The Prohibition of Interest in Islam (prophet, blessing, Christianity, Christian)

[tariqkhwaja]

This is religion and economics at the same time. I am not sure if we can discuss this on a religious forum. But since Islam is the religion that strongly forbids usury so ...

Prophet Muhammad (peace and blessings of Allah be upon him) pointed out that the reason usury was forbidden was because money does not automatically increase in value. Money is invested and the invested might yield a profit or a loss. However, in a system based on interest lending money ALWAYS brings profits. Which is unrealistic.
So a lender lends money to a borrower. The borrower invests, gets a profit. The lender is repaid and the profit is used to pay the interest. But what if the borrower invests and makes a loss. How come the lender still gets more money than he initially lent?

Ponder on this reasoning and one finds out the horrors of interest and what they are doing to the world we live in today!

This posts leaks of plaigarism from Ahmadiyya Muslim Community - Al Islam Online - Official Website.

[Seyorni]

The lender renders a service to the borrower. The interest is the price of the service.
Moneylending is not a sure thing. It does not always bring profit. There is always the chance that the unfortunate borrower will be unable to repay both the loan and the interest. Both parties are gambling.

Usury is not synonymous with interest. Usury is exorbitant interest. Usurers are usually predators taking advantage of the foolish or desperate.

[tariqkhwaja]

What happens if I (or a big company) borrow from a bank and declare bankruptcy and am unable to repay?

[Seyorni]

Nothing. The bank writes off the loan as part of the price of doing business.

Your declaration of bankruptcy confers legal protection from creditors.

[9-10ths_Penguin]

Originally Posted by tariqkhwaja

This is religion and economics at the same time. I am not sure if we can discuss this on a religious forum. But since Islam is the religion that strongly forbids usury so ...

Christianity used to as well, but it's been de-emphasized in the past few centuries.

Originally Posted by tariqkhwaja

Prophet Muhammad (peace and blessings of Allah be upon him) pointed out that the reason usury was forbidden was because money does not automatically increase in value. Money is invested and the invested might yield a profit or a loss. However, in a system based on interest lending money ALWAYS brings profits. Which is unrealistic.

When I lived in a rented home, I payed a fixed amount every month for the rent. In months where the house didn't need anything more than cutting the grass, it was the same. In the month when our basement flooded, my rent was the same, even though the repairs probably cost more than several months' worth of rent. How is this different?

Seyorni's right: interest is like a "rental fee" for money.

Originally Posted by tariqkhwaja

So a lender lends money to a borrower. The borrower invests, gets a profit. The lender is repaid and the profit is used to pay the interest. But what if the borrower invests and makes a loss. How come the lender still gets more money than he initially lent?

Say you own a furniture store, and you lease a number of trucks from a leasing company. Business is bad and you lose money on the store. Should this affect how much you owe the leasing company for the use of their trucks?

They arranged for you to use their property (i.e. the trucks) for a time for a fee (i.e. lease payments). Regardless of what you do with those trucks or how much money you make (or don't make) with them, they've still provided you with a service that you agreed to.

How is interest any different? It's still a voluntary arrangement for use of property (i.e. the money of a loan) for a time for a fee (i.e. interest).

Originally Posted by tariqkhwaja

Ponder on this reasoning and one finds out the horrors of interest and what they are doing to the world we live in today!

There are unscrupulous money lenders who take advantage of people (I'd include many "pay day loan" places in that category), but there are unscrupulous people in all types of business.

Personally, I don't think it makes any more sense to condemn the rental of money than it does to condemn the rental of trucks or apartments.

[YmirGF]

Originally Posted by Seyorni

Nothing. The bank writes off the loan as part of the price of doing business.

Your declaration of bankruptcy confers legal protection from creditors.

True, but don't the Jews that control the banking world also send out paramilitary hit squads to deal with those who default on loans? Surely there must be something to this rumor.

[tariqkhwaja]

Money is not a commodity like a truck or a house. We cannot treat it as such.

When you rent a house you pay a rent. The value of the house depreciates or appreciates accordingly. So when the house is returned to the owner he gets the value attached to the house which might be more or less than before. Paying the rent makes sense because we are giving a commodity.

The same with a truck. There is a degree of depreciation that is accounted for by the rent.
However, money, itself is not a commodity. Money is invested and upon invested you get more or less of it. But if money is assumed to automatically increase in value all the time ... that just makes no sense whatsoever.

When lenders deposit money in banks they ALWAYS get a profit in return. The whole economy might be suffering a recession and the whole economy might be making an overall loss but the lenders, somehow, still get more money back. Unless the borrower goes bankrupt and simply can not repay anything. It just makes no sense.

[YmirGF]

Originally Posted by tariqkhwaja

Money is not a commodity like a truck or a house. We cannot treat it as such.

Tariqkhwaja, have you even studied Economics?

[tariqkhwaja]

Yeah I did ... did A-levels in Economics ... got a B grade?

Why?