Struggling with usury

Discussion in 'The Law of God' started by BayouHuguenot, Nov 3, 2017.

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  1. BayouHuguenot

    BayouHuguenot Puritanboard Amanuensis

    As some might know, I am a strong proponent of free enterprise. Further, I hate socialism and communism with all my being. I have read von Mises and his argument that interest is inevitable. Mises argues that it is the discount of future goods as against present goods (521). It is the price men pay for valuing present goods more than future goods. It is a ratio of commodity prices, not a price itself. Mises argues that as long as there is scarcity, there will be human action, and hence, interest (525).

    Yet I can't shake the idea that usury is, as the title of Mooney's book says, the destroyer of nations. How do we address this fact in the modern world? Are there good criticisms of interest on loans? On the other hand, are there any rebuttals to Mooney?
  2. lynnie

    lynnie Puritan Board Graduate

    If we had sound money, backed by a fixed amount of gold or silver or oil or some global commodity, then a bank could loan money and get repaid in kind over time, with maybe a service fee added.

    However, when you have a central bank with unlimited power to create money out of thin air, thus inflating the money supply and reducing the purchasing power of a fixed amount, it seems only fair to pay interest that matches the inflation amount- the true inflation rate, not a stupid figure that leaves out basic living expenses and medical insurance and weights the inflation rate with technology getting cheaper.

    So I would say the destroyer is fiat money, in the hands of governments, inflating the currency and thus robbing those who save with the currency and ultimately destroying the currency.

    The other destroyer is creating huge debts to saddle the next generation with. Don't single out usury as the problem, since unbridled debt is probably far more wicked.

    End the Fed, and stop the debt. Then maybe you can think about usury.
  3. BayouHuguenot

    BayouHuguenot Puritanboard Amanuensis

    I think I agree with most of that. The FED and Fiat money are surely enemies. I'm just trying to see how usury fits into this.
  4. Douglas P.

    Douglas P. Puritan Board Freshman

    Technically, the central bank cannot create money out of thin air, they can only expand their balance sheet, it's the treasury who is creating the money out of thin air.

    More importantly though, Gov't Debt = Private Savings. It's a simple function of accounting. Take away the debt and you take away the money for the citizens.

    The Federal Debt does not have to be paid back by the next generation. It can always be there, without worry. In fact, the only two times we (the US) has ever had a federal surplus for more than two quarters is from 1927-1929 and 1999-2000. Good things did not follow. Running a fiscal surplus is a sure fire way to crush the economy.

    As for interest, it is my understanding that interest barring loans were only prohibited between fellow Jews (Deut. 23:20). I think the point of God prohibiting usury between Jews (among many other reasons) was to put the emphasis on both the individual and the state to better assist and provide for the needs of the poor as aposed to taking advantage of them, which I think is a wise and timely wisdom for our nation today as well.
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  5. BayouHuguenot

    BayouHuguenot Puritanboard Amanuensis

    I can understand that with regard to a Treasury Bond, but I don't see how my storing away some silver coins depends on the Government's being in debt.
  6. Douglas P.

    Douglas P. Puritan Board Freshman

    The US Treasury is the issuer of our currency (Dollars), Dollars are required (essentially) to purchase silver coins. No federal debt = no dollars. It's no coincidence that there is approximately $20T in private pensions & 401Ks and $20T in US Debt.
  7. Contra_Mundum

    Contra_Mundum Pilgrim, Alien, Stranger Staff Member

    This seems to be a naked claim to unfettered ownership of virtually all wealth in a territory, if held in tradable dollars, which "private citizens" merely utilize as lessees, paying a neverending series of fees for the "service."

    What happens when the government prohibits not just counterfeit dollars (private, unbacked "expansion" of that govt debt--why is it OK for one side in this social contract to manipulate this service for the benefit of its brokers?) but all other exchange media as well; or demands a "cut" (denominated in its own wealth counters) for those who would prefer to eliminate their reliance on commodity prey to the Issuer's coin-shaving habit?
  8. BayouHuguenot

    BayouHuguenot Puritanboard Amanuensis

    In one sentence that seems to be a pretty good case against the Fed.

