Topic: Banning Usury will promote cryptocurrencies - page 3. (Read 4372 times)

Next, let's discuss the above.

I'm not sure if you meant physical gold/silver or gold/silver standards.  In the case of using physical gold and silver as money, both Medieval Europe and post-1500 China have proved to be stable economies.  When technical and commercial innovations took off during the Renaissance, the economy prospered, while still on physical gold and silver as money and very low amounts of credit compared to today.

In the case of the gold (and indeed silver) standard, you're correct to point out many problems.  But remember this is not a free monetary system either.  It is an older and more stable version of today's system but essentially the same.  (In fact we might be heading back there if this system implodes.)  The gold standard was also a system of artificial asset inflation driven by the state-bank alliance.  The mechanism of exploitation was issuing paper money while claiming all of the issued paper can be redeemed for gold at the fixed price.

Maybe, because otherwise he will starve to death?

You see, ultimately it doesn't matter whether he wants to spend or doesn't since, first, the amount of money in the economy is fixed, and, second, the profits of the producer can't be negative (or else he just won't produce). Given these two conditions as binding, you have to face the fact that the consumer should necessarily be eating away his savings. Remember, profits should remain positive for this economy to work in the first place, and no additional money gets injected (that would make up the producer's profits). So before we proceed any further, you should either accept that (and thus we can't possibly proceed any further) or try to escape from this setup using some arcane logic that I'm not aware of. Basically, you have to explain where the producer's profits come from (namely, those 5 dollars)

First let's talk about your previous post.  There is no reason the consumer should want to spend $105 when they are only earning $100 (who would want to keep eroding their savings?)

So the follow-up issue becomes, if everyone saves a portion of their earnings every year in hard money, I imagine your claim is that the circulating money must keep dwindling.  This is not the case in steady-state.  It doesn't matter if the exact mechanism is that retirees become net consumers, or that someone who just landed a big profit or inheritance spends a lot for a while, or what not.  The market incentives are for the steady-state of total societal savings to be constant, so in steady-state net savings must match net consumption.  (If net savings become too high, prices will come down so the balance is restored.  When prices come down, not only are you enticed to buy, but you also realize you don't need so much for retirement, so you spend more.)

So, I would like you to demonstrate how, in a truly free market like this, under constant supply of money (which is BTW only one possible scenario of a truly free market), any kind of instability, including implosion, can occur.

In a truly free economy, steady state dominates.  Only when some special insight is discovered, that serves the population something new at the right price, do we have an investment.  Investments are therefore a much smaller portion of the economy compared to today, as they should naturally be in a healthy system.

I love how religion bends to accommodate changing times. 
When the typical money lender was a tight-fisted jew (think Shylock) most people were against it. Now you have faceless banks charging all that they can.

There is not any other option in a fixed money supply environment

In fact, this has always been the case when, for example, gold had been the hard money. Ultimately, it led to wars, revolutions and interventions when accumulated wealth had been redistributed, only to get accumulated in few hands again over time. You yourself essentially confirm that when you say that people save hard money. Basically, that's what happens to Bitcoin right now. Regarding the economy running out of money, I want you to comment on my previous post

I would add that the reason it is considered haram (forbidden) is because it is considered immoral to make money from predatory loans. For much of the history of Christianity usury was also forbidden. However there is so much money in it that exceptions have been rationalized over the centuries.

In a truly free economy:

- People save hard money.
- People don't invest more than they can afford to lose in risky ventures.
- Purchasing power is preserved (if not slowly increased over time,) so there's no fear of not having enough to retire if one plans and saves adequately.

In this economy we don't run out of money (so no need for barter, etc.) and I also don't see any way we're concentrating wealth in a few hands.

I'm not assuming that, and that should be pretty straightforward from my post

But, to tell the truth, I expected that you would try this trick since this is what I'm used to hear in such cases. This new money which the producer receives (and which will be created by banks through loans in real world) is his profits. These are the same profits both in the case of a fixed money supply and in the case of an adjustable money supply. But in the former case they come at the expense of the consumer (the worker) by impoverishing him (basically, taken directly from him as I have shown) while in the latter case the consumer wealth remains arguably the same

Accurate, based on those numbers, I think the only caveat to this though is that it assumes there is someone who doesn't take out debt yet still actively spends their money and allows for others to pay off their own debt. When everyone gets into debt, people have to completely stagnate and pay their debt back, taking away from economic activity, resulting in a lack of money to pay interest back with.

Usury is so-so in my opinion. It's not like banks or anyone will make money without it, and banks won't provide interest at the rates they do now.

It appears that you are assuming that all the wealth in the world is backed by money, but that is not the case. If you determine the total wealth in the world, you will find that it far exceeds the total amount of money in the world, by orders of magnitude. The wealth of the world grows because people are productive and they create value and not because there is more money.

How does that have nothing to do with a fixed money supply?

