From: hubey@pilot.njin.net (Hubey)
Newsgroups: soc.culture.turkish
Subject: Re: ERBAKAN HOCA ve EKONOMIK PROGRAMI (Islamcilardan secmeler)
Date: 24 Dec 92 23:02:01 GMT
Organization: Rutgers Univ., New Brunswick, N.J.

In article <22959.9212241252@thor.cf.ac.uk> spebcg@thor.cf.ac.uk (Mr B G Cetiner 92) writes:


> paper as all governments did in Turkiye today, and Darphane (?) works 
> overtime during the payments of workers and officers. 

This is a more complicated problem. Let's see first if we can
agree on simpler things. I'll explain this later. I already
alluded to it in the previous post.

>In Ottoman state,
> gold was used as money. And even today (I think) if you had money made
> of gold there was little inflation.    

No, it won't. Having pieces of paper backed by a yellow metal
won't stop inflation. Value of gold (its measurement with the
instrument called money) also keeps changing with time. There are
probably better things than gold, like real estate, if you wanted
to back up paper with something else.


> However, I do not agree with your saying that being able to buy same
> amount of bread with the same money even 5 years later is called
> interest. This is part of an ideal system, which Ottoman applied
> hundreds of years. If you now say this is difficult to use gold as
> money, you can use paper or something else instead of gold. 

Ottomans did not have an ideal system. Many of the Janissary revolts
and other problems were caused by fiddling with the money supply.
When gold became scarce they started adding copper to it. Besides,
you can't eat gold when you're hungry. You might as well keep
land instead of gold. AFter all your gold can be stolen but your
deed to property will be backed up by the government :-)..


> But we must be strict on that we must produce the money as exactly as we
> have in our state treausery. 

Same problem as in the beginning. See below.


> In such a case I would lend some gold to my friend and even 5 years
> later I could buy a car with moreless same amount of gold.

You're dodging the problem. There's only a limited amount of
gold. In order to spread it around, you have to keep splitting it
up into smaller and smaller pieces. Is this any way to run
a modern economy :-). 

Do you see what the problem is ? If the amount of gold stays
constant and the amount of goods keeps increasing, then you'll
have deflation (reverse inflation). Nothing changes. If one
piece of gold bought one loaf of bread, then later it will
buy many loaves of bread. You have to break it up into smaller
units. Practically speaking, it's unworkable. Besides that
its effect on inflation is zilch.

You might as well go back to the barter system.

n
> I think Socialist economies must be out of question because they treat
> profit and interest in the same category. And they have nothing to grow
> the economy rather than increasing the people's efficiency by force.


They don't have profit and they don't have interest. It's a
socialist economy; the state owns everything and does not
exploit the workers. Thus it makes no profit. This point
is off the mark and it's  useless.


> As far as I know, the unemployment policy is one of the ways to drop the
> inflation. I think it is one of the problems in Capitalist system. I
> would like to have more information on that. 


First let's look at it without money. The total output of
every country cannot be consumed. Some of it has to be
invested--i.e. some wheat has to be saved to be replanted
later, some of the output has to be in terms of machines
that are used to create more machines. Thus everything that
is produced is not for immediate human consumption. This
part is called investment. Industrial countries have more
of it than underdeveloped ones. That's why worker productivity
is high and the people produce more. Therefore the people
have more to consume. During times of rapid increase of
investment, obviously consumption suffers. The only way
to increase both, is to increase the efficiency of the
labor and machines. If the investment goes into the right
things it's possible. This is a difficult problem and
can't be explained in a few words. That's why there are
books and books and books..


But all of this has to measured in money.
In order for banks to lend money to businesses and to people they
have to have money to lend. If people don't deposit money into
the banks, they'll have no money to lend. Businesses don't 
deposit money into banks. Why should they? They sink their money
into their businesses. In order to expand they need to borrow
money. If there isn't enough money, then the economy grinds to
a halt. This is where the government makes more money available
through a complicated serious of maneuvers. You have to read
about it. The net result is that now there's more money in the
country with which to buy goods and this affects the inflation
rate.


Once again, if the banks don't offer interest to depositors then
no one will put money into banks and they'll have no money to
lend. The difference in what they pay their depositors and what
they borrowers pay is for their operating costs.
-- 

	mark	

   hubey@amiga.montclair.edu         hubey@apollo.montclair.edu
   hubey@pilot.njin.net               ...!rutgers!pilot!hubey    
Newsgroups: soc.culture.turkish