The origins of the global system of credit (=Debt/Riba)

Posted: March 10, 2015 in Debt, Fractional Reserve Banking, Geo Politics, Islamic Finance, Monetary System, Paper money, Poverty
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Further reading of Dr Nazeer Ahmed’s insightful history of the Islamic world, and all related developments, brought me to the following piece which touched upon the establishment of the global system of credit, which nowadays drives the global market for capitalism/trade.

I have used the below extract as an example of the underlying motive for creating this sub-system of global dominance, which also shows the nature and purpose of its exploits and manipulation.

Please read for yourselves;

The rise in the power of commercial banks in the 18th century was directly related to the Industrial Revolution in England. It was a convergence of several historical events that transformed England from a mercantile society to an industrial society and finally led to the triumph of the bankers. The arrival of fresh capital from Calcutta and Oudh (1757-1767) enhanced the substantial wealth that was flowing in from the Atlantic slave trade, and enabled the funding of innovative ideas. Inventions need capital to see the light of day. Without it, they wither and die. The first thrust of British innovation was the replacement of cotton goods from India. The spinning jenny went through rapid modifications and was “perfected” in 1767 by Hargraves. The colonization of Bengal provided a large captive market of thirty million consumers. The British East India Company slopped on a hefty 70% duty on Indian made goods while opening the floodgates to imports from England

I also make a connection to the previous post in Ahmed’s compilation;

The loot from Bengal heralded the onset of the capitalist society. Industrialization further consolidated the accumulation of capital. With the wealth of Bengal at their command, the British successfully fought off Tippu Sultan of Mysore (1770-1799) and subdued India. With the resources of the great subcontinent of India at its command, European colonization of Asia and Africa in the 19th century was only a footnote 

Using these two articles in another post, I intend to explore another vital factor which led to the state of global poverty as it exists today.

However the first quote comes from an entry in which Ahmed further enlightens us with the development of the modern usurious system at the time of the onset of colonialism. It gives an overview of the entire history of money, a subject well covered already, however the author does a brilliant job of contextualising this history with that of imperialism and the modern world.

This links European colonialism with the development of paper money and the rise of the nation state, it is therefore highly recommended to read this in full, selected extracts however appear below;

Islam maintains that usury is debilitating to civilization. It saps the strength of individuals and nations, encourages greed, and discourages trade. It works in the direction of economic centralization, makes the rich richer and the poor poorer, creates instability in the society and ultimately destroys it. (“Those who devour usury will not stand except as stands one whom Satan by his touch has driven to madness”, Qur’an, 2:275-276)….

The issue transcends the Islamic world, and affects it only because it is now a part of a global community of poorer nations. Whether it is coffee, coconut, spices or oil, the international banks have a major influence on the economic sinews of the world. Interest payments are a major factor in the enormous flow of capital from the poorer countries of the world to the richer nations….

From times immemorial, the merchant had depended for his protection on the soldier. After the Battle of Plassey, the tables turned and the soldier was to be a servant of the merchant and his hired hand. Civilizational initiative passed from the soldier to the merchant….

Monetary policy passed on to the bankers who could either fuel an expansion by increasing the supply of money and easing credit, or cause a contraction by withholding credit. This was a fundamental paradigm shift. From times immemorial, one of the essential privileges of a sovereign soldier-king was his authority to mint coins. This privilege now passed on to the bankers, although they printed money in the name of their sovereign….

….The merchant makes his money when the value of his goods relative to the money he has borrowed goes up over time. The usurer, on the other hand, makes his money when the value of the credit he has advanced goes up in relation to the goods that are held in mortgage. Thus it is in the usurer’s interest to ensure that your property is worth less tomorrow than it is today so that he can get more of it when payment is due.

For more than a century, until 1972, when the United States abandoned the gold standard, those who controlled the gold, controlled the monetary veins of the world….

Major contractions in the British economy were recorded in 1815, 1825, 1847, 1857, 1866, 1893 and 1929. The last one caused a global depression and was a contributory cause for the Second World War.

The disengagement of the world monetary system from the gold standard did not change the fundamental relationship between creditor and debtor. Whether the standard is gold, the American dollar, the British Pound or the Japanese Yen, the process remains unchanged. Credit, with interest, works to the advantage of the lender in favor of economic centralization…

Bereft of capital, the emerging countries of the world turned to international bankers for loans after the Second World War. The credit system increased the span of control of the international bankers over the entire globe. New mechanisms of international credit were created through the World Bank and the International Monetary Fund. Loans were offered against the natural wealth of the borrower nations (commodities such coffee, jute, oil, bananas, spices) as collateral…

To continue debt financing, the bankers often force the poorer nations to devalue their currencies and accept international oversight of their economies. The cycle continues…





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