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# T P W I

Helping people understand banking and finance

## Sitemaps

- [XML Sitemap](https://theproblemwithinterest.com/sitemap.xml): Contains all public & indexable URLs for this website.

## Posts

- [I Don't Do Blog Posts!](https://theproblemwithinterest.com/hello-world/) - There's already too much content out there. Too many people have too many opinions and too much certainty. If people said only what they know to be true, the world would be a much better place. And there'd be a lot less to read and listen to. If people did a bit more patient research,

## Pages

- [Home](https://theproblemwithinterest.com/) - The Problem With Interest. If the financial system was fair, your life would be completely different . . .
- [How is Power Being Used to Prevent Change?](https://theproblemwithinterest.com/how-is-power-being-used-to-prevent-change/) - How is Power Being Used to Prevent Change? Step 3: Change is going to be a Struggle ... Here's Why As a rule, those who conduct an injustice of some kind are not usually keen to publicise it. There are some exceptions of course, despots who like to make examples of others in the manner
- [The Great Islamic Mortgage Caper](https://theproblemwithinterest.com/396-2/) - THE GREAT ISLAMIC MORTGAGE CAPER FIRST published www.islamic-finance.com 2003 According to the Halifax Bank of Scotland House Price Index, the average house price in the United Kingdom as of January 2003 was £120,137. With average earnings in the United Kingdom standing at £27,379 (Office for National Statistics New Earnings Survey), average house prices are now almost
- [Islamic Finance Archive](https://theproblemwithinterest.com/archive/) - ISLAMIC FINANCE ARCHIVE 30 years of essays and interviews originally published at islamic-finance.com 1996 - 2000 Fractional Reserve Banking Interest and Entropy Speculation 2001 - 2005 Breakthrough in Islamic Alcohol Thus did Power Pass from Kings Second Thoughts on Sukuk Fortune Favours the Bankers The Great Islamic Mortgage Caper Don't Mention the Reserve Ratio 2006
- [Investment Information](https://theproblemwithinterest.com/investment-information/) - Investment Information FIRST published www.islamic-finance.com 2014 The following is some general information for the benefit of private individuals who wish to invest in accordance with the requirements of Islamic law. It is not a recommendation to any particular course of action. Specific laws and practices will vary from country to country, hence some of these
- [About](https://theproblemwithinterest.com/about/) - About ESSAYS, BOOKS, ARCHIVES This website is published by Kreatoc Zest Ltd in London. It contains essays and other information on the economics and history of money by Tarek El Diwany. The site also contains an archive of the author's previous essays and interviews on the topic originally published at www.islamic-finance.com. The fourth edition of
- [The Politics of Money Creation](https://theproblemwithinterest.com/386-2-2-2/) - The Politics of Money Creation ABRIDGED FROM THE PROBLEM WITH INTEREST, 4th EDITION, 2025 American bankers knew, like their English counterparts before them, that a central bank with the power to issue a widely accepted paper money would safeguard the long-term interests of the entire banking sector, and particularly its larger players. However, to succeed
- [The History of Money Creation](https://theproblemwithinterest.com/386-2-2-2-2/) - The History of Money Creation ABRIDGED FROM THE PROBLEM WITH INTEREST, 4th EDITION, 2025 In the introduction to this topic we saw that two forms of modern money can be defined, one that is produced by the state (state money) and the other that is produced by commercial banks (bank money). Bank money originated with
- [Other Writers](https://theproblemwithinterest.com/others/) - Other Writers A curated list of important works by other writers on the topic of money, banking and political economy. Each worth a careful read for those on a longer journey of learning. Islamic SOCIETY AND ECONOMY Asia and Western Dominance, K. M. Panikkar, 1969 A Young Muslim’s Guide to the Modern World, S. H.
- [The Details](https://theproblemwithinterest.com/the-details/) - The DETAILS MORE on topics INTRODUCED in the BAsics INTEREST-BASED FINANCE Essay 1 Weaknesses in the Theory of Interest MONEY CREATION Essay 2 The History of Money Creation Essay 3 The Politics of Money Creation AN ALTERNATIVE SYSTEM Essay 4 (coming soon) A New Way Forward in Money, Banking and Finance
- [What Is Money Creation?](https://theproblemwithinterest.com/money-creation/) - WHAT IS MONEY CREATION? Step 1: WHO CREATES MODERN MONEY AND WHY SHOULD WE CARE? A commercial bank and an investment bank are two common types of banking organisation. The former holds deposits of customers' money and issues chequebooks, debit card facilities, arranges home loans for customers, and so on. The latter tends to engage
