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Usury and the financial crisis

Usury and the financial crisis

Postby Bluegoat » 22 Apr 2009, 19:11

I've been thinking about prohibitions against usury and the financial crisis. Any thoughts?
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Re: Usury and the financial crisis

Postby postodave » 23 Apr 2009, 22:27

It's something I've often wondered about. I know the Christian economist Michael Schluter thinks the usury ban should still apply and so does Prabhu Guptara who is a Hindu disciple of Christ. Unfortunately I'm not an economist so here are some links
http://www.sydneyanglicans.net/media/au ... _interest/
http://wakeupfromyourslumber.blogspot.c ... erest.html
http://209.85.229.132/search?q=cache:G6 ... clnk&gl=uk
http://209.85.229.132/search?q=cache:Yu ... clnk&gl=uk

If any of that grabs your interest you might like to glance at the work of Bob Goudzwaard
http://www.allofliferedeemed.co.uk/goudzwaard.htm
Especially as I recall some of the stuff in Aid for the Overdeveloped West
So I drew my sword and got ready
But the lamb ran away with the crown
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Re: Usury and the financial crisis

Postby Leslie » 23 Apr 2009, 23:31

Many devout Muslims do not borrow or lend money for interest. For example, some Islamic communities have mutual funds and other investment instruments that do not derive any income from interest. And I've heard that they make interest-free loans available within their communities for buying homes.
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Re: Usury and the financial crisis

Postby deadwhitemale » 25 Apr 2009, 10:44

I must live in the world as it is. I have almost always made a point of paying everyone everything I owed them, with interest, if any interest was due. "Oh, I pay, I always pay," was a sort of motto of mine, plagiarized from Rafael Sabatini's fictional pirate, Doctor/Captain Peter Blood (who, for a pirate, was uncommonly scrupulous about keeping his word and paying his debts, including ransoms and bribes). But it would go against my own conscience to ever lend money at interest. On the other hand, if my checking account or savings account draws any interest, is that usury also? :undecided:

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Last edited by deadwhitemale on 26 Apr 2009, 16:23, edited 1 time in total.
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Re: Usury and the financial crisis

Postby Leslie » 25 Apr 2009, 18:12

deadwhitemale wrote: On the other hand, if my checking account or savings account draws any interest, is that usury also? :undecided:

DWM

Indeed it is -- even though indirectly, you are profiting by the interest that someone somewhere is paying on a loan or a mortgage. Lending money at interest is so deeply embedded in the Western economy that one must entirely step out of mainstream banking and investment to be completely free of it.

This financial crisis is an opportunity for Christians to take a critical look not only at usury, but the whole economic fabric of Western society. I can't help thinking that serious cracks are beginning to show in the classical liberalism that has been the dominant narrative (either on its own or in the various reactions to it) in the Western world since the beginnings of the Enlightenment and the Industrial Revolution.
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Re: Usury and the financial crisis

Postby postodave » 25 Apr 2009, 21:21

Well, I take dwms point. These products barely exist. There are things we can do - for example we can get involved with Credit Unions - but I don't think we can be too purist about this. Even among Christian economists I don't think there would be a lot of agreement about this. But maybe it will be like fairtrade and take off at some time. I remember when fairtrade meant trying to drink awful coffee and tea bought from reps in local churches but now it is in supermarkets and coffee bars and most people know about it. At least they do here in the UK.
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Re: Usury and the financial crisis

Postby deadwhitemale » 26 Apr 2009, 16:40

Leslie wrote:
deadwhitemale wrote: On the other hand, if my checking account or savings account draws any interest, is that usury also? :undecided:

DWM

Indeed it is -- even though indirectly, you are profiting by the interest that someone somewhere is paying on a loan or a mortgage. Lending money at interest is so deeply embedded in the Western economy that one must entirely step out of mainstream banking and investment to be completely free of it.

This financial crisis is an opportunity for Christians to take a critical look not only at usury, but the whole economic fabric of Western society. I can't help thinking that serious cracks are beginning to show in the classical liberalism that has been the dominant narrative (either on its own or in the various reactions to it) in the Western world since the beginnings of the Enlightenment and the Industrial Revolution.



