How do Islamic economies control their economy

Oxidant · Post by **Oxidant** » Mon Mar 22, 2010 10:48 pm

What do Islamic states do if there is a recession? How do they stimulate the economy? What if there is a boom, how do they control and cool down the economy?

In the western, they use monetary policy and fiscal policy to manipulate the economy when needed.

gedo_gurl · Post by **gedo_gurl** » Mon Mar 22, 2010 11:26 pm

Who says that Islam cant have fiscal and monetary policies of its own to control the economy...

There is no such thing right now, however there wouldnt be such market crashes of the same scale because there is no riba (interest) to begin with.

Mr. Yungnfresh · Post by **Mr. Yungnfresh** » Mon Mar 22, 2010 11:38 pm

Good question...is there a central bank in Muslim nations? If so, how does it control money supply? Do Islamic banks take part in "fractional-reserve" banking? Does the central bank buy/sell government bonds? Is there a bank/overnight rate? Etc.

I can't imagine how banking operates under a Sharia-compliant structure when interest is a fundamental component of it

gedo_gurl · Post by **gedo_gurl** » Mon Mar 22, 2010 11:41 pm

^^ Thanks for the clarification.

I dont know...to the best of my knowledge a real shariah banking system doesnt exist. Anyone able to name one country as an example?

Mr. Yungnfresh · Post by **Mr. Yungnfresh** » Mon Mar 22, 2010 11:46 pm

I don't think it's possible, unless they get very creative. Commercial banks are only profitable based on the interest their loans to people/other commercial banks/deposits in the central bank generate.

I'm curious to know if fractional-reserve banking is xaram though, cuz that doesn't necessarily deal in interest but seems shady as hell.

dawwa9 · Post by **dawwa9** » Mon Mar 22, 2010 11:47 pm

Islamic banking = biggest scam ever

Just use regular banks, they are the same..

gedo_gurl · Post by **gedo_gurl** » Mon Mar 22, 2010 11:54 pm

Mr. Yungnfresh wrote:I don't think it's possible, unless they get very creative. Commercial banks are only profitable based on the interest their loans to people/other commercial banks/deposits in the central bank generate.

I'm curious to know if fractional-reserve banking is xaram though, cuz that doesn't necessarily deal in interest but seems shady as hell.

Isnt it a must to have fractional reserve banking? Otherwise how would there be a flow? And what would be the point of keeping it if there wasnt any interest to gain from lending out the rest?

Mr. Yungnfresh · Post by **Mr. Yungnfresh** » Tue Mar 23, 2010 12:02 am

gedo_gurl wrote:
Mr. Yungnfresh wrote:I don't think it's possible, unless they get very creative. Commercial banks are only profitable based on the interest their loans to people/other commercial banks/deposits in the central bank generate.

I'm curious to know if fractional-reserve banking is xaram though, cuz that doesn't necessarily deal in interest but seems shady as hell.
Isnt it a must to have fractional reserve banking? Otherwise how would there be a flow? And what would be the point of keeping it if there wasnt any interest to gain from lending out the rest?

I mean like if they put an Islamic twist on it where they removed the fluctuating nominal interest rates and instead introduced some kind of set premium loan rate. That way, banks can still keep a reserve, reinvest their excess assets and keep it xalal...or is that just repackaging interest in a different form?

What I was saying is shady as hell is investing other people's money and increasing money supply in the economy without increasing the wealth...even if u could get around the interest aspect, it still seems unethical to profit off of funds you haven't secured

gedo_gurl · Post by **gedo_gurl** » Tue Mar 23, 2010 12:09 am

A set premium loan rate? Thats definitely riba! In an Islamic economy one cannot make a profit from a loan, the money doesnt belong to them either... the only option would be to charge for services other than loans. The banking system was created by Goldsmith Jews who wanted to make an extra buck...no variation of it would in actuality fit in with Islamic values...I was taught that even paper money/digital money was xaraam because it wasnt an actual payment, its the promise of a payment, therefore null an void as xalaal currency

Mr. Yungnfresh · Post by **Mr. Yungnfresh** » Tue Mar 23, 2010 12:15 am

I suppose you're right...Islamic banks is an oxymoron.

@ fiat money being xaaraam...so what do we do if commodity money is outdated and fiat money is the only store of value (or at least the most liquid and thus, most widespread)? We can't exactly barter with other goods or services in this society (or any society really, at least not practically).

gedo_gurl · Post by **gedo_gurl** » Tue Mar 23, 2010 12:20 am

Mr. Yungnfresh wrote:I suppose you're right...Islamic banks is an oxymoron.

@ fiat money being xaaraam...so what do we do if commodity money is outdated and fiat money is the only store of value (or at least the most liquid and thus, most widespread)? We can't exactly barter with other goods or services in this society (or any society really, at least not practically).

Thats where jihad comes in

Joking...I dont know, I suppose in this day and age there are enough Muslim countries and resources between them to create a system based on xalaal exchange of goods and services...but this shit takes sheikh upon sheikh and economist to come up with a real solution. certainly no-one on Snet knows how it would work practically.

Mr. Yungnfresh · Post by **Mr. Yungnfresh** » Tue Mar 23, 2010 12:29 am

There's an economic theory called something like "the unlikelyhood of double coincidence", which basically means it's not likely you'll want what I have and also happen to have something that I want which you're willing to part with. It would just be way too impractical, especially since I might sell you my knife for your spoon but the next guy might want a microwave for his spoon, since there's no set unit of account.

LoL @ the "J" word...(MI5, CIA, CSIS...I'm just joking about lol'ing)

gedo_gurl · Post by **gedo_gurl** » Tue Mar 23, 2010 12:32 am

Yeah I understand, and I have no effing clue how it will work out xalaal...Thats why slavery was so great...everyone wanted one

(Btw...do u think they dont see inside brackets?) LMAO

Mr. Yungnfresh · Post by **Mr. Yungnfresh** » Tue Mar 23, 2010 12:38 am

I think we should enslave Great Britain for the sake of the Ummah

Dammit! I knew I shoulda put it in italics

bareento · Post by **bareento** » Tue Mar 23, 2010 11:32 am

Hi,
To begin with there is no such thing called Islamic Economy; Muslims do not participate in world economy, their position is that of parasites...the rich “muslim” countries live of royalties...arabs from petrol royalty, malaysians by letting chinese minority work;
Muslims do produce nthg ...

The question of interest rate (riba) in Islam is very interesting one in that it proves that a doctrine/ideology unable to go with its time dies out ....
hence no sane Islamist proposes an Economy based on Sharia (ie an interest rate excluding finance).

B.

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