Wednesday 30 September 2015

INFLATION THEORY OF ISLAM

Islamic banking finance economy

by islamicbankingfinanceeconomy.blogspot.com

INFLATION THEORY OF ISLAM


According to Islamic economists, inflation is very bad consequences for the economy due to:1. Potential disruption of the function of money, especially against the savings function (value store), the function of a payment at the start, and the function of calculation unit. One should break away from the money and financial assets as a result of the inflation burden. Inflation has also resulted in a return of inflation.2. Weaken the spirit of saving and attitudes towards saving society.3. Increasing tendency to shop, especially for non-primary and luxury goods.4. Directing the investment on things that are non-productive accumulation of wealth such as land, buildings, precious metals, foreign currencies at the expense of investments towards productive such as: agriculture, industrial, trade, transportation, and othersMoreover, inflation also lead to problems related to accounting such as:1. What is the assessment of the fixed assets and assets lancer done with the historical cost method or the actual cost method.2. Pemeliiharaan real capital by isolation inflationary gains.3. Inflation causes the need for correction and reconciliation operations to obtain a comparison needs of time and place.Islamic economics Taqiudin Ahmad Ibn al-Maqrizi which is one of the disciples of Ibn Khaldun, inflation classifies into two groups, namely:1. Natural inflation2. Human error inflationNatural InflationAs the name implies, this type of inflation caused by natural causes, in which people have no control over it (in terms of preventing). Ibn al-Maqrizi say that inflation is inflation caused by the decline in the Aggregate Supply (AS) or the increase in the Aggregate Demand (AD).Human Error InflationOther than that referred to natural causes inflation, the inflation caused by other things can be classified as human error or false inflation inflation. Human error is said to be infalasi inflation that result from errors of the man himself (according to Surah Ar-Rum 30:41)Human error can be grouped menururt inflation causes as follows:1. Corruption and poor administration2. Excessive Tax3. Printing money with the intention of taking advantage excessive.

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