The
Rupee like other currencies such as the Dollar and the Pound was originally
backed by real tangible wealth in the form of a precious metal. In the case of
the Dollar it was gold and in the case of the Rupee it was silver. This system
stabilized the value of the monetary unit both internally within the country
and externally in international trade. Today, there is sufficient gold and
silver in the world to support the actual economy, transactions such as buying
and selling food, clothing, shelter, luxuries, manufacturing machinery,
technology and so on. However, due to capitalist practices the demand for the
creation of money outstrips the supply of gold and silver. Governments
abandoned the precious metal standard, so that currency became backed only by
the authority of the state, allowing more and more notes to be printed without
being backed fully by gold and silver, so the money became worthless, if not
almost worthless. Despite the false reassuring claims of the government to the
contrary, the Rupee is collapsing constantly, which is leading to huge
increases in prices. Yet, the government continues to print more and more money
unheeding of the dire consequences, busily digging a grave for the lifeblood of
the economy - its currency.
Capitalism
mandates interest rate manipulations to control the economy. The
privately-owned banks use depositors' money and deposit it with Pakistan's
state bank in special accounts to earn higher rates of interest. As the State
Bank does not have surplus money to pay back the interest to the private banks,
it "creates money" by printing more, in order to pay interest to the
depositing banks.
The
capitalist balance of trade policy through devaluation of the Rupee also leads
to inflation. Being a net importer country with a weak manufacturing base,
Pakistan's capitalist government oversees the devaluation of the Rupee in
accordance with IMF orders. This was claimed to be done primarily to address
Pakistan's balance of trade. However, by devaluing the Rupee the Pakistani government
increased the costs of manufacturing inputs, which caused havoc in the
agricultural, textile and other sectors that were already reeling from the
policy of high interest rates. Hence, the high cost of borrowing together with
the increase in manufacturing costs, rendered many industries and companies
unable to compete internationally.
Islam
has mandated that the currency of the state is backed by precious metal wealth,
ending the root cause of inflation. Islam defined the currency of the state as
Gold Dinars weighing 4.25g, and Silver Dirhams weighing 2.975g. This is why the
Khilafah enjoyed stable prices for over a thousand years. Return to the gold
and silver standard for Muslims is eminently practical. The lands of the
Muslims in which the Khilafah state is likely to arise contains a lot of gold
and silver resources, such as the Sandaik and Reko Diq fields in Pakistan.
The
future Khilafah will strengthen and stabilize the currency by backing it with
real wealth, gold and silver, to end the generalized inflation which has
crippled households, industry and agriculture, once and for all.
For
further details see the complete economic policy and its relevant articles from
the constitution of the Khilafah state in the book: Manifesto of Hizb ut-Tahrir for Pakistan.
Or,
See
this Link:
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