WORDS: MUSLIM BITCOINER
From the first essay onward, we talked about how Riba is completely entrenched in our fiat monetary system. Therefore, like in the last essay, we’ll refer to fiat money as Riba money. In our last piece we talked about time preference, or the degree to which the future is discounted. In general, high time preference means valuing the short-term over the long-term, while low time preference values the long-term over the short-term. We also explained that the high time preference incentives from Riba money led individuals to adopt a wasteful and short-term approach rather than a sustainable and long-term outlook. This shift results in increased interest rate arbitrage, moral hazard, rent-seeking, and overall capital misallocation and destruction.
The first consequence that we’ll explore concerns the soil that Allah has provided for us. Soil is the “original” and most pristine form of capital and provides the foundation to allow the formation of literally all other types of capital and consumer goods to facilitate the building of civilizations. It allows for the production of food to help us sustain ourselves so that we can pursue more abstract and advanced endeavors. Without reliable production of food, there simply is no division of labor, no scaling of trade and commerce, and no way to build a civilization.
When our time preference is increased due to Riba money, the soil is no longer seen as this most crucial civilizational building block. Much like what was discussed in the previous essay, all that matters is the extraction of soil for its nutrients and its potential to generate yield for this harvest right now, not for future harvests. The natural result of this high time preference behavior is the stripping away of the health of the soil, where it is not given a break to regenerate due to intensive monocropping practices, leading to erosion and desertification, as noted by the ranchers at “Untapped Growth” in their essay “Soil and Money”:
“The true problem that defines our imperiled agricultural systems is erosion and desertification. Our soil is being turned into mere dirt, sediment of minerals that is entirely absent of life. We stand at the precipice as industrial farming and fiat extract unreplaced fertility from the soil at scales never before seen in history are creating a crisis beyond any the world has ever seen.”
And now because the health of the soil is being eroded, the soil ends up getting the high-modernist prescription of being treated and artificially revived to keep turning out the same yield or even higher yields than before. So now, the soil is in need of intervention through the application of extra chemical fertilizers, more pesticides like glyphosate, and extra soil tilling. The soil is like an overworked and genetically modified cash cow, relentlessly milked for every drop of value until it is completely depleted and spent, without giving it a chance to replenish its reserves.
These effects of soil degradation are further exacerbated when we consider that farmers typically finance their agricultural operations through Riba based debt. The high time preference farmer is now further heavily incentivized to generate faster and more consistent yields to service the debt that finances his livelihood. He does not, and he cannot, concern himself with the longevity or sustainability of his soil, or any negative long-term consequences that might result from the overuse and exploitation of his land. He will resort to intensive monocropping practices that strips the quality of his soil that his forefathers probably worked hard to maintain which took generations to build.
A programmatically debasing fiat currency coupled with interest-based credit financing shifts the attention of the farmer from caring for his land to dealing with the pressure to siphon his most precious capital to service his debt. This results in the farming industry being completely indebted to the degenerate wielders of Riba. Dr. Yassin Dutton, in his essay “Usury and Its Effect on the Environment: A Local View”, gives an old statistic from 1986 about the size of U.S. farmer debt, and we can guess that the problem is probably much worse today:
“In this spiral of ever-expanding credit, production, and debt, it is the farmer who is under the most pressure, and when he is under pressure the land has to bear the brunt of it. It is the same everywhere. A report written in 1986 pointed out that United States agriculture was in the fourth year of a deep agricultural slump, with US farmers currently owing the banks a total sum of US $210,000 million, which is more than the combined foreign debt of Brazil and Mexico. It was also estimated that a further 200,000 US farmers were facing bankruptcy in 1986.”
Closely related to soil is the impact that Riba money has on our food. This particular impact is quite subtle, yet it has a very pernicious and profound effect through influencing people’s eating preferences and habits. Recall from the last essay that increasing the money supply in general results in higher prices of goods and services. In the event of monetary supply expansion and the subsequent rise in prices, the capitalist has 2 choices, either keep the current prices that he’s selling his items for or increase the price of his items. Either decision is not favorable, as the former results in the capitalist selling at a loss, and the latter results in less sales. But there is a 3rd option. The capitalist, a juice seller for example, could sneakily water down his juice slightly, so the juice isn’t as sweet, and it’s likely the customer wouldn’t notice it. The capitalist can now get away with keeping the same price while not needing as much capital to produce his food products. Obviously, this scenario would apply to more than just food, but there is another aspect of the effect of Riba money on food.
