Continued from prvious page
The Modern Forms of Riba!
1. Printing of Paper currency without any
base. The gold standard was abandoned in 1970s.
2. Fluctuations in and Manipulation of
Exchange Rates
Printing of currency notes without
any base or beyond the reserves required to maintain its stability, causes
fall in purchasing power of the money as mentioned below:
"By a continuing
process of inflation governments can confiscate, secretly and
unobserved, an important part of the wealth of their citizens".
_John Maynard Keynes (1883–1946),
British economist.
There are indeed advantages of paper money
and it helps in minimizing inroads of deflation and facilitates quicker
mobilization of resources. But since the 8th century in China, every experiment
with fiat money has generated many ills and ruined many economies destroying
the middle class and fixed income groups, that are the backbones of civilization.
On International level it is making rich countries richer and poor countries
poorer and more dependent on aid and differences in living standards are
widening and the need.
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"By
a continuing process of inflation governments can confiscate,
secretly and unobserved, an important part of the wealth
of their citizens".
_John
Maynard Keynes, British economist.
since
the 8th century in China, every experiment with fiat money has generated
many ills and ruined many economies destroying the middle class and fixed
income groups, that are the backbones of civilization
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International Monetary Fund
(IMF) was established in 1944 under the auspices of the United Nations,
and became operational in 1947 with its headquarters in Washington, D.C.
Its objectives are to promote international monetary cooperation and the
growth of international trade, and to facilitate multilateral payment arrangements
among member states.
The members of the International Monetary
Fund (IMF) used to define the value of their own currencies in terms of
the dollar instead of gold because the United States had agreed to convert
all dollars held by foreign governments into gold on demand. Thus U.S.
dollar had become, in effect, the world’s currency.
But after Arab-Israel war in 1960s the
oil producing Arab countries resolved to rationalize the oil production
and prices. That caused a big upheaval in international trade. It was estimated
in late sixties that 80 % of the world’s wealth would go the oil producing
countries within a decade or two.
Among various measures to obstruct that
flow of wealth to Arab Oil Producing Countries, United States suspended
gold payments of U.S. dollars in 1971 as the quantity of dollars held by
foreign governments began to exceed U.S. gold holdings by large amounts.
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IMF used
to operate in U.S. dollars linked to gold. But since 1972 the IMF has used
the special drawing right (SDR) as its standard unit of account, valued
in terms of a weighted “basket” of currencies.
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Since then the United States has
had a fully managed currency system, one with no metallic base whatsoever.
Under this new system aside from the currency in people’s pockets, most
of the money consists of entries in the books of banks. In the continuing
evolution, as more money is exchanged and transferred electronically, the
supply of US dollars will increasingly be represented by entries in computer
data banks.
IMF Stops Operation in U.S. Dollars
linked to Gold since 1972!
IMF used to operate in U.S. dollars linked
to gold. But since 1972 the IMF has used the special drawing right (SDR)
as its standard unit of account, valued in terms of a weighted “basket”
of currencies.
Since 1971, IMF rules have been progressively
adapted to floating exchange rates that are controlled by the big economic
powers. It is alleged that the liabilities of the third world countries
are inflated and the liabilities of the G 7 countries are reduced by jugglery
of exchange rates.
IMF requires its members to follow a
managed monetary system without any gold or commodity base.
This can be termed a new kind of ‘riba’.
IMF allows standby loans to members in balance-of-payments difficulties.
To be eligible for a credit quota or the loan, the country must agree to
take certain corrective measures besides paying interest.
The IMF also operates other drawing facilities,
including several designed to provide preferential credit to developing
countries with liquidity problems.
Group of Seven (G7): Seven leading
industrial nations; the United States, Japan, Germany, France, the UK,
Italy, and Canada formed this group ostensibly with the aim of coordinating
international management of exchange rates after the collapse of the old
system of fixed rates.
