Many parts of the world have negative interest rates today. Despite the sharp back-up in U.S. long-term interest rates in recent times, some $8 trillion in global sovereign bonds still continue to yield negative interest.
Negative interest rates give rise to a strange phenomenon. An interest rate below zero implies that money has a negative time value. In other words, this state of affairs effectively assumes that the future is more secure and sure than the present.
Of course, this is ridiculous. Not only that, it could be seen as blasphemous. How could a man-made financial instrument (something subject to human valuation) be considered to be as accurate about the future as God. The Christian God (Jehovah, not Allah) stakes His reputation and identity on the fact that He alone has the ability to accurately tell the future. I am the first and I am the last; apart from me there is no God. Who then is like me? Let him proclaim it. Let him declare and lay out before me what has happened since I established my ancient people, and what is yet to come — yes, let them foretell what will come” (Isaiah 44:6-7).
Interestingly, now may be a time in which both Islam and Christianity will see interest rates as blasphemous. It makes for an informative exploration.
Historically, a key point of friction between the West (what Islam still considers to be largely made up of Christian nations) and Muslims in our modern Age of Global Capital is the concept of interest (financial interest). The impact that this different perspective on the charging of interest has upon the world today cannot be overemphasized. Let’s then investigate this point of difference more closely.
As most will know, charging interest on loans is expressly and clearly prohibited in the Koran. All interest charges or any transaction that incorporates the spirit of an interest charge is considered usury according to mainstream Islamic interpretation.
The Bible also speaks against usury. However, the charging of interest is not in itself a sinful activity. The main difference here lies in the definition of usury. Whereas only excessive interest rates and financial slavery is considered usury in the Bible, all interest is usury or “riba” according to the Koran.
The Islamic View on Interest
The Koran condemns the practice of charging interest — referred to as Al-Riba — in a number of Suras (the Arabic term for books.) For example, in Sura Aal-Imran, Allah is quoted as saying, “Oh you who believe! Devour not usury doubled and multiplied; but fear Allah that you may prosper.” Moreover, a harsh judgment comes to those who practice “riba.” Says Allah, according to Surah Al-Nisaa’ verse 161, “That they took usury though they were forbidden and they devoured people’s wealth wrongfully; We have prepared for those amongst them who reject faith a grievous chastisement.”
There are more commandments in the Koran that leave no doubt that the charging of interest is sinful and severely punishable. Therefore, fundamentalist Islamic nations take care to avoid this practice (though new creative approaches to doing so are blurring interpretations.)
Actually, the concept of “riba” is much more complex than the charging of interest on loans. Rather, “riba” includes the whole notion of effortless profit or earnings that comes without work or value-addition production in commerce. In short, riba seems to be any charge that relates to the time value of money and capital. Money is not allowed to earn its keep other than through the means of facilitating trade and commerce. This is a very crucial point of difference with the rest of the world’s major religions.
In the Western world, money has two uses — transactional as in buying and selling, and interest-bearing due to its time value. Idle money held by one party can earn income by simply being lent to someone else for a period of time. Very few people in our society would ever stuff their money into mattresses as they would forgo the time value (or interest income) of money.
But why did Mohammed expressly prohibit “riba”? Islamic scholars offer several reasons. Firstly, there was an awareness that the practice of charging interest would eventually stratify wealth in their society and lead to the oppression and enslavement of the poor. They understood the power of compound interest; that a modest amount of money can grow to very large sums over time without any trade or work being done. After all, the Arabs were amongst the world’s foremost mathematicians, having imported and popularized the decimal system of the Hindus in India that we use today.
It was Arabs who later discovered the concept of zero.2, This discovery was a necessary step, giving rise to the mathematical expertise that today is used to underpin the modern-day explosion of global financial wealth. Without the necessary math to capture the time-value of money, the Western world could not have experienced the modern-day boom in capitalism and financial markets; nor the impetus it has given to excess-consumption; nor the unprecedented chasm between the world’s rich and the “have-nots.”
Another reason why riba is forbidden in the Islamic faith is because it is sometimes understood to infringe upon Allah’s sovereignty. In this view, the charging of interest is seen to guarantee a rate of return in the future. This is considered blasphemy since Allah alone can guarantee or know the future. To set a fixed interest rate upon a loan is to put oneself in the place of Allah. Since the fate and security of mankind rests in the will of Allah, only an “unbeliever” relies on the future obligations of mankind.
Considering these Islamic views of “riba,” concentrated wealth, waste, extravagant spending and miserliness, most Christians would probably agree with the supporting merits we have just reviewed. The first time that the Islamic concept of riba was explained to me was by a Muslim intellectual I met on a trip to Egypt. The pious motivations behind its prohibition as presented were touching; its logic seemingly displayed high ideals. Practicing Muslims can only be admired for their commitment to such principals.
