The west’s economic model of fuelling growth through ever higher levels of debt is proving unsustainable
With the EU drowning in debt, the US having struggled to raise its debt ceiling again and having its credit rating downgraded, debt is the perennial bane of western economies. Here we present 10 truths about western debt that exposes the fallacy of the capitalist model that is fast losing credibility:
1. The US is the biggest debtor in the world – owing a colossal $52000000000000 ($52 trillion)*
2. With the US economy producing $15 trillion worth of goods and services a year, its total debt is equivalent to 350% of GDP
3. The debt amounts to every single man, woman and child in the US indebted to the tune of over $165,000. However, half of the US population lives on less than $46,000 a year
4. US debt amounts to 58 times the $900 billion of actual currency (or hard cash) in circulation
5. Interest payments on US debt totalled $414000000000 ($414 billion) alone in 2010. This is equivalent to the annual GDP of Norway.
6. Paradoxically the US borrows to pay back existing debt
7. The US ‘debt ceiling’ has had to be raised 33 times since 1981
8. In 2008 the US Government bailed out the financial sector to the tune of at least $13 trillion which is nearly equivalent to total value of goods and services produced in the whole country in a year**
9. In Europe, most of the debt is held by the so-called economic power houses of France, Germany and Britain – together totalling $25000000000000 ($25 trillion)
10. In comparison to western (US and France, Germany, Britain) debt of over $75 trillion, total Third Word debt is a relatively meagre $1.3 trillion.
The glitz of westerns capitals with their tall sky scrapers and ostentatious lifestyles betrays a hollow economic existence built on debt that is on the verge of collapse under its own weight. As the Muslim world seeks new beginnings from western backed tyrants they would do well to avoid the clutches of the western capitalist model of debt fuelled growth.
While the Sharia permits debt and borrowing, interest is forbidden which will greatly inhibit the growth of the debt menace in the Islamic state reducing it to the margins of the economy unlike in the western capitalist model where it is at the core of the system. In place of debt, Islam’s economic model favours the use of ‘equity’ through the sharing of profit (or loss) in encouraging investment and thereby promotes an inherently stable economic model which is not susceptible to the whims of the financial markets.