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An Islamic Solution to the Financial Crisis Dubai, 8 th Dec 2012 Jamal Harwood

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Presentation on theme: "An Islamic Solution to the Financial Crisis Dubai, 8 th Dec 2012 Jamal Harwood"— Presentation transcript:

1 An Islamic Solution to the Financial Crisis Dubai, 8 th Dec 2012 Jamal Harwood (Twitter @Jamal_Harwood)

2 Greece

3 Spain

4 London

5 World Debt

6 Growth of Derivatives

7 US House Price crash

8 US Govt Bailouts FacilityTotal (Billion, $)Percent of total Term Auction Facility$3,818.4112.8% Central Bank Liquidity Swaps10,057.4034.0 Single Tranche Open Market Operation8552.9 Terms Securities Lending Facility and Term Options Program2,005.706.8 Bear Stearns Bridge Loan12.90.0 Maiden Lane I28.820.1 Primary Dealer Credit Facility8,950.9930.2 Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility217.450.7 Commercial Paper Funding Facility737.072.5 Term Asset-Backed Securities Loan Facility71.090.2 Agency Mortgage-Backed Security Purchase Program1,850.146.3 AIG Revolving Credit Facility140.3160.5 AIG Securities Borrowing Facility802.3162.7 Maiden Lane II19.50.1 Maiden Lane III24.30.1 AIA/ ALICO250.1 Totals$29,616.4100%

9 Money Supply Growth

10 Total Liabilities out of control…

11 Islams Solution Non Interest – and most derivatives contract forbidden Gold & Silver currency – a real stable currency True Financial reform – where is the change since 2008? No Growth obsession – basic needs not GDP Radical taxation policy – tax under utilised wealth not income/consumption Social welfare – arise the family Land reform – use it or lose it

12 Gold and Silver Standard The gold basis necessitates the free circulation, import and export of gold, which leads to monetary, financial and economic stability. The gold standard ensures the stability of exchange rates between countries, and the stability of the exchange rates in turn leads to a boom in international trade, for traders would no longer fear the uncertainty of exchange rate instability. Central banks and governments are prevented from the issuance of banknotes not backed by gold or silver and therefore prevented from eroding the value of money through inflation. Each of the currencies used all over the world would be fixed by a specific amount of gold. As a result, the movements of commodities, money and people from one country to another would be easier, and the problems of hard currency would disappear.

13 Gold Silver and no Interest Borrowing is encouraged and interest free which does not increase the debt burden Gold and Silver money give prices a strong anchor bringing price stability throughout the economy and creates a stable economic environment for business investment The Gold and Silver Standard has historically been associated with no or low inflation which means peoples money holds value and is worth more not less year on year

14 Equity Investment and Tax Businesses invest based on equity finance that encourages risk sharing and rewards profits Taxation is wealth based and defined so the government cannot increase and create new taxes There are no income taxes so work is incentivised and disposal income is higher boosting spending There are no expenditure taxes which lowers prices and increases affordability. Wealth tax encourages spending Hoarding is prohibited

15 Wealth Circulation Taxes are on wealth so the poor dont pay There is active redistribution of income via paying Zakat (wealth tax) so the poor and needy are lifted out of poverty There is active and fast circulation of money through the prohibition of hoarding gold and silver, no interest and a wealth tax of 2.5% which encourages equity finance The state is prohibited from fixing prices of goods and services or wages allowing prices and wages to fall as well as rise and thereby stimulating the economy even when overall demand is low. There are restrictions on derivatives trading and other harmful business activities

16 Gold Silver Standard Twitter @Jamal_harwood

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