The Prison Industrial Complex

The Prison Industrial Complex
America’s slave plantations

The Shield
Vol. 1, No. 12 July 2007

Most of this article will focus
on the private sector
associated with the penal
system, but I would also like to
briefly touch on some
environmental factors that act as a
lubricant for the Prison Industrial
Complex. Because of its political
sensitivity I will skim over the
Welfare System and high divorce
rate. Myself, like many others
know successful people who grew
up under these circumstances.
Quoting from an article in the
American Friends Service Committee,
“ The politics of systems —
— the welfare system, the public
school system, the health and the
criminal justice system play a
profound role in the lives of the poor
in this country.
In the Fall of 2000 , Opra
Winfrey aired a show about,
“juvenile crime.” The discussion
was centered around a juvenile
nicknamed “Gummie” who
committed several crimes in the
West Englewood community in
Chicago. On the panel was Patrick
Murphy, who was an official, at that
time with the Cook County Juvenile
Corrections, was quoted as saying,
“Hundreds of Gummies come
through the system everyday, but I
can count on one hand the ones
who come through whose father
plays an active role in their development.
”(Unquote) Without
the knowledge being passed on
from the head of the household who
is in the trenches and being the
shock absorber for whatever the
society has to throw at him, the
family unit becomes more
vulnerable to a system which seeks
to exploit its members. The Welfare
System and high divorce rate have
created a serious absentee father
problem.
We now find impressionable
youth involved in the gangster
antics of the prohibition era such as
drive-bys. The theme is echoed in
gangster rap where many youth
view a conviction rap sheet as a
right of passage. The societies
temper - tantrum creates judges
whose appointments hinge on a
high conviction rate and the social
safety net for the youth begins to
be replaced with a dragnet. These
kind of environmental factors
provide oil for one of America’s
largest growth industry, the Prison
Industrial Complex.
When the Prison Industrial
Complex is brought up, usually the
first issue is privatization . As we will
see later, there is not a big leap to
privatization from the extent the
private sector is already involved in
the penal system.
According to a Fall, 1993 article
in Covert Action Quarterly entitled
Prisons for Profit, private prisons are
not new in U.S history. In the mid -
1800’s legislatures awarded contracts
to private corporations to operate
Louisiana’s first state prison, New
York’s Auburn and Sing Sing
penitentiaries and others. As the
system spread , labor and business
complained of unfair competition. By
the turn of the century, the first era of
private prisons came to an end.
The concern for privatization
resurfaced under former President
Reagan’s Get Tough on Crime
Policy.” Prison populations soared
in the 1980’s into the 1990’s, making
the Land of the Free (U.S.) the
world leader in locking up its
citizenry. According to the FBI
Uniform Crime Reports, by 1990,
421 Americans out of 100,000 were
behind bars, easily outdistancing
our closest competitors, South
Africa and the then USSR with its
KGB tactics. On any given day the
prison population topped 1.2
million, compared to the fewer than
400,000 at the start of the Reagan
era. Currently the prison population
is 2 million plus.
The Prison Industrial Complex
has become such a well oiled
machine, there are currently 7
million in U.S. jails, on probation
or parole. In Illinois 2/3rds of those
released from prison return to the
inmate population within three
years.
The cost of the state and local
federal corrections budgets ran to
more than 20 million a year in the
early 1990’s.The cost of constructing
cells to keep up with the constant
increase in prisoners is estimated at
$6 million a year. The public sector
imprisonment industry employs
more than 50,000 guards as well as
additional tens of thousands of
administrators,and health, education
and food service providers.
Especially in rural communities
where employment is scarce,
corrections institutions provide
stable jobs. Private enterprises from
architectural firms and construction
companies, to drug treatment and
food service contractors, to prison
industries –to the whole gamut of
equipment and hardware suppliers
of steel doors, razor wire,
communications systems and
uniforms. Post programs like
electronic monitoring and boot
camps all get a piece of the action.
Quoting from a January 29,
1996 article in The Nation entitled
Making Prisons Pay, Bob Tessler,
owner of DPAS, a company that
opened a date processing operation
in San Quentin State Prison. “ We
have a captive labor force, a group
of men who want to work. That
makes the whole business
profitable. We don’t have to pay
health and welfare on top of wages
. We don’t have to pay vacation or
sick pay.” (Unquote) DAS also gets
a 10% per cent tax cut on the first
$2,000 of each inmates wages.
In California’s Joint Venture
Program inmates receive a
minimum wage minus 80% that is
withheld to cover “institutional
costs”. Quoting “ Brad Haga,
former spokesman for Oregon
Prison Industries , “We’ve got guys
paying $6,000 a year to rent a cell.”
(unquote) According to Haga,
Unigroups aggressive marketing
tactics sold over $4.5 million worth
of “Prison Blues ”, a convict made
line of blue jeans. The California
Department of Corrections even
made inroads into the Japanese jean
market with a line of “Gangsta
Blues”. Ironically the gangster
culture was being glamorized and
sold back to the public by the very
criminal justice system that claims
to be at war with these threats to
society.
These industries are finding
prison joint ventures more
lucrative than cheap foreign labor
because there’s no language
problem, better control of the
workforce and because it is local
there is a quicker turn around time.
There also are no strikes or
union organizing. In fact , they
have been used to break strikes.
Prior to proposition 139 in
California , TWA’s ticket reservation
operation in Ventura Youth Facility
was allowed to open because
juvenile prisons were exempt from
many of the state laws. The
company was forced to close its Los
Angeles reservation office because
of a flight attendants strike. Over a
2-day period, 61 youthful offenders
worked 718 hours processing calls
from travelers who would have
otherwise been lost to TWA’s
competitors. TWA’s extra help
allowed them to transfer ticket
agents to flight attendant positions,
effectively breaking the strike .
According to August , 1999
report AFSCME Corrections
United, three independent studies
have shown that private prisons
haven’t saved the taxpayers any real
money or improved service. These
companies make their profits by
cutting corners and hiring workers
at lower pay.
As we have seen, the
tentacles of the Prison Industrial
Complex are many. Environmental
factors related to the
family unit and corporate greed
fuel a machine that views an
offender as a cash crop. Until a
system is in place where the
overall health of the society takes
precedent over corporate greed
this condition will only magnify.

