Consider the financial collapse of the Roman Empire. Lenders were able to charge interest on loans that were made to other parties. While this seems like a good situation for the lenders, with a finite amount of physical currency i.e. gold, the lenders eventually possessed all the gold, and the debtors were left with no possible means of repayment. For centuries afterward, usury was a crime which was punished very harshly because of this.
Not exactly. The lenders couldn't possess all the gold. There was (and still is) plenty of gold which can be mined naturally. Also, the lenders would need to put some of their gold back into circulation for things they wanted otherwise it wouldn't make sense to have it. Interest can reflect the market price for the immediacy of money. Interest is not inherently evil. However, I would say interest rates above a certain level can be immoral.
Fast forward to today. We've been off the gold standard for quite some time. While this may have resulted in a temporary economical surplus, it of course would not last. With nothing to regulate the increase of money, banks have been able to lend vast amounts of money with interest created out of thin air. More money in circulation means less purchasing power, means higher prices. Because of this, more and more loans with interest have to be created to stave off the eventual catastrophic deflation and economic collapse such as the great depression.
Correct.