I basically proved to you that the reason for this system to be unsustainable is exactly because of a fixed money supply. If you don't really see how it is the crucial point here, assume that there is a dynamic money supply. In that case, the profits of the producer will be from the new money created, i.e. at the end of each cycle new 5 dollars will enter the system, and the producer gets this money while the worker still has his 100 dollars and is able to buy the same amount of apples each cycle without becoming poorer. The producer can then expand production and start growing oranges as well as hire two children of the worker for this new production. So more wealth get created in the end with everyone becoming wealthier in real as well as nominal (money) terms

I agree that more productive people gain a disproportionate share of the wealth, and it is not sustainable. It eventually results in revolution where the haves become have-nots.  But this has nothing to do with a fixed money supply.

I understand that. And I don't claim that the producer shouldn't get any profits. But this is not the real issue. The real issue here is that the amount of money in circulation doesn't change. Say, the consumer and the producer have $100 each at the start (let's break free from the borrower/lender dichotomy for simplicity), and the consumer also happens to work for the producer. So, at the end of the production cycle, the producer should get income of $105 and pay $100 to the worker (who is also the consumer). The consumer gets paid $100 for his work as well as pays himself $105 for apples. Now the producer has $105 while the consumer only $95. Both were not sitting idly, but in the end the wealth got redistributed, and someone (the producer) ended up wealthier while someone else (the consumer who is also the worker) poorer, any way you look at it. By the end of the next cycle, the producer will have 110 dollars while the consumer (the worker) just 90 dollars, until the worker can't pay for apples at all

And how could this system be sustainable in the long run?

The profits and the ability to pay interest come from the value created by growing the apples. Ideally, the grower wouldn't spend all of the profits on interest (otherwise there would be no benefit from getting a loan), and both the lender and the borrower are better off than if the loan were never made and the apples were never grown.

Well, I assume a hypothetical situation when the system runs out of money. Indeed, in reality this is unlikely to happen since in that very case people will just switch to direct barter or use another means of payment. Though the latter could still bring down the system to very primitive levels. Let's assume that people can't use barter and no other money is allowed either. Ultimately, that will cause stagnation to the point where every new generation of population will be poorer than the preceding one simply because all money gets accumulated in fewer hands (remember no barter is allowed)...

In the end, this system is bound to disintegrate down to pure natural economy with little or no trade

Where is the crash going to come from?

If people stop lending their saved hard money, it just means no new investment gets funded.  There is no problem because all the demand is real, ie not driven by (ultimately) policy of the state-bank alliance.  Demand doesn't need to collapse simply because no new investments are made.  People still want the things they wanted yesterday.  No new investments simply means the society won't get wealthier, for now.

Remember, this is a very different world from today's state-driven-inflation world.

Contrast that with today's world, where there are enough people working on projects that really won't see any demand without the state-bank alliance's propping up of financial assets and demand.  If, for whatever reason, investments stop, these people will lose their jobs, and the people who serve *their* 'needs' which again is mostly propped up demand also lose their jobs, etc.

So the key is whether demand is natural (ie free-market based), or propped up by the state-bank alliance.

Of course, this story has little resemblance to how we live today, because our entire system is based on theft by the elites.

This society has no usury *for that year*.  Maybe, in the following year, someone finds a good new investment again, and usury (interest) is paid again, because there is a new loan.  No one has chosen not to participate in usury.  The (small amount) of interest gently and slowly redistributes wealth to finders of new demand over time.  There will be a slow deflation over time. This is not a problem as it is not the same kind of deflation we face in today's artificial-demand economy.

But you still fail to explain why this system won't crash eventually or credit runs dry, i.e. no more economic growth due to ever increasing deflation (in other words, deflation outperforming economic growth)


In other words, it can be said that you just include the interest into the price of your apples

In this manner, the interest can be excluded completely from consideration by simply diminishing the profit margins you obtain by selling your merchandise. But the question still persists, namely, where do your profits come from? In this system when someone wins (i.e. earns) someone seemingly loses, at least in monetary terms, right? I mean the profit margins, of course, not the money which apples themselves cost to produce. In this way, profit margins amount to bank interest (though this shouldn't be misconstrued as if I were against producer profits altogether)

Then the society has no usury. They not only have sound money (not debt based) but have chosen to willingly cease participating in usury altogether including fractional reserve banking. So yes there is no longer is a need for endless exponential growth in this example as that need comes from usury. This hypothetical has very little in common with our current society and economy.

In a truly free monetary and financial market, let's say you found a new plot of land and borrow $100 to grow apples.  The interest you owe is $5.  People like apples so much that they eventually pay you not just the $105 you owe but also $200 for your profit.  A little of society's wealth is redistributed to you and your lender for the innovation you've provided.

Let's say, the next year, no new land was discovered for apples, and indeed no one finds anything new to do.  Then there is no debt in the economy.  Everyone does the same thing, and pays and receives the same monies as before.  There needs not be exponential growth of debt.

The reason the modern (state-driven-inflation based) economy needs a growing money supply is that people never really liked the apples enough to pay that much for it normally, but the inflation made people feel rich, throw caution to the wind, and buy them anyway.  If the debt mountain stops growing, all the apple growers who have no real demand anyway will now close down, and jobs will be lost.