American or Muslim: What is my Identity?

American or Muslim: What is my Identity?

The Muslim identity is unique

The Shield

Vol. 1, No. 4


Muslims, especially our young ones,
find themselves forced into a dilemma as to
what is their identity? Although, the issue is
clear according to Islaam, for political and
assimilation reasons it has become somewhat
blurred and troublesome for some.
While many Muslims celebrate a
Muslim being elected into congress in
Minnesota, putting aside the issue of ruling
with other than what Allah has revealed,
bullets and bombs continue to fall on many
parts of the Muslim world while at the same
time our Deen is ideologically attacked.
Being an American goes well beyond
simply being born in America or carrying its
citizenship. America has a cultural heritage
as a nation based primarily on British and
European culture.
This culture separated itself from God
(separation of church and state), and based
its creed on the ideals of freedom,
individuality and man made reasoning,
hence the ideology of democracy and
capitalism. To be an American, means to
accept these values and visions to a degree,
even if you did not choose to do so.
The value of individuality and freedom
leads to selfishness, greed, family and
community abandonment which at it
extremes can lead to depression and even
suicide and a host of other problems. In fact,
according to sociologist Eric Klinenberg,
many elderly people died in their homes
during Chicago’s 1995 heat wave because
they did not want to burden family members
and others to care for them.
It is not just the elderly that take on this
American creed, but many sons and
daughters neglected their mothers and fathers
as well. In other words, it was reciprocal. It
must be made clear here that it is the
American ideology of democracy and
capitalism that breeds social problems and
destroys families and communities, and
allows some to prosper while others suffer.
This ultimately leads to the hell fire by going
against what Allah has ordered one to do.
Being a Muslim or embracing the
Islaamic creed contradicts the American
ideology of freedom/democracy/capitalism.
There is no separation in our belief in Allah
and our daily lives while we live here in
America or elsewhere. Prophet Muhammad
(saw) said:

“Whoever goes to sleep, and
wakes up, without being concerned
for the affairs of the Ummah, then
he is not one of us”

The identity of a Muslim is a serious matter.
This identity will save our skins on the Day
of Judgment. Our creed, and thus values and
sentiments, are unique. We do something
that is good, not because America sponsors
it, or because it is trendy, we do things as
Muslims because Allah demands and wants
us to with the view of either the Nar (hellfire)
or Jennah (bliss) in mind once this life as
ended. Because our creed is unique, there
is no need to preface or mix our identity with
that which takes away from its purity.
Simply put, we are Muslims.
Some of us were born and even
converted in America, but once we embrace
the Islaamic creed, then our identity as
Muslims supersedes all other identities, and
this is what is appealing to the potential
convert. We should reflect values and
sentiments that pull people out of jahiliyyah
(Ignorance) into Islaam. The Muslim
identity makes us witnesses for justice, and
moves us beyond racial identity, patriotism,
sexism, individuality, democracy, and
capitalism.

