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Money , What it was , and What it has become by Tarek El Diwany

Money , What it was , and What it has become by Tarek El Diwany.

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Money , What it was , and What it has become by Tarek El Diwany

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  1. Money,What it was,and What it has becomeby Tarek El Diwany

  2.  "Relieved of their annual debt repayments, the severely indebted countries could use the funds for investments that in Africa alone would save the lives of about 21 million children by 2000 and provide 90 million girls and women with access to basic education" source: UNDP Human Development Report 1997, page 93

  3. "New estimates show that the world's 225 richest people have a combined wealth of over US$1 trillion, equal to the annual income of the poorest 47% of the world's people (2.5 billion). The enormity of the wealth of the ultra-rich is a mind-boggling contrast with low incomes in the developing world. The three richest people have assets that exceed the combined GDP of the 48 least developed countries. The 15 richest have assets that exceed the total GDP of Sub-Saharan Africa" source: UNDP Human Development Report 1998

  4. TOTAL EXTERNAL DEBT (US$ bns) 1980 1990 2000 Developing Countries5251259 2140 Transitional Countries 96203358 Source: IMF World Economic Outlook series W200D 2001

  5. COMPARING CONSUMPTION Sub-Sahara Industrialised Meat consumed 11.2 77.36 (Lbs/year) Cereals consumed 104.7 130.3 (Lbs/year) Energy consumed 450 4569 (LbsOE/year) source: data for 1994 and 1995 as collated in UNDP Human Development Reports 1997 & 1998

  6. WHAT THE KINGS DID TO MONEY • debasement is the lowering of the precious metal content of the currency • in England during the 12th Century, one pound of silver was minted into 240 silver pennies • in England during 1666, one pound of silver was minted into more than 700 silver pennies

  7. WHAT THE BANKERS DID TO MONEY • exchanging paper receipts for gold coins • promoting paper receipts as a form of money • lending receipts, not spending them

  8. ENGLAND’S NATIONAL DEBT

  9. BANK $10 state money PERSON B PERSON A

  10. BANK $10 state money PERSON B PERSON A loan $100 $100 money

  11. BANK $10 state money $8 revenue PERSON B PERSON A loan $100 $100 money interest $10 $2 interest

  12. WHOLE ECONOMY TIME 0 Gold $100

  13. WHOLE ECONOMY TIME 0 Gold $100 Paper $400 $400 Debt at 30%

  14. WHOLE ECONOMY TIME 1 Gold $100 Paper $400 $520 of debt due now

  15. WHOLE ECONOMY TIME 1 Gold $100 Paper $400 $520 of debt due now Money supply $500

  16. LEVERAGE • the rationale of modern business is to borrow at, say, 10% and invest at 15% return on assets. • in order to maximise profits, the businessman must borrow big • big borrowing means big projects • the small businessman disappears, variety is lost, society suffers from huge anonymous projects

  17. COLLATERAL & WEALTH INEQUALITY • banks lend money to people who can provide collateral • the wealthy have more collateral than the poor… • so the poor don't get much financing … • … so the wealthy do most of the business … • and become still wealthier than the poor …

  18. BOOM AND BUST • money creation leads to inflation if productivity does not also rise • Decreases in the rate of money creation can lead to recession • leverage provides a motor for speculation, with increasing asset prices acting as collateral

  19. FORCED ECONOMIC GROWTH • because there is insufficient money to repay the debts of society, society is forced to compete … the alternative is that yours will be the business that cannot repay its debt • competition means the ever increasing search for economies of scale, for cheaper production methods, lower quality goods which can be sold cheaper to beat the competition

  20. Paterson … "The Bank hath benefit of interest on all moneys which it creates out of nothing“ William Paterson, first Director of the Bank of England, upon receiving the Charter of the Bank in 1694: quoted in Tragedy and Hope, Carroll Quigley, MacMillan New York (1966)

  21. Jefferson … “And I sincerely believe with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale” Thomas Jefferson in a letter to John Taylor 28 May 1816, Writings (1984) New York: Literary Classics of the United States

  22. Lincoln … “The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of the consumers. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government's greatest creative opportunity. By the adoption of these principles ... money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power” Abraham Lincoln, Senate Document 23 1865

  23. CONTACT TAREK EL DIWANY … • www.islamic-finance.com • Or in London on + 44 207 495 8713

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