Library Chat #23 – What Every Muslim Needs to Know About Rib & Dr. Fadel

This mean, he'll walk man you know he

Smilla Rahim Al hamdu lillah wa salatu salam ala Rasulillah who either he will suck up woman whether my bad. First and foremost, welcome to another library chat. No, it's been a while, this is going to be a very atypical one also a topic is going to be a typical then as you can see, I have a guest between whom I'm going to introduce in Charlaine, just a few minutes after our brief remarks and introduction. Firstly, the usual disclaimers. This is a somewhat advanced library chat in the sense that you need to have an interest in the field of Islamic economics, it would really help if you know the basics. Secondly, this is a library chat and not a football q&a. And what I mean by this is

that the purpose of this chat as is usually the case with my other library chats is for you to think for you to explore, to give information that might be cutting edge might be controversial. The goal really is not necessarily an endorsement, but rather the beginning of a conversation. And then the final point in the introduction. So as you're aware, I've said this many, many times, you know, I don't view myself to be a specialist in modern Islamic finance and economics. I don't give factoids that you know, are outside of the mainstream, I really consider myself to be this is not my area of expertise, you know, those areas that I feel confident, I'm more than happy to break away from the

majority and have a minority opinion. And I can defend that opinion, feel free to agree or disagree. But when it comes to the field of Brewer of extra side of Islamic economics, you know, I fully am cognizant of my own shortcomings in this regard. I just never had a passion for the field, I've studied it in the basics way I've had, I also had a private teacher I studied with, you know, back in the day, and, you know, in Arabia, when I was there studying, we went over modern boy, your interesting field, and I decided I don't want to specialize. So if you listen to my q&a, I'm always quoting, you might feel I'm quoting you, the fifth Council and quoting you the mainstream fatawa

councils, most of them follow a ofii. Now, for those of you that are aware, there is a counter current of alternative views. And since the beginning of my preaching and teaching people in that counter currents have told me that, you know, I should be more aware of this counter current, I should be aware of the alternative side and views, one or two of them have even said that if I were to specialize, knowing who I am, they feel I would be more sympathetic to the alternative side of things. That's their interpretation of my own views. At this stage, I'm simply aware that there's other views out there. And multiple times when I've given my q&a and fatawa. When I've actually

given the fatwas of the Marshfield Clinic, or of the Robert or Adam, or whoever it might be, if you look at the comments, I get emails, and they tell me that, you know, Chef, you know, these, these people with utmost respect to them don't understand various views, or they don't understand the modern system or whatever. And they really tried to make a case of the alternative paradigm. As of yet I have resisted simply because I don't view myself to be qualified to go to that to that level. Nonetheless, I think it is important that the other side is heard. I think it is important that we understand their arguments for those that are interested and that we have the right to agree or

disagree or right the right to choose who you're going to make Toledo. And therefore, I had an extensive q&a on a certain aspect was another chef and Dr. Mohamed Feldon, whom I really respect and admire and he's a professor at University of Toronto, he's transmitted the workload, remember, his credentials are mashallah, you know, well known you can you can read about him in every paper he's written, I have to say, every paper he's ever written that I've read, honestly, it is a work of art. It's really it's just amazing, the erudite, you know, methodology in presenting his arguments, the extensive footnotes, mashallah he's done his research, Dr. Father reached out to me and said,

basically, the same thing that so many other people have said, and that is, you know, you need to understand the other side, there are issues that perhaps the mainstream don't see b2b TV seem to be taking into account. And as our conversation went back and forth, I said, you know, Dr. followed, you know what, let's just have a frank interview. And let's just put this online and let the viewers you know, hear, you know, your views and, and who you're quoting and your arguments, and you know, let them decide. So, Dr. Feldman, first and foremost, welcome to a library chatter of mine. Thank you very much. Is that cola cooler hair chef? Yes. That's like probably the most generous

introduction I've ever heard about myself. And I don't feel eminently not nearly good enough to warrant that kind of praise, but hamdulillah I'm very great. gratified to hear it.

So I told you when when I when I when I called you. This is a really, really vital question for the average Muslim.

And so I just feel it's important that the average Muslim have a much better understanding of the issues.

so that they can make a better decision for themselves in their community because it's so, so critical to our lives, particularly for those of us who live in North America. Indeed, and Dr. Father, for those who are not fully aware of your background and whatnot, I know this is awkward, I'm putting you on the spot. But can you just give us a very brief synopsis for our viewers who don't know, you know, your your your background, and you know, what you're doing? And you know, the studies that you've had, if you can summarize for a little Sure. So I, I was born in Egypt, but my family immigrated to the United States when I was three years old in 1970. So, you know, I had a

very conventional public school education. I went to university, the University of Virginia, majored in politics.

And then I did a PhD in Near Eastern Languages and Civilizations at the University of Chicago. I wrote my dissertation on legal process and medieval Islamic law focusing on the Maliki method. And during my dissertation, I studied informally, a basic Maliki text called a shot Hassan here with a sheikh in Cairo. So short has so here is the multifocal book that is taught in the US how the family system, the secondary school system.

So I read that text with the sheikh. And then in the context of my own dissertation, I, you know, I, I became much more familiar, I would say with advanced Maliki texts. So, as a scholar, I consider myself a specialist in Malachy, Fick, more or less. After I finished my PhD, I then went to law school at the University of Virginia again, I graduated in 1999. After that, I clerked in for a federal district court for a year and then full federal court of appeals for a year. And then I practice law in New York City with a fairly well known Wall Street Law Firm for four and a half years. And then I joined the faculty at University of Toronto, in 2006, where I teach

business organizations the law of corporations, international business transactions, and then I have a seminar on law and religion, which is the focus of my my scholarly research for the most part. So most of my publications are in Islamic legal history with a focus on masochism, but also Islam and political theory and democracy and constitutionalism.

And I've written a couple of articles about Islamic commercial law, right, particularly the, the rules regarding Riba and what are the kinds of ethical values that Islamic law promotes in the field of commerce?

Mashallah, so Dr. following you, you're one of the very few people actually who's actually combined a PhD in Islamic Studies Near Eastern Studies, traditional training, as well in Cairo, and JD and so you're basically very rare Actually, don't anybody else who's done all the which you've done, Mashallah. And I do encourage the readers that are really interested to just Google Doctor father's name, download some of his articles and see for yourself, the level of output and you know, the grasp that adoptive father has also the mind, because how you're trained really affects, you know, how you view the world. And so having gone through a PhD, and the JD, along with some traditional

training and part here in Cairo, with some sad shoes and whatnot, subhanAllah, the mind of Dr. Father is really a very, very unique mind. And every time an article is released, I eagerly downloaded and peruse it. And sometimes, sometimes some of your stuff with the commercial stuff goes above my head, I have to be honest, but some of your other stuff, Will this really resonated with me. And I'm, we've had a number of, of deep interactions. So I'm very honored that you are here to share your views with us in shallow Tana. Well, you know, if I could just say that about the rules in the in the con commerce are very, very difficult for us to understand. Because the

the modern economy is so radically different than the kind of economic life that the self lived, and that the people in the Middle Ages lived. It's very hard for us to even imagine

how Congress was organized, right? And that's part of the problem. That's part of the problem is that, you know, it's not like prayer. So prayer, the Prophet SAW, Selim taught us how to pray, we pray. And we can easily imagine what it was like to pray during the prophets lifetime. But it's very hard for us to imagine what it was like to get what you needed to live in the seventh century, there was no grocery store around the corner where you just go, right, no credit cards, no checks, no banks, right? radically, radically different worlds. And so you have to

spend a lot of time trying to figure out what's going on in order to make sense of what they were talking about. So it's one of the big barriers. Yeah, and one final point before we begin our more deeper discussion, um, I use this generic

