With the economic crisis in our country after November 2021, one of the most discussed issues was the issue of interest and interest rate cuts. Of course, it is not possible to summarize the very broad subject of interest in one article, but I think it would be useful to briefly touch upon the discussions. Firstly; Islam strictly and strictly forbids interest. Because, interest is a virus that allows the money, which should be the equivalent of a production and added value, to be obtained free of charge, without producing, undeserved, and therefore causes the capital to flow from the producers to the money holders, and the inequality of income distribution to increase continuously. The cost caused by interest complicates investments, directs people to earn interest by preventing them from production, and thus creates a restrictive effect on production and employment. In addition, keeping money on the sidelines with interest rate concerns causes the continuation of economic recessions. Interest also causes social effects such as the disappearance of cooperation in the society, the increase of selfishness, doing everything for profit, and usury.
As for the interest rate cut issue; After 2002, the government authorities, which applied a low exchange rate and high interest policy for more than 15 years, made the public, private sector and households indebted to an inextricable level, and adopted the policy of lowering interest rates and based this on nass. While high interest rate policy was implemented in the 2000s when interest rates were low and even negative interest rates were spoken all over the world, lowering interest rates in a period when countries were dragged into crises and increased interest rates as part of a certain plan due to the effect of the pandemic throughout the world, triggered the current problems for our economy, which has many structural problems. When this is the case, the day has dawned for the global exploitation system, which knows nothing but the memorizations of the Orthodox economy and considers every suggestion other than these memorizations as unscientific.
They started to make propaganda as if the policy of interest rate cuts was at the root of all the problems experienced today. First of all, it should be stated that the reason for the current crisis is not the policy of interest rate cuts. The interest rate cut was only the trigger. Turkey pays the bill for the so-called reform process initiated by Kemal Derviş and the wrong economic policies implemented by the AKP government afterwards. While we have been experiencing the result of these policies with the currency crises that have been constantly recurring since 2018, the bill has become more severe with the interest rate cut. For this reason, even if the central bank takes steps to increase interest rates, our economic problems will continue, even if there is a short-term and limited relief due to the structure of the current system. Because the public, private sector, household debt is at its peak, the scarce resources are wasted with inefficient investments, the most basic necessities, especially the products with high added value, are imported instead of producing them, thus constantly running a foreign trade deficit and the need for foreign currency due to imports and overdue debts. Considering the decrease in interest rates as the main reason for the crisis in a country that is constantly increasing is incompatible with science and with the science that the mankurts we have mentioned above. The same is true in the USA. Although the FED decided to increase interest rates, economic problems could not be resolved as structural problems continued and new interest rate increase pressure continued to occur. Because this is how the wheel of the system of exploitation turns. Countries that are in economic distress are under the pressure of constantly increasing interest rates in order to provide financial resources, borrowing at higher interest rates and being more exploited.
Another discussion about interest is related to the claim made by the President of the Republic that "interest is the cause of inflation". The memorizations of orthodox economics are based on the thesis that inflation is the cause of interest. However, considering that the cost of interest is reflected in the prices and that this situation will affect the inflation data of the next period, it would be memorizing to argue that the interest rate does not affect inflation.
It should be stated here that; In my opinion, there is not a one-way interaction between the interest rate and inflation variables, but a mutual interaction. Empirical studies in the literature also show that there is a mutual effect between interest and inflation. In short, interest is a future-oriented phenomenon, expressed in future rates, while inflation is based on the past. It refers to the ongoing price increase in the past periods. The cost of the interest determined in one period affects the inflation that will occur in the next period, and high inflation is given as the reason for the increase in the interest in the current system. Therefore, in the current global financial system, the relationship between interest and inflation is like a chain that feeds each other and creates a continuous cycle. To terminate this cycle, one of the links of the chain must be removed. Choosing the future-oriented interest ring, which can be taken as the starting point, is the only reasonable and logical solution. In that case, an interest-free economic model must be established in order to end this cycle of exploitation. Since we know that the mankurts of the global system will object to this, let us express in advance that we know that it is not possible to talk about an interest-free economy within this exploitation system, the principles of which they memorized. We are talking about the creation of an interest-free economic system that can be presented as a model to the whole world. There may be some who would describe this proposal as unscientific because it doesn't fit their rote, but there is a truth; One of the most studied subjects in the field of economy and finance in academia all over the world, especially in many developed countries, is the interest-free economy. Because economists and scientists in many countries have seen the destructive effect of interest and have sought an alternative system. Of course, it is not possible for a single country to implement an interest-free economic model. If such an attempt is started by a country, the existing system of exploitation is likely to be punished by its masters. For this reason, countries that want the end of global exploitation, especially Islamic countries, should come together and implement an interest-free economic system and present it as a model to the whole world. The point brought by the exploitation wheel of the interest-based capitalist order to humanity and the inequality of income distribution, which can be expressed as the most important reason for interest, reveals that such a move is inevitable for the liberation of all humanity from exploitation.