In The Name Of Allah, the Beneficent, the Merciful

DEFICIT FINANCING – Where it leads?

[Shamim A Siddiqi. New York]

The economy and the fiscal policies of the USA, the way it is running, reminds us about an Urdu poet who compares the life with a person who is riding on a horse but he is neither holding its reins nor has his foot in the saddle while the horse [the life] is running fast. In such a state where the horse will tumbled him down, it is every body’s guess. Just only the last week the debt ceiling, the limit of loan acquiring power of the US administration, has been raised by a Resolution of Congress to 8:2 Trillion dollars, increasing the limit outright by 800 billions. The condition of the economy of the USA is so “sick” that it no longer can survive by itself. It is running on loans from foreign investors who purchase the interest bearing IOU’s of the Government of the USA. Thus, the deficit financing is ballooning both the cost of debt servicing and country’s indebtedness to insurmountable limits.

The gap between the Revenues and the Expenditures of the governments is increasing beyond an unmanageable proportion. The deficit for the current year is reaching 440.

This is not a one time story. The Republicans as a tradition claim vociferously to cut the taxes when they go to power. Then to meet the deficit they resort to cut the facilities to the poor, needy and have-nots of the country and resort to deficit financing at large. I have been watching the gradual decay of USA’s economy and ballooning of its foreign debt and servicing cost since the time of President Reagan. I was wondering why it is so? I reminded the President in writing with many possible suggestions at that time. He acknowledged with appreciation but did nothing to correct the situation.

Then one day while I was studying Surah Taha from the Qur'an, the Verse # 124 struck me with extraordinary curiosity. It says: "And one who turns away from My Guidance [Zikri], he will have only tight economy or a narrow life and I shall bring him blind to the assembly on the Day of Resurrection." 

It is applicable equally both to individuals and nations. They all are heading towards the same fate. America is no exception to it.

The economy of the USA is heading towards, God forbid, a catastrophic end. If once the “world financing” to its enormously growing deficits contracts, the financial market is bound to collapse, resulting in a disaster of unprecedented magnitude for the USA and the world at large.

Will the financial wizards of the global economy ever think for a moment that the world and what it contains does not belong to them or to the Superpower but to the Creator and Sustainer of this cosmos? The economic system that they, including the USA and its trading partners are promoting is producing only exploitation of extreme nature all around and in its aftermath only "oppression" [Zulm] is sprouting everywhere. It has filled the earth only with Fasad [transgression] and the Creator and Sustainer hates it.

However, it must be clear to all of us that the betterment of humans and their societies now lies only in total surrender to their Creator and Sustainer and following the way of life that He has ordained through His appointed Messenger, Muhammad (peace be upon him). The rest does not hold good at all. So for the USA and the secular world at large are avoiding the Guidance from the Creator and Sustainer, they cannot postpone the collapse of its economic system for long. It is an inevitable fate that is in waiting. The patch work that is going on here and there in the name of “globalization” and controlling of International trade by WTO will not lost long.

Shamim A Siddiqi

November 28, 2004