The push to assimilate young Muslims
into the American society has a political
and dangerous motive. A Muslim must not
take on values and sentiments which are
responsible for the many social problems
we find here in the West. How can we call
others to Islaam, if we are no better than
them? Do we want our children to grow up
and become thugs, pimps, whores, or lost
in the American values of individuality to
the point where they no longer respect or
care for us? No, of course we do not. Our
identity is with Islaam and what Allah wants
for us.

‘‘Who is better in speech than
one Who calls (men) to Allah,
works righteousness, and says, “I
am of those Who bow in islam”?
Qur’an 41:33

Are Muslims Safe In America?

Are Muslims Safe In America?


The Shield
In the Name of Allah, The Beneficent, The Most Merciful
Vol. 1, No. 1



Everywhere in the world to day,
Muslims are under fire. If we are
not being physically fought against,
we are being fought ideologically. All it
takes for the average Muslim to realize
this is to read the local newspaper or
read the news on the internet or watch
the the news on TV, and you get the
feeling internationally that Islam (Deen/
Way of Life) and Muslims are under attack.
Every day we hear or read that
Muslims in Iraq are being killed, but this
is not the only place. Muslims are being
killed in the Philippines, China, India,
Chechnya, Sudan, Nigeria, Saudi Arabia,
Pakistan, Afghanistan, and many
other places under the justification that
these are the “terrorist” or “militants”
that want to harm the so-called free
world which in reality is ran by the
Western powers. Calling people terrorist
who are fighting their oppressors or
demanding their right to live as human
beings is ludicrous.

If non-Muslims (kuffar) and the
so-called Muslims rulers who are the
real enemies of Islam are not physically
killing or bombing Muslims,
they are tormenting and torturing
them. For example, in Uzbekistan,
Iraq, Egypt, Turkey, and many other
parts of the Muslim world, Muslims
are put in prisons by unjust tyrants
who inflict pain, rape, burn, beat and
use other forms of torture.
If this is not enough for the Muslims
in America and the West to feel
that Muslims are under attack then they
need to look at their own condition and
the way they are being treated under
Western rule. If you don’t think this is
the case, try taking a trip on the airlines,
or getting an unrestricted passport.
Muslims are being fired from their jobs,
or not being hired, and even locked up
just because they are Muslims.
If a Muslim or anyone for that matter
who donates money to help improve
the conditions of Muslims or find it
reprehensible for the unjustified attacks
by the Israelis on Palestinians, they are
arrested or their tenure in America revoked
or placed on a “watch” list and
harassed if they speak out against the
wrong done to Muslims. Donated funds
are seized illegally by the government,
and in some cases the one in charge of
such funds become suspect of aiding
terrorist or of being a terrorist.

Muslims in the West have another
battle to fight, which is ideological in
nature. We have to confront attempts
to secularize our Deen (Way of Life)
in an effort to make it a weak religion
which they want us to ritualize with no
relevance as being a complete way of
life.
They do not want Muslims to
become aware that Islam is a complete
system with a political, economic, educational,
and social system that does not
exclude worship of the Creator as in a
secularize system such as the so-called
democratic system as practiced in the
Western world.

Although this attack is ideological,
it nonetheless is a battle that Muslims
must endure. We endure the pain of
knowing in our hearts that Islam is a solution
for the Western societies while at
the same time we listen to the rhetoric of
their politicians, religious leaders, educators
and others who espouse secularization
as a superior way of life.
The news media has contributed to
demonizing Islam and Muslims so that
Muslims are the prime suspects for terrorism.
Even when Muslims have come out
and said that they are “peaceful people”
who mean no harm to Americans, they
are still targeted, stopped and denied
the right to fly or receive funding. As
one military official said, “the gloves have
come off” in their treatment of Muslims.
Al-Hamdulillah, this has only pushed us
to reconsider our realities all around the
world, causing us turn more towards Allah
as our only Protector.

