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Disciples of Islamic Monetary Policy

How does Japan’s monetary policy resemble a campaign to lessen the influence of Western “values”?

January 21, 2000

How does Japan's monetary policy resemble a campaign to lessen the influence of Western "values"?

(Dateline — Tokyo) For years, Japan’s central bank has kept the country’s interest rates hovering just above zero percent. That is surely as low as they can go, since the Bank of Japan incurs at least some costs lending its money out.

Many analysts have explained that an easy monetary policy is necessary if the Japanese economy is ever to start growing again. But we have developed a different and ultimately more compelling theory.

Instead of reflecting a languishing economy, we think the policy of near-zero interest rates is really a campaign by the Bank of Japan to lessen the influence of Western “values” in international economic and financial dealings.

How? Japan’s policy makers are steadfastly resisting the economic advice of U.S. and European institutions. Instead, they are taking their cue from Islam’s holy book, the Koran — which explicitly prohibits lenders from charging borrowers any interest.

Even before the Bank of Japan pushed official interest rates down to zero, industrial Japan had always been able to borrow money and pay virtually no interest. This is in large part the result of the keiretsu system in which companies owned banks that owned other companies which, in turn, owned other banks…

But with its central bank having succumbed to the charms of no-interest lending, Japan is clearly throwing off the yoke of U.S. and European influence over its economic affairs. By closing ranks with fiery cultural forces of the Middle East, the Bank of Japan is forcing the country stand up to what is known elsewhere in the world as the Great American Satan.