:??: I'm not persuaded there is anything inherently usurious about classical liberalism as I understand it. Even if there is, I think I'd rather stick with classical liberalism over any of the serious alternatives now being offered.

What seems to be sweeping over us now is a tide of what might best be described as corporatism:

' ... we are entering quite a different age right now, one in which the President of the United States and his hand-selected industrial overseers fire the chief executive of General Motors and chart the company’s next moves in order to preserve it.

Conservative critics of the president have said that the government’s GM strategy is one of many examples of an America drifting toward socialism. But President Obama is not a socialist. If his agenda harks back to anything, it is to corporatism, the notion that elite groups of individuals molded together into committees or public-private boards can guide society and coordinate the economy from the top down and manage change by evolution, not revolution.

It is a turn-of-the 20th century philosophy, updated for the dawn of the 21st century, which positions itself as an antidote to the kind of messy capitalism that has transformed the Fortune 500 and every corner of our economy in the last half century. To do so corporatism seeks to substitute the wisdom of the few for the hundreds of millions of individual actions and transactions of the many that set the direction of the economy from the bottom up.'

' Corporatism is especially attractive to politicians, public intellectuals who serve as policy makers, and Nobel Laureates because it is ultimately a world managed by the few, the elect, through the state. If we are told enough times that nothing, even technological innovation, is possible anymore without significant contributions and directions from the state, maybe we’ll eventually come to believe it, although the inventors of the printing press, the steam engine, the light bulb, the telephone, and internal combustion engine and other game-changing technologies might wonder how they accomplished what they did without government.

Corporatism is not about regulating capitalism better as markets evolve. It is several steps beyond. It is instead about those who believe in “the beauty of pushing a button to solve problems,” as the economist Paul Krugman recently described his attraction to the social sciences. Some people worry about what happens when the regulators take charge of our economy. But the real concern is what happens when the button pushers take charge, for the button pushers are the corporatists.'

http://www.realclearmarkets.com/article ... _of_c.html


I think I'd rather put up with a certain amount of usury -- even a certain amount of pickpocketing and pimping and smuggling and gambling -- than be constantly told what to do and have every little detail of my life managed by some sort of god-king or appointed group of philosopher kings/commissars or "czars" of this or that.

Yet, for decades I have wished to step clean outside not only the financial system but the political system as well -- a sort of quiet "internal secession," so to speak. It's hard to explain exactly what I mean, since I am limited by the language, and since secession is such a loaded term. I am even hard-pressed to provide any example or illustration (though perhaps Montaigne may have lived some phase of his life somewhat like what I have in mind).

I have encountered people on the Internet who claim to have stepped outside the whole system, generally by becoming nomadic or semi-nomadic, and living by barter in some kind of of underground economy. But I need a [i]place[/i], a base, a seat. I am not a rolling stone. I am more like a tree, or an Ent.

" Mihi libertas necessest ."


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Re: Usury and the financial crisis

Postby Bluegoat » 26 Apr 2009, 22:22

As I understand it, a bank account accruing interest is one of the main examples of usury, because we gain the interest while taking no risk. On the other hand, a venture capitalist who gets a dividend isn't really committing usury - he is an owner.

I found this very interesting article about Chesterton and the Catholic Workers movement - I found his definition of capitalism to be especially interesting.

http://www.cjd.org/paper/roots/rchest.html
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Re: Usury and the financial crisis

Postby Leslie » 27 Apr 2009, 22:41

deadwhitemale wrote:
:??: I'm not persuaded there is anything inherently usurious about classical liberalism as I understand it.

I'm not saying there is. In mentioning classical liberalism, I was speaking generally about the current financial situation, somewhat tangental to the original question. What I meant was "Not just usury -- what about the rest of the mess, too?"

