Ibn Taymiyyah on Money Debasement and Inflation

Summary

The video discusses Ibn Taymiyyah's views on monetary policy, emphasizing the role of money as a medium of exchange and a measure of value. It critiques governments' overproduction of money, comparing historical practices to modern inflation and quantitative easing. Ibn Taymiyyah argues that governments should avoid profiting from money creation and maintain its intrinsic value. The video reflects on the ethical principles of money serving public welfare and reducing economic instability. These insights aim to restore integrity in monetary systems, especially from an Islamic economic perspective.

Takeaways

• 🪙 Ibn Taymiyyah emphasized that the essential function of money is to measure the value of goods and act as a medium of exchange.
• 💡 Money should not be treated as a commodity for profit, and trading in money diverts it from its true purpose.
• 📏 Ibn Taymiyyah believed that the primary role of money is to maintain its value and be trusted, especially to prevent inflation.
• ⚖️ He argued that the government should mint coins based on the just value of people’s transactions to prevent exploitation and erosion of value.
• 💰 Ibn Taymiyyah warned against overproduction of money, which can lead to inflation and devalue the currency, much like modern-day quantitative easing.
• 🔗 The intrinsic value of coins should match their purchasing power, ensuring no one can profit by manipulating or debasing the currency.
• 🛑 He advised governments not to profit from creating money and to prioritize public welfare over commercial gains.
• 👩‍⚖️ Money, like a judge, should serve the public without commercial incentives, similar to Imam Al-Ghazali’s perspective on money’s role in society.
• 💼 The state should pay workers from the public treasury, ensuring money serves the people rather than creating profit for the government.
• 📉 Erosion of currency value and uncontrolled money expansion are key causes of economic instability, and governments must regulate currency to prevent this.

Q & A

What are the primary functions of money according to the video?

Money serves several functions: it is a medium of exchange, a measure of value, a store of value, and a standard for deferred payment. Ibn Taymiyyah emphasizes the first two functions—medium of exchange and measure of value—as the most important.

How does Ibn Taymiyyah view the role of money in an economy?

Ibn Taymiyyah believes that money's primary role is to serve as a medium of exchange and measure the value of goods. He argues that money should not be traded for profit, as this diverts it from its essential function.

What is Ibn Taymiyyah's stance on trading in money?

Ibn Taymiyyah is opposed to trading in money because it distracts money from its intended role. He believes money should only be exchanged directly and simultaneously, without delay, as per the rules of riba (interest).

What concerns did Ibn Taymiyyah have regarding the debasement of currency?

Ibn Taymiyyah was distressed by the debasement of currency in Egypt, particularly under the Mamluk Sultans. He was concerned that the overproduction of copper coins led to a decrease in their value, which he saw as unjust and damaging to the economy.

How does Ibn Taymiyyah's perspective on currency relate to modern inflation?

Ibn Taymiyyah's concerns about the debasement of currency are similar to modern concerns about inflation. He believed that overproduction of currency erodes its value, just as inflation does today.

What advice did Ibn Taymiyyah give to rulers about minting coins?

Ibn Taymiyyah advised rulers to mint coins in proportion to the actual transactions in the economy and to ensure that the intrinsic value of coins matches their purchasing power. He also warned against rulers profiting from the production of money.

How does Ibn Taymiyyah believe money should be viewed by the government?

Ibn Taymiyyah believes that the government should view money as a tool to serve the public good. It should not be a source of profit for the government, and its value should be preserved to avoid economic injustice.

What is the significance of Imam Ghazali's view on money in this context?

Imam Ghazali's view, which is echoed by Ibn Taymiyyah, is that money is not an end in itself but a means for acquiring goods. He likens money to a judge, whose role should not be incentivized by profit, but rather, serve the public interest.

What did Ibn Taymiyyah mean by reducing incentives for governments to profit from money?

Ibn Taymiyyah argued that governments should avoid creating money for profit, as this erodes its value and leads to economic instability. He believed that the role of money is to serve people, not to be a tool for government revenue.

What can be learned from Ibn Taymiyyah's approach to monetary policy?

Ibn Taymiyyah’s approach teaches that money should maintain its value and not be overproduced. His perspective encourages governments to ensure that currency serves the public good, without being manipulated for profit, which can lead to inflation and economic instability.

Outlines

00:00

💰 Understanding Ibn Taymiyyah's Perspective on Money

The video introduces the ideas of Ibn Taymiyyah regarding money, focusing on its essential functions and the role of the state in monetary policies. Ibn Taymiyyah highlights two key roles of money: a medium of exchange and a measure of value. He critiques trading money as it diverts money from its primary function. The video emphasizes that money should maintain its value and avoid overproduction to prevent inflation, drawing parallels to modern quantitative easing. Ibn Taymiyyah also stressed the importance of not profiting from money creation, advising rulers to mint coins without the goal of personal gain, as public welfare should be the priority.

