CHAPTER
5Money and Its Creation
The Federal Reserve System
(Central Banks), Interest Rates, and
Commodity IndexationT
his chapter is about money and, in particular, its use to help the economic
growth and prosperity of the community through providing credit. The
question is how to reward those who own, in order to entice them to invest
within the community. Chapter 2 concluded that the Judeo-Christian-Islamic
tradition and lifestyle prohibits the charging of a rate or fee for the use of
money (i.e., usury, which is now called interest). It also concluded that
if money is given for helping the poor and the needy, there must not be any
increase when it is paid back. In Chapter 3, we discussed how Shari’aa
(Judeo-Christian-Islamic Law) requires that when pricing a service or an
item, we should use the concepts ofcommodity indexing(using precious
metals or food staples as references) andmarking to market(gauging the
value of properties and services according to values on the local market).
Any discussion of the riba-free (RF) banking and finance system, as
compared to the riba-based system, should be based on a clear understand-
ing of money and how the U.S. dollar monetary policies are handled. This
chapter is a must for everyone who is interested in understanding the way
money is created and is interested in popularizing the new way of living
using the RF style of Judeo-Christian-Islamic living.
THOSE WHO ‘‘MAKE’’ MONEY AND OTHERS WHO
‘‘EARN’’ MONEY
Money is an important factor in our lives. Many of us say that we work in
order to ‘‘make’’ money. We try to save money in order to buy the things
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