An Islamic Solution

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

Greece

Spain

London

World Debt

Growth of Derivatives

US House Price crash

US Govt Bailouts
Facility

Total (Billion, $) Percent

of total

Term Auction Facility

Central Bank Liquidity Swaps
Single Tranche Open Market Operation
Terms Securities Lending Facility and Term Options Program
Bear Stearns Bridge Loan
Maiden Lane I
Primary Dealer Credit Facility
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility
Commercial Paper Funding Facility
Term Asset-Backed Securities Loan Facility
Agency Mortgage-Backed Security Purchase Program
AIG Revolving Credit Facility
AIG Securities Borrowing Facility
Maiden Lane II
Maiden Lane III
AIA/ ALICO
Totals

$3,818.41
10,057.40
855
2,005.70
12.9
28.82
8,950.99
217.45
737.07
71.09
1,850.14
140.316
802.316
19.5
24.3
25
$29,616.4

12.8%
34.0
2.9
6.8
0.0
0.1
30.2
0.7
2.5
0.2
6.3
0.5
2.7
0.1
0.1
0.1
100%

Money Supply Growth

Total Liabilities out of

control

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

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.

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

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

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

Gold Silver Standard

www.thegoldreport.c
o.uk
Twitter
@Jamal_harwood