You know, understanding of classical who you are with modern Islamic gift Assad as a segue to my deeper talks of the the need the necessity to rethink through filthy issues in light of modern contexts, and anybody who studied any method of the blue or the chapters of you know,

commerce that you study and finance that you study are, frankly, so disconnected from the world that we live in, the average Muslim will hardly benefit from any of the classical books when it comes to who you are. And if you were to read any modern book of Islamic finance, you will see at the surface level, basically zero correlation between that book and between classical Phil, basically, for the initial, for the novice, you're going to think those are two different disciplines. But for the Adam for the filthy, this discipline of modern if the salt has been derived from classical field, right, so they take the principles of classical field, they take the power that, you know, classical Roma

have derived, and they try to apply them or we think them through in the modern context. And this is why it is so important to understand the context of our fifth derivation. And the need and necessity to rethink through this is not a rejection of the tradition, it is actually the implementation of the tradition, because there's hardly a question in modern Islamic finance, whether it comes to banks, whether it comes to mortgages, whether it comes to credit cards, whether anything, even you know, modern trade and commerce, except that you're not going to find a simplistic, you know, fight to a copy and paste from earlier in the month, there's going to be an extrapolation. And that's why

people like Dr. Father and others really bring up some very important caveats, or maybe even disagreements, when they point out perhaps in that extrapolation, some of our modern fuqaha have not really looked at issues that might not they might might not be aware of, because they're not in the field. Dr. Follette has been in the field, he's been working as a lawyer, he's been involved in commercial contract issues. So therefore, it is important to hear a voice like his. With that long introduction, Dr. Faldo, let me ask you the first question, and I think you have a PowerPoint slide as well. So that might be useful to bring up when you're ready. But let's begin with the basics.

What is Riba? And in the Quranic sense, and how can we understand it in light of our modern time, so Bismillah to speak? So, so can you can you see my slide here? I can actually, yes. Okay, great. So I think the most important thing for us as Muslims, is to begin with what the Quran says about Riba. And although you find references to the ABA in various different chapters of the Quran, the most extensive extensive treatment of Riba is toward the end of Surah, Al Baqarah. So I think it makes sense to start there. And so I have in the slide, starting with first

two 275. And so let me just go through these. And these are verses that we should all be familiar with. Those who devour river shall not rise except as one rises who was felled by the touch of Satan. That is because they say, trade is like Riba. But God has permitted trade and forbidden Riba, whoever desists after receiving admonition from his Lord may keep what occurred in the past and his affairs left to God. But as for those who persist, they shall be the denizens of hell, dwelling theory in forever. So what right away we know that it is an extremely serious matter, because God is threatening those who practice that Abba with with hell, and a lasting, lasting punishment of Hell.

Right.

Then, God immediately the next verse, contrast the river with charity. So God says God blights the river, but he causes charity to grow, and God loves not the sinful engrade. So we know that rebar

has a superficial appearance with trade. But it's not trade, but it's the categorical opposite of charity. So

on the one hand, we have on one extreme, we have River at the other, we have charity, and in the middle, there's something called trade. So Allah's patana then again, says, Oh, you who believe fear God and relinquish what remains of your claims to Riba? If indeed you are believers. And then he threatens us again and says, If you do not take notice of a war from God and His messenger and others is a very, very strong language. Allah subhanaw taala uses the word harp, and you can correct me if I'm wrong, Chef. Yes, sir. I think this is the only sin in the Quran, in which God threatens us with war. Indeed, the only sin Yes, and this is directed to the believers. This is not to non

believers, this is directed toward believers. If you repent, you may retain the obligations owed to you also unwelcome, neither committing wrong nor being wronged. Now,

and if he either debtor the word in Arabic is due or

Straton is in difficult circumstances, then grant him respite to another attorney LMI sarachan until this condition is eased, but it would be better for you were you to forgive the debt? Well, en casa daku Hieron Lancome in quantum Tala Mon, right. So Allah concludes that after he threatens us, if we engage in rubber, He then tells us, if somebody owes you money, right, then give him more time to pay. And if you forgive it is better, or you forgive what he owes you. Okay. Now, let's pause here and try to understand what's going on. Right? The end of the last of these verses actually is crucial and understanding the beginning of the verse. Because when Allah subhanaw taala talks about

riba he uses the definite article LF lamb, meaning this is something that the Arabs knew it was a transaction that they understood that they was familiar to them. So in the Arabic language, is this called LF lamb light? Right is the is the definite article for that, which is something that's customary and well known. Right? So what's what is known about it? Well, clearly, we see here that it's talking about the relationship of a creditor and a debtor. And we know that the problem is that the debtor is unable to pay. So riba has some sort some sort of relationship to when a debtor can't pay. So what do we know happened in pre Islamic Arabia, in pre Islamic Arabia, when the debtor was

unable to pay, the creditor would charge him more money in exchange for more time. And that's what the word liberal means. River literally means an increase zyada. Right. So that's what the Quran is talking about here. That when the debtor this is the, the obvious sense of the verses is that you should not when your credit when your debtor is unable to pay you give him more time in exchange for him, giving you more money. Now, the Arabs thought that this was like trade, because what do you do when you're trading? Let's say you have a car? Well, you sell it to somebody and you want to make a profit. So the Arab said, well, by trade is all about buying and selling at a profit. So rebar is no

different than trade, because all you're doing is just getting an increase in the debt. But Allah says, No, it is not. It is not trade. Right? It's not trade. And I want to explain why it's not trade. It's superficially like trade, because it seems that there's consent, because the debtor consents to it. And from that perspective, it looks like trade, but it's not trade, because the debtor is not receiving any new property. So in a normal situation, if I sell you my car,

I give you my car, and in an exchange, I get money, right? So property is going back and forth both ways. But in the transaction that the Quran is describing, the debtor is not getting any new property from the creditor, but nevertheless, the creditor is getting more property from the data. Right. That's why it's not trade, even though it superficially resembles trade. Okay. This also teaches us why Ribba is the opposite of sadaqa. So sadaqa is a free gift of something to somebody else. So when I give somebody sadaqa, or is their cat, I'm taking something that belongs to me, and giving it to that other person and not taking anything in return. Right. So it's totally

uncompensated. It's a totally altruistic act. Right. Riba is the exact opposite of that, because in the case of Riba the creditor is taking from the debtor, and giving nothing in return, so it's the exact opposite of sadaqa. Right? So the Quran is very eloquent in these verses, and explain to us why Libya is so evil because it is a pure taking from somebody else without giving anything back. And that's why it's harder. Because what did people do in pre Islamic Arabia and Harb, when you defeated your enemies, you took their property. That's it. That was what HUD was all about. Right? So when you take rebar from somebody, you're treating them as though you're at war with them. That's

why Allah subhanaw taala threatens us with war. If we engage in the river well Allah Allah

Okay, now what you're saying basically,

what you're saying basically is that the river of the Quran

is

Is the creditor taking advantage of the debtors inability to pay back the loan, and therefore charging more because of the circumstance of the debtor? And it's not pre arranged. Is that correct? That's correct. So the Mufasa ruin the commentators, the earliest commentators are explicit in this point, that they said that the pre Islamic Arabians said that there's no difference between Riba and Prophet, because the prophet does yada. The real legitimate prophet is specified at the beginning of the contract. So what difference is it if we do it at the beginning or at the end? And but Allah said, No, when you do it at the end, it's river. And as I explained, the Isla de hikma is clear.