    If money = Federal Reserve notes, then it does appear that the Fed owns all rights to money. But if we separate money from the state, there might be ways around this problem.
  9. Stephen L Smith

    Stephen L Smith Moderator Staff Member

    Just curious: what do people think of his "Theory of Money and Credit"?
  10. BayouHuguenot

    BayouHuguenot Puritanboard Amanuensis

    In terms of the Boom/Bust Cycle I lean towards it. I also agree that money is value-subjective and not valued by some objective labor within it. That's a big gain of the Marginal Utility school.
  11. Ed Walsh

    Ed Walsh Puritan Board Junior

    Here's some information on what the Bible teaches on limiting debt. I have been reading all things Rushdoony lately so this naturally came to mind.

    Attached Files:

  12. SolaScriptura

    SolaScriptura Puritan Board Doctor

    You guys can discuss macro national economic policy. I just want to disagree with the assumption of the OP: I do not believe that the act of charging interest on loans is inherently “usury.”

    I understand that at one time the term was used to describe any charging of interest, but I agree with the modern definition. I think the modern definition works better in a free market economy, and I am a proponent of the free market.
  13. Jack K

    Jack K Puritan Board Professor

    There's nothing immoral about charging reasonable interest.

    If I loan you some money, even in a world without inflation, there's a cost to me: I give up the potential use of that money for a period of time. It means I must wait to buy something I may need or desire, and I cannot invest that money to make any profit for a time. You, meanwhile, can do these things. So I deserve to be reasonably compensated by you for my cost. Besides, interest is good for an economy as it encourages the making of loans, which helps commerce thrive and gives the poor both jobs and a chance to start their own enterprises.

    "Usury," then, is best defined as unreasonable or predatory interest. If you are in a difficult financial situation compared to me and you need a loan to have a chance of bettering your situation, and I take advantage of your need by charging you higher-than-reasonable interest knowing that in your need you will still pay, that's wrong. It keeps the poor underfoot while the rich get richer at their expense.

    Of course, the second scenario happens all the time in free markets. I love free markets, but this is one area where God seems to be calling believers to resist charging what the market will bear, in order to be fair to the poor.
  14. BayouHuguenot

    BayouHuguenot Puritanboard Amanuensis

    That's good, and the Bible's teaching on not keeping a security forbids fractional reserve banking:

    A pledge or security can be, although it need not be, required. As Gary North points out, this forbids fractional reserve banking, in that the security cannot be used to negotiate a second loan, in that it is held by the lender during the day. !e pledge requirement was a protection against irresponsibility on the part of the poor worker. If the poor worker were a trustworthy man, the employer would not require the pledge. !e pledge or security was thus insurance against failure to repay, or to work out the loan. !e charity in this case is thus a gi" of the interest, not of the loan
  15. arapahoepark

    arapahoepark Puritan Board Graduate

    It is amazing!
  16. arapahoepark

    arapahoepark Puritan Board Graduate

    " ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest."
  17. Edward

    Edward Puritanboard Commissioner

    Well, actually, that was the "hard man, reaping where [he] ha[d] not sown, and gathering where [he] ha[d] not scattered seed" that said that.
  18. Stephen L Smith

    Stephen L Smith Moderator Staff Member

    I note the book is about 100 years old. Does it still stand as a leading text on this topic? I see a study guide has been produced for the book.

    What do modern day economists think of it?
  19. arapahoepark

    arapahoepark Puritan Board Graduate

    Depends on what you mean by modern. Modern as those the government uses? They are Keynesians. They would hate that book. They believe debt is a good thing. They are the reason the world is reeling from a massive depression.

    Austrians like me think it laid the foundation to show these Keynesians their massive errors and its gaining traction.
  20. Stephen L Smith

    Stephen L Smith Moderator Staff Member

    I thought you were born in the USA? ;)

    Seriously, I was just wondering it it was worth purchasing (with the study guide) or if it has been replaced by something better? I speak as someone with sympathy to the Austrian school of economics.
  21. arapahoepark

    arapahoepark Puritan Board Graduate

    I apologize, I assume those on this board are acquainted with Austria economics, named after the biggest contributors who happened to be Austrian.

    I would highly recommend it. It is quite a Good foundation for you! Its not antiquated at all.
  22. BayouHuguenot

    BayouHuguenot Puritanboard Amanuensis

    Mises's best student Rothbard has improved it. I'd go with Rothbard. Most modern economists probably would reject it since the book rejects state power and fractional reserve banking.
  23. BayouHuguenot

    BayouHuguenot Puritanboard Amanuensis

    The Anti-Liberty conservatives at National Review won't like it, but here is a little-known fact. When Paul Johnson wrote his History of the 20th Century and HIstory of America, he used Rothbard's book on the Great Depression. That probably makes Jonah Goldberg apoplectic.

