When is interest, not interest? When it's a rent of course.
Bonds are a cornerstone debt instrument in financial markets. Essentially the issuer guarantees the holder of the bond an income stream at a fixed interest rate for the life of the bond. When the bond matures the owner of the bond gets back the money they paid for the bond. Essentially we are talking about a loan with interest payments that can be traded on an open market.
Now Islamic Sharia law doesn’t allow people to charge or collect interest, thus effectively cutting them off from the debt market and the ability to easily raise the finance for large projects or loan out their money to people who could use it. However, there is a fix, apparently you can call the interest payment a rent payment and all is well. The finest piece of sophistry I’ve seen in awhile.
Before any of us get too smug it should be remembered that it was only a few hundred years ago in the West that it was against the law for Christians to lend money and charge interest. For some strange reason it was OK to borrow and pay interest, go figure.
The Christian solution to this was to allow the Jews be money lenders, and in most cases this was the only occupation allowed to them. The Jews were then despised for the practice of usury and condemned by the Church. Both the Church and noble men would on occasion renege on paying interest or giving back the principal leaving the money lenders with no way to get back their money since in most cases the law courts would rule that usury was against the law of god and man. Of course if the Church or nobles did this too often they wouldn’t be able to get anyone to lend them the money needed to build their churches and/or fancy homes.