What I'm saying is that the premise of individual freedom as applied to the economy, and the entire financial structure of the Western world, based on the idolatry of the "invisible hand" of market forces, may have been an experiment gone awry, and Christians may do well to shake off the thinking of the modern world (including both classical and modern liberalism, neo-conservatism, socialism, totalitarianism, and any other ism on offer today) and wonder what an economy truly reflecting Christian values might look like.
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Re: Usury and the financial crisis

Postby Bluegoat » 28 Apr 2009, 10:43

A few years ago there was a fellow who did a study, developing a personality profile of a corporation, treating it as if it were a person. What he found is that the corporation behaved as a psychopath. The main players in our economy, even bigger than governments, are corporations, and I think that the kind of behavior that we see from corporations fits the profile of a person with no morals. I don't think it's that the people within them are like that, but something about the structure of a corporation does not allow the ethical and moral imperatives of individuals to be taken up into the action of the corporation.

I think Chesterton is right when he says capitalism is not a system where there is private property, but rather a system where a few people have most of the capital and the rest are dependent on them.

He suggests a Christian system would involve every family having enough property to support themselves, but not much more. What is interesting about this to me is that it is very similar to what many Christian groups such as Mennonites do, and they find it is indeed the best system for maintaining a Christian lifestyle. They also do not borrow from banks, but rely on money lent by the community, without interest.

Here in Nova Scotia the co-op movement has traditionally been very strong, and was started by a Roman Catholic priest. Many of them are for specific trades like fishermen, but there are lots of co-op grocery stores and credit unions. Credit unions are of course still part of our financial system, but I am thinking of leaving my bank and joining one instead. There philosophy is much more in line with my own values.
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Re: Usury and the financial crisis

Postby warren_piece » 28 Apr 2009, 16:57

if i am earning interest at 3% and the rate of inflation is 5%, am i really accruing interest?
we live with a monetary system far different from the one of biblical times. we currently live with a fiat system that, at the very least, negates the question of usury in regards to interest earned.
everything around us is almost inherently based on some sort of borrowing. heck, look at our governments. our governments are either engaged in loaning or borrowing (or both) on a massive scale (in relation to their gdp). i see no escape from usury or interest.
without interest (at the very least) any money we 'saved' for retirement would be worthless by the time we got around to spending it.
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Re: Usury and the financial crisis

Postby deadwhitemale » 28 Apr 2009, 18:33

The Captain: You see, it's... it's no good, Montag. We've all got to be alike. The only way to be happy is for everyone to be made equal. -- Fahrenheit 451 (1966)

" He [Chesterton] suggests a Christian system would involve every family having enough property to support themselves, but not much more."

:??: :stunned: Well, I like a great deal of what Chesterton said, but I do not consider myself obliged to slavishly and unquestioningly go along with every particular thing he ever thought or said.

Who, exactly -- what commissar or "czar" or "people's committee" will decide for us -- for every family (or individual) -- how much we need -- how much is "enough" -- to support ourselves? Who will enforce this equality, and how?

I sincerely believe that I myself have special and specialized needs in housing, clothing, equipment, and transportation, which no elected official or appointed bureaucrat could ever anticipate, and which I doubt more than a few hundred members of the human race could even begin to understand. It would cost a lot too. If someone says I ask too much, I reply, "Fine, but without what I need to work with -- to do the work I was put here for -- it will not be done. At least not by me. As Gandalf said when implored to start a fire during the blizzard on Mt. Caradhras, 'I cannot burn snow. I must have something to work with.' "

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Re: Usury and the financial crisis

Postby Bluegoat » 29 Apr 2009, 11:44

warren_piece wrote:if i am earning interest at 3% and the rate of inflation is 5%, am i really accruing interest?
we live with a monetary system far different from the one of biblical times. we currently live with a fiat system that, at the very least, negates the question of usury in regards to interest earned.
everything around us is almost inherently based on some sort of borrowing. heck, look at our governments. our governments are either engaged in loaning or borrowing (or both) on a massive scale (in relation to their gdp). i see no escape from usury or interest.
without interest (at the very least) any money we 'saved' for retirement would be worthless by the time we got around to spending it.


Some might argue that a fiat system is a big part of the problem with our financial model.

Edit:I was thinking about this more today, and thought of some things I'd like to add.

First, if inflation is higher than the interest you are earning on your account, you are getting gyped, but that is probably a systematic problem.

Secondly, I don't thing prohibitions about usery are really just about usery itself, but the effects of a system based on it. I was trying to think of the pros and cons of our system, so I'll give what I came up with - I'd be interested to see what others come u with.

