RIBA – inflation

RIBA and INFLATION

In an Islamic state RIBA is haram i.e. prohibited by law. No country can declare itself a true Islamic state as long as it deals in Riba. One of the sign of prevalence of Riba in country is inflation.

We are made to believe now a days that some inflation is mandatory for economic growth. This means that our system accepts that some people should be RABB / nourisher or lords while other people should be subservient to them. These lords or rabb over the people like to have inflation because inflation tends to be of benefit for them.

Any economic student understand that basic of inflation is an increased price of commodity over time or cash inflow usually black money into the system or rising demand. The price of the commodity or service is disproportionate to the underlying work or labor.

So you see inflation:

1. In real estate, when there is large surge in property prices.
2. When wages or labor cost is high.
3. There is a boom in credit/money supply.
4. Increase in oil prices.
5. Increase in business taxes.
6. Depreciation of exchange rates.
7. When other countries with Riba based economy has high inflation and you follow them, you have to adjust the inflation rate accordingly.

In an inflation based system measures are taken to control the inflation but they are never intended to stop inflation. Remember that the system accepts some inflation is mandatory for economic growth. These measures include monetary and fiscal policy, the detail of which can be read from any standard article of economic, but as already said these are measures within that inflated balloon of economy and thus they maintain a balloon.

Islam is a way of unity. It rejects all the rabb except one Allah. If a country wants to be Islamic it has to break these rabb/ lords. It should declare war against these lords, the lords of wealth, lords of real estate, lords of commodities, lords of oil and so on. It should be an honor to fight them, don’t you see Allah and His prophet have declared war against them, so why don’t you? Why do you support them? Why do you give them tax haven?

When you break these lords, counter the inflation with:

1. Decrease demand/need. Islam calls it “muttaqi”. Control of self and control of wishes. One of the key of inflatory system is to increase the needs of people so act counter to it.
2. Everyone should work and work for good. Work should be the basis of earning and nothing else. Work so as to make more than required, much more. Don’t you see Allah has made for you earth and universe even though you still cannot completely master this earth alone.
3. No gain over time. Daily wages and point to point transactions. No third parties.
4. Every commodity and service should be scaled according to a central index. If a price of an item increases a corresponding increase in percentage should occur in other areas. If oil price increase, wages should automatically increase so no one should increase the oil price to get benefit from other.
5. Build a system of “ihsaan”. People should be ready to do well to other and give other what is extra for them without any recompense.

Believe in Allah saying:

هل جزاء الاحسن الا الاحسن

(Is there any other recompense for ihsaan except ihsaan)