The individuals whom you mock as “poor” are, in fact, subsidizing the lifestyles of those who take out interest loans such as mortgages. Let me explain:

I understand your perspective on the phrase “debt is good.” I am aware that within the existing financial framework, often referred to as the Central Banks Fiat System or The Riba System, individuals can procure loans / borrow money with interest. They can then utilize these funds to acquire hard assets that gain value over time.

This philosophy is advocated by figures such as Robert Kiyosaki and various others. However, a challenge emerges for devout Muslims who uphold their faith conscientiously. They abstain from participating in such contractual agreements due to their religious convictions, as these contracts are deemed prohibited by God, given the widespread detrimental effects they impose on the majority of humanity.

Consider the words of Professor Saifedean Ammous @saifedean:

“Borrowing money imposes a tax on society while offering a subsidy to the borrower. In the current fiat-based monetary system, a Muslim who opts not to engage in borrowing money due to religious convictions against usury / interest effectively subsidizes everyone else that does borrow money. Essentially, they are paying to support others through this subsidy.”

“The conclusion of the fiat system is that you need to short fiat as much as you can; that’s a smart, winning move. Human wisdom over thousands of years is to save. Try not to borrow as much as you can and attempt to accumulate as much savings as possible. This concept is reversed under the current fiat system: if you’re saving money, you’re essentially subsidizing everyone else taking on loans.

The winning move under the current fiat system, which is what rich people do, involves borrowing. Under the fiat monetary system, wealthy individuals don’t hold a significant amount of cash. For example, if you’re worth a billion dollars today, you wouldn’t have a billion dollars in a checking / savings account. Instead, you might have around $100,000 to $1,000,000 million, which is just a small fraction of your wealth in cash, while the majority is invested in various hard assets. The wealthiest individuals in the world are also the biggest borrowers, and this applies to powerful entities like governments as well.

This is how they become the richest and most powerful, as every borrowing instance provides an excuse for banks to print new money, which devalues everyone else’s currency. Those who borrow also get a cut of this new money. For instance, if you were planning to purchase a house with your savings, your accumulated savings would lose value. On the other hand, if you were to buy the same house with credit, the bank’s issuance of new money would make it more cost-effective. This is why people tend to buy everything on credit.

The way we create fiat money is through credit creation. Most people think of fiat money as something that happens when the government prints money, and we still use the term “government’s printing money.” However, the vast majority of fiat is not physical. In fact, in the US, it is not created when it is physically printed; it’s created when it is lent. So when you go to a bank to get a $1 million loan to buy a house, that bank is not going to give you a million dollars from its own money or its depositors’ money.

Instead, they will create a fresh new $1 million. When you walk out of that bank, the money supply is increased by $1 million to finance your home. Therefore, fiat money is essentially born out of government credit and the credit of banks backed by the Central Bank and the government. If you are part of the institutions that are granted the privilege of issuing fiat through loans backed by the Central Bank , you effectively create new currency and new money every time you issue a loan.”

In other words, it’s important to bear in mind that humanity is forced by law to use fiat paper money (fiat meaning “by decree” of the State). Additionally, the majority of humanity receives payment for their labor (whether it be as a doctor, taxi driver, chef, school teacher, etc.) in fiat government “money.”

Due to inflation—defined as the increase in the money supply, partly achieved through actions such as issuing bank loans—the currency that everyone is obligated to use experiences a loss in purchasing power. This entails the decrease in the value of fiat money over time, resulting in individuals being able to purchase fewer goods and services compared to the past, even with the same amount of fiat money. As a result of this phenomenon, people are disinclined to retain their wealth in a vulnerable form of fiat government currency. So, what alternative actions do they take?

Those who are able, use their fiat money to purchase assets they believe will at least maintain their purchasing power over time, and ideally hopefully increase it also. Consequently, they invest in art, stocks, real estate, and similar avenues. However, this leads to the creation of artificial bubbles in various markets. To illustrate, one of the explanations behind the elevated and inflated housing prices is the presence of easily accessible cheap money, essentially generated from thin air.

Shaykh Muaawiyah Tucker explains:

“Everything, I mean absolutely everything, is influenced by the principles of supply and demand. This is why some individuals resort to unethical tactics. For instance, they might claim, ‘We have only five seats remaining in our course, so enroll now!’ Although they may possess more than five seats, they deliberately state otherwise—five or six left—simply to create the illusion of scarcity, presenting a reduced supply. This, in turn, fosters the illusion of high demand, prompting people to believe that the offered price is favorable. In essence, the underlying concept is that every commodity, whether it’s rice, gold, or even your own home, is intricately linked to the interplay of supply and demand.

Let’s delve into another aspect. Take the case of house prices, which appear to consistently go up year after year. There’s a rationale behind this upward trend, driven by the dynamics of supply and demand, amplified by the riba interest-based monetary system. This system, essentially allows for the creation of money out of thin air, enabling more properties to be withdrawn from the market. With a fraction of the total cost as a deposit,  people can now become homeowners, a possibility that previously eluded them.

Here’s a certainty though: if all interest-bearing loans suddenly ceased to be issued—literally, if all lending came to a halt—house prices would plummet significantly. The reason? Most individuals would find homeownership unattainable, and consequently, those seeking to sell their properties would be compelled to lower their prices considerably, in order to attract potential buyers capable of affording them. Therefore, the prevailing high costs of real estate can be attributed to the influx of readily available cheap riba fiat money.”

This situation impacts all of humanity, as all national currencies that serve as our monetary mediums are linked to the US dollar. But a demographic that is disproportionately affected by this monetary system is Muslims, due to their principles against usury / interest / riba. They engage in debt significantly less than other demographics.

The Prophet Muhammad ﷺ said: 

“A time will come upon people during which they will consume usury.” It was asked, “All of the people?” The Prophet replied, “Whoever does not consume it will be affected by its dust.” (Musnad Aḥmad 10191)

“For their engagement in usury, despite being forbidden from it, and their unjust consumption of people’s wealth, we have prepared a painful punishment for the disbelievers among them.”

Qur’an 4:161

“Oh, you who have believed, do not engage in usury, doubled and multiplied. Instead, fear God, so that you may achieve success.”

Qur’an 3:130

“Whatever interest you provide to increase the wealth of people will not increase with God, but what you give in zakah (charity), seeking the countenance of God, those are the multipliers.”

Qur’an 30:39

“Those who engage in usury will not stand, except as stands one whom the Devil has driven to madness by his touch. This is because they say, “Trade is just like usury,” but Allah has 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. However, those who repeat the offense are companions of the Fire, and they will abide therein forever.”

Qur’an 2:275