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Can we really achieve an economic recovery?
Viral in Malaysia
(Translated)
Economic recovery is good news that every citizen of a country dreams of, and its impact is also at the international level.
However, the economic situation in Malaysia today is undeniably burdening the lives of the people, which is also felt by some of the rich.
The phrase 'economic recovery' itself is often used not only by the government but also used as a sentiment in election campaigns.
However, an important question arises - can it be done and what steps need to be taken to realise it?
Referring to a Book entitled, "The Confessions of an Islamic Banker" authored by the Deputy Chairman of the Malaysian Movement for Monetary Justice, Muhammad Zahid Abdul Aziz, this question was insightfully addressed in a delightful way.
*Reform of the Monetary System*
The fact is, a country will only be able to recover its economy through a comprehensive reform of the country's monetary and banking system.
According to Muhammad Zahid in the Book, the recovery of the country's economy is just a 'daydream' as long as the country's economic system is still centered on the current defective monetary system.
"We must understand that no country will ever recover its economy when its banking system is still responsible for its various problems including persistent and permanent inflation, youth and graduates unemployment, underemployment and unreasonably low wages, soaring house prices and the rich getting richer while the poor get poorer,".
Such problems are also accompanied by global financial crises such as the Depression Era (1929-1939), the 1997 Asian Financial Crisis and the 2008 Subprime Housing Loan Crisis.
He further stated in the Book, the wrong channeling of funds of the banking system itself that encourages such financial crises to continue to occur.
On average as much as 70 percent of bank loans are channeled to the personal loan, credit cards, housing, and generally the personal sector.
"If you look more closely, only 30 percent of the money flows into the real economy to create economic output and employment."
"Out of this 30 per cent, only 16 per cent of the funds are channeled to the Small & Medium Enterprises sector which creates 70 per cent of jobs in the country (SME's are businesses with sales of RM50m/ USD10m and below).
"Therefore, there needs to be a reversal in the ratio, so that 70 percent of the money created should be channeled to the real economic sector, while only 30 percent to the personal sector," he explained in the Book.
He added that this kind of Reversed Ratio has been implemented by China since the 1960s, which hence made the country a major economic superpower in the world now.
"When more money is channeled into the real economy, there will be more jobs in the country reducing endemic unemployment."
"Not only that, this kind of measure can eliminate underemployment by producing reasonable wages for workers," he wrote.
*Sovereign Money and Debt Jubilee*
Muhammad Zahid added in the Book, the corrected distribution of money created by today's financial system needs to be followed by another step called Sovereign Money.
"In this step money is no longer created by private banks but by a monetary authority independent of the ruling government, and reporting only to Parliament.
"In this mechanism, the money created will be channeled to a State Investment Bank to channel 100 percent to the real economy to create jobs and increase economic output," he wrote.
The step should also then be accompanied by a Debt Jubilee which has been done historically by European empires to correct the excesses of a faulty system.
He stressed that the execution of a Debt Jubilee may not be easy to do but any government that succeeds in doing so is a truly commendable government.
Therefore, the economic recovery of this country can indeed be done, but it requires action that arises from out of the box thinking.
This means that if any government still wants to maintain that economic recovery can be achieved under the existing monetary system, then such claim is nothing more than a lazy pipe dream.
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Dikemaskini [Updated]: Sam Ahmad 20241007