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For or Against Usury

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  • Fri, Jan 29, 2010 - 08:51pm

    #1
    J Kovacs

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    For or Against Usury

 

I was wondering who on this site thinks Usury (interest) is a good thing?  Now I’m not talking about interest you get on your savings or CD’s but on loans people take out.

When a bank gives you a loan for a house, car or small business, it technically does not have the money to back up the note/loan.  So why should a person be obligated to repay P+I when they (the bank) technically never had P to begin with through the practices of Fractional Reserve Banking?

I think we should end usury on Loans for Houses, Cars, Businesses and College.  

Now the argument is that “that is how banks make their money”, but that also makes no sense to me when they have the power to make the currency available on demand with a few key strokes and book entries.  

The issue of Debt free monetary systems has never been discussed in the media at all.  I was also wondering if this done for the very specific reason to purposely not inform the public?

 

  • Fri, Jan 29, 2010 - 09:10pm

    #2
    Peak Prosperity Admin

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    Re: For or Against Usury

I think we should end usury on Loans for Houses, Cars, Businesses and College. 

So what you are saying, is you shouldn’t have house, car, business or college loans?  After all, if you don’t have interest why would anyone lend money?  Would you put your money at risk with no upside?

Now I’m not talking about interest you get on your savings or CD’s but on loans people take out.

They are the same thing.  Why do you think you make money on your CD’s and savings?  It’s because the bank is lending money to others and some of it goes to paying on savings, other for operating the bank. 

Fractional Reserve Banking?

Now that is the real question, not interest.   Should FRB be allowed, that is should a bank be able to lend out more than they have in deposits.  If you choose no, then I think savings takes on a different feel.  You deposit money and specify how much can be lent.   Lending would be just like you making a loan to a friend.  The money that is lent is no longer available for your use until it is paid back.  Now with a central holder like a bank making the loans they may be able to aggregate loans to reduce individual risk.  That is you allocate a specified amount to be lent and the bank can aggregate it with others to make loans so that any one bad loan doesn’t result in a total loss like you would have if you personally lent money to an individual.

No matter what interest rates will be much much higher, and should be for making loans.  Right now money is cheap so it is used to do stupid things like buy houses, CRE, speculation, etc.  Also because savings interest is so low no one wants to save, rather you have to speculate to keep up with inflation.

My personal opinion is that we should allow competing currencies and banking systems.  That way you get to make a choice based on your risk tolerance.  You can choose a commodity backed currency or a fiat currency. You could choose a FRB or non-FRB bank.  There is no reason we can’t have choice and let the market and people choose what works best.  Right now we are forced to use the USD (at least in the US) and forced into a FRB system so that the government can spend without having to directly raise taxes.

 

 

  • Fri, Jan 29, 2010 - 09:16pm

    #3
    Peak Prosperity Admin

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    Re: For or Against Usury

If I am collecting the interest I am all for it. If I am paying it I am dead set against it.

If we have a system of 100% reserves then the banks can make their money off of fees. Of course unsecured loans with no collateral such as revolving credit accounts are another matter. That is how Louie down at the pool hall makes his money.

V

  • Fri, Jan 29, 2010 - 09:24pm

    #4
    Peak Prosperity Admin

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    Re: For or Against Usury

 

Rhare,  You ask “if you don’t have interest why would anyone lend money?”   Simple, If I had the power to loan money I don’t have like the banks do then I would not care.  Since the banks do have this power, why enslave the working people of an economy?  

A predominant debt-free monetary system has so many more perk as opposed to a Debt based monetary virus.  

 

Im sure if the FED need to pay for some kind of costs it does not come out of their own pockets. 

  • Fri, Jan 29, 2010 - 09:55pm

    #5
    Peak Prosperity Admin

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    Re: For or Against Usury

So what you are saying, is you shouldn’t have house, car, business or college loans?  After all, if you don’t have interest why would anyone lend money?  Would you put your money at risk with no upside?

And this IMO is the crux of the argument. If a bank didn’t charge interest it would go out of business.

Usury IS debt. No usury, no banks. No banks, no debt. The usury is there so that the bankers can make money period. Remember they aren’t putting up any risk. They make the money appear out of thin air plus they have the down payment, collateral, and any equity. Pretty sweet deal huh?