Because when you do it at the end, you're not giving the debtor any new property. So when I sell you something on credit, I'm giving you property and exchange, you're promising to pay me money. So both of us are being treated fairly, we're both benefiting. But when we do it at the end,

I'm not giving you anything new in exchange for the new money you promised to give me right. That's why it's a pure taking. Yeah, and you know, this last verse to ad it's, it's really interesting, what in Canada, also written for another attorney, Eli Mesa rock, it's seems to be very clear. And like you said, this, this is also the dominant interpretation. Some have said, it's the only interpretation of this actual verse, because Allah is saying, if the person is in difficult circumstances, then you are required to give him extra time until he's able to repay you, which seems to indicate the Quranic Riba is that they would not give extra time for free. The ironic Riba

is that when the debtor is in difficult circumstances, you're squeezing for even more, and you're tough luck, you're gonna have to pay me extra now. And that's why Allah saying what until Sudoku, but if you were to forgive the entire debt for Hula, hula can quantify the moon, so it's very interesting. Okay, so yes, going back. And so and just to confirm this reading, what, what are the verses that come after this? Right? It's the longest verse in the Quran to

attain, it's called the alright. And this is such an important first, we don't realize that this verse comes in the context of Ribba, because of thereby is the prohibition against the red bar is intended to protect debtors, right? Well, how do you make this rule effective, you make it effective by ordering people to write down their debt contracts. Because if you write down your contract at the time, you can track the debt, then you can prove what you actually owe. Right? If you never write it down, then it's very easy for the creditor to coerce you into lying about how much you owe. So you can get libber through the backdoor, right? But when you have when you write down your debt,

and you have witnesses to it, then the obligations are clear. And it's much harder for the creditor and the back end, to cheat you with whatever, right. That's why That's why the first of the day of recording debts comes immediately after the prohibition of rubber. Right, so the hikma of the Quran is so clear here, if we read everything together, right? And it's so important, it's so important that we record our debts that Allah says even if you are in a journey, and you can't find people to write down your your debts, because writing back then was not something that everybody did take pledges, right, sorry, hang on mock Buddha. Again, this is something that we don't understand,

because today, we don't use collateral in this way. But at the time of the Prophet sallallahu sallam, one of the most fundamental uses of collateral was as evidence of the amount of the debt owed.

So when people were on a trading journey, and they they entered into a credit contract, but there were no scribes around, which could be very well the case, Allah ordered them to take pledges. And in fact, if you read early flipbooks, like them a lot that a lot of the detailed questions centered around

how to use rahoon as evidence for the amount of the of the debt that was owed. Right, you have an example there to follow this process our viewers understand give an example of a classical, let's say, let's say let's say we're on a caravan we're going to Syria from Medina, right, or returning. And so I was in Syria, I bought some merchandise, right. And then you looked at he said, Oh, this is really great. I'd like to I'd like to buy that from you. But I don't have cash. So I agree to sell it to you on credit. Right? But we don't have a we don't have a scribe to record the the amount

So let's say I sold it to you for 10 dinars, you have property in your possession that's worth 10 dinars. So you give me that property as Iran as a pledge. So let's say a nice beautiful decoration piece. Let's say you have jewelry.

So you give that to me as a pledge. And so that pledge now serves as evidence that what you owe me is 1010 dinars, because we know that the value of this floss is 10 dinars, that's what this first is. And if you're on a journey and cannot find a scribe, then take a pledge in hand. But he has no mockable boss, transferred from the person who purchased the merchandise to the one who sold it. So it's now basically temporarily there, when you get to your destination, you're going to do the swap, you're going to give you the 10 dinars and take the one or the visor. But the point is, is that the value of the pledge is evidence to the whole world about how much you owe me. Yes, I wrote roughly

equivalent,

because the way to protect me it's one thing to prohibit rubber, but then you have to have rules to make this prohibition effective. And one of the most effective ways of preventing rubber is documenting debt obligations. Right? And so the Quran is very clear about this right now, just in case people think that Muhammad father is making this up. This is the evidence that we find in early fifth books and Tafseer books. So I'll just give one example. This is from the water

so Malik has this hadith in the water.

It's not a hadith. It's a it's a it's a report of a tabby. Yeah, it's an excerpt from the Tarot. So say the ask them said in the days of ignorance prior to Islam, unlawful game, that's my translation of riba was understood to consist of the following transaction, someone was owed an obligation from another Do you want a future date? And your Cornella Rajamouli? Allah Rajamouli, ad hoc Illa agile?

And when payment of the obligation became due, the creditor would say to the debtor, will you pay me what you owe? Or will you increase the principal sum owed and defer payment to the future? If the debtor paid the creditor would accept payment, but if he did not, the creditor would increase the principal sum of the debt owed to him and extend the maturity date further into the future. Now one thing that now the one thing that's very interesting here is that say the Aslam uses the word Hawk, Hawk, you know, agile Hawk in the Arabic language is a generic term for any kind of obligation.

Right, the Huck could be a result of a failure, it could be the result of a Janessa. It could be the result of a card, it could be the result of asylum, right? It's not any particular kind of debt. It's just a generic debt, any kind of debt that one owes for whatever reason, right? Could be subject to riba because if you're unable to pay it, then the creditor might, as you put it, strong arm you into paying him more, right. Okay, so

the Quran tells us Riba is not a sale. And as I explained, and I'll say, again, the reason it's not like a sale, is because in an ordinary sale, both parties get a value called an a word, in Arabic, right? I sell you my car, you give me money. So both of us are getting in our world, right?

But about from a superficial formal perspective resembles a sale because of the debtors consent. But in substance, it differs from a sale because the debtor doesn't receive any new property from the creditor. Because it's the because it's effectively a unilateral taking. It's like war, because in war property is taken by force, not by trade. So it's not okay. Somebody can this is gonna say it's not quite force, it's kind of sort of taking advantage of somebody's circumstance.

Right? It's, it's not, it's not literally war, but it has the has the same outcome as war, because in war, people take each other's property without paying for it. And that's what a creditor does when he takes off from the debtor. And therefore, again, I know we're gonna jump the gun, but I mean, I'm sorry, I'm jumping the gun. I know we're gonna get there. But because I think this is a perfect time to point out if the two parties willingly and mutually agree to a difference in price from the beginning, and the person does. So untape enough, certainly, he really wants to do this, right. You may call it a different type, but it's not the Quranic verse here. Absolutely. That's

exactly correct. This kind of we're going to come to or at least, or at least you're coming to this end. The disclaimer is guys, this is not an endorsement. I'm just telling you the opinions out there. So for example,

If you're looking at the Tafseer books lack of authority to be a provocative lobby, they're very clear that the increase in price that a merchant charges

to sell something on credit that is perfectly jet is that is perfectly licit. Right? Because in that case, both parties are receiving value from each other. But in the labor, only the creditor, right, as I said, it's an uncompensated taking. That's why it's the opposite of sadaqa. Because sadaqa is an uncompensated gift. Right? So again, when you understand these things, makes you appreciate the wisdom and the Basilica of the Quran.

Excellent.

Well,

this now, as many people know, in in sort of common Muslim sense, riba has a much wider meaning than what what is in the Quran, and I want to talk about that, about that a little bit. But I think it's very important for us to understand that

a word in Arabic can make it can have several different meanings. But we need to understand the Quran in the Quran in context. And so it's important, in my opinion, that we don't confuse what I'm going to call secondary meanings of riba with what the Quran is saying, right? Because a lot of our confusion about whatever stems from the fact that we confuse secondary meanings of riba with the Quranic meaning, but the Quran is very, very clear. And it makes a lot of sense, right?

When I mean, a lot of sense, it makes a lot of sense, it's easy to understand from the plain meaning of the verses of the Quran. And it also makes sense from an economic perspective. Why? Because it permits us to use credit. And it permits merchants to profit from trading on credit, but it protects debtors from ex being exploited if they're unable to pay their debts. And then because it concludes by saying, Well, I'm casada to hide on Lakhan it actually anticipates what we call in bankruptcy law, the Fresh Start policy. So many of us if people know what bankruptcy does, law patrulla affect them a lot. If somebody goes into bankruptcy court, what the bankruptcy court does, is it figures

out how much money the debtor has, and figures out how much the debtor can actually pay. And then after that, it cancels all the debt that the debtor owes, right. So it's funny that modern bankruptcy law is not funny. It's it's shows the wisdom of the Quran. Modern bankruptcy law actually implements what the Quran says the Quran says we'll enter Sudoku height on LEGO. That's what the law says, when somebody is bankrupt. What we do is we figure out how much a person can pay. We give that to the creditors, and then we say, That's it, all your debt is cancelled, start over again. Right? So the Quran is very, very consistent with what a con economics considers to be the best way of

treating debtors. So why does it matter? If we

understand the Quran condemnation of Riba

in this narrow sense, and separate secondary census,

because

the threat of war is a very, very extreme threat, as we said, it's the only thing only sin in which God threatens us with war, not adultery, not anything else. It's the river. Right? So this makes more sense. If the Quran is talking about this specific kind of transaction, then we understand why it has such a severe, severe threat, right? So the secondary uses of riba or something else entirely and should not be confused, they might be prohibited, right. But they're not subject to the same level of scrutiny and condemnation. That's the important point. Right? Excellent. Okay. Now, Reba is also used, as I said, in the secondary way, that's, that's we see that in the thick books, and this

is where I think people get really, really confused, because the fic that's in the thick of rubber is very, very complicated. It's very closely connected to pre modern economies, in which most trade was barter, not with cash. And it was a very different kind of economic system. So here, if you were to pick up a thick book,

they divide rebar into two broad categories, what they call a liberal Barua rebar in connection with contracts of sale, and rubber Dune, rebar and connection with debts. And then there are special rules regarding loans. So loans in Arabic are called current. Hard is completely different idea than what we mean by loan today. So it's free

Very, very unfortunate that people translated the Arab, the Islamic word card for loan, because they have, even though the words are the same, the meanings are completely different. And so it leads to lots of errors. But let's begin by looking at riba rules involving sales.

