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The VERY Essence Of The Banking Industry...

(112 posts)
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  1. gv
    Member

    @nota

    moneylenders were there before fractional reserve banking came into being.. who were by all accounts a lot more predatory than modern banks..

    received wisdom is that fractional reserve banking is more efficient because banks (if regulated properly) use deposits to lend to businesses and individuals at competitive rates as there is an inherent margin in place due to the central bank providing interest payments on the reserve capital..

    i guess you could abolish the current system but that would mean longer lock ups for savings accounts and higher fees. unless all banks suddenly turn into non profit organisations..

    if you outlaw lending it will just go underground and private money lenders and pawn brokers will thrive..

    i think improved regulation would be sufficient - forcing banks to be

    a) more diligent with their lending practices.

    b) prohibiting them from charging excessive interest (e.g credit cards) and unfair fees on services &

    c) implementing the volker rule in earnest. --- where public deposit taking institutions are forbidden from risk taking (read trading) activities.

    Posted 1 year ago on 29 Nov 2010 17:28 #

  2. hariskhan
    member

    Assalam-o-Alaikum-Warahmat-ULLAH ALL,

    (1) What has 'fractional reserve banking' given to mankind ?

    Let's draw up a balance sheet of the good and the bad, shall we ?

    (2) Why should we/Muslims allow for 'non-existent' money to be used for spending on one's interests (individual, group, collective, national, international), trading, local and international ?

    (3) Why should those who have no money be allowed to 'use' 'non-existent' money (money that has no value, no worth) to 'conduct' 'trade' ?

    What are its repercussions ?

    Is it possible ? Is it sustainable ?

    (4) Why should those who have no money be allowed to 'use' 'non-existent' money to do 'what they want to do' ?

    What's the purpose of money, that has value, that is worth something, if we are to allow money that is 'non-existent', that has no value, no worth, no just way we can 'quantify' it to be used as 'money' ?

    (5) Why do we complain or have the 'credibility' to complain of injustice when we 'knowingly' allow for this injustice to go on unchecked, without it being bound by any limits, any code of conduct, any laws, etc etc ?

    Why ?

    If this was allowed, then it would be clear to all mankind that 'its the rule of the jungle'. That ALL bets are off. That everything is 'acceptable'. That there are no limits, no boundaries, no considerations, no law(s), no code of conduct. One can do whatever one wants.

    Posted 1 year ago on 29 Nov 2010 17:38 #

  3. nota
    Member

    @gv
    unless all banks suddenly turn into non profit organisations
    Now there's an idea!

    "if you outlaw lending it will just go underground and private money lenders and pawn brokers will thrive.."
    Let them thrive then ("private money lenders and pawn brokers" could never dream of creating as much damage as banking industry has done!

    "i think improved regulation would be sufficient..."
    And I have a bridge I'd like to sell you! And while we're at it, let's regulate wolves telling them from now on they are not to eat sheep :-P

    Posted 1 year ago on 30 Nov 2010 4:49 #

  4. nota
    Member

    STIGLITZ: We Have To Throw Bankers In Jail Or The Economy Won't Recover

    As economists such as William Black and James Galbraith have repeatedly said, we cannot solve the economic crisis unless we throw the criminals who committed fraud in jail.

    And Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals – and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future. See this, this and this.

    Nobel prize winning economist Joseph Stiglitz just agreed...

    France has Now Grabbed Their People's Pension Funds to Give to Banks and Their Debt - Joining Hungary and Ireland

    Cutting the Deficit: Sacrificing Workers to Save the Rich
    (Ah, just loved this Warren Buffet quote:

    There’s class warfare, all right, but its my class, the rich class that’s making war and we’re winning

    So any surprise then:
    The Rich Get Rich and the Poor Get Poorer
    Hunger and Homelessness in America

    Why Poverty Spreads Across America

    Bush: War Is The Engine Of Our Economy

    Mullen: US Still Thinking About Attacking Iran

    Posted 1 year ago on 30 Nov 2010 4:59 #

  5. haider3
    member

    A model answer of its kind. Now let's wait and see what gv's fertile brain suggests to counter it.

    Posted 1 year ago on 30 Nov 2010 8:16 #

  6. gv
    Member

    @mg

    if anyone has a 'fertile brain' around here - its you

    @nota

    look either can one can chose to suggest realistic pragmatic and achievable solutions or one can try and bring about an idealistic utopian scenario. i personally would much rather be in the former camp.

