Re: Third Worlder on Free Markets

From: Mike Lorrey (
Date: Mon Oct 15 2001 - 11:41:40 MDT

"Robert J. Bradbury" wrote:
> Georgie Anne Geyer (Universal Press) said:
> > Painfully little of this complex but creative -- and comfortably
> > quantifiable -- process is present today in the Arab and Islamic
> > world (whose banks spurn interest, for example). Only 4 percent of the
> > investment moneys of the world go into the Middle East, including Israel.
> > No wonder, then, that teams of violent youth haunt the mountains of
> > Afghanistan and the streets of Cairo and Djakarta.
> If accurate, this is significant! If Islam really prohibits banks
> (or individuals) from charging interest then I have a big question
> whether a successful capitalist economy could ever develop. Even
> if you had "title" to your home, banks could not loan you money
> to develop a business because they do not make anything on the loan.

Well, middle eastern banks do get around this by charging loan fees
which are tantamount to interest but are not directly linked to a
percent of the principal. The problem of this system is obviously that
by not publishing interest rates, money costs are not easily
quantifiable and shoppable, and thus the velocity of money is low and
the money supply is smaller than it can potentially be.

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