I first became interested in the idea of Shariah-compliant finance after reading a special report published by Forbes this past April entitled, “Islamic Finance is Booming.” It probably comes as little surprise to my fellow Americans when I say that I was immediately and keenly interested in an institution that positively invokes the words “finance” and “booming” in the same sentence. As a recent college graduate, the prospect of putting a portion of my hard-earned funds into a Shariah-compliant mutual fund in hopes of positive return is an inviting idea, especially because it could be done within the realms of my religious beliefs. Those American Muslims who share this feeling may wonder, as I had wondered: where is the best place to begin? Can one navigate the intimidating financial world while having little or no experience, and most importantly, how does one develop sustained financial practice in accordance to their religious principles?
A Muslim’s Guide to Investing & Personal Finance: In Accordance with the Shariah by Virginia B. Morris in collaboration with Monem A. Salam is an easy-to-read introduction to personal finance and available Shariah-compliant products. The goal of the book is to promote basic understanding of Shariah-compliant financial alternatives for those who, faced with lexicon of mainstream, conventional finance, would like to make “wise investment decisions” and manage their financial lives in accordance with their religious principles. The Guide appropriately begins with a brief overview of Islamic financial principles like Islamic contracts, riba (interest), and halal and haram investments. It then offers succinct presentations of investment and risk, stocks and mutual funds, as well home finance, halal retirement planning and investing for education. The details are not overwhelming and options and scenarios are laid out for better understanding.
The Muslim’s Guide is the 2nd edition of Guide to Islamic Financing (2001), republished to reflect the changes in the industry. The publisher, Lightbulb Press, has produced a series (similar to the popular “Dummies” collection) by taking “perplexing subjects” and from them producing colorful and engaging presentations. And in that, it succeeds. Each glossy page of this slim book is filled with delightful illustrations that are effective in fortifying the understanding of a given concept. Each topic is dully introduced and explained on a two-page spread, with key words bolded and defined. For example, when I open to pages 20-21, under the topic “Understanding Investing,” I find the definition of liquidity (complete with the picture of a water drop imprinted with a dollar sign for visual learning). While the Guide can be read straight through, the index is very accessible, easing reference (I went straight to the index and looked up life insurance for much needed clarification).
While the guide clearly defines what constitutes halal and haram in the financial sphere, it is not meant to be a book of fiqh, as is stated within the first few pages. It is designed as a go-to reference that leaves room for differences in school of thought. Conflicting and majority opinions are mentioned without explicit proofs, so those who need added validity may consult a religious scholar who is versed in the modern application of Islamic financial laws. But the guide effectively demarcates the two separate spheres; a religious authority may point you towards avoiding what is not compliant with the religion but, unless adequately trained, they may not be an effective financial adviser (as was evident in the recent affinity fraud in Chicago with Sunrise Equities). I greatly appreciated the productive suggestion in the book: “Pick the scholar or opinion you agree with and stick with it.”
A Muslim’s Guide to Investing & Personal Finance is an invaluable, hands-on reference that succeeds in its aim to provide those American Muslims interested in Shariah-compliant finance and investing with the tools to understand and navigate the system. There are subtle themes throughout the book that stayed with me, one being the importance of financial planning for those saving for the Hajj-Pilgrimage and for those who hope to maintain a charity-filled life. And the other is the importance of being fully aware and responsible for your personal finance choices, even if you choose to have a financial advisor. This Guide is a first step to gathering the knowledge and terms essential to understanding Shariah-compliant options within conventional financial institutions. The projected benefit is there: as Forbes reported, Islamic finance is a growing market, and “if even a fraction of the world’s 1.3 billion Muslims” would show interest in it, insurance and home finance companies, along with world banks, will “happily oblige.” (Islamic finance is booming.)
Add A Muslim’s Guide to Investing & Personal Finance: In Accordance with the Shariah to your home library today!
Lightbulb Press, September, 2008; ISBN: 978-1-933569-99-4. Available for bulk and retail sales directly through Lightbulb Press. Customized and branded versions are also available. 212-485-8800, sales@lightbulbpress.com. www.lightbulbpress.com
As salaam ‘alaikum Ustadh Suhaib,
Just dropping by to say salaams. Hope all is well with you and the family.
Waffaqaka Allahu li kulli khair, wa nafa’a Allahu bika al-islama wal muslimeen.
Was salaam
-Navaid
Thanks for the info. I just ordered the book. aSalaam Alaikum.
Assalaamu ‘alaikum
Have the shuyukh begun understanding what US Currency REALLY is, so that they can modify their fatawa accordlingly?
