[notch656a]

But won't you just hoard all of your earnings if it isn't inflated away by 2+% every year? I've been told spending would grind to a halt. Also without holding your wealth in cash in a bank, how would banks use your money as a reserve for lending out to their favored clients?

[azth]

Not necessarily. Secondly, banks and money lending are immoral and predatory. Usury is prohibited in the three major religions (Islam, Judaism, and Christianity), so we're better off without this dangerous practice. It goes hand in hand with fiat money by the way, the government is taking loans from the Fed, which is why it keeps needing to print more and more money to fuel it. The sooner we get rid of money lending as a business, the better.

On a side note, Islam requires a 2.5% Zakat from money hoarded in your account, to be donated to charity, so there's your solution against hoarding :) We don't need the government to fake print money to prevent people from hoarding. Better that money go into charity to truly have a more equitable society, as opposed to the fake and useless proposals we keep seeing and pitting parties against each other.

[notch656a]

The Zakat is an interesting concept, but I don't see much functional difference from inflating the currency by 2.5% and then giving the newly created currency to the poor. Presumably some system is needed to enforce Zakat, that same mechanism of force could be used to inflate currency.

Since inflation is a centralized operation and Zakat is decentralized, I would wage enforcement of inflation is much easier than enforcement of Zakat.

[telotortium]

According to https://en.m.wikipedia.org/wiki/List_of_countries_by_total_w..., the total wealth of the US in 2021 (which is what I'm supposing would be subject to the inflation Zakat) was $126,340B, 2.5% of which is $3,158B.

According to https://www.usgovernmentspending.com/welfare_spending_analys..., in FY2021 welfare (not including Social Security or Medicare, which are for retirees, but including Medicaid) was $2,418B across federal, state, and local, about 76.6%. Neither Zakat or US welfare spending includes discretionary charity.

Overall, US welfare spending seems to be on the same order as, albeit a little less than, a Zakat imposed on all US wealth. Also, I'm not sure if this welfare figure includes EITC, which is the logical way that additional cash benefits should be distributed (since it avoids welfare cliffs).

[azth]

Different types of wealth have different Zakat values, and not all wealth is subject to Zakat (e.g. the value of your home does not count towards Zakat). For example, currency, including fiat, gold, silver and other precious metals, is at 2.5% annually. Livestock has a different calculation, and so does produce.

Bitcoin and ETH combined are over 1T USD, much more than the figure you quoted. That's 25B annually, imagine how many lives that can change. Not to mention gold, which is at 11T, so 250B annually. Insane money that can revamp the entire planet.

It's strictly superior to have a system based on Zakat than the insane income taxes that we have today.

> Neither Zakat or US welfare spending includes discretionary charity.

Zakat is the bare minimum required for Muslims to pay per year. Islam heavily encourages discretionary charity, called Sadaqah. Both approaches are complementary.

[telotortium]

> Different types of wealth have different Zakat values, and not all wealth is subject to Zakat (e.g. the value of your home does not count towards Zakat).

Of course. I did not want to get into such complications. This was more of a Fermi estimate to compare the amount a Zakat would raise in the US.

> It's strictly superior to have a system based on Zakat than the insane income taxes that we have today.

Maybe - remember that the US government pays for more besides bare welfare for the needy. Also the Islamic Zakat pays for more than welfare - also administration of Zakat (reasonable, but should be kept as low as possible) and Islamic missionary efforts (I don't think the US should redirect its welfare to "spreading liberty and democracy").

Even in Islam, there were more taxes than Zakat[1] - at the very least, a tax on harvests (corporate income or business reciepts tax) and a land tax - because Islamic governments also have other responsibilities besides charity. It would stand to reason that the federal and state governments would also continue to collect other taxes to support other government responsibilities. Also remember that inflation (certainly that intentionally engineered by the central bank) is effectively a wealth tax.

[1] https://en.wikipedia.org/wiki/Islamic_taxes

[azth]

> and Islamic missionary efforts

Which missionary efforts? If you mean paying Zakat to those whose hearts are inclined toward Islam that's something different.

> a tax on harvests

I mentioned this in my previous post. Livestock and produce have different Zakat calculations than the 2.5% of money held for a year.

If you're referring to Ushr, that's imposed on non-Muslim nations that taxed Muslims, so a tit-for-tat treatment, and it's not part of Islam per-se, but a socio-political decision.

