etc etc, and yet it wasn't til last year that I had a clue as to how money was issued: yet it's a thing we all deal with every day.
As I understand it (and I might still have it wrong) money can't be issued in the modern sense without the paying of interest somewhere along the line.
Then you get sharia law. Which forbids interest. And you can get sharia-law mortgages and even sharia-law banks, but:
Is there such a thing as sharia-law-issued money? How, for example, are Saudi Ryals(sp?) issued??
Any ideas?
Question for any money maestros out there
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RenewableCandy
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adam2
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Does money have to involve interest ? which is forbidden under sharia law.
Most currencies started as gold or silver coins, and were then replaced by paper money backed by gold in a vault, and then replaced by paper money backed by er um not much really.
If someone owns a gold mine, or obtains a supply of gold by exchange for say cattle, they could make this gold into small easily counted and exchanged gold coins.
These would end up in widespread circulation, and would appear to comply with sharia law provided that they are not lent/borrowed for interest.
Later governments obtained gold via taxation (either directly or in the form of other goods exchangeable for gold) and used this gold to mint coins.
Later still government considered that the gold should be secured in vaults, and paper notes and base metal coins issued instead, but exchangeable for real gold.
Since the banknotes thus issued were in effect a promise to pay a certain amount of gold, I dont believe that useing or issueing them would contravene sharia law, provided again that no interest was paid or received.
Modern paper money is backed not by gold but only by the reputation of the government issueing it, but does not appear to breach sharia law.
It could be argued that the selling of governmemt bonds is debt and therefore prohibited, but presumably, devout Muslims would not purchase such bonds.
I dont think sharia prevents the everday use of money, only the paying or receiving of interest.
Most currencies started as gold or silver coins, and were then replaced by paper money backed by gold in a vault, and then replaced by paper money backed by er um not much really.
If someone owns a gold mine, or obtains a supply of gold by exchange for say cattle, they could make this gold into small easily counted and exchanged gold coins.
These would end up in widespread circulation, and would appear to comply with sharia law provided that they are not lent/borrowed for interest.
Later governments obtained gold via taxation (either directly or in the form of other goods exchangeable for gold) and used this gold to mint coins.
Later still government considered that the gold should be secured in vaults, and paper notes and base metal coins issued instead, but exchangeable for real gold.
Since the banknotes thus issued were in effect a promise to pay a certain amount of gold, I dont believe that useing or issueing them would contravene sharia law, provided again that no interest was paid or received.
Modern paper money is backed not by gold but only by the reputation of the government issueing it, but does not appear to breach sharia law.
It could be argued that the selling of governmemt bonds is debt and therefore prohibited, but presumably, devout Muslims would not purchase such bonds.
I dont think sharia prevents the everday use of money, only the paying or receiving of interest.
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biffvernon
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My grandfather, Major W F. Vernon M.P., thought interest a thoroughly bad thing. He was Old Labour before it was old. When elderly himself he lent money to his care worker and to the postman to buy plots of land from him and to build houses for themselves on it. He did not charge any interest on the loan.
Re: Question for any money maestros out there
"As I understand it (and I might still have it wrong) money can't be issued in the modern sense without the paying of interest somewhere along the line."
It can.
Its (currently) called "Quantative Easing". Otherwise known as money printing.
The reason its not done is because, well, just look at Zimbabwe and South America.
It can.
Its (currently) called "Quantative Easing". Otherwise known as money printing.
The reason its not done is because, well, just look at Zimbabwe and South America.
I'm a realist, not a hippie
Re: Question for any money maestros out there
You think they dont expect us to pay this money back ? lol.DominicJ wrote:"As I understand it (and I might still have it wrong) money can't be issued in the modern sense without the paying of interest somewhere along the line."
It can.
Its (currently) called "Quantative Easing". Otherwise known as money printing.
The reason its not done is because, well, just look at Zimbabwe and South America.
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RenewableCandy
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I looked into those sharia bank accounts and they do pay you something kind of analogous to interest
Its more like dividends on shares in theory and very much like interest in practice
As you say under sharia law you can't charge interest but you can recieve dividends on a loan - the important point is that you have to share the risk with the person you are lending the money to. You take the risk of losing money on the loan as well as gaining it.
So you can lend money to someone to conduct some kind of venture and if they win you win you can share in their success - but if they lose you lose too - your buying into whatever it is they are borrowing the money for (i think) So you put your money in a sharia bank, they invest it in stuff that is morally acceptable under sharia law (no alchohol or tobacco etc.) and then as long as business is good you get some returns in the form of something that looks very like an interest payment
I think an islamic mortgage works on the principle of the bank buying a house and selling it to you at a profit in installments - so not that different then
it could all be seen as sophistry but then its a modern interpretation of what is basically a really good system because it bans usury
Its more like dividends on shares in theory and very much like interest in practice
As you say under sharia law you can't charge interest but you can recieve dividends on a loan - the important point is that you have to share the risk with the person you are lending the money to. You take the risk of losing money on the loan as well as gaining it.
So you can lend money to someone to conduct some kind of venture and if they win you win you can share in their success - but if they lose you lose too - your buying into whatever it is they are borrowing the money for (i think) So you put your money in a sharia bank, they invest it in stuff that is morally acceptable under sharia law (no alchohol or tobacco etc.) and then as long as business is good you get some returns in the form of something that looks very like an interest payment
I think an islamic mortgage works on the principle of the bank buying a house and selling it to you at a profit in installments - so not that different then
it could all be seen as sophistry but then its a modern interpretation of what is basically a really good system because it bans usury