Payment of interest
Name(s):
Inflation-based monetary systems
Nature
The crisis in financial systems and the financial difficulties experienced by many arise from the payment of interest from those who have less money to those who have more money than they need. Based on interest and compound interest, a given amount of money doubles in value at regular intervals, following an exponential growth pattern. The continual payment of interest and compound interest is arithmetically, as well as practically, impossible in the longer-term. The concentration of money in the hands of fewer people or enterprises creates a constant pressure for large scale investments. Military production is perhaps the only area through which the saturation point can be postponed indefinitely.
Background
One common misconception is that payment of interest can be avoided by not borrowing money. This is not true because included in every price paid is a certain amount of interest. A second misconception is that since everybody has to pay interest when borrowing money (or buying goods or services), then all benefit or lose equally. This is incorrect. There are great differences between those who profit from the system and those who pay for it. The present monetary system allows the operation of a hidden distribution mechanism which constantly reallocates money from those who have less money than they need to those who have more than they need. The payment of interest is prohibited by the Islamic faith.
Incidence
1. One of the symptoms of this system is inflation which is effectively another form of taxation through which governments try to overcome the worst effects of increasing debt, resulting from the monetary system they created. Inflation, through the printing of money, is a way for government to overcome its increasing interest-related indebtedness. For example, government income in the former West Germany rose only 300% between 1968 and 1982, whilst its interest payments rose by 1,160%. Such problems would be avoided under an alternative system in which people would pay a fee if they kept money out of circulation.
2. Muslims are prohibited from any involvement in interest by their religion. But because the financial system of the world is currently dominated by interest, Muslims find it extremely difficult to abide by their religious convictions when dealing with that system. Most Muslims are deprived of any means of using the few non-interest paying facilities.
Claim
1. Interest in effect acts like a cancer in the social structure.
2. The accumulation of compound interest is economically unsustainable in the long term. A dollar invested a 10 percent compound interst would be worth $2.59 after 10 years; $13,780 after 100 years; and around $2,473 x 1048 after 1,000 years, which is about ten trillion times the value of the earth's weight in gold.
Narrower
Aggravates
Strategy(ies)
Type
(F) Fuzzy exceptional problems