    The wealthy have always had undue influence in every society from the dawn of time and its not going to change anytime soon

    Lets move into the realm of achievable outcomes and then have this discussion.

    Humans are typically motivated by greed. If you reduce the profitability of the banking industry via regulation you will see a reduction in incomes and an exodus of human capital over time.

    The banks have excess influence at the time due to their enormous wealth - once you take away (or make difficult) their wealth generation ability - their influence will become proportionate with every other major business sector in the global economy.

    In terms of white collar crime - Frauds and crooks will always exist in every society and every industry - all you can do is create an infrastructure which

    a) makes it easier to identify fraudulent activity when it takes place and

    b) mitigate their ability to profit from fraud etc

    Posted 1 year ago on 30 Nov 2010 10:11 #

  7. hariskhan
    member

    Assalam-o-Alaikum-Warahmat-ULLAH ALL,

    Video: Money - Jane D'Arista

    09-December-2010
    --------------------------------------------------------

    --------------------------------------------------------
    Source: Youtube Channel: TheRealNews

    Posted 1 year ago on 16 Dec 2010 18:54 #

  8. hariskhan
    member

    Assalam-o-Alaikum-Warahmat-ULLAH ALL,

    Video: Criminal Charges Must Be Laid - Former Finance Reg

    01-February-2011
    --------------------------------------------------------

    --------------------------------------------------------
    Source: Youtube Channel: TheRealNews

    Posted 1 year ago on 01 Feb 2011 19:38 #

  9. gazi23
    Member

    No Matter what ever this Banking system is offering us but would our Fatwa Brigade like to mention what are the ALTERNATIVES for a good Muslim to consider for their Financing?????Although Conventional and Islamic Banking both are using unethical means of financing according to Islam but one thing they should also keep in mind that people dont want to even listen until they provide any alternative as their are no choices left for the people now so GROW UP and come up with the better Alternative instead of WHINING about what to do and What not to do.....If people are offered best alternative then their wont be any problem but till now this Haram Halal Fatwas are USELESS to consider because they have no CHOICES except that....

    Posted 1 year ago on 01 Feb 2011 19:46 #

  10. hariskhan
    member

    Assalam-o-Alaikum-Warahmat-ULLAH ALL,

    @gazi23: I need more study of Islam to bring you the answer to your question.

    Having said that, if I'm allowed to "engage" in "idle speculation", I would say the "model" of money management in financial system that Islam offers is such that banking is not required. Banking becomes completely irrelevant.

    As a result Islam is able to curb corruption right at its root, enabling mankind to have freedom. The only thing banking offers is slavery. Slavery that is forced upon the masses through economic persecution.

    Posted 1 year ago on 01 Feb 2011 19:56 #

  11. nota
    Member

    ...and the thieves said: "But everyone is doing it!" :)

    Posted 1 year ago on 01 Feb 2011 19:57 #

  12. gazi23
    Member

    @hariskhan

    The time of Dirham and Dinar are gone because the world is changing and new advancements have been made in order to ease the way of doing things.....For today's lucrative period their arent anything left in the world which is called STABLE....Its all Supply/Demand game which allows this system to flourish as today the price of Gold and Silver which were used as a currency in Muhammad(SAW)'s period are also very UNSTABLE as their values are changing by hours....So in such situation can we consider that as our mode of financing?????

    Banking is not just about printing Currency and keep a person's saving its bigger then that....Uptil now even our TRANSACTIONS have been carried out through Banks.....How many people here carries cash in their briefcases these days????When we talk about International Trade then it becomes more important to have an institution which could handle the transaction as soon as possible for that the operations of Banking has grown and now Plastic money has also done alot of ease for those who had their volets full of cash as just a bar Code is more then enough to made transaction.....

    So claiming that Islamic system has nothing called Banking is not true as even Islam doesnt stops a person to make his live easy within the limits set by Allah otherwise their wont be anything called Golden Age of Islam in the past.....The Limits are important here to consider otherwise I dont think that Banking doesnt fits Islam so what is wrong with our Ulemas who waste no time in offering Fatwa doesnt offer any Alternative to that????Why wasting time on Alternative while wasting no time on Fatwa????That is why till today Islamic System has not been developed....

    Posted 1 year ago on 01 Feb 2011 20:22 #

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