Is this ribaa or what?!
I am talking about the following, which is really mind-boggling, when we consider it:
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Modern Money Mechanics & other Federal Reserve Publications Explained
If I were to loan you $100, my assets would decrease $100. When a bank or other “lending” institution “lends” to you or anyone else, their assets actually increase!
The Federal Reserve Bank of Chicago used to publish Modern Money Mechanics. They stopped largely because of this quote from Page 6, Last Paragraph:
“What they [banks] do when they make loans is to accept promissory notes in exchange for credits to the borrowers’ transaction accounts. Loans (assets) and deposits (liabilities) both rise by [the amount of the "loan"].”
Now, when was the last time you lent money to a friend and suddenly found you had more funds?
So the “lending” institutions (including credit card companies) “accept promissory notes in exchange for credits to the borrowers’ transaction accounts.” What exactly does that mean?
Accepting Your Promissory Note…
Now, when the lending institution “accepts” your promissory note in exchange for credit to your transaction accounts, that means that they add money (they credit money) to your checking account(s), but not the one(s) that you know you have. The funds for the addition to the “secret” account(s) came from depositing your promissory note! (Except the credit card companies actually deposit your application/agreement – and monetize it even if you are not approved! Again, you provide the source of the funds that are deposited into your account.)
How can they do that? Well, they’re bankers. Your promissory note is a note.
Look at a dollar bill. It says “Federal Reserve Note” on it, doesn’t it? You bet. See, a “note,” according to The Dictionary of Banking Terms, 4th Edition, by Thomas P. Fitch, is “legal evidence of a debt or obligation.”
That means that a “note” is “owing money.” That means that what we call “money” or “cash” today is really owing money.
So since “money” now days means “owing money,” and your promissory note is “legal evidence of a debt or obligation,” (owing money) that counts as “money” and can be deposited.
Anyway, all they’ve done is converted your promissory note into “funds” that they then “loan” back to you. And now you have to pay them again, plus interest? Huh? Where in the agreement does it say that you are providing the value (through the promissory note that they received from you) to fund your own loan? Is that a mutual intention? Is that what you agreed to? Is that written in the agreement?
The FRB of Chicago writes in their publication, MODERN MONEY MECHANICS on page 2: “Money is such a routine part of everyday living that its existence and acceptance are ordinarily taken for granted. A user may sense [Think?] that money must come into being either automatically as a result of economic activity or as an outgrowth of some government operation. But just how this happens all too often remains a mystery”.
Ah yes, a mystery, but wait, trust me, the Fed (Federal Reserve System and it’s member banks in the USA – put in the name of your nation’s central bank here) will soon solve the mystery for us!
Again, MODERN MONEY MECHANICS, page 3: ” In the United States neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper. Deposits are merely book entries. Coins do have some intrinsic value as metal, but generally far less than their face value. What, then, makes these instruments –checks, paper money, and coins– acceptable at face value in payment of all debts and other monetary uses?”
HEY, The Fed wants to know – what makes you slaves take ‘these instruments’ as payment???
Here’s the Fed’s answer, same publication: “Mainly, it is the confidence people have that they will be able to exchange such money for other financial assets and real goods and services whenever they choose to do so.”
A CONFIDENCE GAME! Bookkeeping entries – numbers, valueless paper currency, and copper/nickel slugs (remember – they stole our gold and silver coin!) and we surrender our labor and goods/services for THAT?
It gets better, for again MODERN MONEY MECHANICS, page 3 talking about why the salves take it: “This is partly a matter of law; currency has been designated “legal tender” by the government — that is, it must be accepted by creditors in payment of money debts, and paper currency is a liability of the government. Transactions deposits are liabilities of the depository institutions which stand ready to convert such deposits into currency or transfer their ownership at the request of the depositors. Confidence in these forms of money also seems to be tied in some way to the fact that the assets exist on the books of the government (or central bank) and the depository institutions equal to the amount of money outstanding, even though most of these assets themselves are no more than pieces of paper…and it is well understood that money is not redeemable in them.”
“Money” is anyTHING people accept, but then the mystery…wherein “money” is NO THING such as bookkeeping entries, pictures of dead presidents and copper/nickel slugs operating on us in a huge CONFIDENCE game, with the FORCE of government making us accept them, although the assets are nothing more than paper too!
And exactly who/what is it that creates this No Thing used as money today – internationally?
MODERN MONEY MECHANICS, page 3: “The actual process of money creation takes place in the banks.”
