Short thread on inflation
1- I have been listening to what experts have been saying about inflation & its impact on various parts of the economy in recent weeks. Many think inflation is a modern phenomenon & somehow the FED, fiat money, or capitalism created it. #Inflation
1- I have been listening to what experts have been saying about inflation & its impact on various parts of the economy in recent weeks. Many think inflation is a modern phenomenon & somehow the FED, fiat money, or capitalism created it. #Inflation
2- Inflation is old.. thousands of years old, when people used all kinds of things as money. Inflation existed even when gold & silver were used as money.
The main reason for my thread today is this:
Anglosaxon experts must read about inflation in other languages & cultures.
The main reason for my thread today is this:
Anglosaxon experts must read about inflation in other languages & cultures.
3- The quantity theory of money was NOT introduced in Europe in the 17th century as European books claim. It was introduced in Egypt 300 years earlier in a book written by a scholar called: Al-Maqrizi
#Inflation #Money #Egypt #Economics
#Inflation #Money #Egypt #Economics
4- Here is the amazing part that I want you to know:
Yaqub ibn Ibrahim al-Ansari (known as Abu Yusuf) a judge and jurist who lived in 8th century Baghdad, studied inflation & debt and concluded that debt has to be paid in its "real value" not the "nominal value."🔥🔥
Yaqub ibn Ibrahim al-Ansari (known as Abu Yusuf) a judge and jurist who lived in 8th century Baghdad, studied inflation & debt and concluded that debt has to be paid in its "real value" not the "nominal value."🔥🔥
5- As many of you know, usury (interest on loans) is banned in Islam (same as in Christianity and Judaism). Abu Yusuf concluded that the increase in the "nominal value" when paying the debt in "real value" under inflation is NOT usury. This is from the 8th-century folks!
6- Abu Yusuf is from the Hanafi school of thought. I saw this first hand as a young boy in a small village:
A man visited an old businessman and told him that over 20 years ago when his father was on his deathbed said:
A man visited an old businessman and told him that over 20 years ago when his father was on his deathbed said:
7- I borrowed money about 40 years ago from XYZ (the father of the businessman), please return the money to him or his children.
Now I am here to pay my father's debt to you since your father died too! the man said.
Now I am here to pay my father's debt to you since your father died too! the man said.
8- both men realized that with massive inflation over the years, paying the debt in its nominal value doesn't make sense. They decided to go to the highest religious authority in town (Shiekh), who was from the Hanafi school .. one of the main schools in Islam.
9- They explained the matter to him. He wrote on a piece of paper five items that are widely used on daily basis in the village & told the two men to go ask the oldest people in town about the prices of these items when they were young and write them down next to each item.
10- They brought back the list after a few days with prices. The Shiekh asked his son to go to two stores nearby to get the current prices of these items. Now you know what he did: with a simple calculation, he calculated the real value of the debt. The dept was settled.
11- My point here is: Inflation is old even when gold was used as a currency, societies dealt with inflation ramifications long ago. Even in a remote village where most people were uneducated realized what inflation means and how to deal with it.
12- So why do some "experts" & "traders" think inflation is something new? Why do some people think "fiat" money is the problem while inflation existed when gold and silver were used as currencies?
Look: gold is just a stone if you do not believe in its value! #Gold #Inflation
Look: gold is just a stone if you do not believe in its value! #Gold #Inflation
13- One of the most amazing things about the Arabic language is that it is the only language that is widely used today that has not changed much in the last two thousand years.
Arabs can still read books written 1,500 years ago. A wealth of macroeconomics knowledge is out there.
Arabs can still read books written 1,500 years ago. A wealth of macroeconomics knowledge is out there.
14- According to the majority of Islamic scholars, price controls are prohibited. Prices are set in free markets.
In the 8th century (on the modern-day Syrian coast) people complained about the increase in meat prices. A scholar told them: make it cheaper! Reduce your demand!
In the 8th century (on the modern-day Syrian coast) people complained about the increase in meat prices. A scholar told them: make it cheaper! Reduce your demand!
15- Even at that time, they realized the difference between cost-push inflation, demand-pull inflation, & the role of the money supply. They also realized the solutions & that government intervention to lower or set prices is wrong.
I hope you benefited from this thread!
I hope you benefited from this thread!
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