However, the real reason for formation
of this group is suspected to be to offset the impact of increase in oil
prices.
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The group
has been blamed for the 1987 stock market crash in which most of the oil
producing countries lost money in their investments abroad.
G 7 (which is
now G 8 after inclusion of Russia) is also blamed for economic exploitation
of Asian tigers and Far Eastern countries in
1996/97. There
has been growing criticism of the group for its policies of manipulating
the exchange rules to maintain their economic supremacy and to obstruct
the flow of funds to oil rich Islamic countries by unfair means
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During the middle of sixth decade
Arabs started using their oil production to strengthen defense against
expansionist designs of Israel. The hegemony of these powers over the economic
affairs was threatened. Since 1975 the heads of government of G 7 countries
have been meeting once a year to discuss economic and political matters.
The president of the European Commission is also invited to attend their
annual summits. Russia has been a partner in political consultations since
1994.
The group has been blamed for
the 1987 stock market crash in which most of the oil producing countries
lost money in their investments abroad. G 7 (which is now G 8 after inclusion
of Russia) is also blamed for economic exploitation of Asian tigers and
Far Eastern countries in 1996/97. There has been growing criticism of the
group for its policies of manipulating the exchange rules to maintain their
economic supremacy and to obstruct the flow of funds to oil rich Islamic
countries by unfair means. It is worth remembering that during Iraq-Iran
war both the countries bought weapons secretly at exorbitant prices from
the leading nations of G 7. Subsequently, the attack of Iraq on Kuwait
and the ensuing events have helped the G 7 countries in restricting the
flow of wealth to Islamic countries.
In quite a few developing countries
the organizations like IMF and the World Bank are now hated. They are said
to be the agents of the big 7 economic powers who are accused of practicing
economic slavery and exploiting the underdeveloped or developing countries.
These organizations are considered to be working for the benefit of the
US and its economic partners by sacrificing the interests of the countries
in debt. The disparity between the wages and salaries of Asian, European
and American workers with similar qualifications and expertise, prevails
not only in the West but also in oil rich Asian Countries. It is apprehended
that similar treatment is meted by the aid agencies in settling the balances
of payment. The products and services of Asian and Latin American countries
are under-valued and those of the big 7 over-valued.
One of the underlying objects of various
aid programs developed by US and other developed countries has been to
keep the wheels of their expanding industries running by expanding consumer
base in developing countries. They were the people like J. F. Kennedy who
realized that:
“ If a free society cannot help the
many who are poor, it can not save the few who are rich.”
“The wave of the future is not the conquest
of the world by a single dogmatic creed but liberation of diverse energies
of free nations and free men.” _J. F. Kennedy
International Bank for Reconstruction and
Development or generally known as the World Bank, was established in 1944
under the initiative of the United States on the platform of the United
Nations. The main objectives of the bank are “to assist in the reconstruction
and development of territories of members by facilitating the investment
of capital for productive purposes, to promote private foreign investment
by means of guarantees or participation in loans and to supplement private
investment by providing, on suitable conditions, finance for productive
---“.
The World Bank grants loans only to member
nations, for specific projects. To ensure repayment, member governments
must guarantee loans made to private concerns within their territories.
After the loan has been made, the bank requires periodic reports, both
from the borrower and from its own observers.
Initially the Bank granted loans were granted
chiefly to European countries and were used for the reconstruction
of industries damaged or destroyed during World War II (1939-1945). Since
the late 1960s most loans have been granted to the developing countries
in Africa, Asia, and Latin America to help them to raise their productivity
and to gain access to such necessities as safe water and waste-disposal
facilities, health care, family-planning assistance, nutrition, education,
and housing. Continued on next page.
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“ If a free society cannot
help the many who are poor, it can not save the few who are rich.”
“The wave of the future is not the conquest
of the world by a single dogmatic creed but liberation of diverse energies
of free nations and free men.”
_J. F. Kennedy
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