By: Dr Faisal Ali
“The greatest shock of this decade is that more people are about to lose more money than in any time before in our history. But the second greatest shock will be the incredible amount of money just a relatively small group of people will make at exactly the same time.”
–(Larry Bates, The New Economic Disorder, p 1)
Since the dawn of modern economics, several models have emerged in the economic literature to combat poverty in the horizontal as well as vertical angle. Each model has its own plus-points but most of the economists of the world fail to realize one important factor behind poverty in this modern world. That factor which is an impediment in eliminating the poverty from the world is Compound Interest in our society, which is also responsible for evolution of economic collapses at government as well as at community level.
In the words of Larry Bates….“The servicing of this debt requires the Federal Reserve to always be in a posture of creating more money in order to stave off a collapse… This is simply compound interest in full operation… all of this within itself is inflationary.” (Pp 126-127)
Nobel laureate Frederick Soddy once said … “You cannot permanently pit an absurd human convention, such as the spontaneous increment of debt (Compound Interest) against the natural law of the spontaneous decrement of wealth (entropy)”. (Cartesian Economics, p 30)
Banerjee and Esther Duflo in Poor Economics: A Radical Thinking of the way to Fight Global Poverty discuss the contrasting approaches by Jeffrey Sachs and William Easterly. Jeffrey Sachs holds the “Poverty Trap” responsible for the prevalence of poverty while William Easterly implicates aid as a suppressing force for downtrodden society. The authors of the book argue that both Sachs and Easterly may be right but the point which I consider worthy of mentioning over here is that the cycle of poverty will continue around the world until and unless the system of economic and social disorder in which we live today is reformed. In my view, the interest- and usury-based Fractional Reserve Banking is responsible for the Debt Trap while child sexual abuse and terrorism are behind the Poverty Trap. For these reasons, the eradication of interest-based fractional reserve banking, child sexual abuse and terrorism are the needs of this era. The assumptions of my model for eradication of poverty are very simple. Those assumptions are…
Abolish interest and usury based Fractional Reserve banking.
Eradicate child sexual abuse because it leads to various psychiatric and psychological disorders plus pathological conditions like AIDS and Neisseria gonorrhea
Eliminate Terrorism and Proxy wars
The interest-bearing activities like subprime loans, Collateralized Debt Obligations (CDOs), credit default swaps and margin trading may be discarded as soon as possible.
The Islamic model of Zakat and other charity models in the economic literature should be studied and explored worldwide to beat the horrors and extremities of poverty. Similarly, the Demurrage and Time Banking should also be given due coverage in the print and electronic media of the world for the benefit of mankind.
Every human being has the right to become rich if he is born poor, but if the poor dies in poor conditions then it implies that either it is his fault or there is a flaw in a system around him or her.
