Editor in Chief: Moh. Reza Huwaida Saturday, October 20th, 2018

Financial Serfdom & Freedom


Financial Serfdom & Freedom

Continued from Yesterday

The father of modern economics, John Maynard Keynes contended that without the abolition of interest, unemployment cannot be eradicated. Silvio Gesell castigated interest on the basis that his sales were more often related to the price of money (i-e interest) than people’s needs or the quality of his products. Gesell also launched “Stamp Scrip Movement” to make money a public service for a use fee but all his efforts went in vain. In 1919, Gottfried Feder wrote a book “Breaking the Shackles of Interest (Brechung der Zinsknechtschaft)” about the implications of interest and wealthy bankers. He described Mammonism as a consequence of the effortless and endless income that is produced through interest. His endeavors led Adolf Hitler to proclaim that the kernel of National Socialism is breaking the thralldom of interest. Major Clifford Hugh Douglas published “Social Credit” in 1924. In 1929, He went on a lecture tour of Japan. His proposals for creation of the nation’s money by government and credit on an interest-free basis were enthusiastically received by Japanese production sector and government. The net result was the rapid boom in the economy of Japan in 1930s. Margrit Kennedy, the ink-slinger about the negative consequences of interest is considered as the mother of anti-interest movement in modern times. In her book “Interest and Inflation Free Money”, she inks that interest increases social costs like alcoholism, families breaking up and criminal behavior. Stephen Goodson, a South African banker, politician and leader of South Africa’s “Abolition of Income Tax and Usury Party” has also authored several writings about the cynical and gloomy aspects of interest. Economic historian, John L - King links the rising prices to the interest paid for the “credit balloon”.11 Thomas Greco in his book “Money: Understanding and Creating Alternatives to Legal Tender” says…
“The banks are continually making new loans and retiring old ones as they are repaid. In the aggregate, the debts owed to banks are increasing with the mere passage of time, because interest accrues over time. The money available to repay those debts, however, can be created only by the banks as they make additional loans.”12
The history of laws has also incessantly lambasted interest and usury. The ancient Roman law punished usurer with forfeiture of quadruple the value of the thing taken in usury.13 The laws of Charlemagne categorically prohibited usury in 806 CE. In 850, the Synod of Paris excommunicated all usurers. Interest and Usury was also banned by Common Law. In 1275, Edward I of England passed the Statute of the Jewry which made usury illegal. The great English jurist Lord Coke declared all usury unlawful in the latter part of the sixteenth century. The bygone French law punished usurer for the first time by a public and inglorious acknowledgement of his offence and was banished. The penalty of his second offence was hanging.14 The prohibition on interest continued in the civil legislation of the countries of Western Europe until the 16th century, when it was removed by the Reformation. In the 16th century, works appeared justifying the taking of interest like that of John Calvin in 1536.15 In Russia, Interest was prohibited morally.16 The Communist Party of China proscribed usury in its revolutionary base areas in late 1920s and replaced it with credit cooperatives.17 The criminal law of North Korea (2009) in the chapter 5 titled “Criminal Violations of The Socialist Economic System” forbids usury under Article 118. The article prescribes a punishment of less than 2 years of Labor training for practitioners of usury and stipulates the same punishment for up to 5 years in case of large profits gained through usury. In similar chain of events, The Khyber Pakhtunkhwa Assembly in Pakistan unanimously passed the Prohibition of Interest on Private Loans Bill on September 19, 2016.
The major religions of the world deplore, condemn and prohibit interest in all its forms. The Manu Smriti of Hinduism categorically expresses sentiments for contempt of usury in chapter 11: verse 62. The Buddhist Jatakas refers to the practitioners of interest as hypocritical ascetics. The Old Testament speaks about the proscription of interest in the books of Deuteronomy 23: 19, Leviticus 25: 36, Exodus 22: 25, Ezekiel 18: 13, Ezekiel 22: 12, Psalms 15: 5, Amos 8: 4-6 & Nehemiah 5: 7. The New Testament confirms the prohibition of interest in the Gospels of Luke 6: 35 and Matthew 5: 17. Jesus (Peace be Upon Him) says in the 95th verse of the Gospel of Thomas that if you have money, do not lend it at interest, but give (it) to one from whom you will not get it back. The forbidding of interest in Holy Koran is mentioned in the Chapter of The Romans: verse 39, Chapter of The Family of Imran: verse 130, Chapter of The Women: verse 161 and Chapter of The Heifer: verses 275-281. The prohibition of interest is also mentioned in the Sayings of Prophet Muhammad (Peace be Upon Him). The Apostle (Peace be Upon Him) said…...
“No matter how much is the increment accrued through interest, the eventual outcome is scarcity.”18
The Prophet also prophesied that.......
"There will certainly come a time for mankind when everyone will take riba and if he does not do so, its dust will reach him."19
The Fractional Reserve Banking became a legalized form of economic sacerdotalism at national and international level after the establishment of Bank of England and the foundation of International Financial Institutions (IFIs). The era of this banking has affected the countries and humanity in form of interest payments on debts, business cycles, buying power, global imbalance of payments, increased taxation and positively skewed distribution of wealth. In the financial year of 2014-15, the UK government rewarded £34 billion overall interest on its national debt, which amounted to 4.6% of overall spending according to the Institute for Fiscal Studies (IFS). In 2015, the United States of America (USA) paid $223 billion of interest on the debt which amounted to 6 percent of the federal budget.20 Pakistan spent Rs 1.3 trillion on debt servicing in fiscal year 2015-16 that represented 42.36% of FBR’s tax revenue.21 In Germany, the poor 80% pay one billion Euros in interest to the wealthy 10% per day which amounts to one seventh of German GDP according to Anthony Migchels of Real Currencies. The system has not only affected the states and humanity but also the interest based banking sector itself in the form of interbank rates like that of Federal Funds Rate (USA), the LIBOR (UK) and the Euribor (Eurozone). (To be Continued)

Dr. Faisal Ali is a freelance columnist. He can be reached at the drfaisalali88@gmail.com

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