The Problem With Money

[Allegra]

What does a bank put into the deal? Remember, they asked for permission to extend credit. When it was granted, the bank simply entered numbers on a ledger. It put none of its own assets at risk.

Now you might say that the Fed is the one taking the risk, since it is the source of the funds. But again remember, Dollars are backed by the US, not the Fed.

Third, the source of the funds are the borrower’s promise to pay. When he makes his note, the bank deposits it on the books as an asset. When the loan is funded by the bank, it enters a liability, and the books balance. So the asset comes first. That is the source of the funds.

Bank loans are really exchanges.

I got you now.
Assuming the bank is able to get the value they paid for the asset, then there is little risk. Does it matter though, morally I mean, if the bank has a significant risk or not? Using that logic, payday loan places are less sinful because they often have no collateral and take a much more significant risk . However, they charge an insane about of interest and the person taking out the loan usually is not likely to make any profit after an interest rate so high. (Even if he does invest it into something other than bail money.)

 

[Jozefo]

I got you now.
Assuming the bank is able to get the value they paid for the asset, then there is little risk. Does it matter though, morally I mean, if the bank has a significant risk or not? Using that logic, payday loan places are less sinful because they often have no collateral and take a much more significant risk . However, they charge an insane about of interest and the person taking out the loan usually is not likely to make any profit after an interest rate so high. (Even if he does invest it into something other than bail money.)

I think it matters. It transforms the deal from an investment to exploitation, if not outright fraud.

But like St Paul said in the beginning, the desire of money is the root of all evil. And I think he was referring to more than everyday, worldly desire. I think God showed him that eventually the love of money would consume the whole earth.