We have always had usury with us, more or less. Our rules reveal our weaknesses, and every major religion condemns usury harshly because we are so prone to it.
Today what we call "interest" is usury, but by etymological tricks there is enough fog to give it a pass, in spite of its condemnation still being on the books, so to speak.
The rule is simple enough: make no gain on any loan. All loans, the loan itself, are charitable events. Even as charity, they are to be repaid. If they are not repaid, then the idea is the best thing to do is let your charity run deeper, and forgive the loan.
If it is your desire to make money with your money, then the proper means is to invest in a business, at risk with everyone else. And in fact today, far more money is tied up in equities as investments than loans. So skin-in-the-game investments is no controversy, but condemning making money on loans sure is.
The scholastics were given to philosophizing, and a theoretical problem of taking a loss while doing charity was addressed. Theoretically. Say someone needs $10,000 today to keep the wolf away from the door, today, Friday. You were going to sell a flock of sheep on contract for $12,000 on Monday. The best price you can get today for the same sheep is $10,000. So to sell today, you'd in effect lose $2000 doing your charity of a loan. As part of the deal, is is legit to ask to be repaid $12,000 on the $10,000, since you in effect lost $2000 being charitable? The answer was yes, theoretically, and in the Latin discussions of this theoretical problem, the loss was called interesse. The theory began to address all sorts of scenarios such as "what if I was supposed to pay a bill and the repayment was late, and I suffered some loss?" The word interesse covered this loss too. By sheer multiplication of theoretical scenarios of possibilities where a loss can be experienced, covered by interesse, the idea of interesse as a loss to be covered as legitimate spread about the West.
So, when doubtful scenarios in which people made money on money, illicit gain, the propounders called it interesse as well. And where the word once meant loss on a loan, it now means gain on a loan.
As states began to take temporal power from churches, states began to accept the idea of making money on money, so usury spread. States also got involved in banking, starting with the Bank of England 300 years ago, and over time learned to lend money at interest, lend money at fractional reserve, lend fiat currency at fractional reserve, which has no rational limit.
To be able to create so much credit makes it cheap and plentiful, so customers need be found to sop it up. The idea of "risk" in business was introduced, to help foster demand. Whereas before entrepreneurs would never take a risk, today all schools, media, law assumes that is the essence of entrepreneurialism (except for Peter Drucker, whom I follow: entrepreneurs do not take risks.)
Now, those who engage in usury on steroids (lending fiat fractional-reserve currency at usury) can aggregate enough resources unto themselves to literally call the shots. For example, look at a map of countries the UK has invaded since they formed the Bank of England:
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| http://www.telegraph.co.uk/history/9653497/British-have-invaded-nine-out-of-ten-countries-so-look-out-Luxembourg.html |
Some people call this success. I suppose it depends on which side of the rifle you happen to be. Of course, no one needs to be on any side of the rifle, it is also possible to trade freely and peacefully and justly without killing people in the process.
We can have golden eras and renaissances without usury being the heart of the economic system, or any part of it at all. It does not make sense to outlaw usury, people like many vices, people will engage in it. At best just recognize all loans are charity, and interest is un-enforceable, like gambling debts or contracts with children. Usury would wither away without the violence of the state to enforce it. And just how come do we, fifth parties, agree to pay taxes to fourth parties to maintain third parties to enforce by violence agreements between second and first parties (usurers and their victims)? Let them pay for it themselves.
Usury is important to states. The
CIA is steeped in its promotion, and although
Muhammad Yunus won a Nobel Peace Prize for discovering microfinance as a policy tool for Bengla Desh poor, oddly,
Pres Obama's mother was introducing it in Indonesia before or the same time as Yunus. Well, Darwin and Wallace thought up evolution at the same time, and Newton and Leinniz invented calculus independently, so I suppose there could be two inventors of microfinance. Who had nothing to do with the CIA.
I was at a meeting of an NGO looking to advance a Guatemalan (if I recall) project to help a village with whatever. Two members of the village were present. Have you applied to USAID? "No thanks." Fair enough. "How about microfinance?" Silence. "It is a great system, you need it to help you." Silencio. "Well, if you are not willing to help yourselves..."
Came the reply from the "natives", "Microfinance is a trap."
Just so. And people are figuring that out. What people need is not microfinance, but freedom from state violence against their entrepreneurial efforts. That is what is missing.
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