- [The Basics](https://theproblemwithinterest.com/the-basics/) - Three SHORT Pieces EXPLAINING THE PROBLEM The basics of what you need to know in one hour WHAT IS Money creation? What Is the PROBLEM WITH INTEREST? HOW IS POWER BEING USED TO PREVENT CHANGE?
- [Resources](https://theproblemwithinterest.com/resources/) - Resources QUICK READS & DETAILED ESSAYS Choose The Basics if you're short of time. For longer discussions, go to The Details. For other writers on these and related topics go to Other Writers. For the author's archive of articles and interviews from 1996 onwards, go to Archive. THE BASICS Grasp the core ideas in summaries
- [Weaknesses in the Theory of Interest](https://theproblemwithinterest.com/386-2-2/) - Weaknesses in the Theory of Interest ABRIDGED FROM THE PROBLEM WITH INTEREST, 4th EDITION, 2025 The simple scenario described below is based on an idea by Michael Lipton at the University of Sussex in 1992. Imagine a farmer who wishes to buy a plot of land and farm it. His purchase and operating costs are
- [Interest And Entropy](https://theproblemwithinterest.com/386-2/) - INTEREST AND ENTROPY FIRST published www.islamic-finance.com 1996 Entropy is a term that is used to represent the amount of disorder in a physical system. When physicists say that 'entropy is increasing' they are describing the tendency of all physical systems towards greater disorder, a tendency that is encapsulated in the first two laws of thermodynamics.
- [Purchase](https://theproblemwithinterest.com/purchase/)
- [What Is The Problem with Interest?](https://theproblemwithinterest.com/interest-based-debt/) - WHAT IS THE PROBLEM WITH INTEREST? Step 2: What IS THe Interest-BAsed System Of BAnk Finance doing to Our Society? The Business Cycle Largely as a consequence of the variation in the rate of money creation by the commercial banking system, a business cycle has developed that is unrelated to real factors such as climate
- [Don't Mention the Reserve Ratio](https://theproblemwithinterest.com/651-2/) - DON't MEntion The Reserve Ratio First published on www.islamic-finance.com 2002 Not so long ago American commentators were talking of paying off the US National Debt and the British Chancellor was trumpeting the "end of boom and bust". Now the Americans are becoming more concerned by the day about the ballooning budget deficit and the British
- [Thus Did Power Pass From Kings](https://theproblemwithinterest.com/thus-did-power-pass-from-kings-2/) - Thus Did Power Pass From Kings FIRST published www.islamic-finance.com 2003 Those with deadened thinking glandscould not perceive the cheating handsthat Shiteman brought with words of silkto speak of wealth with King and ilkThat they in need of greater rankmight throng en masse at Shiteman's bankto borrow papers newly printed(Shiteman's house had no coins minted) In
- [SUBVERTING THE BAN ON USURY](https://theproblemwithinterest.com/subverting-the-ban-on-usury/) - Subverting the Ban on Usury published in The Financial Times as an Opinion Piece 14 July 2007 In about 1220 a canonist named Hispanus proposed that, although usury was prohibited, a lender could charge a fee if his borrower was late in making repayment. The period between the date on which the borrower should have repaid
- [Preface to Edition 3](https://theproblemwithinterest.com/the-islamic-mortgage/) - Preface to Edition 3 Reproduced from the third edition of the Problem With INterest 2010 In the seven years since the second edition of The Problem With Interest was published, the global economy has completed another boom-bust cycle. It is a cause for great concern that the banking system which is responsible for this latest
- [Questions for the Scholars](https://theproblemwithinterest.com/548-2/) - Questions for the Scholars FIRST published www.islamic-finance.com 2007 On the 31st of January of this year I attended a conference on Islamic banking and finance organised by Euromoney in London. In answer to a question from the floor, one of the scholarly panelists remarked that "we welcome constructive comments, but there are some people who
- [Karima Presentation](https://theproblemwithinterest.com/karima-presentation/)
- [Fortune Favours the Bankers](https://theproblemwithinterest.com/411-2/) - FORTUNE FAVOURS THE BANKERS FIRST published www.islamic-finance.com 2002 Each year Fortune magazine publishes a list of the top 500 corporations in the world measured by revenue (the Fortune Global 500). The corporations are further categorised in a number of ways, including by business sector, by profits (after tax and extraordinary charges), and by country. Fortune ranks companies