Under a riba money regime, capitalists are now incentivized to cut corners in the production process or produce goods that require even less capital and more short-term revenue over long-term profits. For the food industry, we see that certain higher quality foods are more heavily affected by monetary supply expansion compared to lower quality foods. For example, foods like corn and soy, which are heavily subsidized by governments, do not experience much price increases related to monetary policy, as the supply is usually plentiful. In contrast, red meat production is highly sensitive to price increases because the inputs required to raise cattle are costly, and the process cannot be significantly shortened. Essentially, red meat demands a “proof-of-work” that resists efficiency improvements, making it more vulnerable to the effects of monetary supply expansion.
So this results in the peculiar effect of people choosing certain foods that are not as sensitive to inflation. Government agencies will use a common metric such as the Consumer Price Index (CPI) to report inflation based on a basket of goods. Initially, these goods typically included meat, dairy, and eggs. However, over the last few decades, the U.S. government has endeavored to slowly remove these foods from the basket to focus on plant-based alternatives instead to obfuscate the rise in food prices. Saifedean Ammous gives a brilliant example of replacing steak with soy burgers to illustrate this point:
“As prices of highly nutritious foods rise, people are inevitably forced to replace them with cheaper alternatives. As cheaper foods become a more prevalent part of the basket of goods, the effect of inflation is understated. To illustrate this point, imagine you earn ten dollars a day and spend it all on eating a delicious ribeye steak that gives you all the nutrients you need for the day. In this simple (and many would argue, optimal) consumer basket of goods, the CPI is ten dollars. Now imagine one day hyperinflation strikes, and the price of your ribeye increases to one hundred dollars while your daily wage remains ten dollars. What happens to the price of your basket of goods? It cannot rise tenfold because you cannot afford the one-hundred-dollar ribeye. Instead, you make do with the chemical shitstorm that is a soy burger for ten dollars. The CPI, magically, shows zero inflation.”
And consider that current dietary guidelines disseminated by governments promote the consumption of vegetables and carbohydrates over red meat, which further incentivizes “health conscious” individuals to consume more red meat alternatives. These high-modernist dietary guidelines are deliberately crafted to include copious amounts of industrial sludge to obfuscate the price increases in actual healthy foods like red meat, dairy, and eggs. While it is outside the scope of this essay, the discouragement of red meat eating has its origins in the Seventh Day Adventists Church, which had a key role to play in the founding of the American Dietetic Association that disseminates U.S. dietary guidelines. One of the church’s founders, Ellen White, advocated eliminating the consumption of meat (while she consumed red meat in secret) as it caused masturbation and increased sex drive, and one of her disciples, John Harvey Kellog would invent the abomination of corn flakes to help curb people’s sexual urges. But today, and especially since the 1970s, the movement to reduce meat consumption is mainly spearheaded, often in a religious way, by environmental activists and academics in a hilarious attempt to fight climate change.
In short, people are eating less nutrients from real food because of Riba induced inflation. We see the familiar pattern of increased time preference, where Riba siphons the nutrients of the foods we eat, as it encourages short term gratification from nutrient deficient plant food rather than long term benefits of eating nutrient dense animal food.
Another effect of riba money concerns family building. We need not cite statistics showing the decline in birth rates in recent years as the reader is probably already familiar with this phenomenon. While it’s true that this decline gets increasingly blamed, and rightfully so, on the rise of feminism and other Marxist movements, we contend that the decline in family growth is also the result of Riba induced high time preference behavior. As Riba money loses its purchasing power over time, people’s time preference is increased where they prioritize spending over saving. Under this monetary regime, individuals, especially women, are less likely to invest in their future by building a family, instead focusing on attaining present pleasures and fiat credentials. And when they do try to invest in building a family, it is increasingly difficult to save and plan for, as purchasing power is eroded through Riba, and this leads to families morphing from single income to dual income households, where both parents spend more time working longer hours rather than raising children. Seb Bunney In his book The Hidden Cost of Money describes this circumstance:
“With the burden of debt and purchasing power erosion greater than ever, dual-earner families, let alone single-earner families, struggle to cope. This puts a significant strain on the parent-child relationship as parents must either get by on less or increase their income to make ends meet. For many families, this means working longer hours, sometimes by getting an additional side gig or even a second full-time job. After preparing dinner, organizing the house, and finishing chores (if they are lucky enough to be able to be home for dinner), they have little energy left to direct toward quality time with their children.”
As essentials like housing and food become more difficult to secure, families find themselves trapped in paying off Riba-based mortgages and car loans. More time and energy are diverted from saving and planning for family growth to servicing Riba-based debt. Consequently, a Riba-based monetary system either disintegrates the family unit or constrains it to the point where long-term planning and investment become impossible. The family unit, the primary guardian of traditional morals and the building block of civilization, is increasingly exploited to enrich those who wield Riba.
