Yesterday our central bank, we are informed, reduced statutory reserves requirement from 4% to 3.5 %. The whole idea is our central bank thinks, as the whole world is thinking, that the nation’s economy is going to go down in the near future. So the rationale is leave more money in the banks’ hands so they will lend to companies who will then generate more employment and output in order to counter the falling economy.
Towards a Just Monetary System have very serious reservations against the current economic and banking system. Especially in the light of the required Muamalat system to be practiced by Muslims as expounded in the Quran and Sunnah. But let’s leave that be for the time being and address things as they are.
First of all is it true the banks will lend more to corporates when they have more funds in their hands? Yes this is what Western knowledge believes, this is what the Economics and Banking subjects we learn at universities say, this is what the Professors of Harvard and London School of Economics say, but is it true?
Are we so inferior in our standing in this world we do not feel we can challenge these commandments that come from our Western Mahagurus? This is the problem when we don’t even realised we were secularised by our colonialists! We did not realised we were so brainwashed into being inferior that we dare not challenge any of their views!
We have a complete Manual given to us by our Creator but we worship and uphold the views of people who have no benefit and no knowledge of this blessed Manual. And God forbid many of us look down on this Manual! Nauzubillah. We have been made to feel so inferior it will be of the utmost audacity for us to challenge traditional Western beliefs.
Back to the issue at hand. It is not true that banks will use the extra money to lend to companies. They are long term sufferers of the disease called Riskoitis.
This disease was introduced by the Fathers of Riba 300 years ago and until today they have not found a cure for it. The cure for this disease is in the Manual given by the Creator, but the West have told everyone the Manual is outdated, so, many Muslims do not believe they can find the cure in the Manual.
Riskoitis in modern banking terms is the disease of transforming every transaction, every rule, and every term, so that the riba lender is in a no lose situation. It’s easy to understand. Lets say, you and I invest RM50,000 each in a restaurant. Now you face the vagaries of profit or loss in the venture but I don’t. I am entitled to a return of x percent p.a. whether or not the venture is profitable. And on a certain date I set, you must return to me my RM50,000 even if you have to sell your grandmother to get the cash to return to me.
The other symptoms of riskoitis is, whenever they find any business transaction they are involved in they will change the terms, move goalposts, handcuff the opponents goalkeeper, to ensure they are in a no loss situation.
The Manual says this is not right. The Manual says the Legal Maxim everyone is to live by, is that Rewards Comes With Risk. In other words rewards may only be received by someone when he is willing to accept risk.
But the riba masters have drummed this disease into the minds of today’s bankers for so long, 300 years and on actually, that they reject the commandment that comes from the Manual. They say the Manual is wrong; they say the Professors of Harvard knows better.
Back to the issue at hand, that is why the banks will not lend to companies the extra money in their hands because of the reduction in statutory reserves ; their riskoitis disease will prevent them from doing so. They will say outlook is bad, we must not take risk, and why should they?!
They have engineered themselves into a perfect no lose business situation. First they lend money which is not theirs anyway, but that is a different story. They put terms to the borrower that actually redefined the art of bullying. And they got the courts of law supporting their bullying and theft! It’s not unlike the big gangster coming to beat you up, and when you complain to the court, the court will side with the gangster!
Anyway back to the issue again, the banks will not lend to companies; they will use the extra funds to give out personal loans and similar. Why personal loans? Aaah this is where you have to understand the banks thinking.
You think they are a group of people society has given the right to collect and pool society’s money together, for them to lend to companies to create jobs and output for the nation, right? Sheesh, think again, their ultimate objective is to please themselves and to hell with the nation.
They will channel funds that will give the maximum benefit to their bottom line even if it is at the expense of the nation. So believe you me, they will not lend the extra money to companies they will give it out to personal loans and similar. Their diseased riskoitis minds say it is less risky to give out personal loans because any non payments will be individually and small, compared to if a company does not pay. You get the picture now?
So who are the victims? These are the young people just entering the job market. Salaries already too low because of the monetary system we have discussed elsewhere. Every month they are under water, in terms of budget and with the hard sell by the banks staff and bank media adverts, they succumb, and took the bait, the personal loans being pushed under their nose.
The first round they fail to pay, they are saved by taking up a credit card. Then new credit cards will solve old credit cards debts. Until they reach such a time they cannot juggle anymore, husband and wife found themselves bankrupt at the age of 28.
Do the banks care? The personal loans sales staffs meet or exceed their budget and get their bonuses, the management gets their huge annual bonuses, while the bank itself will hold lavish ceremonies in hotels telling the world they have made RM2 billion profit this year and they have piled up previous years profit to the tune of RM30 billion. The young bankrupts and the other suffering members of society? Tough luck, they are not the banks’ concern.
Be brave. Towards a Just Monetary System ask you to join us, to challenge the system and to challenge the status quo. Even if we are not concerned with anything else, the Creator will ask, what we have done to uphold the Manual?