Today we see the real terrorist
and enemy to our Ummah, and this is
a good thing. If someone breaks into a
man’s home and attempts to harm his
family, his natural reaction is to fight
to his death. After this he takes actions
which will provide security for himself
and his family, Insha-Allah. He may buy
a gun, install a security system, or move
to a different neighborhood. But he certainly
would not wait for the same thing
to happen again. He would not allow
anyone to tell him that he should just
pray or ask the criminals of the world
not to do it again.
The question that we should ask
ourselves as Muslims is: “What kind
of an Ummah or Muslims waits to be
slaughtered or taken from their homes
in the middle of the night to be tortured,
imprisoned or killed?
What kind of a nation would not
take steps to secure its children and
women from the shock, horror, or grief
potentially waiting for it?” These are
the kind of questions the Ummah has itself,
because this is the stark reality of
our position in the West as well as in
other parts of the Muslim world.
We have no security or peace
of mind because we have no State to
protect us. We have no Muslim army
to fight those who attack us with far
more sophisticated weaponry. We have
no State to take care of our affairs, and
that is why a righteous Imam is such
an important aspect of our security, for
Prophet Muhammad (saaw) said:

“He who obeys me, obeys Allah,
and he who disobeys me, disobeys
Allah. He who obeys the chief, obeys
me, and he who disobeys the chief,
disobeys me. The Imam is like a
shield for whose safety the Muslims
should fight and where they should
seek protection. If the Imam orders
people with righteousness and rules
justly, then he will be rewarded for
that, and if he does the opposite, he
will be responsible for that.”
Narrated by Abu Huraira.

As Muslims, will we not take actions
that any sensible Ummah should
take to protect itself and its ideology
from the wolves who sometimes appear
in sheep’s’ clothing to tell us that voting
in a democratic society is the solution.
Will we not put all of our efforts and
resources into the cause and call for the
Islamic State which is the only solution
for our security, protection and problems.
What kind of an Ummah or Muslims waits to be
slaughtered or taken from their homes in the middle
of the night to be tortured, imprisoned or killed?
What kind of a nation would not
take steps to secure its children and
women from the shock, horror, or grief
potentially waiting for it?” These are
the kind of questions the Ummah has itself,
because this is the stark reality of
our position in the West as well as in
other parts of the Muslim world.
We have no security or peace
of mind because we have no State to
protect us. We have no Muslim army
to fight those who attack us with far
more sophisticated weaponry. We have
no State to take care of our affairs, and
that is why a righteous Imam is such
an important aspect of our security, for
Prophet Muhammad (saaw) said:

“He who obeys me, obeys Allah,
and he who disobeys me, disobeys
Allah. He who obeys the chief, obeys
me, and he who disobeys the chief,
disobeys me. The Imam is like a
shield for whose safety the Muslims
should fight and where they should
seek protection. If the Imam orders
people with righteousness and rules
justly, then he will be rewarded for
that, and if he does the opposite, he
will be responsible for that.”Narrated by Abu Huraira.

As Muslims, will we not take actions
that any sensible Ummah should
take to protect itself and its ideology
from the wolves who sometimes appear
in sheep’s’ clothing to tell us that voting
in a democratic society is the solution.
Will we not put all of our efforts and
resources into the cause and call for the
Islamic State which is the only solution
for our security, protection and problems.

Virtual Economy - Root Cause: Analysis of The Current Financial Crisis

In a statement made to a congressional committee on April 3, 2008, the Chairman of the Federal Reserve Bernanke said that “if Bear Stearns had been allowed to fail, it would have led to a “chaotic unwinding” of Bearn Stearns investments held by individuals and other financial institutions. Moreover, the adverse impact of a default would not have been confined to the financial system but would have been felt broadly in the real economy through its effects on asset values and credit availability”[1]. In an article published by Newsweek, October 11, 2008, Daniel Gross writes [3]: “Back in 2002, Apple’s stock was trading far below the level of cash on its books, ascribing a value of zero to its brands and products, compared with several billion at the height of the boom”. Both statements refer to the existence of two views of the economy: a real economy which is reflected by the level of cash on corporate books, and an inflated, exaggerated view which is reflected in the current stock values of the market. The second view of the economy will be referred to as a virtual economy in this article. Virtual economy, in this context, differs from what is being called virtual economy commerce [2], where customers trade in a virtual imaginary product with certain specifications and an imaginary value. However, this will not be the subject of this study.