In the absence of family, individuals increasingly rely on government-provided welfare, which is conveniently funded through Riba. Under a Riba money standard, the welfare state becomes the caretaker for individuals who choose to, and are incentivized to, not start families. Normally, parents raise their children, who in turn care for their parents in old age. However, as families deteriorate due to Riba, the welfare state assumes a more intrusive role in the care of children and the elderly. Unlike families, the welfare state does not promote or uphold traditional morals. In fact, it directly attacks families, the “producer of morals,” and undermines the preservation of conservative values, as Jörg Guido Hülsmann in the book The Ethics of Money Production explains:
“The excessive welfare state of our day is an all-out direct attack on the producers of morals. But it weakens these morals also in indirect ways, most notably by subsidizing bad moral examples. The fact is that libertine “lifestyles” carry great economic risks. The welfare state socializes the costs of morally reckless behavior and therefore gives it far greater prominence than it would have in a free society. Rather than carrying an economic penalty, licentiousness might then actually go hand in hand with economic advantages, because it frees the protagonists from the costs of family life (for example, the costs associated with raising children). With the backing of the welfare state, these protagonists may mock conservative morals as some sort of superstition that has no real-life impact. The welfare state systematically exposes people to the temptation of believing that there are no time-tested moral precepts at all.”
Let’s now look at how the constant debasement caused by Riba money has a profound effect on charity and almsgiving. This is especially relevant for Muslims as it is a requirement and a pillar of Islam to pay Zakat every year. But due to the nature of Riba money, most Muslims today, specifically those who do not qualify to receive Zakat, do not have any savings or any significant amount of accumulated capital. So, we arrive at this conundrum. How can we pay Zakat if there’s no savings to pay it on? Fiat Muslim does not concern himself with saving, for as soon as the paycheck lands in his “Riba free” checking account, he, often, immediately spends it on frivolous things. Even without the high time preference incentives caused by Riba money, Muslims tend to view savings with contempt, as if it were a weight that would invite Allah’s wrath. But savings and capital accumulation are necessary prerequisites to facilitate the paying of Zakat. Since Riba money is an assault on savings and capital accumulation, we can deduce that Riba money is also an assault on this pillar of Islam.
The reader may find it sadly amusing that we are discussing the payment of Zakat on “Riba money,” the usurious monetary system that all Muslims are subjected to. We need not discuss whether this is halal or haram, but it is indeed a curious situation the ummah finds itself in. We must pay Zakat, yet the vast majority of our retail wealth is stored in checking accounts composed of deposits that are essentially interest-bearing loans. Abdulhaqq Bewley, writing in “Zakat: Raising a Fallen Pillar,” laments this unfortunate scenario as it relates to Zakat:
“It is clear that the present world-dominating kafir economic system of banking capitalism has destroyed the pillar of zakat. This is partly because it has displaced the economic transactions into the arena of the haram by involving them inextricably in a usurious web which it is at present virtually impossible to escape. But it has done it more directly by redefining the nature of wealth and specifically by changing the nature of money in a way which prevents Muslims from paying their zakat in accordance with the conditions laid down by the shari’a.”
The last effect we’ll touch upon is the gruesome influence of Riba money on war. In the past, under silver and gold standards, governments had to raise funds for military operations through taxation or by conquering other nations and seizing their wealth. Many governments would also engage in subtly debasing the metal in their coinage. However, with the advent of fiat money, war-hungry governments could amass massive debt by borrowing from state-approved central banks. To repay this debt, they relied heavily on usurious war bonds, enticing citizens, usually through deception and manufactured hype, as in the case in the UK during World War I, to purchase them, sometimes with the promise of higher interest rates compared to regular bonds. Ultimately, this method siphons the wealth of citizens through Riba and burdens them with the financial costs of war.
Riba money allows governments to prolong wars far beyond what would otherwise be possible. Take, for example, the US and the “War on Terror.” Governments can now effectively put war costs on a credit card, leaving future generations to deal with the debt. This obfuscates the true cost of war through the deception of Riba money. Furthermore, the U.S. policy of “Super Imperialism” compels every major country to hold large amounts of U.S. debt since the dollar is the global reserve currency. By holding U.S. treasuries, other nations essentially finance the U.S. government’s extensive military expenditures. This creates a feedback loop that reinforces the global dominance of the usurious dollar, giving the U.S. greater economic leverage over other nations and enabling it to expand its military dominance even further. Simply put, the hundreds of millions of lives lost to wars in the last century are the result of Riba money. As the former U.S. Representative Ron Paul once said: “It is no coincidence that the century of central banking was the century of total war.”
With that, we conclude by acknowledging that we have only scratched the surface of the detrimental and catastrophic effects of Riba on humanity. In the next essay, we’ll explore various attempts made in the past to address this vexing problem of Riba.
Muslim Bitcoiner is co-founder of Bitcoin Majlis, and can be found on X @MBitcoiner