PRO

Some people become very rich
Some people become relatively well off and comfortable
There are some impressive innovations in technology

CON
The environment will inevitably suffer as it is a finite resource in a system based on infinite growth.
Most people are still poor, objectively or comparatively, and have to be for the system to work - this results in hardness of heart in the rich.
Many individuals, and also regions, are no longer self-sufficient in their basic needs such as food.
People are continually subjected to advertising and pressure to view wants as needs.
Moral issues, and people, are seen in terms of their monetary value and other values arelargely ignored
Wealth is seen as a good in itself
It's easier for a camel to go through the eye of a needle... or, material wealth tends to obscure spiritual clarity.

Someone else will have to work more on the pros!

I think Bhutan is on the right track in rejection GNP for GNH - Gross National Happiness. http://en.wikipedia.org/wiki/Gross_national_happiness
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Re: Usury and the financial crisis

Postby nomad » 04 May 2009, 03:12

Bluegoat wrote:Most people are still poor, objectively or comparatively, and have to be for the system to work - this results in hardness of heart in the rich.


I'm not sure what "objectively or comparatively" means exactly. I do know that this is very subjective. Financially speaking, I suppose I would be considered poor, or at least on the poor end of comfortable, in the US. However, I also live a much richer and fuller life than a lot of people in the "quite comfortable" category because I have much more freedom. But then, my financial status is a direct result of my choices which have tended to value that freedom and my artistic endeavors above financial stability. And any time I wanted to reverse that and place my priority on developing a career, I can (at least for a few more years). Being "poor" by choice is different from being poor with no way out. This is by American standards. "Comparatively" speaking, I am financially and materially among the richest people in the world.

Bluegoat wrote:People are continually subjected to advertising and pressure to view wants as needs.

That I very much agree with as an evil. Once you view wants as needs, you also begin to see them as rights, or things you are entitled to. That in turn will put social and economic pressure on the system.

Lastly, the main reason I posted. Perusing through Proverbs a while back, I was struck by the number of admonitions against unfair business practices, especially the use of "false weights". It shows up more than any other single issue. In the current context, I think the sale of variable-rate mortgages definitely counts as using false weights. From now on, I'll be sure to point that out to anyone who thinks religion or the Old Testament are irrelevant.
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Re: Usury and the financial crisis

Postby Bluegoat » 04 May 2009, 11:37

nomad wrote:
Bluegoat wrote:Most people are still poor, objectively or comparatively, and have to be for the system to work - this results in hardness of heart in the rich.


I'm not sure what "objectively or comparatively" means exactly. I do know that this is very subjective. Financially speaking, I suppose I would be considered poor, or at least on the poor end of comfortable, in the US. However, I also live a much richer and fuller life than a lot of people in the "quite comfortable" category because I have much more freedom. But then, my financial status is a direct result of my choices which have tended to value that freedom and my artistic endeavors above financial stability. And any time I wanted to reverse that and place my priority on developing a career, I can (at least for a few more years). Being "poor" by choice is different from being poor with no way out. This is by American standards. "Comparatively" speaking, I am financially and materially among the richest people in the world.


Comparatively poor in that they are poor compared to other people, but are getting along. So this would apply to many low-income people whose needs are being met but are less well off than many around them. Objectively poor in that although they might be at the same level as those around them, they are all starving.

I was actually not thinking primarily of people in the West. I think the way things are set up now depends on people in far-away countries living in poverty. Being poor in the Western sense is often not a bad thing, if basic needs are met. Living in poverty is another thing altogether.


Lastly, the main reason I posted. Perusing through Proverbs a while back, I was struck by the number of admonitions against unfair business practices, especially the use of "false weights". It shows up more than any other single issue. In the current context, I think the sale of variable-rate mortgages definitely counts as using false weights. From now on, I'll be sure to point that out to anyone who thinks religion or the Old Testament are irrelevant.


That's really interesting. I think you are right.

There is a strange way of thinking that business practices are somehow seperate from our real lives, and so aren't subject to the same moral requirements. It seems to reach its zenith with corporations. It's so strange, I just don't get it, but many people seem to believe it.
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