The second type of virtual economy (VE) is the one that is important and is strongly related to the failure of the financial capitalist system as is being witnessed today. VE allows the economy to appear much larger than its real size. This economy is based on the assumption that the real money will not be tapped into and therefore, it is possible to deal with an assumed larger (virtual) value for the money. A good example of this scenario is the case with Donald Trump. He ran projects worth billions of dollars, while being more than 50 million dollars in debt. He was about to file for personal bankruptcy in 1989 when he was pressed to pay some of his debts.

A parallel concept to virtual economy exists in computer systems, where the concept of virtual memory is used. Virtual memory is a special type of organisation which allows the memory in the system to appear much larger than the real size of the memory. With this type of organisation, it is possible to execute program applications which require much larger memory than the system actually has. Virtual memory organisation in computer systems remains a smart way of running applications. However, there are some cases where an application may break the limits of virtual memory and cause the system to thrash, i.e. to fail. This happens when an application insists on using more than the size of real memory instantly, at one given time.

In a similar manner, virtual economy (organisation) provides two views of the economy. One is the real value of commodities and services in a given economy which corresponds to the real economic growth and production. The second view of the economy represents the imaginary value of stock prices and the accumulation of interest (usury) in the banks. A virtual economy system, similar to a virtual memory systems, is bound to crash (thrash) at any point when the instant demand for finance at any given time exceeds the real value of the real economy. The current financial crisis in the US and the world at large is a striking example of a virtual economy crashing (or thrashing).

The phenomenon of a virtual economy, where the money in transactions appears much larger than the real money, began to surface at the level of state economies at the end of the 19th century when financial markets began to take shape in New York. This phenomenon grew to be an integral part of capitalist economies, especially in the US and in Europe due to three major reasons, namely: stock markets, interest based economy, and the removal of gold as a basis for the monetary systems. At the political front, the cold war between the capitalist and socialist camps in the 2nd half of the 20th century further strengthened the virtual economies in the west. We will examine these three factors in some detail in the next few sections.


1. Stock Markets and the Virtual Economy

Stock market activities at the start of the 20th century created a new phenomenon in the economy, where the wealth associated with stock values grew at a much higher rate than the wealth associated with the real economy. When the stock market collapsed in New York in 1929, economists attributed the crash to the great difference between the inflated values of stocks and the values of the real assets of the economy.

The Economist magazine reported on 2/11/1929 that “there is warrant for hoping that the deflation of the exaggerated balloon of American stock values will be for the good of the world.” To understand this aspect it has been found that the prices of financial market increased during the preceding period from 1925 to 1929 by 120%, while economic growth for the same period did not exceed 17%. And when the market collapsed, it lost over 93% from its value, which means that the market returned to its real value which was obviously much lower than what the stock market indicated. The same scenario repeated itself in 1987 when the market collapsed again, and as observers again noted financial market had been grossly inflated compared with the real size of the economy, such that the difference between the virtual economy and the real economy was more than 200%. And by the end of the twentieth century the virtual economy was again three times the size of the real market value and this scenario came to be known as the Internet (or DOT COM) Bubble.

The result is that the nominal values of stocks do not reflect the reality of economic production. It is possible to increase the value of the shares of a given company without any real increase in production or profit achieved by that company; this was the case with Amazon, where its stock value exceeded $300 at a time when the company had not achieved any profits. Enron is another example, where the rising value of their stock was based on false information about fictitious profits.

These kind of financial activities, transactions and dealings create two faces for the economy: a real face linked to the economic growth and production which indicates the real strength of the economy. And an imaginary side, that reflects the image seen and observed by the local and global community. When the difference between the two sides is small, there does not appear to be a serious problem in the economy. When the difference, however, is vast as is the case now, in 1987 and in 1929 it is dangerous and may lead to devastating consequences for many years, as happened with the Asian Tiger economies in the late 1990’s.

The capitalist countries are aware of the magnitude of the problem, and its seriousness, and keep developing plans and alternatives to prevent or delay an inevitable devastating collapse, to mitigate the effects of the collapse, or to exit quickly in case a collapse happens. A good example of such plans is the recent bail out of the Bear Stern Bank, which almost collapsed after the drastic decline of its stock prices. (The most recent bailout of more than a trillion dollars in US and Europe occurred few months after this article was written).

