Islam's Response to Contemporary Issues — Page 184
184 islam’s response to contemporary issues previous example. At an average rate of, say, 14 per cent, his total loan from his own future earnings would work out to be far greater than the actual money he borrowed. This will lower his ability to repay and lengthen the period of repayment to a considerable degree. Such a person will have to suffer patiently for some 20 years or so as a punishment for his impatience making monthly repayments of about $500 i. e. a total of about $120,000 to repay the loan with compound interest. The loss is most certainly of the borrower and not of the lender. The lender is part of a very powerful system of exploitation, which guarantees, after allowance for inflation and loan loss that the lender ends up with more money in his pocket. With inflation, the situation of the borrower in question will further worsen. His buying power will continue to decrease so that if it was difficult to live within $600, it will be impossible to cope with the same as time goes by. There are but a few who are fortunate enough to receive annual increments equal to the rate of inflation. To further aggravate the situation, in a society where people become more pleasure-seeking, it is impossible for them to wait for a long period of sheer austerity imposed on them by themselves after a few moments of reckless spending. More money is borrowed with greater recklessness and the expenditure is increased far beyond the means of income. In fact, decades of one’s future earnings with ever increasing debt-servicing and concomitant problems are pledged to the lending banks and financial institutions. As a whole, such economies are inevitably heading for a major crisis. You cannot limitlessly pledge your future to the present before reaching the precipice of financial crisis arising from irresponsible spending which then raises the rate of inflation. To combat inflation