Press Release
Hizb ut Tahrir / Wilayah Pakistan Issues Policy Paper on Inflation
Only the Khilafah will Eliminate the Menace of Ever-rising Inflation

Like other currencies, the Dollar, the Pound and the Franc, originally, the Rupee was backed by real tangible wealth in the form of a precious metal. In the case of the Dollar, it was gold, in the case of the Rupee it was silver. This system stabilized the value of the monetary unit both internally within the country and externally in international trade. The evidence for this was that the standard prices of gold in 1910 were almost the same level they were in 1890. Today, there is sufficient gold and silver in the world to support the actual economy, transactions such as buying and selling food, clothing, shelter, luxuries, manufacturing machinery and technology and so on. However, due to capitalist practices, the demand for the creation of money outstripped the supply of gold and silver. The states abandoned the precious metal standard, so that currency became backed only by the authority over the state, allowing more and more notes to be printed, without being backed fully by gold and silver, so the money became worth less, if not almost worthless. Despite the false reassuring claims of the government to the contrary, the Rupee is collapsing constantly, which is leading to huge increases in prices. Yet, the government continues to print more and more money unheeding of the dire consequences, busily digging a grave for the lifeblood of the economy, its currency.

Capitalism mandates interest rate manipulations to control the economy. The privately-owned banks use depositors' money and deposit it with Pakistan's state bank in special accounts to earn higher rates of interest. As the State Bank does not have surplus money to pay back the interest to the private banks, it "creates money" by printing more, in order to pay interest to the depositing banks.

The capitalist balance of trade policy through devaluation of the Rupee also leads to inflation. Being a net importer country with a weak manufacturing base, Pakistan's capitalist government oversees the devaluation of the Rupee, in accordance to IMF orders. This was claimed to be primarily done to address Pakistan's balance of trade. However, by devaluing the Rupee, the Pakistani government increased the costs of manufacturing inputs, which caused havoc in the agricultural, textile and other sectors that were already reeling from the policy of high interest rates. Hence, the high cost of borrowing, together with the increase in manufacturing costs, rendered many industries and companies unable to compete internationally.

Islam has mandated that the currency of the state is backed by precious metal wealth, ending the root cause of inflation. RasulAllah (saw) commanded the Muslims to mint Gold Dinars, weighing 4.25g, and Silver Dirhams, weighing 2.975g, as the currency of the state. This is why the Khilafah "Caliphate" enjoyed stable prices for over a thousand years. Return to the gold and silver standard for Muslims is eminently practical. The lands of the Muslims in which the Khilafah "Caliphate" state is likely to arise contains a lot of gold and silver resources, such as the Sandaik and Reko Diq fields in Pakistan.

The up coming Khilafah "Caliphate" will strengthen and stabilize the currency by backing it with real wealth, gold and silver, to end the generalized inflation, which has crippled households, industry and agriculture, once and for all.

Note: To see complete policy and its relevant articles of the constitution for the Khilafah "Caliphate" state please go to this web link. http://htmediapak.page.tl/policy-matters.htm

The Media Office of Hizb ut Tahrir in Wilayah of Pakistan

 Click Here for Policy Regarding Crippling Rises in Prices