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Re: How Is Inflation Accounted for in "Islamic" finance
Posted: Fri Dec 25, 2009 4:35 pm
by xamd
AbdiWahab252 wrote:Xamd,
You made some excellent points. However, I do disagree that there is no inflation in an economy that does not use paper currency.
It is not that paper money leads to inflation it is that more money is printed by governments using fiat money than is needed by the economy. An economy that does not use paper currency can also have inflation and deflation but it is not regular, however, for the US government it is the case that there is constant inflation because the government is spending more money than it has and instead of collecting tax from its citizens (very unpopular) it simply prints more money.
Re: How Is Inflation Accounted for in "Islamic" finance
Posted: Fri Dec 25, 2009 9:57 pm
by gurey25
Abdi you need to think outside the box..
a constantly fluctuating rate of Inflation is an essential component of fractional reserve banking and fiat currency , basically everything we see today as the economy.
The case will not be the same for an economy based on interest free money.
Abdi check out some material easily available online
http://userpage.fu-berlin.de/roehrigw/kennedy/english/
but check out my favorite
http://wikilivres.info/wiki/The_Natural_Economic_Order
i discovered one of the original 1929 edition in my fathers bookshelve when i was in still in junior high school
only managed to read it a few years ago.