The Evils of Riba Currency: A Modern-Day Tool of Financial Enslavement

June 26, 2024

Riba currency, commonly known as fiat currency, stands at the center of modern financial systems, perpetuating global oppression, wealth inequality, moral decay, and societal collapse. This article examines the mechanics of Riba currency, its creation through interest-laden debt, and its foundation on Treasury bonds—contracts rooted in Riba, making them haram. Drawing insights from Saifedean Ammous’s “The Fiat Standard” and Nik Bhatia’s “Layered Money,” we explore how this system works, why it should be called Riba currency, and why muslims must unite in rejection of this Riba system.

Creation of Riba Currency: Lending into Existence

Riba currency is created through a process of lending money into existence, inherently involving interest. When banks issue loans, they do so by creating new units of currency on the spot.  In “The Fiat Standard”, Saifedean Ammous explains the mechanics of the modern fiat monetary system, highlighting its creation and maintenance through debt and central bank policies. The riba financial system results in perpetual inflation, wealth inequality, and economic instability, stemming from the endless cycle of money being lent into existence with interest.

The concept of lending money into existence means that for every dollar created, more than a dollar must be repaid. This imbalance forces borrowers to find additional money elsewhere in the economy, which is itself also borrowed and subject to interest. This relentless cycle of debt and interest is the essence of Riba, a practice explicitly prohibited in Islamic finance due to its exploitative nature.

The Base Layer of Fiat: Treasury Bonds and Riba

Nik Bhatia’s “Layered Money” describes the structural basis of the current financial system, highlighting the central role of Treasury bonds. These bonds are IOUs issued by governments to finance their expenditures. When a government needs money, it issues Treasury bonds, which are bought by investors, including banks and other governments. 

However, Treasury bonds are themselves haram contracts involving Riba. Investors buy these bonds with the expectation of receiving interest payments, making the entire system fundamentally un-Islamic. The reliance on interest-bearing Treasury bonds to underpin fiat currency means that Riba is embedded at the core of the global financial system. With this understanding that the currency has to be lended into existence with interest, and that treasury bonds (Riba contracts) underpin the currency system, muslims should normalize calling fiat currencies what they really are: Riba currencies!

The Consequences of Riba Currency

The lending of Riba currency into existence and its foundation on interest-bearing Treasury bonds have several dire consequences:

  1. Wealth Inequality: The creation of money through debt disproportionately benefits those who have access to cheap credit—primarily large corporations and wealthy individuals—while ordinary people face higher interest rates and debt burdens. This exacerbates wealth inequality, as the rich get richer while the poor struggle to keep up.
  2. Economic Instability: The reliance on debt and interest creates an inherently unstable financial system. Periodic financial crises are almost inevitable, as the burden of debt becomes unsustainable. Each crisis leads to bailouts and further money printing, devaluing the currency and eroding savings. This system contributes to the boom-bust cycle, where periods of rapid economic growth fueled by easy credit are followed by severe downturns when the debt bubble bursts, leading to recessions or depressions.
  3. Moral Decay: Riba currency incentivizes dishonesty and short-term thinking, fostering a high time preference among individuals and businesses. High time preference prioritizes immediate gratification over long-term planning and integrity, leading people to make decisions that benefit them in the short term but are detrimental in the long run. Businesses may cut corners or engage in unethical practices to meet debt obligations, while individuals may resort to deceitful means to cope with financial pressures. This erosion of long-term thinking and integrity deteriorates the overall moral fabric of society as ethical standards are sacrificed for immediate survival and gain.
  4. Financial Slavery: The perpetual cycle of debt and interest traps individuals, businesses, and even governments in a form of financial slavery. They are constantly working to service debt, with no hope of escaping the burden. Beyond individual and national impacts, the Riba system enforces a structure of global oppression. Developing countries, including most muslim countries, are often burdened with high-interest loans from the IMF and World Bank, and they find themselves in a cycle of debt and dependency. These countries are forced to allocate significant portions of their budgets to debt servicing rather than essential services and development. This dynamic perpetuates global inequalities, where wealthy nations and financial institutions exert control over poorer countries, dictating economic policies and priorities. The Riba system thus reinforces a global hierarchy, stifling opportunities for true economic independence and growth in muslim countries, leading to economic disparity and social injustice on an international scale.

Bitcoin: A Path to Liberation

Bitcoin presents a stark contrast to Riba currency, offering a revolutionary form of money that is free from the corrupting influence of central banks and interest-bearing debt. Bitcoin’s protocol ensures that an absolutely fixed amount of monetary units will ever exist, making it immune to inflation and the manipulations that plague fiat currencies. This fixed supply is credibly enforced through a decentralized network of nodes and, most importantly, a key mechanism called proof of work (PoW).

Proof of work ties Bitcoin directly to the real world by requiring significant computational effort and electrical energy expenditure to validate transactions, introduce new monetary units in a fair manner, and secure the network from attacks. This process ensures that Bitcoin is the only digital monetary system with a credible enforcement mechanism, backed by the highest amount of proof of work. Other cryptocurrencies either lack proof of work or are backed by a meaningless amount, making them much more susceptible to manipulation and centralization.

Bitcoin operates on principles that align more closely with Islamic finance, emphasizing fairness, transparency, and having no reliance at all on Riba. By adopting Bitcoin, individuals, organizations, and countries can break free from the shackles of Riba currency, reclaiming their financial sovereignty and moral integrity. Bitcoin’s decentralized nature provides a way for people to transact and be holders of their own wealth without any reliance on financial institutions.

Riba currency, created through interest-laden debt and built on a system of haram Treasury bonds, is a tool of exploitation, control, and enslavement. Its consequences—wealth inequality, economic instability, moral decay, and financial slavery—underscore its inherent evils. In contrast, Bitcoin offers a beacon of hope, providing a halal, riba-free, and incorruptible alternative. Rejecting Riba currency and embracing Bitcoin can pave the way for a more just and equitable financial system, liberating the Muslim Ummah from the chains of debt and interest.

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