05:00

📉 The Impact of Money Overproduction and Currency Erosion

In this section, the video discusses how overproduction of money and currency debasement lead to the erosion of monetary value, causing economic instability. Ibn Taymiyyah argues that the government has a responsibility to prevent this, as unchecked currency expansion harms the economy and the people. He warns that when rulers prioritize profit from money creation, it results in inflation and the devaluation of existing currency. This creates injustice, as it erodes wealth through false means. The video concludes by stressing that money must serve the public and retain its value, rather than be used for personal or governmental gain.

Keywords

💡Ibn Taymiyyah

Ibn Taymiyyah was a prominent Islamic scholar whose views on monetary policy and the role of money are central to the video. He believed that money's essential function was as a medium of exchange and a measure of value, and that governments should not profit from minting money. His teachings form the foundation for the video’s argument about the role of the state in managing currency.

💡Medium of Exchange

A medium of exchange is one of the primary functions of money, allowing it to be used in transactions to purchase goods and services. In the video, Ibn Taymiyyah emphasizes this function as the most important role of money, suggesting that trading money for profit, rather than for the exchange of goods, leads to economic injustice.

💡Measure of Value

The measure of value is another crucial function of money, which allows goods and services to be priced and compared. Ibn Taymiyyah highlights this as a key purpose of money, arguing that it must accurately represent the value of goods in transactions to maintain fairness in the economy.

💡Riba

Riba refers to the Islamic prohibition of interest or unjust gains in trade. In the context of the video, it is mentioned to explain how Ibn Taymiyyah's views align with Islamic rules against exploiting money through profit-making, emphasizing the importance of fair, immediate exchanges without interest or delay.

💡Debasement

Debasement refers to the reduction in the value of currency, often through overproduction or reducing the precious metal content in coins. Ibn Taymiyyah criticized the debasement of currency by governments in his time, arguing that it leads to inflation and economic injustice, which mirrors modern concerns about inflation caused by excessive money printing.

💡Inflation

Inflation is the erosion of money's purchasing power over time, typically due to an increase in the money supply. The video connects Ibn Taymiyyah’s concerns about currency debasement to modern inflation, especially in the context of practices like quantitative easing, where governments print more money, causing prices to rise.

💡Quantitative Easing

Quantitative easing is a modern monetary policy where central banks create money to stimulate the economy. The video draws a parallel between this practice and historical debasement, suggesting that Ibn Taymiyyah would have opposed such measures because they undermine the real value of money and harm public welfare.

💡Copper Currency (Fulu)

Copper currency, or 'fulu', refers to lower-value coins used in transactions. Ibn Taymiyyah argued that even these coins should maintain their real value and be proportionate to market transactions. He believed that overproduction of such coins leads to inflation and economic imbalance, and the state should avoid profiting from their creation.

💡Public Welfare

Public welfare refers to the well-being of the general population. In the video, Ibn Taymiyyah argues that the government’s role in minting money should prioritize the public interest, rather than generating profit. Ensuring that currency maintains its value is seen as crucial for protecting public welfare and preventing economic exploitation.

💡Economic Injustice

Economic injustice refers to unfair practices that harm the financial well-being of individuals, particularly the poor. Ibn Taymiyyah warns that government practices like debasing currency or trading money for profit lead to injustice by eroding the value of people’s wealth, highlighting the moral responsibility of states to ensure fair economic policies.

Highlights

IB Tamia's perspective on money and its functions

Money's essential function as a measure of value and medium of exchange

The rule of riba and the Prophet's guidance on equal and immediate exchange

Importance of money maintaining its value to serve as a good medium of exchange

IB Tamia's concern over coinage erosion under Mamluk Sultans

Opposition to overproduction of currency leading to inflation

Government's role in minting coins at just value without injustice

Proportionate supply of copper currency to transactions for price stability

Alignment of metal coins' intrinsic value with their purchasing power

Advising rulers not to profit from minting coins

Money's purpose to serve the public without commercial incentives

IB Tamia's advice to rulers on minting coins for real value and public welfare

The concept of money as a public service rather than a profit-making venture

IB Tamia's warning against government's pursuit of profit from money creation

The responsibility of the state in controlling currency expansion and value erosion

The impact of overproduction and profiteering on the value of money

Lessons from IB Tamia on preserving the value of money and its service to people

The importance of not commercializing money for profit, especially by the government

