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the capital will fly but will the land as well?
resources are scarce but have we achieved maximum efficiency in it?
and western economics says that resources are scarce, that is why we have wars. Islam does not say that resources are scarce. remember malthus? who said that increase in population will lead to starvation. has it happened?
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Malthus example was about food, it was an exception but that example could not refute scarcity. We're going to run out of gas in the next 20 years. How plenty is that resource? Radio spectrum for mobile communication. How plenty is that? Land will not go away? What does it even mean? Take example of real estate. How plenty is real estate from downtown? Mall Road or Gulberg? A shop down there will be best for business but the space is limited. More buyers will skyrocket the price of real estate. Inflation again?
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zero interest means that inputs of the farm will become cheaper.
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How will that happen?
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also it is not the amount of money that matters, what matters is its circulation.
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Both matter. A large amount with more purchasing power shows it's a big economy. And a large amount of money circulating that has less purchasing power shows that the currency is inflated which is not much use.
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also only those loans will be sanctioned which will be profitable only.
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there is no way to determine that a venture will always be profitable, no guarantees.
But who will issue those loans? With zero interest rate no one will have an incentive to issue loans
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the loans for luxuries and consumption products will go down and so inflation won't go beyond a certain limit.
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People won't save because there will be no incentives to save. Their savings are used to lend borrowers by investment banks/financial firms. Jab savings hi nahi hongay to loan kesay finance hongay??
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also if you abolish interest rate you have stabilized the economy because there is no danger of a trade cycle. stabilization of the economy will attract FDIs.
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Trade cycle hi nahi rahay gaa.. downward spiral zarur hoga...
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and yes imports will decrease but exports will increase. and with zero interest rate we will be able to supply goods for exports.
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Imports will decrease when currency is depreciated and there is inflation. Since you have accepted there will be inflation you might as well check out the harms done by inflation esp. to the poor and middle class
Exports are going to benefit exporters but how're we going to even that out with the price hike as a result of high Oil prices that will directly hit poor and Middle class?
If inflation is not to go beyond a certain limit, how is that controlled? Monetary policy! And how is monetary policy controlled? Primarily by controlling interest rates. By fixing it at zero how is Government going to control inflation and keep it beyond a certain limit?