From: hubey@pilot.njin.net (Hubey)
Newsgroups: soc.culture.turkish
Subject: Re: ERBAKAN HOCA ve EKONOMIK PROGRAMI (Islamcilardan secmeler)
Date: 23 Dec 92 23:57:44 GMT
Organization: Rutgers Univ., New Brunswick, N.J.

In article <9619.9212231236@thor.cf.ac.uk> spebcg@thor.cf.ac.uk (Mr B G Cetiner 92) writes:

> $imdi Bulent bey ben de ekonomi konusunda cali$miyorum. Yanliz size
> burada bir $ey belirtmek isterim. $imdi siz Islami sistemde ki$ilerin
> faizli ali$veri$inin yasak mi oldugunu soruyorsunuz. Evet boyle bir
> ali$veri$ yolunu sececek enayi zaten oyle bir sistemde mevcut olamaz.

The need for interest has already been pointed out. Interest rates
and inflation rates are related. The problem is people sometimes
put the cart before the horse. Dropping interest won't solve the
inflation problem, because interest is not the cause of the effect
(inflation).  Interest is there to keep accounting simple and to
do justice to those who handle money--that means everyone.

We measure things in n-dimensional space with arbitrary units.
Length is measured in meters, feet, inches etc. Mass and Force
in slugs, Kgs, lbs etc. The unit of measure of the dimension called
value is money. It's an arbitrary unit a lot like feet, hour, minute.
But unlike others, this particular instrument keeps changing; it's not
constant. How would the laws of physics look if the measurements were
done with instruments that kept changing over time ? This only happens
in physics in relativistic mechanics. But in an economy the value of
money fluctuates (the instrument--the meter stick--keeps getting
expanding)--usually increasing. You measure something today, it
measures 10 (loaf of bread); you measure it 5 years from now, it
reads 100. The only way to compares apples to apples is to deflate
the figures or to use the same expanding scale. 

If you lend someone enough money to buy a loaf of bread today, when he
repays you 5 years from now,it should at least be able to buy another
loaf of bread. That's interest. There's nothing wrong with it. And if
the person who lent it deserves something for forgoing present
pleasure i.e. Suppose you have enough money to buy a car. Your friend
needs to borrow it. If you lend it, you can't have a car for five
years. Should you not be expected to get something for going without a
car for five years ?  The interest rate that you would want to charge
(not the bank) depends on how much more you'll enjoy the money, when
you eventually get repaid. And what if, you're not sure you'll get
your money back (there goes that risk-factor again), you'd want even
more interest to make up for the risk.

When extrapolating these ideas to the economy as a whole, more 
care needs to be taken.

If inflation could be stopped by prohibiting interest, the Marxist
countries would not have instituted strict price and wage controls
in their economies. AFter all, they have control of the banks.

These proposals show a deep ignorance of the role of money and how
it affects the economony.

> yatirsa sattigi evin tuvaletini dahi satin alamaz. Eger bugun batidaki
> enflasyonun cok dusuk oldugu ekonomilere bakarsaniz, faiz oranlarinin
> du$uklugunu gorursunuz. Adamlar neden faizleri 0 a dogru du$urmeye
> cali$iyorlar? Ben ekonomist degilim ama size soyleyeyim, nicin her
> ulkede genellikle faiz ve enflasyon oranlari at ba$i gidiyor? 

Points to Ponder:

In some countries (developed ones), an increase in unemployment
translates to a decrease (drop) in inflation. Why ?


The USA which is richer than Japan has problems raising investment
capital (money). It is claimed that the people don't save enough 
i.e. deposit savings in banks.  Countries like Japan, Korea, Taiwan
etc which are poorer don't have this problem. Is it because their
people have more money (extra money) to put in banks ? Or is because
Americans would rather borrow and spend now ? Everyone wants to
borrow. Why not ? What are its affects? If no one saves money (i.e.
deposits money in banks) then how do businesses get money to borrow
for more machines, more land, more raw product, to pay salaries 
i.e. expanding the business, modernizing the plant etc. These after
all are what are associated with being a developed and rich economy.
Everyone wants to industrialize but how ? Check the Marxist 
techniques and compare them against Iran? 
-- 

	mark	

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