    Many modern economists and historians don't like Rothbard/Mises because they believe in the separation of banking and state.

    But start with Rothbard's What has Government Done with our Money? It's narrated by Jeff Riggenbach, one of the finest audio readers alive.
  24. Parmenas

    Parmenas Puritan Board Freshman

    Definition of "Usury" in the Bible

    Webster's Dictionary 1828: 1. Formerly, interest; or a premium paid or stipulated to be paid for the use of money.

    Smith's Bible Dictionary: The word usury has come in modern English to mean excessive interest upon money loaned, either formally illegal or at least oppressive. In the Scriptures, however the word did not bear this sense, but meant simply interest of any kind upon money. [...]—ED.

    Easton's Bible Dictionary: The sum paid for the use of money, hence interest; not, as in the modern sense, exorbitant interest.

    Click here to see all of the occurrences of "usury" in the Authorized Version.
  25. Krak3n

    Krak3n Puritan Board Freshman

    Thank you for that link, looking at Ezekiel 18:5-9, specifically v.8:

    But if a man be just, and do that which is lawful and right,
    6 And hath not eaten upon the mountains, neither hath lifted up his eyes to the idols of the house of Israel, neither hath defiled his neighbour's wife, neither hath come near to a menstruous woman,
    7 And hath not oppressed any, but hath restored to the debtor his pledge, hath spoiled none by violence, hath given his bread to the hungry, and hath covered the naked with a garment;
    8 He that hath not given forth upon usury, neither hath taken any increase, that hath withdrawn his hand from iniquity, hath executed true judgment between man and man,
    9 Hath walked in my statutes, and hath kept my judgments, to deal truly; he is just, he shall surely live, saith the Lord God.​

    It does seem like we are not to lend and charge interest (little or much), at least not to those who are our brothers and sisters.

    It is also... umm... interesting about what he says concerning a "menstruous woman".
  26. Stephen L Smith

    Stephen L Smith Moderator Staff Member

    There is a quote in Wikipedia:
    "In a 1957 review of his book The Anti-Capitalistic Mentality, The Economist said of Mises: "Professor von Mises has a splendid analytical mind and an admirable passion for liberty; but as a student of human nature he is worse than null". I have checked this quote in the 1957 Economist.

    So I have a nagging question in my mind. If Mises did not understand the nature of human depravity, what implications does this have for his economic theory? That is freedom based on a "survival of the fittest" will generally opress the disadvantaged.
    No need to apologise. You had said "Austrians like me". I was just joking that you were a citizen of the USA, not a citizen of Austria. It was meant to be a joke.
  27. BayouHuguenot

    BayouHuguenot Puritanboard Amanuensis

    He was a Utilitarian in ethics. The implication is that he didn't truly understand how evil the State was. Rothbard did. That's one of the reasons I prefer Rothbard over Mises.
  28. BayouHuguenot

    BayouHuguenot Puritanboard Amanuensis

    Interestingly enough, a 3rd generation Austrian, Hans-Herman Hoppe, saw even further. Most Libertarians say the State is evil and leave it at that. True enough, but Hoppe realized that it was actually a Plutocracy behind the State that was the main evil in the modern age. I have in mind Soros, the Rockefellers, etc.
  29. arapahoepark

    arapahoepark Puritan Board Graduate

    How far have you read economically?
    The best introduction I can recommend is Hazlitt's Economics in One Lesson
  30. Stephen L Smith

    Stephen L Smith Moderator Staff Member

    I have a Commerce degree which included serious sudy in economics. Further, my country went through major economic changes in the 1980's influenced by the Austrian School of economics. So I am fascinated by the discussion.

    But when I was making a comment about the relationship between economic freedom and human depravity, I had Edmund Burke's quote in mind -
    “Men are qualified for civil liberty in exact proportion to their disposition to put moral chains upon their own appetites…in proportion as they are more disposed to listen to the counsels of the wise and good, in preference to the flattery of knaves. Society cannot exist, unless a controlling power upon will and appetite be placed somewhere; and the less of it there is within, the more there must be without. It is ordained in the eternal constitution of things, that men of intemperate minds cannot be free. Their passions forge their fetters.”
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