The direct cause of a stock market collapse is the attempt made by some investors to transfer what they own from fictitious money to real money. As an example, let’s assume that the real money is 10% of the total virtual money. This means the amount that can be turned into real money, is no more than 10% of total capital, and the rest is equal to none. So when the owners of the shares notice that a major investor started selling his possessions (to convert them to real money), they panic and start selling their possessions hoping to cash in some real money before the collapse. Then a collapse takes place and brings everything to the foundation (real money).

Let’s work through the example more thoroughly. Assume that there are 1000 shares in a company. Also, assume that each share is worth $100. So the total stock value of the company is $100,000. For the sake of argument, assume that the real value of the company is $10,000. In other words, the real value of the company is 10% of the virtual value. Now assume that a major investor sells 50 stocks at $100 and cashes $5000. If the rest of the share holders start selling their shares hoping to get real money from the company, they will be able to get no more than $5000 at best, which translates into $5 per share. Now if one more person was able to sell 50 shares at say $50 and cashes $2500, then the rest of the crowd will have to share the remaining $2500 at $2.5 a share. Eventually when all $10,000 are gone, the share will go to zero. This is how the stock values of Enron and Martha Stewart companies collapsed.

The danger of the virtual economy is that it creates a state of delusion in the economy, which can deceive senior economists and politicians, and drives them to undertake projects larger than their real wealth. There could be a temporary positive effect from this delusion, especially when competing with others for large projects. America has benefited greatly while in a conflict with the Soviet Union during the cold war era, where the Soviet Union used real money to finance its projects, and America used the virtual economy for its own projects. But when a state is exposed to a financial or political crisis larger than the size of its real economy, the illusion may push the state into a losing gamble. The current wars in Iraq, Afghanistan, Somalia and the devastating effects of hurricanes in the US must have contributed to the recent financial crisis in the west. Some countries may sometimes intentionally create real crisis for other countries that depend on the virtual economy, in an attempt to push them to the limits of their real economies. Note also that a sudden collapse of the virtual economy brings the economy to levels much lower than the real value of the economy.


2- The Usury and the Virtual economy

The objective of the financial policy in the capitalist economy, as stated by the bylaws of the Federal Reserve Bank in the USA, is to maintain the highest return on production and labor and to sustain price stability. This objective will be achieved through a mechanism that controls the value of usury (interest rate). During a recession in the economy, the state reduces the value of usury in order to encourage borrowing and increase the demands on goods and services. Conversely, the value of usury would be increased to curb inflation. The point here is to recognize the importance of usury for the capitalist economy as the most important tool to control the ups and downs of the economy. This explains the wide spread of financial institutions that offer loans to individuals, companies, institutions and even governments themselves.

Within this usury based economy, the money flows in two directions. In one direction, the money flows from the investors towards the bank in a form of deposit payments. The other direction is from the banks to the investors in a form of loan payments. Except for cases where the inflation rate is higher than the interest rate during the repayment period, the amount of money going towards the bank is steadily more than the amount of money going towards the investors. If the real money is the money which the investors deal with to increase production and to maintain price stability as required by the fiscal policy, this money will certainly be less than the money that accumulates in the banks. This is the main reason for the difference between the real money and the virtual money. And there are two cases that lead to this phenomenon.

The first case is when the bank performs the lending process. Let’s assume that the bank provided a loan of 100 million dollars with 5% usury for 1 year. Let’s assume also that the inflation during this period was 2%, the real interest rate becomes 3%. Now presume as well that the borrowed money (100 million) was spent on profitable projects and the total profit was 2%. Now the total value to be paid back to the bank = 103 million dollars, while the real money which is the sum of the initial money and the profit is equal to $102 million. This means that (1) $million accumulates in the bank account which does not correspond to actual value in reality. This surplus is the usury which is described in the Qur’an (That, which ye lay out by usury for increase through the property of (other) people, will have no increase with Allah). Note that the biggest borrowers in the world are governments which borrow money to pay for their operations and not for profit production. Consequently, the accumulated pure usury will be much higher than the ratio of (1%) in the above example. That is why usury money can reach during a specific period of time hundreds of billions of dollars and up to twice the amount of real money. It is worthwhile to know that the real economic growth rate in the US was no more than 3.5% during the last (30) years, while the actual interest rate was more than (8%). This means that virtual money over (30) years was (135%) of the actual value of money. So if the actual value of the US economy was 5 trillion dollars, the value of usury excess of the true value will be $6.75 trillion dollars. This makes the virtual money value (11.75) trillion dollars.