How about this. The governmet issues a note that has a law attached to it and that law says it is illegal to attach any usury (interest) to this note. So why would the government do this if it wasn’t making interest? Because it would be great for the economy and business. Banks could charge a fee for storing your money, safe gaurding it, transfering it, etc.

The interesting part would be: could the government tax that note? Would that be considered usury?

  • Fri, Jan 29, 2010 - 10:03pm

    #6
    Peak Prosperity Admin

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    Re: For or Against Usury

If a bank didn’t charge interest it would go out of business.

 

How can a bank go out of business, when any expenses can be covered and created just like the loan was, out of thin air?  Banks should be a public utility to benefit the people not the bankers since they charge interest on $$$ they never had to begin with.  

This Debt based system is beyond paralyzing and naturally inflationary.

  • Fri, Jan 29, 2010 - 10:15pm

    #7
    Peak Prosperity Admin

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    Re: For or Against Usury

JK121

Thats my point. They couldn’t and shouldn’t stay in business if they survive by usury.

Printing money out of thin air is usury because its done when a loan is created and interest is attached to the loan. They wouldn’t do it if there was no interest in it for them.

  • Fri, Jan 29, 2010 - 10:33pm

    #8
    Peak Prosperity Admin

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    Re: For or Against Usury

[quote=JK121]

Rhare,  You ask “if you don’t have interest why would anyone lend money?”   Simple, If I had the power to loan money I don’t have like the banks do then I would not care.  Since the banks do have this power, why enslave the working people of an economy?  

[/quote]

Sometimes I wonder if this sites advocates of debt free money even bother to think about what the otherside is saying. 

We don’t want banks (or anyone else for that matter) to be able to create money out of thin air.  Once you understand this point we ask, why should those with capital put it at risk by loaning it to someone else if they are not allowed to charge interest to compensate for that risk?

[quote=JK121]

A predominant debt-free monetary system has so many more perk as opposed to a Debt based monetary virus.  

[/quote]

I would sure love to hear how these debt-free monetary systems will solve all of our problems. Then we can end the FED and eliminate our evil debt based monetary system.  Bernanke could then move over to the treasury department and print (I heard he is good at it) lots of credit based money for us until Americans are the richest people on earth as we should be.  When he has made us Americans all rich he can then show the people of Zimbabwe what they did wrong.

Personally I think that any top down monetary system will eventually fail for the same reasons that top down economic systems fail.  Those at the top will use their power for their own personal benefit or suffer from the fatal conceit of thinking they know what is best for everyone else and therefore are justified to use force on others for their own good.

  • Sat, Jan 30, 2010 - 12:04am

    #9
    Peak Prosperity Admin

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    Re: For or Against Usury

Personally I think that any top down monetary system will eventually fail for the same reasons that top down economic systems fail.  Those at the top will use their power for their own personal benefit or suffer from the fatal conceit of thinking they know what is best for everyone else and therefore are justified to use force on others for their own good.

What would you suggest?

  • Sat, Jan 30, 2010 - 01:06am

    #10
    Peak Prosperity Admin

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    Re: For or Against Usury

[quote=Johnny Oxygen]

Personally I think that any top down monetary system will eventually fail for the same reasons that top down economic systems fail.  Those at the top will use their power for their own personal benefit or suffer from the fatal conceit of thinking they know what is best for everyone else and therefore are justified to use force on others for their own good.

What would you suggest?

[/quote]

How about freedom?  If it was up to me I would treat money like every other commodity and let the market sort it out.  One outcome I could see happen is something like the “Digital Coin” proposal but without being forced by government.  It could start with something like WalMart bucks or Detroit Dollars where each end user is free to transact in whichever currency he wishes and market forces will force discipline on the issuing parties.

Honestly I have no idea how it would work but it would have many benefits like:

1) No monopoly control over our money and therefore no single way to capture and corrupt the process.

2) It would be very hard to finance a welfare/warfare state

3) Compatible with the constitution.

4) States/Municipalities could still charge taxes in their own local currency and therefore make a market for it.

5) Hard money types would be free to transact in gold/silver but people that prefer fiat currencies would could use them.

The key would be that there would be no forced fungability between the currencies and therefore markets would spring up to find the proper conversion rates.

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