So

the general rule in Islamic law is that sales are fine to halala whole buyer, right? That's what the Quran says God, God allows sales.

So this there are special rules involving specific cause oddities in Islamic law, in which these when you sell these kinds of commodities, they might be subject to the rules known as that about fod, which is the rebirth of access in these transactions. You must have absolute equality, right?

Then there are other kinds of sales if they're if they're barter transactions, but with delay, right? Again, normally, that's considered fine, unless it involves Pacific kinds of commodities, right, in which case, then deferral is not allowed. Now the second kind of rebound called ribbon ESEA, or thereabout ribbon. So what makes it illegal is the deferral, not the increase. So for example, if I were to sell you 10 bushels of wheat today, for 10 bushels of wheat in the month, that's still not allowed, even though the quantities are the same, because what's prohibited is deferring that exchange. Anyway, I will get to that in a second. So when the rules have been about

five to apply, then we can only exchange equivalent amounts. When the rules of lib NSC are applied, then we must complete our trade immediately. These rules apply only to some commodities, right? But never apply. If it's not a barter, right? So if I sell gold for wheat, or if I sell wheat for silver, then these rules don't apply. Right, let me let me just pause one second for our viewers. So the the examples of whatever father Independencia, it's one of the most contentious issues within the four schools of law, you will find three different or four different opinions within these schools about when does it which which substances or which items are going to be under follow, which

are actually gonna be no Sia, this year. And it's one of the most, you know, standard controversies of the concept is there, though, the whole concept is there. In fact, it's very, very complicated, a lot of controversy. But this is the interesting thing. Once you have a money economy, and everybody has money, and you can buy commodities with money, instead of trading other commodities for them, none of these rules matter. Exactly. When you because gold and silver, but hold on, are we gonna talk about fiat currencies today. We can get there, we can get there. But let's that's that, let's start here. Now the one place the one thing that's difficult is that these rules also apply to

Golden silver. So you could not sell gold for silver.

On a deferred basis, anytime you they call it like soft currency exchange. So in the classical rules, all currency exchange had to be immediate by transactions on the trans on the market, right? So you couldn't trade one ounce of gold today for one ounce of gold in a year.

Right? You couldn't trade one ounce of gold today for 20 ounces of silver in a year. Right?

You could trade one ounce of gold for 20 ounces of silver today.

Because it's okay to do that. Right. But you had to do it on the spot market. And so of course the big controversy and you already alluded to it is on well I don't use gold and silver I use dollars, US dollars, Canadian dollars, Australian dollars, Egyptian pounds, etc, etc. Do fiat currencies take on the rules of gold and silver. Most Muslim jurists say yes. Although some people say no.

We can talk about that if we get there. Right. Right now we just want to understand the basic structure. And one other point I know you hinted at this but just for the explicit benefit of our viewers, these other categories of riba rebuttal for the ribbon See, these are not mentioned in the Quran. That's correct. Derived from the prophetic a hadith these are directed Right, exactly. And therefore the key point Dr. Follett and others are making, or onic Riba and the harsh punishments of Quranic riba are not upon rebuttal for the ribbon NESEA there are several categories and that's what categories and that's and that's the point, Dr. Follett and many other scholars are making okay,

just wanted to go on. Yeah, so I was about to get these these rules derived from certain Hadith of the Prophet. This is like the most famous one in which are bad that Osama reported at the prom

Salah Salem prohibited the sale of gold for gold silver for silver wheat for wheat, barley for barley dates for dates and salt for salt except in equal amounts.

You know, etc. Now you might be asking yourself, Well, why would anybody do that? Why would anybody trade gold for gold, silver for silver, etc, etc. A couple of reasons. First, in the seventh century,

lots of different there was no centralized meant for gold in the hijas. So people had different gold coins from different areas of the world. Some coins had some coins would have more pure than others, others might weigh more, et cetera, et cetera. Right. And so, the Prophet SAW Salem wanted to make sure that people weren't being cheated. That's one reason. The second reason is that these can be means to Reba Ajah Helia. So let's say

I owe chef Yasser $100. And it's time for me to pay him. But I don't have the money. Now the Quran is prohibited sheffey acid, not saying he would do this, I'm just using this as an example. He's prohibited him from saying, okay, Mohamed, I'll give you another month, but now you have to pay me $110 At the end of the month, he can't do that. Now that's a harder so he's not going to do that. But what he might do is say, okay, Mohammed, sell me two pounds of dates for this one pound of dates that I'm going to give you. Right? So rebel fodder could be used as a trick to circumvent the prohibition against the rebel Jaya Helia. So that's another that's one reason why the Prophet SAW

Salem probably prohibited rebel fat because it can be used to circumvent the prohibition against the budget idea.

So let me ask you, because again, this is not my area of expertise. And it's your the question you asked, Why would somebody do this has always been troubling me or I never had a solid answer. In the classical timeframe like in our timeframe $1 is $1 Right? Doesn't matter how worn up tattered it is, in the earlier timeframes. Would a newly minted dinar fresh off the stock? Would that perhaps get you more bargaining power than an old US dinar? That is, of course, okay, as points circulated, they would get worn out. There was a common practice, for example, there was no change, right? So people would sometimes literally break a coin. Like let's say, I bought something where three quarters of a

dinar, well, there's not a three quarter dinar coin.

So people might break it the knot and, and then give you three quarters of it. So oftentimes, people would buy and sell by weight, rather than by number. So and I'm not talking about breaking, I'm talking about a worn out. Yes, yes. And they would just wear out over time. Okay, so this makes a lot of sense. Okay, this is a very interesting point. So a dinar is not the same as the dinar basically, exactly. Of course. That's why, at least in the Maliki mouth have the preference is that people measure by weight, rather than by number, right. But oftentimes, for convenience, people use number 10. There's another issue that coins would be adulterated. People would like mix, mix them

with lead or copper. So even though it's supposed to have, like the dinar is supposed to have 4.25 grams of gold. Lots of gold dinars circulated, they call them knock us that they didn't really have 4.25 grams worth of gold. Right. Okay, any case. So it was a very, very complicated monetary system, there wasn't a Federal Reserve Bank that had a monopoly of a money, right, this is what I'm saying. The differences in our economy and their economy are massive, right. But in terms of agricultural products, this is easier maybe to understand, you know, there are lots of different kinds of dates, some are very high quality, I could say Medjool dates, and then there are dates that are low

quality. So sometimes people would want to exchange a large quantity of, of low quality dates for small quantity of high quality dates, but the profit prohibited from that prohibited them from doing that, and encourage them to sell for money and then buy what they want because it's fairer, right. So there are lots there wisdoms behind the rebel fatty, right. But it's not the same thing as what the Quran is talking about. That's clearly Yeah, if you were to buy a bushel of wheat for two bushels of barley, you know, you know, agile or whatnot. Clearly, that's not fair.

It doesn't make the sale, of course, because it's still a sale. Right? Am I correct in saying that there's really no controversy amongst the classical GPA that that Rebbe is not the law? As far as I know, as far as I know, no controversy because this isn't some modern opinion. This is a mainstream standard opinion. Filter.

