Finally, another Catholic who understands usury is wrong. This anonymous blogger has an encyclopedic site explicating the teaching on usury, and his work is overwhelmingly good. He is a much better writer than I am, mostly because he is pithy in explaining how we get to such confusing ends. For example, check out 29) I know that usury was traditionally considered an execrable mortal sin.
I'll be studying his site thoroughly, for he has spotted some important parallels, such as Church teachings on contraception and usury. Now, having said that, he is also dead wrong on at least one key point: that corporate bonds are legitimate. He does note he has an MBA, and has been involved in "investments" so this sounds like special pleading. "Yes, usury is an execrable mortal sin, except in the work I do."
Bondholders usually have first place in a liquidation, over the equity holders. Bondholders are made whole (if possible) against the assets of equity holders. Bondholders normally lent credit, which is no thing (nothing) and equity holders put in their savings. Here again, as is the case in usury, usury is wrong not because anyone says so, but because it does damage. And not only is it wrong for being a case of usury, it is also probably fraud.
In a licit census, you get a percent of the product, not a fixed amount, plus no recourse.
In a bond there is risk, but recourse to assets. In a licit census, there is skin in the game, and the game is a cut of the production. In a licit census, crop failure and you get nothing. With a bond, business failure and you get the equity holders shares in the business.
Vix Pervenit is Latin for the first words of the encyclical... "No sooner than we had answered.... (we get yet another question...) Claiming corporate bonds are legitimate is just the sort of sophistry (or casuistry in the negative sense) that so aggravated Benedict XIV.
And to rely on Noonan to support the position on bonds? Fie!
Apparently he is also a devotee of the "intellectual property rights" fiction, so I'll be reading that as well. But the bottom line, he is doing excellent work in the empty field of anti-usury.
Feel free to forward this by email to three of your friends.
I'll be studying his site thoroughly, for he has spotted some important parallels, such as Church teachings on contraception and usury. Now, having said that, he is also dead wrong on at least one key point: that corporate bonds are legitimate. He does note he has an MBA, and has been involved in "investments" so this sounds like special pleading. "Yes, usury is an execrable mortal sin, except in the work I do."
19) Is a corporate bond usury?A modern corporate bond is nothing like the medieval licit census, it is a squishy comparison at best. A bond pays interest (usury) on a loan. That there are underlying assets to the loan does not mitigate the damage done. Further, those underlying assets are usually already under some perfected security agreement, so technically not so. And the point is diversionary, whether or not there are underlying assets does not make or break a case of usury.
No. Investors who lend money to corporations cannot pursue individual shareholders for return of principal. The claims in a corporate bond are claims against property which actually exists in its own right: the corporation. Corporations are themselves property: they can be bought and sold and their employees – the workers who “farm” the property – sometimes change completely from one set of people to another. Like a farm, a butcher shop, a farrier business, a hunting ground, etc. a corporation is property which can be alienated from particular persons.
Sale of claims against property – claims bound to specific property and only that specific property – is a sale of something that actually exists. It is still possible for the prices of those claims to be unfair, etc: see Question 11. But contracts like corporate debt are not usury strictly speaking, as long as they are bounded: as long as they are claims against specific property and do not assert any personal guarantees by specific persons.
See also Question 31.
Bondholders usually have first place in a liquidation, over the equity holders. Bondholders are made whole (if possible) against the assets of equity holders. Bondholders normally lent credit, which is no thing (nothing) and equity holders put in their savings. Here again, as is the case in usury, usury is wrong not because anyone says so, but because it does damage. And not only is it wrong for being a case of usury, it is also probably fraud.
In a licit census, you get a percent of the product, not a fixed amount, plus no recourse.
In a bond there is risk, but recourse to assets. In a licit census, there is skin in the game, and the game is a cut of the production. In a licit census, crop failure and you get nothing. With a bond, business failure and you get the equity holders shares in the business.
Vix Pervenit is Latin for the first words of the encyclical... "No sooner than we had answered.... (we get yet another question...) Claiming corporate bonds are legitimate is just the sort of sophistry (or casuistry in the negative sense) that so aggravated Benedict XIV.
And to rely on Noonan to support the position on bonds? Fie!
Apparently he is also a devotee of the "intellectual property rights" fiction, so I'll be reading that as well. But the bottom line, he is doing excellent work in the empty field of anti-usury.
Feel free to forward this by email to three of your friends.
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