Pope Francis denounces usury [CC]

[ProVobis]

Going back to the Church’s prohibition of usury, it made sense to me in the context of a society in which money was entirely non-productive, sort of like holding gold that could not be invested.

But it makes no sense to me at all in a society in which the value of money by government policy decreases every year by at least 3%. That means if I have any savings at all (i.e. by lending money to the bank), I need to get at least 3% interest just to break even.

Speaking of gold, Nixon’s breaking of the gold standard led to almost unlimited money printing by the Fed and lowering of interest rates only overstimulated the economy to inflationary proportions over a span of a decade. Price and wage Inflation grew to such levels that the Fed was forced to increase interest rates to about 20%. The best one could do in order to obtain a mortgage was to pay about 12% interest but at least the asking price of the house wasn’t as high as it otherwise much be. Lower interest rates and credit allow the seller to ask for a higher price, which he typically gets. But this doesn’t necessarily make housing more affordable for everyone else. It’s affordability (monthly costs of credit, taxes, savings, etc.) which ultimately becomes the deciding factor of any purchase.

 

[stinkcat_14]

I have removed myself from all borrowing, if I don’t have the money I don’t buy it. It really becomes very liberating when you are not a slave to your credit score.

I think there is a lot of merit in this, although there are sometimes exceptions to be made. For the most part, I avoid debt and it is very liberating. On the other hand, there are times when a modest amount of debt can be useful in business. Although one here has to be careful not to get over one’s head.

 

[JimG]

I have removed myself from all borrowing, if I don’t have the money I don’t buy it. It really becomes very liberating when you are not a slave to your credit score.

This is a good idea. My brother also refuses to use anything but cash or checks to pay for things–usually cash. This way he knows he is never spending more than he has, and he is less likely to spend when he has to hand out cash instead of pulling out a credit card.

If everyone did this, we’d probably all be better off financially.

But the national economy would take a hit. It would reduce spending.

 

[mpabst]

Yes, but a free economy would take the money-printing Fed out of the equation and let all money borrowing to be private and come out of private saving. Even the fractional reserve system set up by the banks distorts the free market to some extent, as that introduces risks as well. Circulation of existing money is the preferred way of stimulating growth but that tends to be a circular argument of sorts. It’s an interesting area of economics.

I’d hope Pope Francis might be indirectly referring to the Central Banks (money cartels) who are purposefully devaluing the money supply; but I wouldn’t call that usury, I’d call that outright theft!

 

[ProVobis]

I’d hope Pope Francis might be indirectly referring to the Central Banks (money cartels) who are purposefully devaluing the money supply; but I wouldn’t call that usury, I’d call that outright theft!

It is indeed theft, but unfortunately very few see the unlimited amount of “legal” money counterfeiting as being the higher of moral hazards.

 

[twoshoes]

I think there is a lot of merit in this, although there are sometimes exceptions to be made. For the most part, I avoid debt and it is very liberating. On the other hand, there are times when a modest amount of debt can be useful in business. Although one here has to be careful not to get over one’s head.

I agree.

 

[twoshoes]

This is a good idea. My brother also refuses to use anything but cash or checks to pay for things–usually cash. This way he knows he is never spending more than he has, and he is less likely to spend when he has to hand out cash instead of pulling out a credit card.

If everyone did this, we’d probably all be better off financially.

But the national economy would take a hit. It would reduce spending.

The economy might take a hit, but our souls and Peace of mind will be better off. There is always a trade off, I go with Jesus on this trade off.

 

[seekerz]

There use to be laws against this type of usury. This is what happens when money is equated to free speech.

I have removed myself from all borrowing, if I don’t have the money I don’t buy it. It really becomes very liberating when you are not a slave to your credit score.

I hear you - working my way to that point myself, beginning with the use of debit cards only for 99% of my purchases. It’s not a bad thing to be in a position to be able to borrow in case of emergency, but an emergency needs to be just that - not the grand opening sale at X mega-store’s newest location.

 

[twoshoes]

I hear you - working my way to that point myself, beginning with the use of debit cards only for 99% of my purchases. It’s not a bad thing to be in a position to be able to borrow in case of emergency, but an emergency needs to be just that - not the grand opening sale at X mega-store’s newest location.

Before the days of Big banks only, people would walk down to their local banker, usually one of the owners, ask for a loan. If you were a person of good standing very little paper work and you were on your way. This didn’t lead to people being in over their head because you usually deal with the same guy. It worked well. the process wasn’t as fast as a credit card, but a whole lot safer. You had time to think before you acted.

 

[ProVobis]

Before the days of Big banks only, people would walk down to their local banker, usually one of the owners, ask for a loan. If you were a person of good standing very little paper work and you were on your way. This didn’t lead to people being in over their head because you usually deal with the same guy. It worked well. the process wasn’t as fast as a credit card, but a whole lot safer. You had time to think before you acted.