The second case that leads to an increase in the virtual money is when investors deposit their money in the banks for investment in usury. If investors deposit in the bank (100) million with (5%) interest after taking into account inflation, and for a period of (10) years. The value of the money invested becomes (150) million. For the bank not to lose money, it in turn invests the (100) million. Let’s say the bank gains (7%) by investing its money ($ 170 million); if (5%) of that investment was part of productive investment by the bank and the rest was pure usury, we will have (20) million usurious money which has no real value in reality. The reality is that most banks do not invest their money in production processes, but rather by investing in other banks and by recycling the loans to other borrowers. This makes the virtual money increase repeatedly and multiple times.

Either way, the resultant quantity of the money accumulated in the banks is much more than the quantity of the initial real money that represents the (real) production. However, what encourages and motivates the continuation of the increase in virtual money is the absence of the urgent need to withdraw large amount of funds from many banks at once. When one of these banks gets exposed to pressure from investors and depositors to withdraw amounts of money (Run On The Bank) that exceed the amount of the real money, the bank soon collapses for the lack of ability to meet customer needs, as happened with the Bank of Boston in the early eighties of the last century. If the Government does not intervene to save the bank and back it up by its funds, a collapse of the bank becomes imminent. When the problem becomes severe and has the potential of affecting several financial institutions, the big countries such as the US begin to print and pump money that could match the amount of the virtual money. This leads to massive inflation, decline in prices and weak production and may lead to a huge financial disaster. Sometimes a disaster may occur by withdrawing large amounts of investors’ money at the same time from the banks (similar to the real estate and credit crisis in the US – this occurred few months after writing this article).

3- Breaking away from the Gold Standard

The virtual economy would have not become a genuine trend, if the main currency (i.e. Dollar) remained linked to the gold standard as per the Bretton Woods Agreement in 1944. The agreement established a clear base of exchange into gold within a fluctuation rate of not more than (1%); it also set the bases on how to convert currencies into gold. The existence of such a law can not permit any State economy to appear much larger than its real size. That would cost its stockpile of gold to deplete. There will not be sufficient gold to match the fictitious numbers of the virtual economy. But when the US turned against the Bretton Woods Agreement (in the early 1970’s) and broke the link between the dollar and the gold standard, it freed its economy from the rein of the market prices without any restrictions. The US was not satisfied with breaking the linkage between the dollar and the gold, but it also broke the link between the value of its currency and the economy. It made it possible for money to grow more rapidly and at much higher rates than the growth of the economy. It was this separation between money and gold on one hand, and between money and economic growth on the other that enabled the existence of the virtual economy and its tendency to grow at an alarming rate. (Recently the Prime Minister of Britain Gordon Brown called for the reconstruction of the Bretton Woods agreement – Report on Business.com Oct. 14-2008)”

4- Conclusions

Is the presence of a virtual economy a matter of strength or weakness for the State? There is no doubt that the presence of a virtual economy leads to the emergence of the state as a powerful state with an ability to maneuver, threaten and impact other countries. A virtual economy and strength may allow one country to destroy the economies of other countries especially if those countries rely on a real economy or have less ability than the attacking state. America is still using the virtual economy to influence Europe, Japan, China and others. However, the virtual economy is like an Achilles’ heel for these States. While it appears as a point of strength, it also could be a potential point of destruction for the state. When a state is exposed to real crisis, whether caused by disasters or wars, the crisis would drain up what is equivalent of the real economy of that State which in turn may lead to the bankruptcy of the State economy.

Today, the major capitalist countries in Europe and the US have built their enormous economies on the basis of the virtual economy. Most importantly, these countries cannot go back to rebuilding a more realistic economy. The financial politics are based on usury and exorbitant wealth, and the steady increase of the money has become the only goal of their economic and financial policies. And from here we cannot imagine rebuilding the economy in the capitalist countries to become closer to reality, and therefore they will remain vulnerable to destruction and collapse. And Allah SWT says: “Those who devour usury will not stand except as stands one whom the Evil One by his touch hath driven to madness. That is because they say: “Trade is like usury,” but Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (the offence) are Companions of the Fire; they will abide therein (forever). “(Quran
Chapter 2; verse 275)



1. Bernanke Defends Bear Stearns Rescue, http://newsok.com/bernanke-defends-bear-stearns-rescue/article/3224837
2. http://virtual-economy
3. Daniel Gross, NEWSWEEK; Oct 11, 2008