Financial Crises ‘n Monopoly Game

I wrote this article once before @ the UQU Blogs, which (the blogs) have been deleted due to some mistake happened by a web server administration.

However, the idea is as simple as to play the Board Game called Monopoly.

How to play a Monopoly Board Game? *

* If you are a Monopoly Game player, please step to the next bold subtitle.

This game actually works like this:

- There is a bank which have a fixed amount of money.

- Till eight players can play the game, choosing their game avatar( a small prototype of several things).

- Each player will got some amount of money, from the bank, at the start of the game.

- There is a GO point in the game, from which the players start playing. Also, each player got paid 200$ each time he/she passes the GO point during the game.

- Players through the dices each time they want to play, and they move on as much boxes as they got on the dices.

- The boxes drown on the board represents properties, railway stations, or service stations, which can be owned by the first player steps on them. Besides ‘chance’ and ‘community service’ boxes.

- To own a property/station, a player must pay the bank a predefined  value of it. Then, if another player stays on any of those owned boxes, he/she must pay a fixed amount to the owner (as a value of using the services reside on it.

- Once a player owns a full set of properties of one color, or a group of stations of a type; he/she is able to double the charges for other players when they use his/her box.

- Once owned a set/group of property boxes; a player can build houses on them which can be turned into a big hotel, as a fifth extension of those houses. Also, the bills got raised on each house added to the land, for those players who steps-on and use the services.

- Other than Tax tickets which come on ‘community service’ boxes, players should pay to each other each time they step over others’ lands/houses/hotels.

- The game ends once one player become the Monopoly** over the board.

** Monopoly: refers to the marketing term which defines that there is only one single provider for a product type or for a specific marketing segment.

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What is global banking?

I’m not a banker, but I’ve some contacts in several banks, besides my freelancing IT services provided me relations in the banking sectors, from which I obtained some information on how banks works.

Which can be summarized as follow:

- All banks must be registered to a country based financial authority, i.e. National Currency Est. SEMA in Saudi Arabia.

- This authority controls the loans and keeps tracking of credit records. Also, it keeps tracking over the international relationships of the banks within the country.

- Once local banks needs some financial support from outside the country; they keep track of it. They also the authority which claims country level loans from the World Bank if needed.

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Matching…

Now, let’s take a look on the world from a faraway eye, and look at it as you are looking at a Giant Monopoly Board Game, with enterprise players. This giant game includes small Monopoly Board Games within it, i.e. for each country.

You see the World Bank is the bank of the giant game, which have some predefined, specific amount of money, which was divided to the enterprise players of the new world equally (countries and their local money agencies).

While the financial authorities of each country is the bank of the smaller Monopoly game of that country, which have also a fixed amount of money divided to their own small players.

If people, as small players, pays each other right away, and countries pays their dues exactly on time without interest; the world could be just fine. As the same amount of money keeps circling around the players.

Some players gets out of the game due to their lack of money, and due to their inability to pay others. So, what brought the global financial crises then?

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The Problem…

Interest, is the one word explanation of the financial crises’ problem and cause.

Some would say, How come? I will explain it folks..

We know that there is a fixed amount of money in the bank of the Monopoly Game, and we know that the game ends when a Monopoly applied. So, what can make the game never ends? …  Not paying! simple..huh!

So, big players started to think of instead of just keep playing; why don’t we make money by getting interest from those players who can’t pay enough and want to keep playing either.

So, another game started to be played under the real one, the game of interest.

At this stage, if the interest game kept between players only, there could be a chance to save the whole game by showing the bankruptcy of a player when he/she is no longer interested into playing more, or if other players don’t want him/her to be in the game anymore.

But, the bank itself started to think of making money out of interest, forgetting that the amount of money is fixed, and that aside from the players mentality he (the bank) must be rational one who understands this fact much accurately.

Banks were thinking of the interest while started giving loans to players. Players where keeling their eyes on the game instead of recognizing that they have paid their loans already, but the interest keeping them paying more and more, and keep playing.

A stage came were players were not able to leave the game due to their due interests. The banks, even if they have received their actual amounts, but their records system, which was built on an interest based focus, is showing them that they still have money owned by people and that they are running on loss.

Actually, there is no crises but the interest. Now, how people can pay while all the money is stored at banks, and how banks can assure their interest based systems that they have got their all amount of money. These things kept the system shows bankruptcy for everybody.

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The money is there, the game is changed actually. It is not the interest game anymore, but the original Monopoly Board Game. Where everybody should pay his/her dues directly without interest.

Let the game end every now and then for old players, and new players comes in, keeping the market fresh, reducing the greed, enhancing the life of public.

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And…  that was the call of Islam since more than 1400 years, when Allah forbidden the deals of interest (Riba) in Islam.

And… that is why the banks which were applying the Islamic Finance as their loan system didn’t got effected by the global financial crises, i.e. HSBC Amanah.

There are several Islamic Banking players in the market who didn’t got even a single penny loss during the crises.

Hope that the idea of the crises boom is clear now! If not,  please put the puzzle in the comment area, and let me worry about explaining it simply.

Thanks