I don’t know how far back you’re going, but in the first stages of the Great Depression it didn’t work well. Depositors wanted their money and the banks couldn’t call in enough loans to cover them. This was also the case during the 2008 banking crisis, except that now we have the FDIC to cover some of the deposits.

 

[nishkalank]

I had offered comments earlier. The same is not displayed. Kindly look into the same

Nishkalank

 

[twoshoes]

I don’t know how far back you’re going, but in the first stages of the Great Depression it didn’t work well. Depositors wanted their money and the banks couldn’t call in enough loans to cover them. This was also the case during the 2008 banking crisis, except that now we have the FDIC to cover some of the deposits.

They had the FDIC in the time I’m referring to, I know I lived it. The FIDC didn’t create BIG banks, congress did, at the request of the banks, also the same reason they gutted all anti-monopoly laws. the country was governed under the premise that if it is to big to fail, it is to big. You can see what has happen since. Which by the way speaks very well to Pope Francis position that unfeather capitalism can be evil.

 

[ProVobis]

They had the FDIC in the time I’m referring to, I know I lived it. The FIDC didn’t create BIG banks, congress did, at the request of the banks, also the same reason they gutted all anti-monopoly laws. the country was governed under the premise that if it is to big to fail, it is to big. You can see what has happen since.

Indeed. Now the banks can take those deposits and buy up all the oil in the world or drive down the price of stocks if they wanted to instead of lending it out. (I don’t know how the new Volcker rule works, though.)

 

[twoshoes]

Indeed. Now the banks can take those deposits and buy up all the oil in the world or drive down the price of stocks if they wanted to instead of lending it out. (I don’t know how the new Volcker rule works, though.)

I have found in my life you can only trust Jesus, all others will at some point disappoint.

 

[nishkalank]

I do not know the details about Islamic rules on usuary. But if they allow any increase in the amount of loan when it is returned, that increase has to be considered as interest or usuary.
When personal loans are takem for necessities like medical expenses or maintaining the family and educating children, it is only fair that the lonee is charged minimum interest. God fearing people will be compassionate and take only nominal interest or nothing at all. It all depends on the attitude and mentality.

 

[mikekle]

I do not know the details about Islamic rules on usuary. But if they allow any increase in the amount of loan when it is returned, that increase has to be considered as interest or usuary.
When personal loans are takem for necessities like medical expenses or maintaining the family and educating children, it is only fair that the lonee is charged minimum interest. God fearing people will be compassionate and take only nominal interest or nothing at all. It all depends on the attitude and mentality.

That is certainly not the case in the US! LOL Most lenders dont care what you are using the money for, they will charge the same interest rate no matter the purpose, in fact, most only ask details about how you will repay it, not what its for…they may ask the purpose, but the important factor is ones ability to repay (not the need).

This really needs to change in the US.

Ive loaned money to friends here and there in the past ( up to about $700.) and Im never concerned with when I will get the money back, Im more concerned if it will be enough to help them…and most of the time, Im not that worried if they ever pay it back, I only ask that they remember me if I should even get in a tough financial spot, and so far, I have been.

 

[JimG]

That is certainly not the case in the US! LOL Most lenders dont care what you are using the money for, they will charge the same interest rate no matter the purpose, in fact, most only ask details about how you will repay it, not what its for…they may ask the purpose, but the important factor is ones ability to repay (not the need).

This really needs to change in the US.

Ive loaned money to friends here and there in the past ( up to about $700.) and Im never concerned with when I will get the money back, Im more concerned if it will be enough to help them…and most of the time, Im not that worried if they ever pay it back, I only ask that they remember me if I should even get in a tough financial spot, and so far, I have been.

Of course, the Gospel tells us to lend without expecting repayment. That’s a gospel imperative for Christians to help others. But it’s not lending in the business sense.

Would a Christian lend someone $200,000 to buy a house without expecting repayment? Or lend $500,000 in startup funds to a new business with no expectation of repayment? In some cases, an investor might actually lend to a startup without expecting repayment, but would expect a share of future profits in return for the risk.

 

[ProVobis]

In the business sense, there is also the concept of ownership, which we call stock, either private or public. In lieu of interest, there is a dividend declared periodically if at all. On the balance sheet, it is listed under equity, which can be positive or negative. Borrowed money (from a bank and/or from issued bonds), on which interest is paid, is listed under liabilities. Outright gifts or contributions would be listed only under assets.

 

[nishkalank]

I do not know the details of the Islamic rules on interest. If the agreement provides any increase in the amount when returned, it means there is an element of profit to the one who loaned the amount. That is nothing but interest in business parlance.

Nishkalank

 

[saintjohnxxiii]

There use to be laws against this type of usury. This is what happens when money is equated to free speech.

I have removed myself from all borrowing, if I don’t have the money I don’t buy it. It really becomes very liberating when you are not a slave to your credit score.

Would you get a mortgage to buy a home? What would you say to a married couple who want to buy a house and can afford mortgage payments but obviously not pay it all outright?