I understand that report is not out yet examples. Unfortunately Doctor father in my experience, most of the woman was to mean do not understand that and they lump all the river together. And this is one of our biggest problems like when you talk about rebirth people get so ultra sensitive they think all the Rebbe is the Quranic Rebbe understand the categories of river, but yes, so let's move on now to the river of debts. So the focus said there are three kinds of riba that can apply when we're talking about debts. So we already talked about one of them rebel Jaya Helia. And the characteristic feature of that is defer my debt and take an increase in what I owe. That's what the

pneus of the Quran prohibits. And that's what the Quran describes as a harp. But there are other kinds of transactions involving debts that can involve riba according to the folk Aha, the first most important one, or the second most important category is what they called ba what the Agile. This is like, suppose I owe Sheffy acid $1,000. And it's payable the first of July.

So I go up to shake the acid today, and I say, yes, it why wait until July 23 To get your $1,000. I'll give you $800 Today, if you wait if you forgive the the other $200. Okay, so they said this is a kind of rubber.

Because the way they looked at it is that I am getting him to cancel a portion of my debt in exchange for prepayment. So it looks like I'm paying for time. Right? So this is a prohibition based on analogy to rebel Jaya Helia. Okay, it's not based on text. It's based on analogy. Now, the majority of Muslim jurists said this was prohibited. But not all Muslim jurists thought this was prohibited. And there are a thought, in which the profit permitted this in certain situations. The voting elite, I think, right. Yeah. Yeah. And by the way, this is even to me as opinion as well, that is Gize. And then the third category of the rib involving deaths is called up to date with

Danny but Dane.

Now what this means is that we're prohibited from exchanging one debt for another debt. For example, I tell shifty acid, I will paint your house tomorrow for $1,000 Why is this if that would do anything, because I am obliging myself to do something in the future. And he is obliging to himself to pay me in the future. So both of us are, are incurring a DEBT. So in Islamic law, in order for a contract to be valid, at least one of the parties has to pay something immediately.

So what the what the polka would say in a contract like this, is that either yes, it has to pay me immediately, or I have to begin painting his house immediately. Otherwise, this contract is invalid, because it did that with Danny bad day because both of us were exchanging debts. And we're not supposed to do that. Okay, now generally speaking, but they both share henna is the worst form of riba because it's prohibited in the Quran. And it's described as harder. If to that, would Danny badeen is considered a has a no arriba. That is the it's the least repugnant form of Riba. Okay. Now, as I said that about your halaya is prohibited by the Express tested the Quran, da with the

Agile by analogy. And if that would Danny Bedini, is prohibited based on the Hadith. Now, Hanna and Caleb will callate. Now, this, this report and a hand on his calipers, callate is a is a weak Hadith. It's not a it's not a strong Hadith. And it's also a very vague Hadith. And it's not the words of the Prophet. It's a it's a narration based on the like a paraphrase, right? We could say a conclusion. And it's for that reason, I think that the clot decided that this was the weakest form of the river prohibition, but it does enjoy consensus. So the at least among the Sunni schools, there's a consensus that we shouldn't

we shouldn't form a contract by both parties indenting themselves to each other. So you want to just briefly put a footnote on Bayer Salem over here. Yes, so by your Salam is what's known as a forward sale. So you've probably heard that a Muslim should not sell what he doesn't have. Right? It's a bit muddy sign because so this is a very well known Hadith and if you pick up any book on Islamic finance or Islamic economics, they always mentioned this hadith

The rules are a bit more complicated because the Prophet Salah Salem also prohibit per permitted something known as buy or sell them. So Bear Salam is when I sell something that I don't have on a promise to deliver to you in the future. So how did the folk AHA you know, reconcile these two rules. They said that the probate

Shouldn't against selling what you don't have is if you sell a very specific thing, like

this iPhone, I am selling you iPhone serial number XYZ for $10. Well, I better have that fi iPhone in my possession XYZ, so I can give it to you. Or else that's fraud. Right. But if I have a contractual obligation to sell you a generic iPhone, right, an iPhone that meets a certain description, okay, that's fine, because they are salaam permits us to sell something that's a generic obligation on condition. That is the kind, the thing that we're selling is something that's reasonably available in the marketplace, right? So I can sell, I can promise to sell you like a finished goods, or commodities that I don't actually have in my possession, on the assumption that I

can go out to the market and buy it, or I can produce it myself, if I'm a farmer, for example. And in that transaction, the purchaser pays for it in advance. Right. So let's say the classical form is like that the prophet is talking about is purchasing dates. So I want to buy I want to buy dates, but I don't need them until July. So I go to a farmer, and I say, I will

pay you today, for 1000 bushels of dates, the deliverable on July 1. He doesn't have the 1000 bushels today. But it's okay. Because the dates are what we call it. It's a monthly, it's generic, right, I can give him the money for it today. And then, in six months, when it's delivery date, He'll either give me the dates that his trees produced, or he'll go buy them from somebody else and give them to me. So that's if that's fine. Right. But the important point is that I pay now that's why we avoid it did that would they need a day?

Okay.

Now, you might be asking, What about loans, Professor fadul. So now I want to talk about loans.

So loans, interestingly, according to football, ha are exceptional, because if you remember the rules of ribbon, the car

loans violate the role the rules of ribbon ESEA. Because I said I can't give you one ounce of gold today in exchange for one ounce of gold in July. Because that's deferred and gold can't be exchanged on a deferred basis. But that's isn't that alone, Professor fadul

Depends is what the full cohort say, because it depends on the intention of the parties. Because a sale

in a sale, people are seeking profit or benefit. But alone, by contrast, is charitable. This is the condition for the validity of a loan a loan must always be for the benefit of the borrower, not for the benefit of the lender. And you see this in the definition that the focal hotkey If so, for example, the Hanafi is defined alone as something that originates as a gift and concludes in repayment. So

well who the borrower Oh, what a borrower at the end water turn into her and

right.

So many of them says actually, you're not permitted to put a repayment date and alone. If you put a repayment date, it's no longer a loan, right? The Maliki's however permit, permit the borrower the lender to put a repayment date, right? The Maliki's say that a loan the final loan as a gift of a fungible in exchange for an equivalent as a debt for the sole benefit of the recipient, right. So this is different than their definition of a sale because the idea is, it's for the sole benefit of the recipient.

The lender should receive no benefits from the loan. That's why the rule in FIP is that a lender cannot stipulate any kind of benefit from the loan. Right? That the Arabic expression is now is cellphone Jarana van right, so the Prophet, according to the focal hot, there's a hadith that says the Hannah and Sullivan, the Hannah and Sullivan Jarana fan, that the Prophet prohibited us from any kinds of loans that benefit the lender, like the Hadith. Now hang on, Caleb is careless, this is a weak Hadith, except it enjoys consensus of the scholars. Now for maximum right there's a maximum

in German frightened for whatever, right exactly. Every loan that brings about some benefit for the one who gives it is a type of diva. Yeah, and they took this very, very, very seriously, right. So for example, if I lent you money,

you are not supposed to come to my house. I was not supposed to stop by your house for lunch.

Right? Because the idea would

Behind surreptitiously benefiting from my loan, just to clarify, unless you had the routine of doing this as friends Exactly, exactly. Don't take advantage of somebody. Yeah, yes. Now, for a long time this really puzzled me. And I thought, how could you make so many rules based on a very weak Hadith? And then I realized it's actually very consistent with the Quran. If you go to the Quran, the Quran tells us how long Mao rufen hieromonk sada cotton? That's Bao Ha, ha, yeah, right.

And so, the Quran is very keen on separating models, from to genre.

