117. The Problem with Interest with Tarek El Diwany (and Allen Farrington!)
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- เผยแพร่เมื่อ 2 มิ.ย. 2024
- Tarek El Diwany’s book “The Problem with Interest” has attracted attention from scholars of Islamic finance and bitcoiners alike, including Allen Farrington, whose newly published book, Bitcoin Is Venice, draws heavily on Tarek's work. In this episode, Saifedean hosts Tarek and Allen to talk about the morality of lending with interest, why the practice is prohibited in Islam, and how an economy would function without interest rates. They discuss how monetary systems that require the creation of ever more debt impact human time preference, capital accumulation and morality, and whether interest would emerge in a free market monetary system like bitcoin?
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02:21 Interview Starts Here
04:41 Who is Tarek El Diwany
08:00 What’s the Problem With Interest?
14:00 The Austrian Case for Time-Preference
17:00 Tarek's arguments against the time-preference theory of interest rates
22:07 The Austrian Case Against Interest
28:00 Saifedean Ammous’ Case Against Interest
28:30 A nation's morality is heavily influenced by its interest rate
31:33 How Growth and Inflation Destroy Sustainability
36:00 Convincing Others of the Issue With Interest
42:08 Hard Money Economies Support Arguments Against Interest
47:35 Similarities between Austrian and Islamic Economics
53:00 How Bitcoin is lowering people’s time preference
56:00 By introducing the correct incentives, Bitcoin will lead to a islamic monetary system
59:30 The current financial system is to blame for the rise in inequality
01:05:13 Tarek El Diwany on Bitcoin
01:12:59 Bitcoin is a more advanced version of gold
01:20:15 Why Bitcoin is a Anti-Bubble-Technology
01:29:25 Comparing Bitcoin to the Fiat System
Tarek’s book The Problem with Interest:
b-ok.cc/book/5761799/19a46d
Kreatoc Zest’s website:
kreatoczest.com/
Saifedean’s podcast episodes on Islamic finance with Safdar Alam and Harris Irfan:
saifedean.com/podcast/103-isl...
Article on William Cobbett’s opposition to suspension of the gold standard during the Napoleonic Wars:
oll.libertyfund.org/quote/wil...
Selected Writings on Economics by Nassau Senior:
mises.org/library/selected-wr...
See Plato’s Laws, Book 5 and Aristotle’s Politics, Book I, 10, no. 5 for Ancient Greek views on usury:
b-ok.cc/book/952452/cd69eb
b-ok.cc/book/2923500/5379b4
A History of Interest Rates by Sidney Homer and Richard Sylla:
b-ok.cc/book/717352/b51451
Allen Farrington’s book Bitcoin is Venice on Amazon:
www.amazon.com/Bitcoin-Venice...
Saifedean’s podcast episode Allen Farrington’s adventures with Fiat Intellectuals:
saifedean.com/podcast/53-alle...
Saifedean’s podcast episode Bitcoin Strategy with Michael Saylor:
saifedean.com/podcast/97-bitc...
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Saifedean’s first book, The Bitcoin Standard:
saifedean.com/thebitcoinstandard
Saifedean’s second book, The Fiat Standard:
saifedean.com/thefiatstandard
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A very interesting discussion. My main takeaways were: 1. The Islamic world should take notice of Saif's arguments, and instead of banning Bitcoin , should understand it is closer to the Islamic ideals than fiat. 2. at 1hr26mins Tarek reveals he really doesn't understand Bitcoin at all, and makes the common mistake of lumping it in with all cryptos .
What's the complication with Tarek's arguments about Bitcoin? Are you saying a man made system can't be replicated by another similar man made system? Or another, improved system could be devised using better technology and better serves the purpose of a payment network....already happening actually so yes, it's extremely likely bitcoin's value will be diminished so doesn't appear wise to bank on bitcoin serving as money in the long term
@@aek8541 No, the complication is exactly what I said above, so to repeat: Tarek doesn't understand bitcoin, and specifically the vast difference between POW and everything else which is POS. He lumps bitcoin in with all other cryptos, and this show a severe lack of understanding. He hasn't done the research. Once you truly understand the difference, it is mind blowing.
@@theskintones Your response doesn't answer the question posed. Can an alternative system be created which mimics or even betters bitcoin's characteristics thus diminishing bitcoin's value?
