Madinat al-Muslimeen Islamic Message Board
|The dollar crises paves the way for the floating of the pound|
|09/06/01 at 04:18:32|
|The dollar crises paves the way for the floating of the pound|
For more than a year, the Egyptian pound has been susceptible to quick and noticeable reductions in relation to the American dollar. The one who studies these reductions will observe that the Egyptian government, in addition to the economic crises facing the country, is putting in place contradictory and haphazard solutions which confuse the people and remove the blame from itself, through attempts portrayed by the media as serious, in halting the decline of the pound’s exchange rate before the dollar. Sometimes we see the government pumping the banks with dollars to make up for the deficit, and at other times intervening to fix a central price for the dollar in relation to the pound. It knows full well that this will create a black market for trade in dollars. Sometimes it accuses the exchange companies of speculating with the dollar, though these companies are innocent of such activities, since the volume of transactions with the dollar through exchange is about 2% of the amount of dollars in circulation. However, the government wants a scapegoat, and has chosen the exchange companies for this. Then the government returns to freeing the price, whilst the central bank fixes it weekly. All these attempts by the government are only there to lighten the effect of what it is striving to do, which is to float the pound in relation to the dollar. In other words, the price of the pound should be according to supply and demand. In this way the situation of the exchange rate of the pound to the dollar will continue to swing between the claims of the government, in trying to control it, and in its attempts to justify these crises, so as to absorb the people’s anger for this slump in the exchange rate of the pound to the dollar. This in turn will affect the prices by an increase of 60%. This will make the economic crises more acute. Thus stagnation, recession and unemployment will increase. The crisis will reach even the infrastructure utilities and their maintenance, which principally depend upon their spare parts that come from abroad. Similarly, these price increases will result in lowering of living standards and an increase in the rate of poverty.
The true crisis regarding the exchange rate of the pound lies in the deviation from the Law of Allah, and His rules regarding transactions and solutions, as is the case in other crises. The deviation from the Law of Allah, and His rules, in this crisis is reflected in the following points.
Firstly, it contradicts the Shar’a of Allah by relying on a system of currency, which does not rely on gold and silver as a cover for the currency, and tying the pound to another currency such as the American dollar, whose supply is determined by America. This is because the true Shar’a has obliged the Islamic State to have either gold only, or gold and silver, as the basis of its currency. This is what is known as the gold standard. Islam has linked many shari’ah rules with gold and silver; such as the prohibition of their hoarding : ‘Those who hoard up gold and silver, and spend not in the Way of Allah, - announce unto them a painful torment.’[9:34] Islam has also obliged the Zakah, by considering gold and silver as two currencies, and prices for sales, and wages for efforts. Just as Islam has obliged the Diyyah (blood money) with gold and silver. Islam has also determined gold and silver to define the limit for theft: ‘There is no cutting except for a quarter of a Dinar’, and that: ‘The Prophet (saw) cut the hand of the thief who stole a shield, whose value was three dirham.’ Islam also determined the rules of exchange in transactions on the basis of gold and silver. One such narration is: Rasool Allah (saw) forbade the exchange of silver for silver, and gold for gold unless it was the same amount. We have been commanded to buy silver with gold as we liked, and gold with silver as we liked.’ Another narration mentioned : ‘From hand to hand (straightaway)’. This gold standard will create stability in the exchange rate, and prevent the dominance of the currency of one nation over another.
The whole world used to recognise the gold standard until the 1st World War. It had a great effect in stabilising the world currency system. After the Second World War this system was disrupted because some warring nations were putting restrictions on the import and export of gold, until 1971 when America stopped using the gold standard and the link between gold and the dollar was cut. Gold then became a commodity subject for trading. America did this to make the dollar the basis of currency in the world, so that she could control the international financial markets and dominate them. Since that time the dollar has become an instrument of colonisation in the hands of America, and the reason for the changes in the exchange rate, and the difficulty in the movement of currencies and goods.
Secondly, it contradicts the Law of Allah by submitting to the agreements, treaties and international trade institutions like GATT, WTO, IMF etc, which are not founded on the basis of Islam or its ‘Aqeedah. These agreements, treaties and institutions are part of the tools of America and the Kaafir West to control the lands and their people. Allah (swt) says: ‘And never will Allah grant to the disbelievers a way over the believers’ [4:141]. It is through these agreements and institutions that plans are drawn up for what is known as the liberalisation of trade. Economic reform of the country and all these plans are based on opening up these lands as markets products of the Kaafir West. The nations are not allowed to do more than this because of what these agreements and institutions have placed in terms of protectionist measures and penalties, to protect their products when they (economically) invade these nations. These measures also protect these countries against the goods of these nations coming into their markets. That is why we witnessed negotiations where many nations intervene before entering GATT or participating in the WTO, so that each state can put forward its conditions, and to prepare their products and economy to be fit to join GATT. It is a natural situation that those countries which have leadership and power will impose their conditions and plans on the countries which are agents and subservient to them. That is why trade liberalisation and economic reform requires the freedom to move capital. This in turn necessitates that states do not intervene in supporting their own currencies whether directly or indirectly, whether through supporting the exchange rate or supporting imports, however much the people may need them, or supporting the exchange rate by defining it or fixing it. Thus the trade liberalisation and economic reform, requires leaving the price of the currency to the market according to supply and demand. This is what is known in economic jargon as floating the currency. This is what successive governments of Mubarak have undertaken in a gradual manner.
O Muslims! O people of Kinanah (quiver)!
This is the reality of the crisis regarding the exchange rate of the Egyptian pound versus the dollar. The reason for the rapid decline of the Egyptian pound before the dollar in recent days is the bad economic situation; due to the stagnation, liquidity crisis, increase in the domestic and foreign debt of the government, and smuggling out of funds due to privatisation and trade liberalisation.
Indeed Islam generally prohibits price fixing, which includes the exchange rate and makes it subject to supply and demand. However, this is within the framework of the Islamic economic system whose currency base is gold and silver. Islam also permits the movement of goods, funds and people and does not impose tariffs except in reciprocation. It also works to circulate money between the people by the state granting funds to those who are in need of it: ‘In order that it may not become a fortune used by the rich among you.’[59:7]
As for these governments, such as those of Mubarak and others, they do nothing but execute the plans of the Americans, the Kaafir West, and its financial and economic institutions, regardless of the Shari’ah rules, and neglecting to look after the people’s affairs with them. Everything they undertake are policies and plans for reforming the economic course, as claimed by these institutions, in order to open the country as markets for the Kaafir West, and give the West control over the wealth and resources of the country.
Due to this, and the mismanagement of the people’ affairs, and the styles used by the kaafir to gain control over the Muslims, we call you, O people of Egypt, to work with those sincerely working to establish the Islamic State, the Khilafah state. The Khilafah state will apply upon you the Islamic economic system, that is distinguished from these man made systems, and which pleases the Lord of the Worlds. It is a system that satisfies the basic needs of every single individual in terms of food, clothing and shelter as a human being, and enables him to satisfy his luxuries and ensures for him happiness in a Halaal way of life.
He (swt) said: ‘O you who believe! Answer Allah and His Messenger when he (the Messenger) calls you to that which will give you life.’ [8:24]
Wilayah of Egypt
25 Jumada I 1422
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