Topic: USURY is it good or bad or neutral ? - page 2. (Read 6127 times)

thank you for pointing out the origin of my common misquote. in my defense i argued earlier that it was what you could do with money that was the motivating factor and certainly power over others is one such use (in my opinion) also i read that" i should keep my economics out of politics" sorry but not possible, read Marks! reg ps also Rouseaus said "every act is a political act" within which I would include economic acts.

Now this is an interesting point. Would you say that a loan that had a high interest rate, but was clearly explained, would be usury?

What about a loan that had a low apparent rate, but by clever use of mathematics, say, compounding the interest every 30 seconds, had a deceptively high return?

That is a common misquote of a biblical passage, that is improperly used to demonize money.  The literal translation of the passage is...

"For the love of money is a root of all sorts of evil, and some by longing for it have wandered away from the faith and pierced themselves with many griefs."

1 Timothy 6:10 New American Standard Bible


The emphasis above is my own, but note that the meaning of the passage is completely different.  The "love of money" is greed, "a root"  & "all sorts" imply greed is one of several and "by longing for it" implies that money is the object of the sin of greed, but not the sin itself.

Money of any form is simply a symbol, it is neither good nor bad upon it's own, no matter what form it should take.

EDIT: the passage also makes clear that there are certainly kinds of evil that do not have their root in the "love of money", I suggest that the love of power is a close second.

Interesting question. 

The debate between usury versus free market interest rates has a disagreement between sides that is often unstated, so let me state it.

Usury is when a loan is predatory, but has historicly been linked to interest.  It's forbidden in both the Old testatment (Torah) and the Koran because the average Joe/Mohammad was mathmatically illiterate for a long time even in cultures that the general population wasn't actually illiterate.  This is the real reason that, in our modern world, we teach young children arithmatic (and why we should teach them microeconomics) in grade school.  So when they get older they stand a chance of not getting screwed by someone with a much better understanding of mathmatics.

However, in a true free market, we should reasonablely be able to assume that your average consumer isn't mathmaticly illiterate; and even if he is, use of mathmatics to defraud anyone is still fraud.

Therefore usury is a special case of fraud, that pretends to be legitimate via the creative and/or deceptive use of mathmatics to present itself as an honest contract.

As a libertarian who understands, and supports, free market economics; I shouldn't have to argue against usury, because it's not a legitimate example of a free market contract to begin with.

Technology exists.  Therefore your argument is fallacious.

LOL, citing a book that is a cartoon-novella using fish as currency that has a caricature of FDR so blatant that they didn't even bother to put any creativity into it.

I lulled, thanks, that literally made my day.

 

Do I need to insert the Money Speech from Atlas Shrugged here?

I love money, but only the real kind.

The concept of "usury" is just plain ignorant. People are free to contract - period.

Exactly. Let the market decide what the true cost of getting money is (and to the Islamic banking proponents, I would point out that the customer is part of the market), and we will have the right amount of lending, at the right rates.

Altruism only goes so far.  Interest & credit scores allow you to trust people you don't know (or care about).  And the gaining value of BTC is a moot point because I could just not loan you out the money & still receiving that gain in value.  But above all of that, I don't think interest is the root of our financial problems.  In fact, I think the FED's control over interest rates is a large reason for the problems we have today.  Too low, risky lending.  Too high, not enough lending.  Both cause problems & both are caused by someone setting the rate instead of the market place.

yes, with fiat you would certainly get the same or less back because of QE and similar schemes. But with BTC over the last few month at least you would have got more back. For you "interest is the incentive" not altruism as is another approach! Risk is the criteria that causes most worries. That is why current systems need KYC or similar. However you are not opposed to a good credit score and within an anonymous system that may be the answer. But repeating an example of the current systems operation where everyone is charging each other interest and everyone wins is simply disingenuous because look where we are now? reg 

Why would I lend you money (with dollars or BTC) if I got the same or less back?  There's just no incentive.  Interest is the incentive.  Although not necessarily the case with fiat currencies, BTC/gold will appreciate w/o me lending it out & risking not getting it back.  Interest is how I offset the risk that you won't pay me back.  If you have a good credit score, I can charge less interest because I will most likely get my money back.  If you have a bad credit score, I can charge a lot of interest because the changes are greater that you won't pay me back.  It is basic economics.  There is nothing negative about it.  If I get a new job far from home & can't afford a car, it is beneficial for me to borrow the money for the car because I will still net a profit after paying the interest.  The lender will also benefit because they will get more than they lent out back.

