Riba and Interest - Same thing or Not?

[annache]

@elizarn You are the first person I have come across that asserts than a negative real rate of interest caused by inflation greater than the nominal rate is a type of riba compensation to the borrower. If you accept the assertion that interest=riba (which I dont), I think you are correct. But a lot of Muslims say inflation does not matter, that nominal interest rates=riba.

But of course Caliph Umar was not sure what the prophet meant by riba.

 

[elizarn]

@annache

Say I have $3600 in 1960. gold was $36 an ounce then. I deposited it with the bank without taking any interest. The bank returned that $3600 to me in 2023.

In 1960 gold was $36 and ounce, now its $2000 an ounce. I could have bought 100ounces of gold in 1960. In 2023 I can only buy about 1.8 ounces of gold!. Thats 98.2% depreciation!

So the central banks depreciated my Dollars/fiat currency. That's negative interest rates. you don't think this system is absolutely Haram? Its not like giving riba is halal unless the circumstances are dire. So you gave away 98.2% of your wealth as riba.

I also dont think interest=riba because fiat currency did not exist at the time of Prophet and real money is only money that is either pegged to a commodity or a basket of commodities or of something of value(that can include services or gdp or whatever).

but taking interest more that inflation adjusted value is also Riba in my opinion, so its a bit complicated

In the end the system is not ours, we are confused like headless chickens.

 

[alinaseh]

@elizarn Yes, riba and interest and usury are all the same thing. And yes, crypto is haraam.

 

[annache]

@elizarn

religious scholars typically evade this question because of fear of retaliation

I know how those scholars feel!

Various redditors have attacked me with ad hominem insults on this site for discussing modernist views on riba and insurance - those being 1) exploitive riba al-jahiliyya at the time of the prophet is not the same as most modern interest, and 2) insurance reduces risk (gharar), and so should not be prohibited.

If you read economic history and modern economics, you will find that academics deplore the debasement of currency and inflation as you do, and want to eliminate inflation. So most central banks have a mandate to preserve the value of money with a low inflation target. Its a pretty tough job when governments want to spend. You can debate whether the target should be 2% or zero, there are arguments on both sides. Policy errors happen, and one appears to have been the COVID spending and economic shutdown, which caused the current inflation.