Islam's Response to Contemporary Issues — Page 185
Economic Peace 185 by raising interest rates in the hope of making less money available for expenditure is bound to trigger a chain of events culminating in economic recession. It is bad enough at the national level but when the same factors create a recession in most countries of the world, a global recession looms large on mankind. Such global recessions pave the path for global wars and gigantic catastrophes. Bankruptcies and liquidations begin to increase. Trade and commerce enters into the doldrums. The underlying unemployment rate begins to creep up. Real estate businesses start to collapse. The resultant overall frustration in every area aids and abets homelessness, deprivation, fraud and crime. If this happens, it should not surprise anyone, least of all the stout champions of capitalism. In the capitalist economy the situation is not limited to private individuals being financed beyond their means to repay. In fact, the future of the entire industry is jeopardised at the cost of temporary gains. To begin with, of course, the industry of the country benefits to a great degree. This helps in lowering the price of homemade goods. The transfer of money to an individual not only boosts his buying power but also has an impact on the productivity of the national industry. An increase in demand is followed by more production and with rising production, lower costs are achieved. It gives the national industry a competitive edge in international markets. All seems silvery and rosy. Then comes the hangover. When, because of impatience and excessive spending beyond its means, the society as a whole is deeply indebted to the banks, the buying power of the entire society gradually comes to the end of its tether. Such industry has no alternative but to seek larger foreign markets to stay afloat and competitive. The smaller the country’s