Reflections on restoring integrity in economic systems based on IB Tamia's ideas

Transcripts

asalam alikum and welcome back to the

channel today we are talking about IB

Tamia and his stake on money in fact we

are looking at some of the principles

that might help us to reimagine what the

monetary policies and role of State

should be when it comes to printing or

creating money so let's get into

it this work is based on fascinating

book and which is basically a PhD

dissertation and uh I will put some

details in the description so when we

are talking the money money in reality

has several function and most of you are

familiar if you study this at University

that money is thought as medium of

exchange something that measures the

value it's a store of value and it's a

standard for deferred payment even Tamia

consider these first two being medium of

exchange and measure of value as its

most important functions in fact he's

saying that essential function of money

is to measure the value of goods and to

be paid in exchange for different

quantities of goods and even his student

iben Kim would say something similar to

what we've seen Imam gazali saying in

the previous video which is that money

and coins are not meant for themselves

but they are meant to be used for

acquiring Goods they are basically

medium of of exchange so since the main

function of the money is to be medium of

exchange even Tamia considered that

trading in money diverts money from

what's supposed to be doing and if money

must be changed then it must be

completely simultaneously and without

delay this goes back to the rules of

riba and the prophet Salli wasam for

example saying gold for gold and so on

must be in equal amounts and on the spot

it's a rule that we should all

understand by now if we are watching uh

this channel now in particular in order

for money to be the good medium of

exchange and standard of other Goods the

Third component of money keeping its

value something that can be trusted is

of particular importance especially

today with inflation and everything and

this is where we can take a lesson Ian

Tamia was very distressed by what he saw

around himself when it comes to the

basement of the coinage in Egypt under

different mamuk Sultan so he would ask

Sultans to check erosion of value of

money which we would talk today

something like inflation and so on he

would oppose this debate basement in the

currency that came as a result of over

production of money just like today you

have this quantitative easing and ways

that governments would print the money

and so in a similar way Su sometimes on

those times would take these flu or

copper coins and they would over produce

them and so even Tam is saying that

Authority or government in reality

should mean the coins other than gold

and silver according to the just value

of people transactions without any

injust ice to them so think about this

idea that there is some injustice when

you Min the coins other than gold and

silver that is interfering with the

value of money so he would say that the

volume of Fu which is the copper

currency should be in proportion of

transactions that just price are ensures

so we are talking about really hitting

the supply and demand of money so it

doesn't really cause inflation right and

then he's saying that intrinsic value of

coins or this metal coins should match

their purchasing power in the market so

that no one including ruler could profit

by either melting the coins or selling

the metal or by converting metal into

coins at putting them in circulation

what is he trying to say he's saying

basically to the government don't get

into business of making money don't

profit from making money don't make

money from making money and he advised

ruler that when they mean coins it

should be of real value without aiming

at any profit while keeping in view

Public Welfare so what is the purpose of

money then it's to perform this function

and it's to Serve the People it should

be in all of our interest it shouldn't

be commercial transaction that in

incentivizes something this money making

and over Supply which will result in in

the basement it should be kept as almost

not for-profit activity as Imam gazali

when he talks about money he says money

is a judge well who pays for the judge

to judge is it commercial incentive

should it be for-profit judge or is

something that the government or all

people pay we have answer in the second

advice that Tamia gives to Sultan which

is that to pay the salary of the workers

from public treasury B Mal so in order

for us even as a citizen of the country

to make sure that money Serv Ser US

public good that doesn't incentiv over

production and so on we need to pay it

this what IB Tamia says is really about

reducing incentives for government to

find a profitable ways easy way to earn

something because when they do that it

creates the Injustice he's talking about

because it reduces the bases erods value

of all the other money in the

circulation so this trading in money

that I Tam is talking about according to

him opens the doors of Injustice for the

people and devouring their wealth by

false pretenses and this is what Sultans

of those days used to do regarding the

monetary policy here according to bamia

state is responsible for controlling

currency expansion and for checking

erosion of the value of the money so

this control of how much money we have

and erosion of the value are both causes

of economic instability and they are the

ways to corrupt currency of Muslims so

therefore according to bamia the

basement of coins or money is the main

problem for its erosion in terms of the

value or we could call it inflation

government should work to ensure that

this supply of money is there with its

real value intact not eroded and

government should not be in the business

of creating money from money making

profit from making money so what we

learned from IB Tamia is quite profound

lesson for all of us and for our

governments which is to preserve the

value of money not to commercialize it

for profit by anyone especially by

government and money needs to serve

people it needs to keep its value it

shouldn't be overproduced in order to

erod the value that is already shared by

all of us I hope you take some values

from these uh brilliant um ideas from

mamia and that as we are constructing

our economic system we will reflect on

some of these and restore Integrity in

it thank you for spending time to watch

this video if you would like to learn

more about finance and economy from

Islamic perspective head to our new

platform Muslim Money Matters where we

go in much greater details regarding the

content until next time my name is Ali

Chan Salam alikum

o

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