Abdassamad Clarke

The poet W. B. Yeats strove to make a unity of his life. “Hammer your thoughts into unity,” was his expression of that. Few things are more important for us today, as things and causes are automatically shunted into categorical boxes where they are rendered impotent like a freshly slaughtered Egyptian chicken tossed into a large can, there to thrash about until finally dead. “Kettling” anyone?

Thus, deeply moved by the Occupy Wall Street movement and its spread far and wide, and alarmed at the attempts of the media to ignore it or trivialise it, and the attempts of the various alternative ideologues to categorise it according to their predilections, I want to bring this event up against another theme, that of hidden idolatry. This theme, Uthman Ibrahim-Morrison and I touched upon before in The Age of Freedom although it seemed to us much more obvious that Freedom as exemplified by the Statue of Liberty had become an openly worshipped idol rather than an example of concealed idolatry.

Finally we have woken up to the power realities of the age: forget the governments; go for the bankers. Governments have been exposed as powerless before their creditors to whom they humbly submit with a sycophancy that is repellent. At the core of the process there is yet another idol. We might characterise an idol as some thing that is feared or hoped for with unrealistic expectations. To the outsider, the worship of the idol can seem strange and self-evidently dysfunctional. As the votary prostrates and pleads before some stone figurine and supplicates it, the observer is repelled by the oddness of the whole experience, unless afflicted by a misplaced dose of anthropologist’s empathy. “It is only a stone,” one wants to cry out, “it can neither hear you, nor answer your prayers!”

However, most of us are just as guilty as the most primitive animist or polytheist; we hourly attribute wealth to bits of paper with numbers printed on them, for around 4% of the time, and, for the rest of the time, to electronic impulses whizzing through circuitry. And because of this primitive delusion, we are prey to those who print this dwindling portion of what they laughingly call ‘the money supply’ and who indeed are increasingly resorting to printing gazillions of it at the slightest urge, and prey even more to those who simply create money by entering some figures in a spreadsheet.

Now, the most terrible threat facing the ‘Occupy Together’ movement is not suppression or police brutality, but to settle for reform, and this dreadful possibility is already implicit in the way that the movement’s goals have been framed. The slogans read “X% of the population control Y% of the wealth”, which suggests that if we can rebalance those figures in some arbitrary way, we can all go home. But. As long as we are in thrall to money that is invented at will by disreputable people – and be under no illusion about this; these are some of the most sordid human beings you will ever meet, except that they have simply no intention of meeting the likes of you and me – the percentages are irrelevant. Why? Because if there is an even playing field and one player can invent money out of nothing and charge even a minuscule rate of interest, he must in the end take the entire game. It is a rigged game. The rules are inexorable.

The answer? Return to a money that cannot be invented at will. It does not really matter what that is. People throughout history have put gold and silver at the top of the list. Then? Put a stop to those percentages because even with gold and silver if someone can charge others even a minuscule 1% interest, he is going to end up with it all again, and we are back where we started. Is that all? No. There is more, but that is a good start. Some of it is in Banking, the root cause of the injustices of our time. Buy it here.

Banks create money when they ‘extend credit’, to use the technical jargon.  What this really means is making a loan or honouring an overdraft. When a bank makes a loan it simultaneously creates a deposit in the borrowers’ bank account. The bank does not take the deposit out of anyone else’s account. The balance that appears in your account is new money.

This is no more than simple double-entry bookkeeping. The bank has increased its assets because I now owe it money. It has also increased its liabilities by the same amount because my bank deposit is simply the money that the bank owes to me – a bank IOU if you like.

But unlike an IOU between me and you, scribbled on a piece of paper, this electronic Bank IOU is impersonalized. It is accepted by everyone else in the UK in payment for goods and services. This is because it also accepted by the government for taxes. This means everyone wants it because everyone can use it to make their most regular payments.

If you are finding it difficult to believe that banks create money so easily, by just typing numbers in to a computer, you are not alone. Policy makers and economists, including civil servants at the Independent Commission on Banking, have found it very difficult to accept. Banks are usually described as ‘financial intermediaries’, ‘recycling’ the deposits that we’ve put in them for safekeeping as loans. In fact, it’s the other way round. Bank loans create deposits. Banks are better described as ‘credit creators’ than intermediaries.

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If we had had any of that paper money ourselves we would probably have been able to follow our own counsel and buy large amounts of gold and silver and would be doubly able to laugh at the rest of the world in its discomfiture as the economic system of usury goes down into something that would make a double-dip recession look like a picnic. But we had none and still have none.

But as we are people who have been proved so utterly and consistently right, I would like you to pay attention. I don’t think it will take so long for this to be fulfilled and it may be absolutely vital for you to know this if you have money and are considering taking this route.

But first of all, I have to make a retraction: in recent posts I have said, with some emphasis, that Islamic bankers and the scholars who gave them the fatwas that licensed their work are hypocrites. There was no call to make such a charge. For all I know they may be utterly well-meaning people who are completely sincere about their Islam.

Nevertheless, if you have a penny in ‘Islamic finance’ or ‘Islamic banking’ get it out while you have time. Not only is it not shari‘ah-compliant – notice that they invent another term rather than call it halal – but it is a bubble waiting to burst. Apparently it is now $1 trillion or so. Don’t be deceived by words such as murabaha, mudaraba, and musharaka etc., because they haven’t given a moment’s thought to the nature of the money which they are using in all those transactions, and the money which they are treating so ‘Islamically’ is not a great deal different from candy-floss, and even candy-floss is much better than the money they are using. So Islamic finance is one great $1 trillion pile of ‘Islamic’ candy-floss. It is an Islamic bubble waiting to burst Islamically and produce an Islamic disaster and quite probably an Islamic recession and, even worse, an Islamic depression as if things weren’t depressing enough as it is.

Get on the winning side and do not be suckered by fatwas from scholars who know nothing about the history of banking except what a university system that is sustained by banking allows them to know. Yes, get on the winning side and lay your hands on some of that gold and silver. Then do what the Muslims have always done: pay your zakat with it, and go out and spend some of that in the way of Allah and on good causes.

Notes

1 First published in 1987 under the same name, it was republished in 1989 as Banking, the Root Cause of the Injustices of Our Time by Diwan Press.