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Monday, December 22, 2008

Usury 4

I had the good fortune to speak to a wise old man, who was looking for investments into a commerical property development. Investors for properties are hard to come by in a credit crunch. When I asked why he did not look into borrowing money from the bank, he told me that it is not wise to play the 'financial game'. He wouldn't even borrow in US dollars as this will mean exchange risks with his local currency. His grandfather lost billions playing the financial game.
Too many people are playing the financial game and he thinks that this is fundamentally the problem leading to the current global economic and financial crisis we are in. In other words, we are living in a society of borrowed money, not always used for legitimate investments. A "legitimate investment" is one that essentially creates life supporting wealth. When we move away further and further from creating life supporting wealth and the true objectives of money, an economic crisis will be inevitable.
"There is money found in the project itself", he said.
"The investor can make his profits in the project and that is better than borrowing from the bank and incurring interests and charges", he continued.

Not unless if he seek money from an Islamic bank - one that shares the project risks and profits. In Islamic banking, trading of financial risks is forbidden as it is 'haram' like gambling.

Read more about "Usury" here


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