- [Submitting Comfortably Together](https://theproblemwithinterest.com/submitting-together-comfortably/) - Submitting COMFORTABLY Together FIRST published December 2010 in the Church Times, UK As the son of a Christian mother and Muslim father, I spent much of my life navigating between two very different cultures. When, at the age of 29, I chose Islam as my religion, daily life took on a new complexity. Among other
- [Interview On Aljazeera](https://theproblemwithinterest.com/interview-on-aljazeera/)
- [People First Economics](https://theproblemwithinterest.com/people-first-economics/) - People First Economics FIRST published IN People First Economics 2009 and reproduced IN Adbusters 2012 I first applied for work in the City of London as a derivatives dealer in the late 1980's. Over casual chats I was informed that the City demanded a rare combination of intellect, eloquence and sharpness. Those in possession of
- [Second Thoughts On Sukuk](https://theproblemwithinterest.com/425-2/) - SECOND THOUGHTS ON SUKUK UnPUBLISHED LETTER TO THE FINANcIAL TIMES 2008 Dear Sirs, The esteemed Sheikh Usmani is not the first to cry foul of practices in the Islamic banking industry (Roula Khalaf, Financial Times, 6 February 2008). Sheikh ibn Uthaymeen, Sheikh Haitham Al-Haddad, Professor El-Gamal, Umar Vadillo, myself and others were warning of similar dangers
- [Speculation](https://theproblemwithinterest.com/speculation/) - SPECULATION FIRST published www.islamic-finance.com 1996 Whilst economic activity is in part an effort to maintain or replace old stocks of wealth that have depreciated, the making of an accounting profit does not necessarily signify that such wealth creating processes are occurring. For an example of this one need look no further than a casino. Here,
- [Holding Back the Tide](https://theproblemwithinterest.com/holding-back-the-tide/) - Holding Back The Tide Interview with Nadine Maroushi originally published in Islamic Finance Today March 2008 Q. What are your reasons for thinking that "Islamic banking isn't Islamic"?A. "My point is a little more refined than that. I am saying that Islamic commercial banking is not Islamic, and this is because commercial banking is a combination of
- [Fractional Reserve Banking](https://theproblemwithinterest.com/fractional-reserve-banking/) - FRACTIONAL RESERVE BANKING published in The New Straits Times, Kuala Lumpur, August 1997. The interest-based banking system, which now forms the foundation of the monetary system in every modern nation, developed from the practices of goldsmiths who established the first banks in Europe many centuries ago. These goldsmiths were prepared to offer their services to
- [Breakthrough in Islamic Alcohol](https://theproblemwithinterest.com/breakthrough-in-islamic-alcohol/) - BREAKTHROUGH IN ISlamic Alcohol FIRST published www.islamic-finance.com 2002 A historic breakthrough in the Islamic alcohol industry was announced at a recent gathering of industry experts. Our staff correspondent reports. The innovative Islamic alcohol industry is estimated to have a potential annual turnover of 150 billion pints of beer. This potential turnover has been growing at
- [Lizard Hole 2](https://theproblemwithinterest.com/445-2/) - LIZARD HOLE 2 First published on islamic-finance.com 2006
- [Lizard Hole 3](https://theproblemwithinterest.com/lizard-hole-3/) - LIZARD HOLE 3 First published on islamic-finance.com 2007
- [Lizard Hole 1](https://theproblemwithinterest.com/430-2/) - LIZARD HOLE 1 First published on islamic-finance.com 2006
- [T&C and Policies](https://theproblemwithinterest.com/privacy-policy/) - TERMS & CONDITIONS The website at https://theproblemwithinterest.com is owned and managed by Kreatoc Zest Ltd registered at 17 Hanover Square London W1S 1BN, United Kingdom (the "Company"). By continuing to visit our website you agree that: the materials offered here are academic and journalistic in nature and do not constitute financial or investment advice; that
- [Contact](https://theproblemwithinterest.com/contact/) - Contact EMAIL or WRITE Kreatoc Zest Limited 17 Hanover Square, London, W1S 1BN info@theproblemwithinterest.com

## Products

- [The Problem With Interest](https://theproblemwithinterest.com/product/interest-and-inflation/) - The Problem With Interest by Tarek El Diwany in hardback. Fourth edition with a slightly larger font for easier reading.
- [Why are We All in Debt?](https://theproblemwithinterest.com/product/why-are-we-all-in-debt/) - A 25 minute video primer explaining how government and people have become entrapped in unrepayable debt, and how some corporations have used the debt-based system of finance to monopolise many sectors of business activity.
- [Islamic Banking and Finance](https://theproblemwithinterest.com/product/understanding-interest-rates/) - Islamic Banking and Finance: What it is and What it could be, a reference guide to the industry with thoughts on how it can be changed for the better. This is the 2010 hardback edition.

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