I BET YOU THOUGHT,: “Demand deposits are the nation’s most common form of money, comprising about seventy percent of all money in circulation. This checkbook money is bookkeeping money created mainly by the nation’s commercial banks.”.
I BET YOU THOUGHT, “Banks create money by ‘monetizing’ the private debts of businesses, individuals and governments. That is, they create amounts of money against the value of those IOUs.”
Consider too what the FRB of Philadelphia writes in their publication – THE NATIONAL DEBT, page 8: “The Federal Government, with the cooperation of the Federal Reserve, has the inherent power to create money — almost any amount of it. This power makes technical bankruptcy out of the question.”
Do you want to know why they stole our gold and silver coin?
So they could get us to quit using the money we produced and instead get us dependant upon the money they create! “Money” with the force of law; “Money” you only have IF your banker says you do! We don’t need a government to tell us to accept silver or gold in coin form…but when it comes to bank confetti???
WHAT ABOUT CREDIT?
“Economics” I define as the dark, dismal science of deception. Anyone who has taken economic courses must surely agree with the “dismal” part wherein you are forced to learn a buggered up language so that you can’t understand what has so simply enslaved us all, hence the “deception” wherein not one man in a million can diagnose the problem, for after all, those unaware are unaware they are unaware!
Okay, isn’t “CREDIT” what we use when we don’t have any money? Isn’t it something we apply for and get from say, a bank, when we first prove to the bank we don’t need it? You know, you’re a little short of cash right now but you’d like to have that new car so you ‘buy it on credit’, right? WRONG!
FRB of New York’s publication KEEPING OUR MONEY HEALTHY, “And you recall, our system works only with credit”. Ever learn that in school?
Seeing as how our definitions don’t appear to be realistic, let’s let the FRB of Chicago define the term “credit” for us in their publication – TWO FACES OF DEBT, page 1: “Debt is credit”.
Let’s see, if a=b, then b=a, so if “debt is credit”, then credit is debt! So page 12 above could read: “And you recall, our system works only with debt.”
And don’t forget the previous quote referring to ‘monetizing’ the private debts of businesses, individuals and governments….
Hmmmmm, credit is debt is debt monetized is monetized debt is MONEY?
So, what happened back in 24 JUNE 1968?
CONgress removed the last known THING – silver in coin form, that was used AS the money in the United States and failed to declare any THING to take its place, yet some “thing” had to take its place…and that some “thing” was the NO thing known as credit is debt is monetized debt is MONEY! And not only was the payments mechanism WIPED OUT by that Act of CONgress, but we were placed under the greatest CONfidence game in history, and the misleaders in 1968 knew something had to be done, for if a bad check is an irredeemable check, why isn’t irredeemable currency bad currency?
“Currency backing isn’t relevant in today’s economy. Currency cannot be “redeemed” or exchanged for Treasury gold or any other asset used as backing. The question of just what assets “back” Federal Reserve notes has little but bookkeeping significance.” I BET YOU THOUGHT, FRB New York.
Not “relevant”??? Why not? Could it be because you THINK you have money, your banker agrees that you have it, and you THINK you are paid and therefore THINK you are free??? Could it be that simple?
By the way the US Treasury owns no gold and hasn’t since August 1975, see the Treasury Bulletin by the same date for verification.
SO WHAT, you say, doesn’t this system work?
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Taken from:http://www.reallyneatstuffalaska.com/modern_money_mechanics
Also some interesting stuff about this in the Google video:http://video.google.com/videoplay?docid=7065205277695921912
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Check this out too, for the text of the original publication from the Federal Reserve Board.
http://www.fdrs.org/modern_money_mechanics.html
Wassalaam
Shiraz.
I would just like to know if anyone knows what’s the term in Arabic for ‘Islamic Finance’ or the Shar`i/Fiqhi equivalent term for it?
Im just wondering how Islamic investment companies make money w/o charging interest OR holding cash reserves in accounts that accrue it? This basic concept is central to all monetary producing systems from the world bank on down to the local quick cash stores.
Not to mention usury is strictly prohibited. Al-Baqarah 275-281
Assalamu alaykum,
Thank you for the post about alternative financial means in accordance with sharia. If it is possible, I would request more literature on the ideas of islamic economics. The following is a link to a documentary about the real nature of money, and its use in economic slavery.
Caution: the producers are aitheist, and I think are very negative to all forms of religion.
Documentary: Zeitgeist: Addendum
http://video.google.com/videoplay?docid=7065205277695921912
Salam