@@aek8541 the short answer is no. Bitcoin was a once off miracle of an invention. Truly decentralised, secure and reliable. Now with the addition of the lightning network, it becomes perfect not just as a store of value, but also a medium of exchange. Most of the world simply has not caught up yet with what this technology really represents
@@theskintones I'd be very careful about believing a piece of technology which could be made obsolete is a 'miracle' no matter how brilliant the design may have been. It's a very naive position to take. Another 'miracle' can't happen? What would happen if currencies decided to peg themselves against gold again? That would wipe the value of bitcoin as a form of money and any value associated with it would just be for purely speculative reasons
Just finished your 4 hour podcast with Lex Friedman. I hadn’t heard of him before you went on his show
It's amazing how many seemingly quite intelligent people (such as this guy) continue to remain clueless about Bitcoin, and want to argue as if it's 'just another crypto'. A million times no. Not even close. I imagine it to be a bit like trying to introduce the concept of zero into mathematics . The vast majority simply wouldn't get it, and trying to explain it to them would be like trying to explain blue to a blind man.
Could you explain how bitcoin is so unique and why it can't be replaced by an improved or at least parallel system? Especially as technology develops in the future
Bitcoin only fails if some outside sources interfere one example the entire Internet going down think cyber polygon. 🤔
What happened to FTX
@@aek8541 th-cam.com/video/B4X2qXKURgw/w-d-xo.html
This was pretty great, until Tarek went into nocoiner cry hard mode at around 1:15:00. Sounds like he hasn’t put in more than 5 hours into Bitcoin. His “Appeal to Ignorance fallacy” argument at 1:27:00 is not in good faith. “Just a feeling” NGMI HFSP
Just an amazing interview. Thank you Saif for the work that you do. Mind = Blown.
This was an amazing interview. The back and forth between Tarek and Saif was so good I almost forgot that Allen was there. However, Saif has the idea that the enemy of my enemy is my friend. In particular, the fiat standard is the enemy and bitcoin is the enemy of fait, so Saif becomes the ally of Bitcoin to bring down the fiat system. However, this widely held maxim is not always true. Sometimes the enemy of my enemy is also an enemy to me. For Tarek, the fiat standard is the enemy and bitcoin is also an enemy. I think for Tarek the best system is the Islamic economic system, so if you are going to bring down fiat, you should replace it with a perfect system, the Muslim financial system, and not simply adopt bitcoin because it is 50 or 90% better than the fiat system.
I think Saif wasted a lot of time advocating his own views when he should have been questioning Tarek. I agree with Tarek's position. Bitcoin is perhaps worse than fiat. At least currencies were once tied to gold and as seen in the case of Russia, can be linked back to gold at anytime.
the muslim financial system is clear and comprehensive, based on his inherent settings it's shown that bitcoin is more fitted to it's political ambitions than gold because saif clearly demonstrated that it is superior to gold and do not violate any islamic principles.
What a fantastic discussion! How come I haven't heard about any of you guys for so long?! Tarek, you did a wonderful job by inviting Tarek. And thank you all guys for being brave to speak the Truth and about the ugliness of the existing financial system. What a pity though that the link in description hosting Tarek's book is down. It's not available at popular bookstores either. ((
If you don't mind reading pdfs, Tarek's book is available online in pdf format. Just search up "The problem with interest pdf", and the first link should take u to it.
Thanks SA
Hey this is fantastic, I was thinking of writing about Islamic finance and Bitcoin, and hopefully restoring Christian finance, which used to be exactly the same. Looks like i don't have to now, which is good because I'm not very good at writing.
Write an essay. Could turn into a book.
Just looked for a copy of 'The problem with interest..' on Amazon.. a used copy can be bought for £499.. (Feels like price gouging to us) ! Plese do a new revised edition if you can.. thanks
Online PDF version for free
Can anyone please mention the source of the quote that Saif brought up, 'interest rate is a measure of a nation's morality'?
1:20:30 clicked how stock-to-flow ties into Gresham's law and it's one of the hidden magic moments of Bitcoin
How can I get hold of Tarek’s book ‘The problem with interest’ I live in the uk. Thanks
there's a pdf scan out there of the book. not perfect but fine until there's a reprint
I have no interest in this, but keep up the great work!! ;P
no interest but always some appreciation 😉
fitcoin smitcoin what coin?
I don't see anything necessarily wrong with charging interest, only incidentally wrong insofar as it is in the context of fractional reserve banking or fiat money because, in that context, it's not actually lending at all, as the bank doesn't forgo the money it loans in the present, but simply creates new money. This way, they get to eat their cake and have it too, while devaluing everyone else' money. Worse, if they make bad loans, they don't lose their shirts, but get bailed out by the taxpayer, so they'll do it again.
Allen Farrington's arguments are not very good.
Intrest is a time function of money.
The horse example leaves out the owner ship of the productitivity of the horse. Renting the horse does not confer owner ship of the horse but it does confer owner ship of the productivity of said horse.