leaving religion out i have used this service and only repaid what i borrowed. admittedly a small amount for a short period. it  was a social service and appreciated- however the lender got more back than lent because of appreciation which is not interest!. given BTC limit and potential  increased usage would this not always be the case and does this not avoid usury and limit gain to increases in BTC exchange rate? reg

Perhaps I wasn't clear: it's like saying that the unit of mass (an abstract concept) has to have a known mass. See, it is such a silly idea when you apply it to mass or length or color or anything else, yet most people are brainwashed into being comfortable with the same idea when it comes to money. They don't even stop to think for a moment before talking about the "price of money". What would you think of someone telling you "sorry, can't continue building this house, I'm out of inches"?

Well, aside from the fact that having a known mass for "gram" is vitally necessary for proper scientific measurements, what he was saying is that it's not the price of money, per se, but of lending, ie, getting money. Islamic banking refuses interest, going on a "If you appreciate this service, pay what you want" model. It seems to work pretty well, but even though they don't call it interest, it basically is, just with the borrower setting the terms, instead of the lender.

This amounts to saying that the unit of mass we call "gram" has to have a known mass, or that the word "inch" has to be written in certain  length. Money is what we use to measure value, just like we use inches to measure length. In both cases it helps us compare and exchange things more easily.

 Debt does allow for more complex human interactions, even to the point of a hive mind greater than the 120 person limit that we have in tribal setups. 

If considering humans as machines, capable of perfect double entry accounting, there is no problem.

However, there are a so many of cognitive errors that debt is involved in.

Addiction & the inability to calculate compound interest are just 2 problems. Are there any here that aren't related:
http://en.wikipedia.org/wiki/List_of_cognitive_biases ?

Putting a readied syringe next to a recovering heroine addicts bed... well they have a choice don't they, but it's not nice, no?

 The whole debt thing has it's roots in religion way back from year dot.

The other thing I'd say is that having the debt contract open ended is also bad. That is, if you write a contract, the end of term should be clear. With debt as we have today it's a rolling percentage. 2 strikes of bad luck and how do you keep up? Years ago you could take these people as your slaves, or their daughters. Now after a lot of bloodshed (what people don't appreciate), we now have the bankruptcy, insolvency process to stop people killing each other over it. What if the contract was clearer from the start (if X, than Y) so that if it hasn't been paid back in X years then the collateral is taken and the saga is over.

Also, debt is the mechanism of war. Looking at many wars we can see an element of it. Germany's debt WWI & WWII, Napoleon, the US civil war, the kings debt in the British civil war, it's everywhere.
Today we're on a GDP growth treadmill where we have to work harder and harder to avoid war.

Is it really worth it?

I would much prefer to get away from morals and argue mechanisms but that just doesn't seem to work. Talking about how it's killing everyone and putting everyone at loggerheads with everyone at least puts us on the same page. "I, as debtor wish to reconcile with my debtee, we are both the victims of the same problem"


I'd like to see a lot more talk of psychology, network theory and the history of debt in this thread, talking like engineers solving a problem rather than pontificating labeling arm chair politicians.

yes, living well beyond any reasonable assessment of our means on debt is not a good thing to do. Does that mean charging interest on money lent should be morally reprehensible and/or not done in general practice?

no.

One reason for this is that it is possible (not only that, it is easy) to live within your means and take on debt.

it would only be a false premise if what I said was wrong. however a closer reading points out that the play I mentioned directly addresses this exact point. So we are both correct in fact. yes it was ok for jews to lend to non jews but not other jews since they considered themselves christians ie; the chosen people. However I am not familiar with inter religious views and cannot argue reliably but at this low level of economic activity usury was not of itself harmful. however returning to my point, generating interest from lending money grew to such a large extent it became debt. As has been pointed out this is why we are in trouble now. Making debt morally acceptable causes a posative reinforcing model of economics dependent upon growth. Nowadays we wonder how states propose to solve their indebtedness by guess what- borrowing more money at greater rates of interest. My point again- isn't living well beyond any reasonable assessment of our means on debt morally reprehensible? reg

wasn't it only immoral for christians and muslims to charge interest, and it was ok for jews to charge interest to non jews.

I think you labor under a false premise.