Article: Q&A with a Monetary Reformer
MMJ
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QUESTION AND ANSWER WITH A MONETARY REFORMER FROM INDIA ON THE MMJ PRESENTATION AT THE AMERICAN MONETARY INSTITUTE
I had the chance to watch your presentation on Islamic monetary reform, and I wanted to share some thoughts and questions that came to mind.
First off, I really appreciated your. deep dive into the discrepancies between the SME sector's contribution to employment and the financial sector’s neglect of it. Your point about only 7% of financial assets being directed toward a sector that creates 70-80% of jobs was striking. It’s a clear example of how our current system is misaligned with real economic needs, and your emphasis on correcting this through public banking really hit home.
I also found your explanation of usury from an Islamic perspective fascinating, particularly how even minimal interest rates can be considered unjust if they protect one party from all risks while burdening the other. This nuanced approach challenges conventional views and pushes for a fairer financial relationship (I do have certain questions which I will post below).
Comment:
Usury is banned in almost all major religions. Unfortunately at some point in history usury was watered down to high interest rates only ; low interest rates became acceptable. Unfortunately this stance became the international narrative and norm. The truest form of business relationship is an equity relationship ; a fair share of profits and losses. Unfortunately they then debunked risk as the worst possible plague that can befall humanity, such belief repeated widely and deeply in our education system, we then openly accept lending with interest as the only option for banks, and curl in horror at any thing that involves risk. Fortunately in Islam we had this legal maxim that we cannot ignore – AlGhunm bi AlGhurm – Rewards only with risk. You cannot accept any reward unless you are willing to face the risk. That became the standard for what is a fair and acceptable transaction.
Who is “they” in the sentence above? I will elaborate later using western books and references. At this point I will just say it is naïve of the highest order to assume there is no owner or original designer to the current monetary system
Your proposal for Sovereign Money, particularly with the central monetary authority reporting directly to Parliament to sidestep the "Zimbabwe" critique, was also a smart move. It’s clear you’ve thought through the potential objections and framed the solution in a way that’s both practical and persuasive.
Comment: Having embellished Risk as the biggest Monstrosity to be avoided by mankind; they went to make sure all thoughts of moving away money creation from banks will deliver citizens the automatic pain of Zimbabwe. Mention to ordinary man on the street money to be created by the govt you’d be surprised the first word to come out of their mouth is Zimbabwe! So Money Reformers must address this up front. And any mention of money creation by the State must be accompanied by a statement that the money creator will be ensured to be an independent body from the ruling govt!
That said, a few questions and concerns came to mind, and I’d love to hear your thoughts:
Transitioning to Sovereign Money: Given the strong hold that private banking systems have in most countries, how do you see the initial steps toward implementing Sovereign Money? For example, in a country like Malaysia, what would be the most strategic starting point to minimize resistance from powerful financial interests? Would you advocate for a phased approach, and if so, what would the critical first steps be? I'm asking this to understand how you envision the clever and careful transition to a Global Sovereign Money system.
Answer: Coming to the conclusion first I will say in Malaysia we find the only way to establish Sovereign Money is the Political way. In other words, MMJ wins over the ruling govt ; or we politicise and form our own Monetary Reform Political Party.
This I add is not such a wild idea because we already have a precedent in the Social Credit Party, which ruled Alberta with much monetary reform success from mid 1930s to early 1970s ( Ref : Public Bank Solution by Ellen Brown).
In Malaysia we did not find much success dealing with our Central Bank. They are a loyal servant of the mysterious Bank of International Settlements, Basel, the main supporter and protoganist of the current International Monetary System. As to who they are I will lead you to a Book by G Edward Griffin called The Creature from Jekyll Island.
You will find it very, very difficult to address politicians on the subject of Monetary Reform because they do not see yet its benefits. Rather than cast aspersions on their ability to understand I would also say in MMJ we lack the numbers and the Resources to reach close to them. We have talked to key players but nothing concrete has come out of it. So at the moment we focus on public knowledge transfer via forum, seminar, telegram groups, etc, hoping that one day we will reach the critical mass to make a difference.
We believe Monetary Reform can only be executed via the ruling govt who supports and believe in its cause.
Will it be in phases? Not if I’m in charge of course. Haha. Actually there is a pre Sovereign Money Phase. We call it the Public Banking Phase
Preventing Inflationary Pressures: While I understand your point that government-created money doesn’t have to lead to inflation, I’m curious about your thoughts on managing situations where political pressures might lead to excessive money creation. How would you propose safeguarding against potential inflationary spirals, especially in times of political instability or economic downturns?
MMJ believes Money Creation by the State will not lead to inflation. In our Model when the independent Central Monetary Authority create money on approval by Parliament, it will be passed to a State Investment Bank who will direct in 100% into infrastructure and the real economy.
Gold-Backed Currency Considerations: Your mention of possibly backing currency with gold or other intrinsic values in the future is intriguing. Would the backing ratio (gold to amount of Sovereign Money created) be a universal standard across all countries, or would it vary? Additionally, what happens to countries with limited gold reserves when this new system starts to be implemented?
Yes wanting to back to gold really means being able to prevent over creation of money. This is the dream of many people, to be done nationally and internationally. We have seen versions of Gold Standards being used historically. I hold back my opinion on modern Gold Standards and its mechanism. Perhaps we may want to invite MMJ Chairman, Professor Kameel to talk on this – this is his favourite subject and his model is quite advanced . There is option in Islamic law to allow you to focus on the illah (characteristic) of gold. I'm focussing on that at the moment.
Integrating Monetary Reform in Islamic Banking: I have a few tactical questions here—Murabaha and Ijara are alternative methods of buying a house, correct? What happens if the borrower dies halfway through the payment? What about missed payments during the tenure—how are intentional delays handled? Also, does Islamic banking support student education loans? If so, what happens if the student never gets a job or doesn't put effort into finding one?
Answer: For a client who died before they complete payment they have arranged Takaful Islamic Insurance to pay the balance.
Intentional late payments can be charged Ta’weedh (compensation)
For student loans they address it the same way I believe.
These questions are coming from a place of shared commitment to our movement and a genuine desire to explore how we can practically implement the ideas you’ve put forward. Your presentation sparked some great ideas, and I’m keen to discuss them further with you.
Looking forward to your thoughts!
Thanks for the interest. Happy to share.
Zahid
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Dikemaskini [Updated]: Sam Ahmad 20240819