Islamic Banking

[paintpooper]

So the other day I read some things on Islamic Banking, honestly I didn't even know it existed.

Basically it states one can not make "profit" on another, so it sounded like there are no "late fees" and it appears that their banks don't use fractional reserve banking, but actually try to be full reserve, but that is nearly impossible. So no interest rates or very low rates.

Also they don't allow high risk investments.

I guess what I'm trying to say is, I don't think we in the US/world would be in this economic problem if it were not for how our banking industry works.

So a bank charges interest rates on loans you take out. That loan is basically coming from other deposits in the bank. People with the capital. So the interest rates you pay on your home, car or whatever, actually pay the large depositors of the banks. It is all relative on the amount of money the person has in the bank. So if you are rich and have millions of dollars in a bank, you are making money off everyone else little loans, so you constantly make more money while the other people are constantly gouged with interest rates/late fees/penalties that all benefit the already rich.

I'm just in the process of house buying and honestly our system is fuckkkkeddd. So I was just reading about other banking methods.

Also the no-profit/greed thought goes along with rev's recent polls.

[Anomalocaris]

Islamic banks can't charge you interests because interests are usurious. They can charge you 25% a year in fees, however, fees are not usurious. This is what happens when men living in the 21st century and whose brain have attained 16th century dimensions pretend that their brains can fit into the tiny cranial cavity of an 8th century lunatic.

[The Grand Nudger]

We'd also have difficulty funding potentially risky but extremely useful projects, as well as responding to a crisis like the one we're currently in. We've assumed the system we have for reasons (to avoid this or that problem, or achieve this or that goal). Those issues we have attempted to overcome with this system wouldn't go away simply because we chose another system (case in point, free markets were supposed to do away with the inequality we suffered under imposed markets..but they didn't. Islamic banks can't charge usory interest but the can charge fees that would be considered usory if they were interest), and whatever system we chose would have problems of it's own. We might want to give some thought to not marrying ourselves to any single system of anything so completely as we have thusfar. Different tasks, different tools.

I think interest is perfectly reasonable when it comes to personal loans if we're going to continue operating with the systems we have in place regarding what those loans are used for. There has to be some incentive for someone to hand you 30k, or else they won't. Even usory interest rates. You always have the option of declining the loan. Of course, if you'd argue that one needs the loan to secure a home, to use your example...then is it the interest rate or the price of the home that's the problem (or indeed, that there is even a price on a home in the first place)?

[5thHorseman]

So is Islamic Banking a mattress?

[paintpooper]

I'm not advocating Islamic banking. Just some ideas within it. Some American banks charge us fees and interest.
Take all the good ideas of banking and create a system that doesn't create as much inequality and greed.
Loans for some things can be different for other things.
We can all agree the banking system of the US is fucked, no help from congress who are the people who are suppose to speak for us.
So I'm just throwing ideas out there of what other countries do, not advocating any single system.

Most people can not and will not ever be able to "afford" a home, as in pay cash without a loan.

How can anyone support un-tamed fractional reserve banking? It's all based on future growth, if their is no future growth, someone gets shafted.
I'm just trying to understand the over complex banking system/world bank/IMF/ Fed reserve.

[The Grand Nudger]

Obviously I'm no economics major, but I do remember a bit about our banking system not existing or evolving in a vacuum. It supports (and is supported by) a lot of other difficult to understand shit. Giant mess isn't it..lol.

[paintpooper]

It is a giant mess, but I think for them to say it is "over complicated" is a cop out to trying to understand how it does work. My feeling is they don't want us to know how it works, because it is probably criminal. If the system was run with integrity and sustainability we would not have large boom and busts, that shows me that as greed grows the probability of a financial problem erupting increases.

http://prorev.com/2009/03/how-north-dako...could.html

North Dakota interesting about their banking system.

[Anomalocaris]

So is Islamic Banking a mattress?

No, they let you use their money for a while for a non-usuriously usurious fee.

[Minimalist]

pretend that their brains can fit into the tiny cranial cavity of an 8th century lunatic.

Perhaps you meant rectal cavity?

[Oldandeasilyconfused]

Christianity got around the prohibition against usury by the simple expedient of changing the definition.

For centuries in Christendom,'usury' meant "lending money at ANY interest"and was forbidden to Christians. That is one reason Jews became the bankers of Europe.


Gradually, over time,the meaning of 'usury' was changed to " lending money at UNREASONABLE interest" This is the definition used today by Christian apologists, unswayed by anything as prosaic as evidence.


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Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate (as well as charging a fee for the use of money, such as at a bureau de change). In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law. The term is largely derived from Christian religious principles; Riba is the corresponding Arabic term and ribbit is the Hebrew word.

The pivotal change in the English-speaking world seems to have come with the permission to charge interest on lent money[4]: particularly the 1545 act "An Acte Agaynst Usurie" (37 H.viii 9) of King Henry VIII of England (see book references).

http://en.wikipedia.org/wiki/Usury