Saturday 20th Dec 2014
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THE MURKY BUSINESS OF LENDING

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The business of lending to thrive requires continued expansion of credit. After all, the primary concern of the lending institutions is making money that comes in the form of interest on loans outstanding. Every loan recovery kills an existing income stream; every loan extension generates a new income stream...

The problem is aggravated when monetary expansion too takes place in the form of interest bearing debts, as is the case with the current monetary system. In order for new money to come in circulation a loan must be given, a new debt must be created. For every loan to be paid back with interest, borrowers need more money than they have. This additional money leads to additional debts, and so on. As pointed out in the previous paragraph the debt imperative creates a growth imperative that contributes to the destruction of the ecosystem.

[Excerpts from the article ‘Current Financial Crisis and Islamic Economics’ by Prof. M. Nejatullah Siddiqi, mnsiddiqi@hotmail.com]

 



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