Casino capitalism turns to printing money

Following procedure the central bank of the UK, the Bank of England, sought permission from the UK Treasury to begin quantitative easing, and was duly given the go ahead by the chancellor

Despite the formalities there is no due process in creating money out of thin air. It would be printing money but for the fact that notes and coins only make up a small fraction of money supply in the economy in any case. Whilst unlikely to have any material impact on the deeply depressed UK economy, it demonstrates the abject failure of financial management on a colossal scale.

The creation of money by the central bank of the UK will directly destroy the value of all Sterling in circulation. This is an incredibly destructive step given that mere confidence underpins the value of the fiat money supply. The decision to create money by the UK Treasury and the Bank of England is yet another example of a capitalist model that is intellectually bankrupt!

This grossly misguided step to print money is the latest in a series of failed capitalist policies to revive the beleaguered economy. It could literally be the last throw of the dice in casino capitalism. In just over a year hundreds of billions of pounds have been pumped into the financial markets to increase so-called liquidity; numerous banks have been nationalized; interest rates cut to effectively zero; hundreds of billions tied up in guaranteeing value-less bank assets; taxes cut and public spending increased.

In spite of these unprecedented set of measures the economy is sliding further into depression: businesses are collapsing; unemployment is accelerating; and homelessness is rising. Meanwhile, the public debt is into several trillions and rising as more banks and industries in the economy run to the Government for bailouts.

The capitalist banking model, which precipitated the crisis, to lend (or create money) by 100 times or more the size of actual deposits was unsustainable. Based on such a loaded formula no bank is too big to fail. Now each measure deployed to deal with the crisis is more disparate and panicked then the last. This capitalist economic model, flawed in origin, is imploding.

Capitalism’s use of measures that contradict its ideology like nationalization, money creation and protectionism also demonstrates that capitalists can not be trusted to protect and safeguard peoples property and property rights. This is a clear indictment of an ideology that professes to champion free enterprise.

In contrast, in the Islamic economic system the Shariah laws clearly distinguishing the private, public and state property. The state can not usurp peoples private properties while public properties are for the benefit of all citizens. The money supply in Islam according to Shariah is always 100% backed by gold and silver and so money has in effect an intrinsic value which therefore ensures and safeguards the value of money in peoples’ pockets.

By the passing of each day the flaws in capitalism are progressively being exposed. It can be seen that the capitalist model offers no long term, sustainable solutions for humanity. The Muslim world should remove the intellectual yoke of failed capitalist economics and implement the sublime Shariah laws related to the economy via the political application of the Khilafah system.