Accepting interest on a loan: usury

[Kindness]

For much of the church’s history usury was forbidden, such as in the middle ages when Jewish people became moneylenders and bankers because Christians were forbidden from the practice. (Also Jewish people were banned from practicing the vast majority of professions in most places in Europe and also were not allowed to own land so finance was one of the few areas open to them.)

When and why did usury become acceptable to the church? My understanding is that Jews interpreted scripture as meaning you must not charge money on a loan to believers (Jews) but it was acceptable in the case of unbelievers (Christians).

 

[fix]

For much of the church’s history usury was forbidden, such as in the middle ages when Jewish people became moneylenders and bankers because Christians were forbidden from the practice. (Also Jewish people were banned from practicing the vast majority of professions in most places in Europe and also were not allowed to own land so finance was one of the few areas open to them.)

When and why did usury become acceptable to the church? My understanding is that Jews interpreted scripture as meaning you must not charge money on a loan to believers (Jews) but it was acceptable in the case of unbelievers (Christians).

Usury is still a sin. The meaning of money has changed.

 

[Kindness]

So it’s not a moral question but a philosophical one? How has money changed?

 

[fix]

So it’s not a moral question but a philosophical one? How has money changed?

Here is one quick source:

ewtn.com/vexperts/showresult.asp?RecNum=302300&Forums=0&Experts=0&Days=2002&Author=&Keyword=usury&pgnu=1&groupnum=0&record_bookmark=4&ORDER_BY_TXT=ORDER+BY+ReplyDate+DESC&start_at=

 

[peacoat]

So it’s not a moral question but a philosophical one? How has money changed?

For one, we now understand the time-value of money…inflation. Things are a bit more complicated. For instance, if I put $2 in my pocket I can go to burger king and buy a 5oz fry and a small hamburger. Five years from now for a small hamburger and a 5oz fry it may be $3. If I loan someone $2 for a hamburger today, in five years it’d be “fair” for them to give me $3.00

We calculate this using interest rate.

Secondly, some loans are bad and still usary…like preditory lending.

 

[april32010]

maybe someone has another opinion

 

[manualman]

This is perhaps oversimplified, but it’s a good place to start understanding.

Back when usury = charging ANY interest, inflation didn’t really exist. Economics were totally different and cash wasn’t the basic medium of exchange. People bartered for daily needs and cash was a place to park surplus wealth not currently needed for anything. If you put an amount of coin in a hidden place and retrieved it a year later, it still bought the same number of cows either time.

As society urbanized, cash became the medium of exchange and governments discovered the trick of increasing the total money supply when they ran a little short. As soon as that trick was invented, inflation was created and money decreased in value over time. Suddently, usury could no longer = charging ANY interest because cash was both the basis of economic exchange and its value degrades over time.

Charging excessive interest is still usury. It’s just no longer a cut a dried situation to determine the point at which a fair compensation for risk and lost investment opportunity becomes usury. You have to basically go on feel and conscience.

IMO credit card companies are mostly usurers, but prime(ish) rate mortgage lenders aren’t.