Tag: Economics

Money and Inflation

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We often hear the term ‘inflation’ to describe a general increase in prices, this rise is typically caused by one of two factors. First, it can occur due to a change in the purchasing power of what the money symbolizes, often triggered by a deliberate reduction in the quantity of wealth it represents. This is the essence of monetary manipulation. Second, prices may rise due to a fall in purchasing power without any change in the quantity of the money itself. For instance, if gold becomes naturally cheaper because of a new supply, an Islamic Dinar made of 4.25 grams of gold will naturally buy less.

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Pricing Benchmark, Money Market Instruments and Monetary Policy

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Islamic banks currently use the same interbank offered rate in pricing their products. By and large, they provide debt based financing rather than equity based modes of financing. Thus, the promise of egalitarian distribution and inclusivity remains unrealized in practice at the moment. From a more pragmatic view to achieve the promise of Islamic economics, it is important to transform the way Islamic banking and finance is conducted in the contemporary monetary system. One way to achieve that is to link the payoffs to the saving deficient and saving surplus units through real sector economic payoffs. This article gives a review of literature on this issue and the next section presents an alternate proposal to achieve the aim of having a distinct system of financial intermediation which is less reliant on debt based financing and which is closely aligned with the real sector of the economy.

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Utility Maximization, Morality, and Religion

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The paper contrasts this self-centred economic model with moral philosophy. Egalitarian ethical theories which include Utilitarianism, Rawls’s theory of justice, Situation Ethics (Joseph Fletcher), and Kantian ethics (Categorical Imperative), all require that, as a necessary condition for morality, one must treat the welfare of others the same as or equally to one’s own welfare.

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Capitalism: A Very Brief Introduction

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Capitalism is defined by the Cambridge dictionary as, ‘An economic and political system in which property, business, and industry are controlled by private owners rather than by the state, with the purpose of making a profit.’ Following this definition, not every country can be considered ‘capitalist’.

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Budget for FY-26 and Economic Prospects for Pakistan

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It is comforting to note that Pakistan economy has breached the level of $400 billion economy. Per capita income had also breached the level of $1,800. With decrease in interest rates and inflation, the economy may get breathing space. Decrease in interest rates has eased the fiscal burden which will provide space to contain fiscal deficit at 3.9% of GDP and maintain primary surplus at 2.4% of GDP.

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Inflationary Burden of Taxes

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Despite huge burden of taxes in this budget, 75% of all tax revenues will just go in paying interest on and instalments of previous debt. Last year, government spent around Rs 400 billion in PSDP. Spending every year in PSDP falls short of announcement. This Rs 400 billion is less than even 5% of what we will pay in debt servicing and less than 20% of what we will spend in defense.

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Influence of Physics in Contemporary Mainstream Economics

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Those scientists who believe in Scientism and hold that the experimental method is the only arbiter in all matters of life need to look no further than the field of economics where the tools and concepts of physics are applied. Even though science cannot be arbiter in morals, defining motives, public policy and politics, but it cannot even be a perfect and sufficient tool in explaining economic behaviour by taking the analogy of animal behaviour which is based on self-interest and survival instincts.

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