So to genre, it's fine to seek profit, because everybody knows that we're trying to seek profit, and you're on guard, right? If I go to the market, and I'm trying to buy something, the seller knows I'm trying to get a good deal. And the buyer knows that he's trying to get a good deal, right, so we're both on guard, the football hot call that MUSAWAH. Right, and that the assumption is that the parties have a relationship, arm's length relationship characterized by Moshe Ha, everybody's trying to get his own benefit. But my roof is different models, I'm supposed to be just doing something for your good. And so if I turn around and then try to profit from the charity that I'm giving you, I'm

destroying the sadaqa I'm destroying it. Right. So even though the Hadith, the Hannah and and self in Java, and Python, is weak, in terms of meaning, it's well attested in the Quran. Because the Quran tells us about that sadaqa has to be purely for the benefit of the receiver, not for yourself, right. Now.

What what's the take home point for all of this? Because you might be saying, well, does it really matter if it's in the Quran or the hadith is all prohibited? Right? Well, as I said earlier, the fuqaha are in agreement that the secondary forms of riba are not as sinful as as the prawns. And secondly, how do we know this? Well, first of all, we don't have the same kinds of threats with it. But more importantly, the Prophet salallahu. Salam made exceptions to these rules, right. But there are no exceptions to rebel Jania.

But there are exceptions to the rubber that the profit prohibited. So for example, one of the most important exceptions, is what's known as bei olahraga. So, in baierl, oriah, fresh dates on a palm tree would be exchanged for dry dates.

And you could do this in a quantity of up to five hours. So now, five, output is actually a quite a large amount. It's not like a cup. It's not pocket change, right? It's a years worth of food. Right? It's a it's a very large quantity. And the prophesy seven did not even limit this to poor people. Any any Muslim could take advantage of this rasa. Right. But this rocks violates both the rules of rebel FOD and the rules of abundancia. Right. It violates the rules of liberal father, because you can't ordinarily exchange fresh dates for dry dates, because that violates the requirement of equivalence. Why? Because fresh dates will shrink. So if you have a kilogram of fresh dates,

you don't know how much they will be when they dry, so you can't exchange them for dry dates. So all the art prohibit that as a trade because by definition, it violates the rules of equivalence, right? It also violates the rules of redundancy, because the owner of the date palm receives dry dates immediately. But he doesn't deliver his obligation until harvest time.

Right. So

this this Roxa is a quite a major exception to the rules of rebel fats.

With respect to loans the prophesy Salam also permitted borrowers to repay their debts by freely giving the lender something better. Right. So if I borrowed

you know, a kilo gram of dates from shaky acid, and these dates might be medium quality dates, right?

When I, when I decided when I repaid him, I could repay him a kilogram and a half of dates. And that's fine. Right? Sir, no,

sir. Right.

out of jail, weigh out the debt and give some more. Yeah. So below that you're given or even of course, had this been pre conditioned it will be about exactly precondition, and you're encouraged to actually use it. So so

as long as it was freely given without a stipulation it was considered fine by the profit service center.

And there are other exception rules in the scenario in the so now we already talked about them.

We talked about our Salem, so by a Salem is an exception to the rule that you can't sell what you don't have. Right? But the prophet allowed that because you have to have a way to encourage future production. Right? So farmers need money, so they can grow their crops, but they don't have their crops yet, where do they get money, they get their money by selling their crops. So you're in a chicken egg scenario. So the Prophet allowed them to sell their crops before they grew them to merchants who had money, right? And then they could use the money from the merchants to buy what they needed to grow their crops. Right. And this seems to go against the prohibition of Latvian

medicine. Exactly, right. Likewise, another big example, a big a very, very major exception is Madonna, ba, or karate. So in a karate or Mudaraba, everybody calls it Madonna by mu Malik is called cut off.

That's when you hire somebody to trade on your behalf. So I have I have I've, you know, $100,000. But I'm a law professor, I don't know anything about business JPS, that is a merchant. So I gave him my $100,000. And we agree that he'll take 20% of the Prophet, I'll get 80%. And he trades with it. Now, according to the rules of fic. Normally speaking, that's not a valid contract. Because when you hire somebody to do something for you, you have to specify how much he's going to get paid. So this, this, his wage, his edge is now uncertain.

If there's a hot out, and so hot out would make it invalid. But nevertheless, it was permitted. Why? Because of the immense need that people have to invest their money, because most people don't have the capacity to invest their money in commerce, not everybody's a merchant, only some of us are merchants, right? So the Prophet sallallahu Sallam allowed us, those of us who aren't merchants, to give our money to merchants, and let them trade with it, even though we can't, they're not going to get a specific wage for it. Right, we can give them an indeterminate wage, as an exception to the rule that normally the wage has to be fixed. Right. And then we see the fuqaha themselves made

exceptions to these rules. So for example, again, in the in the pre Modern Period, you're asking about coins, one thing people did was they would take raw bullion, and they would go to the mint, and they would give the raw bullion to the mint. And then the mint would make coins for them. Okay, so the custom was the mint will take a fee. So let's say I gave them, you know, 100 grams of gold, they might give me 98 grams worth of gold dinars in exchange, because they're getting paid to produce the coins, right. So that's literally a violation of the prohibitions of Fall River fall under abundancia. But Malik permitted that, and he in fact, he said, that was the practice of the

mint in Damascus, that you go there, you give them your gold, you give them your silver, and they take they, they keep a small amount as a fee for turning them into coins. Right.

Malik also permitted other transactions involving food, which technically violated the rules of riba father in the car, because it further the good of the people. So again, you have to put yourself in the, in the shoes of people living in the Middle Ages. So you're a farmer, you grow a bunch of sesame seed, right? Now you want to have sesame seed oil, because sesame seed oil, you can keep in your home for a long time, whereas sesame seeds themselves will spoil. The problem is, you know, you don't have a lot of sesame seeds, right, you might have a few kilos, right, but your neighbor has a few kilos in your head, that neighbor has a few kilos. So if you go to the oil press, you put them

all together, then you can get a significant amount of sesame seed oil and you can split it up. The problem is, this would technically violate the rules of rubber. Because this is food and it's so subject to the rules of rubber. And you need to you need to make sure that you're exchanging in equal amounts, but it's impossible to because you don't know how much oil is coming out of which set of of seeds and then if every person had to press on his own, nobody would get any oil. Right. So Malik permitted these kinds of partnerships despite the fact that it violated rules of riba because as he said, that Buddha Nasma use level

of evil so I think this is a very, very interesting example because this is technically a type of Riba. Yes, and Imam Malik himself is saying but yeah, but this riba I mean, people need to do it. There is no

Ready to live their lives they need to do it. And I hope that in Charlotte is a trivial matter, right? Yes. And this shows you the fifth type Mr. Malik. And this is one of our biggest problems that when we talk about some modern types of perhaps, you know, slave labor, people think it's all lumped together. And you my mother, and the grateful kaha, Imam, Abu Hanifa. Others clearly understood there's like, so many categories of labor. And the types of riba that are prohibited in the Hadith are not the same. They're nowhere near Can you imagine you Beinecke saying this, and this is that will be happening a lot. It's about which organ so Linda's messenger? Of course not. This is

a complete different, in fact, this transaction, as you said, it goes against both reputable further and in the sphere. And then the mathematics said, yeah, I hope it's okay, because the people really need it to live their daily lives by again, yeah, very interesting food for thought pun intended here. But just

as an example, of an exception to the rule against if that would Danny, but then the Maliki has permitted people to hire

drivers caravan drivers to take them to pilgrimage, without paying them in advance. So this is this exception goes shows you how sensitive they were to human nature. They said, Remember, I gave the example that if I were to hire myself to paint chef the answers house, the rule said that either he pays me in advance, or I begin working immediately. That's what the rules say. But the Maliki said, If you tried to do that, for pilgrimage caravans, everybody's gonna get ripped off. Because the camel herders are going to take them take your money and disappear.

Right? If you paid them in advance, right? They're not going to show up when it's pilgrimage season. So you can contract with them and advance a binding contract and defer payment until actual pilgrimage season. Right, even though that's a violation of the rule of IP that that you that would they need. But that, by the way, just want to point out Dr. Faber, the modern economic system of the world basically is it's entirely based upon the need good thing. Exactly.