If I rent a horse. I do not own the horse. but I am a beneficiary of the horses extra productive capacaty. Ie: A plowed and seeded feild.
The point of renting the horse is to make use and levelrage extra productive capacaty that would not be availiable other wise.
As long as Productivity (Yield )form the feild exceds the value of the rented horse then there is a net gain to the farmer for renting the horse.
I think he agrees with your explanation but he says that doesn't work with money. With his definition you're not supposed to use the money you borrowed because it's not yours and since the purpose of the money is to trade then it doesn't make sens legally.
And if it's to save it then it's even worse because you're paying to keep it which is the opposite of saving.
That's why he says if you want to do something with the money, the person who's investing in you should also take the risk and invest directly in the idea/project and not lend money.
@@SteamalbRushu you are all ready incuring risk by lending the horse or money.
Yeah, I came with an open mind, but the arguments are pretty weak. Like the breakfast analogy. Breakfast spoils, but if it were gold or I could sell it for, say, gold, the rational thing is to choose 7 units today rather than later.
His argument only works for rotting things that you can’t sell, which, by definition, does not apply to money.
saifedean ammous Please do a interview with a Scholar like Shyak Asrar Rashid get him on
We all agree that fever is bad, but instead of addressing the fever, this guy is mad at the thermometer.
This guy is your polar opposite. You give direct and simple answer and he just spews babble and babble (like Al Gore) and essentially says nothing.
He started bringing up the same 10 year old FUD against Bitcoin like everyone else. Sigh.
I stopped watching after 20 minutes because this guy is full of fallacious arguments. For example he says that if asked whether you want a year's worth of vacation days all at once, or if you would rather have them one week per year, that almost everyone would want them spaced out over years (this is true). But then he says this is somehow a counterexample to the time value of money. WRONG. This is an example of decreasing marginal utility. If you go on vacation for 4 weeks, the first week is going to be better than the second. And the second week is going to be better than the third. Each additional day of vacation yields less satisfaction. And his other arguments are similarly incorrect. This video is bunk.
It's not like he is doing it on purpose, he is quite new to the bitcoin ...
Excellent point. It sounded off when he said it, but I didn’t know exactly why.
@@SteveO21M Yh and Saif reply was totally on point, it's just not the same good. Comparing the 4th breakfast with the first breakfast of tomorrow is the problem because they are totally different things.
If you're offered 4 breakfast today or 4 breakfast tomorrow, you'll preferably pick the 4 today which validates the time preferrence principles.
But Tarek didn't think about it this way (which can be quite tricky I agree) so that's how he made the mistake.
What were the other incorrect arguments you notice pls, I'm curious about your thoughts
Yep. Even the 'intensive farming' argument is bunk. If a farmer wants to capitalise on good weather by intensive farming today his private property today (at the expense of next year), then that's the farmer's decision. The farmer is the expert in growing crops after all, plus he can do what he wants with his land.
@@ericcson3429 I think you missed the point there.
1:13 - the physical aspects of gold are what gives gold its value. So by removing the physical aspects you are eliminating all the value. Host needs to study this topic a lot more before discussing openly with an expert
Nope. You only got an assertion without reasoning or evidence. Air is the most essential resource imaginable. Yet zero value on the surface. Because it's abundant. Bottom of the ocean? Very valuable. Scarcity gives things value. Supply and demand. Study those things yourself.
@@Tenebrousable Read my response carefully. You just proved my point. Gold is scarce and limited in supply (the physical characteristics) hence the value. Its also malleable, inert, has minimal use in industry and the discovery rate is c.3% per annum providing it with the almost perfect attributes to serve as money
@@aek8541 Scarcity isn't exclusivelu a physical characteristic. Bitcoin proves absolutely scarce. Unlike gold, wich is just relatively scarce. Because the gold stock is growing each year, and the supply growth stays at ~1.3%. The pounds per year has been actually growing all of the time. Each year, they dig just a bit harder. And if the price jumps up, they start digging extra more harder. Bringing the price back down again.
Stable prices are a fools wish. We don't want prices stable. We want them accurate and change as fast as the situation changes to reflect reality better.
Gold was the best we had come up with, 100 years ago. It's not absolutely scarce. It's expensive to move. They corrupted the price with paper gold. So the price don't respond to fiat debasement as fast as it should be.
Gold is almost perfect. And it's not good enough. Bitcoin is. It moves at light speed and cheap. And central banks don't have bitcoin liabilities, so they won't confiscate it so easily as they do gold.
There's not been a city on earth past 100 years, that was safe to keep your gold in. All the places got robbed by one government or another. Bitcoin is not quite so vulnberable. And it has like 7 billion people waiting to buy it. Gold does not.
Disgusting sponsorship model.