> certainly that intentionally engineered by the central bank

Exactly what we don't want. We don't want a select few people to determine the tax rate for the entire population, affecting mainly people at the lower socioeconomic levels in society.

[notch656a]

Very interesting, and thank you for the information!

[azth]

> Since inflation is a centralized operation and Zakat is decentralized

Zakat is centralized by the government.

> that same mechanism of force could be used to inflate currency.

How so? Could you elaborate?

> but I don't see much functional difference from inflating the currency by 2.5% and then giving the newly created currency to the poor

It's very different because when the government inflates the currency, we all know whose pockets it ends up going into :)

[notch656a]

>Zakat is centralized by the government.

I'm going to assume you're from one of the countries mentioned below? It's my understanding most countries with Muslim majority do not centrally enforce Zakat.

>Today, in most Muslim-majority countries, zakat contributions are voluntary, while in Libya, Malaysia, Pakistan, Saudi Arabia, Sudan, and Yemen, zakat is mandated and collected by the state (as of 2015).[16][17]

[wikipedia ^]

>How so? Could you elaborate?

By compelling people to hold wealth denominated in currency, and then inflate that currency using central bank or treasury.

> It's very different because when the government inflates the currency, we all know whose pockets it ends up going into :)

No disagreement here. But government can also misappropriate Zakat. I am actually not in favor of most forms of planned inflation nor a compulsory Zakat precisely in part because I predict massive fraud on the minority of those holding the power to distribute it.

[azth]

> I'm going to assume you're from one of the countries mentioned below? It's my understanding most countries with Muslim majority do not centrally enforce Zakat.

Today, many Muslim countries are not in a good shape unfortunately, and that's due to several reasons beyond the scope here. I'm referring to how things are required by Islam, and how things were done historically when Islam was actually implemented. Today Islam is not applied 100% unfortunately, which is a main cause of weakness for Muslim nations. They're either in property due to occupation, current or historic, or have to bow down to the West's whims, so that they are not overturned or invaded.

> By compelling people to hold wealth denominated in currency, and then inflate that currency using central bank or treasury.

I meant how would inflation happen in case of Zakat being enforced? They're orthogonal things unless I'm misunderstanding you.

> But government can also misappropriate Zakat

There is a set category of people whom are deserving of Zakat clearly outlined in the Quran. So, if Islam is properly applied, there would not be any meddling. It has been historically documented that in Iraq during Ummayad rule, there were no more poor people left to accept Zakat. Quite amazing.

[notch656a]

You've said If Islam is properly applied, there would not be any meddling and Zakat would be applied appropriately. I guess you have more faith than I do that a human vested with these large sums will apply it appropriately. Humans can be greedy, corrupt, and clumsy and may not practice the word of the Quran accurately. They could simply make bad mistakes, without any bad will. Having centralized access to large sums of alms could result in Zakat going to benefit other powerful parties as well. Since it is collected by government, it would be hard for those paying it to stop payment in protest if someone did start meddling. Note this is also a problem with secular welfare systems, I am not saying it is a problem only with centralized Zakat.

>It has been historically documented that in Iraq during Ummayad rule, there were no more poor people left to accept Zakat.

Umayyad had a variety of religions of persons overseen by their caliphate. Was Zakat distributed to poor Christians in the Caliphate? Or did Zakat only go to Muslims? This is important to know, because supporting only minority of the poor who practice Islam could mean Zakat may have not solved poverty for the entire populace. I'd also be interested in seeing the citation that poverty didn't exist under this caliphate.

In America we have the problem that lots of administrators and bureaucrats siphon off much of the money in the welfare system into their salaries as well as issues with the money going into the hands it is intended to go to. Also since the money is taken by force, there's not a lot of control by those who contribute the money over making sure it is used appropriately.

I will note I find it both fascinating and worthy of respect that many cultures have come up with their own ways of helping the poor.

Personally I would be much more on board with a decentralized type of Zakat where individuals can pick what charity to go to, in order to protect from centralized failures of government.

>I meant how would inflation happen in case of Zakat being enforced? They're orthogonal things unless I'm misunderstanding you.

If I wanted to enforce Zakat via inflation, I would mandate people to hold their money in bank, as debt, or fiat denominated bonds, and then I would inflate the money supply by 2.5% by mailing out 2.5% of the current supply to the poor per year, or something approximating that. But that would also be an imperfect system.