We signed contracts with nothing actually happening, you know, you're basically exchanging dune. And by and large, the majority fail to have had to allow this because of the reality of and this is a type of again, these are types of it, but that we have to overlook and anyway, I just wanted to keep on pointing these things out. Yeah. And then another example is the Hanafi is permitted is to snort, even though it violates the rule against selling that which you don't own. Now is this not is subtly different from Salem. Because Salem involves a generic obligation, like 1000 bushels of wheat, 1000 bushels of dates, 1000 barrels of oil, those are all what we call in law of fungible items like you

don't care which oil barrel of oil, you just want that the oil to match certain descriptions. But it's the Snark is for what the Forgot call ain, like a very specific thing. And that's why it's a much more sort of grave exception from the prohibition about selling what you don't have in your possession. So

for example, this is not I would be so our viewers understand is this not wouldn't be that you contract you you go to a carpenter, you pay him money to make something for you. Right, exactly. And and he has not either is he doesn't have it yet. He's he's gonna construct it. This is not he hasn't built a bookshelf. Yes. Well, so this is a particular bookshelf. Yeah.

It's not generic, right? It's a to order. Exactly. Yeah, he can't go out in the market and buy a new one. Right. It's a It's not generic. It's made to order. Right. And, and so you would think that this would be appropriate, this would be prohibited by the Hadith don't sell what you don't have. But the Hanafi is, and other folks that follow them gave a rasa, because how else are we going to get artisans to build us things that modern folks feel counselors as well, you have to make a concession. For again, like you said, because the system has changed. The modern economics is no longer like seventh century bartering. And the world wouldn't live if you didn't have after this.

Yeah. So just to wrap things to conclude on this section. So the sick, the prohibitions and fix go well beyond what's in the Quran, right? The textual basis of some of these rules as well attested by others, it's weak, except that they enjoy certain kinds of consensus. The Prophet SAW Salem himself often made exceptions to these rules. Muslim jurists themselves also made exceptions to these rules. And other rules, sometimes based on need, sometimes based on what's known as Hey, and

now the controversy and today in contemporary times is based on two principles. Is it permissible to perform analogy based on a Roxa because the argument is, well rocks as an exception, so you shouldn't do it in analogy based on Excel.

Should that's kind of a position of the gym holder, but the majority. And then the second big controversial question is, is need sufficient to justify an exception to a prohibition? Or is only genuine necessity, though Rudra

is what permits an exception to a rule. So these are the two areas of controversy in the modern in the modern world. Now, I want to shift briefly to talk about how we apply these rules in our lives. Right. Now, today, modern writers, if you pick up a book on Islamic economics or finance, they tend to assimilate interest bearing loans that you get from a bank, like for a mortgage or for a car or for business, to the concept of ribbon, a car on the idea that interest is forbidden. So everybody focuses on this concept of Riba, excuse me of interest, they, they equate interest with riba and then they also assume that the prohibition of interest is based on the VS and Bacara that I read,

right.

And then they ignore all the other rules, more or less, right.

And this is problematic, in my opinion, because they don't understand the logic of the fic. And then apply it kind of on an ad hoc in arbitrary fashion without realizing

the the incoherence of their approach. So for example, if you take the legal principle that self interested loans are, are prohibited as Ribba, then even ordinary banking operations would be prohibited. Now, what do I mean by that? So alone in sec, is something that's for the pure benefit of the borrower.

Okay, that's what it says, if you get a benefit from the loan, then it's an ABA according to the classical view of the flipchart. Now, what happens when you put money in a bank,

I go to the bank with $100 in cash, I have a checking account, I put $100 in my branch that's down the street from me. But then I fly to New York, let's say, I can get my money from New York. Well,

that's a benefit to me. And the world, any ATM in the world. So even the simple matter of withdrawing your money anywhere in the world, according to the FDA is a benefit. So you've lent the bank money, because when you give them back the bank and your money, that's a loan, legally speaking, a lot of people don't understand this. But when you put your money in the bank, you don't have a claim to the specific dollar bills that you gave the bank. That money that you gave the bank is the bank's property, because you've lent it to them. And now you're a creditor. So if you look at their balance sheet, they have a line that's called credits and debits. So

they are indebted to you in the amount of $100 that you gave them. Right? So it's a debt that the bank owes you. That's why we have to have deposit insurance now. The fact that I can go collect that debt anywhere in the world is a benefit to me. Right? To say nothing of the fact that they're paying all my checks.

So even the side loans, if we take this idea cellphone Jarrah nephron, seriously, then we have a huge problem. But the obvious answer is that, well,

there's a pressing need for us to have this systems of payment. Right? And so therefore, this kind of Riba is forgiven because of the need and necessity. Right. Now.

What do Samak banks do to avoid interest bearing loans? Right? Because they've assimilated interest bearing loans into the river of the Quran, which they then said is horrible from God. But the reality is, what they're doing is a kind of a healer, a kind of stratagem.

Typically, they do what's known as back to back sales. So they have several a series of sales, whether you call it a job with an orchestra or Masataka or BMO trabajar. It's all several contracts put together. And it's what the classical focal hot would cause by either in what you're using a series of sales to synthesize an interest bearing loan,

as well as classic controversy between the middle hips I'm allowed. Exactly, yeah. So this is what Malik says about bayarena. In the water. A further distinction has been made between the rule that prohibits a person from selling something not in his possession, but permits him to accept payment in advance for something that is not yet oh, that's buy and sell and that's fine.

But there's but there's another rule governing an intermediary when he calls Sahiba aina. Like a bank, who extends credit to finance the sale. The intermediary, the Sahaba Lena, this is the

person who has a lot of gold, but doesn't have goods. The intermediary come to the market bearing his gold, which he wishes to use to purchase things solely for the purpose of reselling them on credit. He says to the merchants in the market, here are 10 dinars, what goods would you like me to purchase for you to then sell back to you on credit?

It is as though the man we're selling is 10 dinars and cash for 15 dinars payable on determinant date in the future. For this reason, the transaction is prohibited, and is deemed nothing other than a ruse to obtain an unlawful game. Now, I have nothing against Islamic banks. But this is exactly what it sounds like banks, do.

They have extra cash, and they tell merchants What do you need, I'll buy it for you. And then I'll sell it to you on credit at a profit. Now, a sale at a credit sales perfectly permissible. I said that from the beginning, nobody disagrees that a credit sale is permissible at a profit. What's controversial, is when the person who's selling it didn't own it already. All he had was cash, and then goes out and buys it just for the purpose of selling it. So at least in this case, Malik said, No, that's not permissible. That's just a that's just alone with interest. Right. So the problem that aside banks have is on the one hand, they want to say loans and interest is condemned by the

Quran. But practically, they're doing the same thing. And that's why it's very controversial.

So I think of this a little differently. I say jurists historically have recognized dispensations from general rules, when it was recognized as being beneficial.

Even if the transactions were not literally necessities, right, so we talked about the partnership to produce oil from sesame seed, sesame seeds, right. So the question we should be asking ourselves is, Can some modern banking, for example, interest based loans be acceptable? So Roxa? And this is why it's very important to understand what the Quran ik definition of Riba is, the Quranic definition of rubber is taking advantage of a bankrupt debtor.

Now, an interest bearing loan, it might be sinful, all things being equal, but it's not what the Quran is talking about not taking advantage of a person in dire circumstances. And so now we need to ask, can there be a rock star for this kind of arrangement? Right. So many jurists, when banking started in the early part of the 20th century and Islamic world. A lot of early jurists said yes and certain under with collude with conditions, right. And why did they think this? Well, one argument is people need a safe way to invest their money. Like think of a woman, a widow, who lacks really, she has money says you heard it from her husband, but she doesn't know how to invest it. But she

needs to invest it to make a little bit of a profit, but needs to be a safe investment. So they said, Well, if you can get interest from a jetpacking account, that's safe, that's good for her, so it's beneficial for her.