The Bible’s View on Interest Rates
The Bible’s view on interest is somewhat different. As mentioned, usury — the excessive charging of interest — is warned against in scripture. But what is excessive interest? No clear definition is given. However, in the case of the poor or needy, any amount of interest was unlawful. “If one of your countrymen becomes poor and is unable to support himself among you, help him as you would an alien or a temporary resident, so he can continue to live among you. Do not take interest of any kind from him, but fear your God” (Leviticus 25:35-36).
As these verses make clear, lending money to those who do not have the means to repay the loan is really an act of human slavery … usury at its worst. Instead, charity is called for in situations such as these. There are other forms of usury, as well; for example, the charging of high interest rates to unsuspecting or gullible people (precisely the thing that the success of some lending institutions depends upon). Ezekiel also confirms this interpretation, saying: “Suppose there is a righteous man who does what is just and right. He does not lend at usury or take excessive interest” (Ezekiel 18:5, 8).
We see that the paying of interest in Jewish society for regular commercial pursuits was a normal practice. Jesus Christ referred to interest without condemning its practice. In the Parable of the Talents found in Matthew 25, the master rebukes the last of the three servants who had buried his money saying, “`You wicked, lazy servant! […] you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest’” (Matthew 25:26-27).
Without pursuing a lengthy review of this topic, suffice it to say that charging interest rates is not frowned upon in the Bible as long as no usury is involved. Christians have the liberty to charge interest — to use the concept that money lent today will be worth more in the future. But with that liberty also comes the duty of charity and considerate application.
All the same, Jewish society of earlier times was aware of the ultimate consequences of a debt-based society (approximately 2000 years earlier than reflected by the writings of Mohammed)3. Eventually, humankind left to its sinful nature would end up with a highly stratified society of a ruling super-rich and an oppressed, enslaved underclass of the poor.
Partly to protect against this outcome, the Jubilee Year was observed. Every 50 years, the clock was set back to the starting point in terms of human financial obligations … particularly those that were a consequence of poverty. For example, if an individual was required to sell his property because he had fallen upon hard times, it would be returned to his family during the Year of Jubilee. In this year, all debt had to be forgiven, bond-slaves released, and property returned to its original owner. In this way, wealth transfer through lending and compounding interest could not lead to an unjust society with a perpetual poverty class.
In conclusion, both Islamic and Christian faiths speak against usury. Muslims, however, go one step further. They condemn all forms of interest or any transaction that assigns a time value to capital. It is this differing perspective between Muslims and Christians that contributes to a major rift in the modern world.
More than anything else, the concept of riba explains why Muslim nations are not a large part of the present financial power structure of the world (excepting the influence of large oil reserves). This is a significant source of tension behind the instabilities that the world is facing today. Yet, nowhere is this explained in the popular media. This is not surprising. We live in a day and age where materialism reigns supreme.
To the Western world, the Islamic attitude (those that take a literal reading of the Koran) of wishing harm upon those who choose to remain “unbelievers” in Allah and the Prophet is a present evil. On the other hand, is there merit in the Muslim view that the Western world’s idolatry with materialism and modern-day financial wealth is also evil?
1 Riba According to Quran and Sunnah. Source: http://muttaqun.com/riba.html.
2. The number zero was perhaps the most important discovery ever for the field of mathematics, paving the foundation for the development of modern-day financial systems and technology. In a sense, zero was a philosophical concept, opening the door into the abstract application of mathematics. The world really had no need of a “zero” to this point. Only what existed needed to be counted. If there was indeed nothing, why require a number to account for it? The invention of the zero was of importance in three ways: a. It allowed a huge contraction in the number of numerical symbols (10 symbols from 0 to 9); b. It greatly advanced the decimal system’s power of mathematics science — a necessary forerunner to the numerical systems of the financial endtimes; c. It opened the door to the concept of negative numbers.
3. The Koran only came into existence in the mid-600s, approximately 15 years after the death of Mohammed, Islam’s Prophet (632 AD). It is not clear what were the normal practices in the “Age of Ignorance”, the period before the religion of Islam was founded. The principle of the Year of Jubilee is found in Leviticus, a book considered to be written by Moses between the years of 1445 to 1406 BC.
About the Author: Wilfred J. Hahn is a global economist/strategist. Formerly a top-ranked global analyst, research director for a major Wall Street investment bank, and head of Canada’s largest global investment operation, his writings focus on the endtime roles of money, economics and globalization. He has been quoted around the world and his writings reproduced in numerous other publications and languages. His 2002 book The Endtime Money Snare: How to live free accurately anticipated and prepared its readers for the Global Financial Crisis. His newest book, Global Financial Apocalypse Prophesied: Preserving true riches in an age of deception and trouble, looks further into the future.