On the other side of the ledger, businesses, governments, consumers need access of the savings of other people to finance, what economists call long lived assets. So if you buy a house, you're not going to consume the house in a day, it's not like buying an apple, and you eat it and it's gone. You buy a house to house last insha Allah 50 years or 70 years or 100 years, right? So, of course, it's beyond your means to pay for a house in cash, because you haven't worked for 100 years to make the money to pay for it. Right? So there's this mismatch between the cost of something that's going to be around for a very long time, and your ability to generate the income to pay for it. So you

need to bridge that gap by borrowing from other people. Right.

And as I said, you don't most people don't know how to invest. So you need some sort of intermediary which banks can do, right? So there's both a social need and an individual need for institutions that match extra savings with those who need the money now, and that's basically what banks do, right. So, my view is a much better approach is to understand loans as a Hajah in the same sense of the Prophet Oh Sanlam recognized they are sell them as a Hajah. Corrado is a hydra Araya as a Hajah, right? And then think about the conditions in which it's okay. Right, rather than encouraging these really complicated, what I call multiple layers of contracting, that gets the same result but

oftentimes in a very convoluted in very expensive and confusing way to the consumer.

So to conclude, strict application of classical rules would make much of modern commercial life impossible for

Muslims in the west and even in Muslim majority countries, because of the breadth of the classical prohibitions like the prohibition against self interested loans.

Modern Muslims have without explaining why narrowed this prohibition to just interest bearing loans. Right. But when they do that confuses Muslims, because they don't understand why credit sales can be made at a markup, because they quite plausibly say, but this is an interest and you told me interest is haram. So why can a merchant sell on credit with a markup? So we ended up in a position saying some interest is okay, in other interest is not okay. Right. So it's confusing to people.

Permitting Islamic banking on the basis of De La Nina is just as problematic from the perspective of classical physics as permitting interest bearing loans, right. And then finally, the systematic and universal demand for credit in the modern economy proves that financial intermediation is a genuine need in all human societies. And this therefore justifies a dispensation from ordinary rules, just like the Prophet SAW Salem, granted special dispensations because of the needs of his society. Right.

Now, we should be careful, just because we permit some interest based lending doesn't mean we should just leave it unregulated to do whatever we want because there's a cada and set a rule at the Rura Takada Burkholderia wamalwa. You'd recall Hala YouTrack Shula, right. So there is a wisdom in discouraging people from the let's translate that that any type of need has to be taken in its context, you don't allow it to become broader than it is. And that which you cannot take in its entirety, it doesn't mean you abandon it in its entirety as well. Right. So you can have narrow exceptions to the UN, what I'm saying is you we should keep the the general prohibitions in the fic

and just make the exceptions that are necessary for our lives, right, not not get rid of them entirely. Second, I think that we particularly those of us living in the West, we should work toward establishing community on banks that are not for profit, right. So in the United States, there is an idea of a not for profit bank, they exist, there are models for not for profit banking, that we can we could we can imitate. Now, these aren't interest free, because there are costs involved in banking, right. But the interest that not for profit banks charge are designed just to cover their operating costs. And anything that's an excess of that is returned to the customers of the banks,

right. So it's a very good model for us develop did for us to develop in our communities.

Now, for profit, Islamic banks are a second best to not for profit banking, but it's preferable to not having any financial institutions at all right? If we can't get Muslim mutual, not for profit banks going, that is not, you know, I'm not gonna say let's not have Islamic banks, because we need to have communal institutions, right? Because having communal financial institutions are crucial for strengthening the community, you'll notice that every immigrant community that's come to the United States has developed its own banking institutions. And the reason for that is oftentimes, immigrant communities, marginalized communities are excluded from credit by mainstream institutions. And it's

crucial, I mean, how are how are people supposed to sort of rise up socially if they can't get access to credit to start a business? Right? If we need to empower our community, to take advantage of their God given skills and talents. And if they're not, if they don't have access to credit, it's very hard for them to do that. So we as a community need to develop institutions that extend credit to our Muslim brothers and sisters to help them achieve, fulfill their God given talents, and that'll strengthen the community. Right? And so I hope that people find this helpful inshallah. Inshallah and Dr. Father, I want to point out that you know, what you're saying, frankly, it's not

as radical as a lot of people

presume that actually, if you look at the fatawa, from the 70s, and 80s, that permitted mortgages for us living in the West, and this fatwa has gained traction it is it is I would say now the dominant position, even of some of the more conservative strands over the last 30 or 40 years, they've come to realize actually, the arguments presented by chakra and others were actually very solid arguments and essentially along the same lines of what you're arguing. I had a nice conversation with Dr. Akram nadwi as well you can find that online, where he basically says exactly what you're saying and that is that the types of riba that are prohibited by the Sunnah are of a

much much lesser category than that permitted by the Quran and those categories should be allowed in the case of hijab because the Sunnah itself shows us that you can allow that which other

hadith of forbidden in the case of hijab and you give an entire two slides with regards to that. I know as well Dr. Judea as well. I've heard a number of his lectures. I've met him a few times as well. Doctors there as well has a similar type, again, not the exact same but it's similar. You know, he's in the same ballpark where he's talking about the Quranic riba being one thing, and then the types of riba we're engaged with primarily in our lives are a totally different one. And there is a greater concession for the need. And he calls it here but he says that the mortgage that you go to the the interest in what you get, it's a type of Riba. It's the Riba, prohibited by the hadith is

the river that is our sila to the Quranic river, but it is not the karate club, and therefore it doesn't have the same rulings. And therefore if there is a hedge, a doctor can basically says, Dr. accompagnato, his position is if there is a hijab, not even a thought, or if there is a hijab, then the student that teaches us that the secondary and tertiary Rebbes should be allowed where there's a Hajin. That's his perspective. And then of course of all we had a different slightly different, which is some hijack tuna Xin Mozilla, todo rot, right, especially the hijama. And of course, you have a joining others who make this argument in any case, bottom line, to the viewers here. Well,

firstly, first, we have to conclude time is up. But Dr. Fowler, honestly, I really appreciate you spending Marshall an hour and a half or more with us. Secondly, a very thorough, very intellectually stimulating presentation I was following along throughout the entire presentation, lots of questions have come, but we don't have time. Thirdly, for the viewers that are listening, I hope Inshallah, this is the first of other conversation we'd like to follow. So this isn't the only one. And again for the disclaimer, necessary disclaimer, this is not a fatwa. This is not, in my particular case, it's neither an endorsement nor a critique, per se. It's a neutral, you know, presentation of the

facts of Dr. Puppet and, of course, my own views, I've given them in the longer q&a. I personally do allow, you know, mortgages for the house that you live in, and allow student loans, even if it's with interest, if there's no other mechanism, doctor for this presentation is a little bit more permissive, if you like, and he's not coming out of thin air. I mean, as you can hear the arguments, they're very, very solid. But just to be technical at this stage of my life, I neither endorse nor criticize. It's a position out there and some scholars have said it, any concluding remarks or to follow them?

No, I want to echo what you just said, I don't want anybody to think that I am claiming to be a Mufti or anything of the sort. You know, I view myself as a scholar of Islamic law, I do my best to understand what the football has taught us. And I try to live them as much as I live my life as a Muslim, but as a lay Muslim, but one with with a little bit of understanding. And I just wanted to share what I've learned and over over the years, with my brothers and sisters, and hoping that they can live a also an Islamically rewarding life, in this life and the next genre. Excellent, really appreciate that. One of the requests I have for the viewers that are interested in these fields,

please, please take some time to read and specialize. We need specialists in Islamic economics. We need specialists who understand the modern world, not just you know, who have been cut off from the actual transactions and corporate realities of living in the world. We need people who are working with I mean, it's tough for a lot I'm not endorsing, but we work with the banks and investment companies and then specialize Islamic finance so that they can tell us No No Well, these laws might not be applicable at this particular situation, argue for or against an interactive file that has a resume a track record that in shallow data, you know, it makes him worthy of holding that opinion,

whether you agree or disagree, definitely, in my opinion, he has the right to hold his opinion. Until then, you know, presented and justify it. Time has really been my shallow end. extrapolate a little bit too much. But we appreciate your indulgence. I appreciate Dr. Father joining us and inshallah until the next library chat Zack moolah here at Santa Monica Warahmatullahi Wabarakatuh.

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