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Interest is one of the main reasons the economic and financial system is in ruins. It is an exploitative, parasitic practice and we've known that for thousands

by apta 6y ago

Interest is one of the main reasons the economic and financial system is in ruins. It is an exploitative, parasitic practice and we've known that for thousands of years. But some people only care about their pockets.

dang 6y ago
You broke the site guidelines by starting and then perpetuating this flamewar. Please read https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here. Note this one: "Eschew flamebait. Don't introduce flamewar topics unless you have something genuinely new to say. Avoid unrelated controversies and generic tangents." We detached this subthread from https://news.ycombinator.com/item?id=23821546 https://news.ycombinator.com/item?id=23821546.
yonaguska 6y ago
Let me know when you figure out a better way to put a price on the risk of loaning money. As evil as you may think interest rates are- without a price on the risk of loaning money- access to loans dry up and only the already wealthy will have access to capital.
- apta 6y ago
  Loaning money should not be done to make money, it's parasitic. It should purely be a charitable contribution without expecting a return. If the loanee decides, out of his or her own goodness to return more money than they took, then that's up to them. Now the obvious and direct effect of this is that people will generally not loan their money. This is a good thing. The follow up is that they will invest their money in hopefully legitimate and moral ways.
  - namdnay 6y ago
    But here we’re talking about equity (stocks), not bonds (loans). So the interest isn’t coming from loaning, it’s coming from investing.
    - apta 6y ago
      When I say interest I mean money for money transactions, like savings accounts in banks or bonds where the return is set ahead of time and is practically guaranteed (i.e. usury). Investing is fine since it can incur a gain or loss.
      - beervirus 6y ago
        Why does that make investing fine?
        apta 6y ago
        Because it does not exploit people, unlike usury.
        beervirus 6y ago
        Investing and lending are both voluntary transactions entered into by consenting adults. Neither one is coercive. Why would one be exploitative and the other not?
        apta 6y ago
        Because the borrower is out of options, and will have to resort to engaging in an interest based transaction, whereby he is exploited by the lender. It's not really voluntary at that point. Do you think anyone in their right mind wants to be on the paying side of an interest based loan?
        beervirus 6y ago
        I mean we're not just talking about sketchy payday lenders here, right? You're also saying that Fortune 500 companies that issue bonds are being forced into doing so by whoever's buying those bonds. That's crazy though. There are plenty of reasons that a company might prefer to issue debt instead of selling more equity.
  - danans 6y ago
    > It should purely be a charitable contribution without expecting a return. > Now the obvious and direct effect of this is that people will generally not loan their money. This is a good thing. The follow up is that they will invest their money in hopefully legitimate and moral ways. What kind of investor are you referring to that doesn't expect returns? Even "social impact" investors expect returns in reputation, or in buttressing the foundation on which their primary profit driven business is built.
    - apta 6y ago
      You can expect returns, but not fix them ahead of time as what people do with interest bearing loans (i.e. usury). Loaning money for money is parasitic and immoral. Investing that can incur a profit or a loss is fine in general.
      - danans 6y ago
        > You can expect returns, but not fix them ahead of time Fixing them ahead of time is an attempt to quantify risk. It doesn't eliminate risk - loan defaults happen. The riskier a loan, the higher the interest rate. As long as the lendee has the option of refinancing with another institution (i.e. there is a competitive market for loans), usury shouldn't be an issue. Usury is an issue when the lendee has no other resort due to being persona-non-grata in the credit system (i.e. people whose only option is payday loans) Without loans, there would be no way for people without extraordinary amounts of capital to purchase such basic items of modern life as a home or a car. What other mechanism do you suggest for those? Also, a lot of businesses are not public investment like technology firms, i.e. a neighborhood deli. If they have multiple investors, they are just partnerships, often with the partners in the same family. Loans are how such businesses find "investors". I'd like a world where housing (in the right place), transportation, and costs of small enterprise startup were cheap and good enough for everyone to pursue without loans, but we aren't in that world yet. Maybe some technology advancement (modular homes, self driving buses, 3d printers) will help to reduce the cost of these things such that people won't need to make such large purchases, but that's still to be seen.
- FlyMoreRockets 6y ago
  > Let me know when you figure out a better way to put a price on the risk of loaning money. Collateral.
  - refurb 6y ago
    So people with no collateral are SOL?
    - apta 6y ago
      If people have nothing for collateral, they're most likely in poverty and should be receivers of charity or other government assistance programs.
      - refurb 6y ago
        So no student loans? Most 19 year olds have no collateral.
        apta 6y ago
        So that's a symptom of an underlying cause: the insanity of for profit college prices in the US. Other countries don't have this problem. There's also the obvious solution of giving them loans with 0% interest. Perhaps another option is to pay their tuition in exchange for working at the lender for a fixed number of years afterward.
    - cko 6y ago
      Partnerships, issuing stock? Not exactly collateral but there are aligned interests.
bryanlarsen 6y ago
So everything is sunshine and roses now that we have effectively 0% interest rates?
- apta 6y ago
  Not quite, because usury is deeply ingrained in the system, from bonds to CDs to buying debt for debt, etc. There are many usurious transactions that form the underpinning of the financial system that need to be abolished for things to be fair.
prussian 6y ago
Even islamic banking expects some kind of ROI. Perhaps it isn't strict usury, but there is generally some kind of ownership or profit sharing happening.
- apta 6y ago
  Expecting is different from enforcing in the contract, as is the case with interest/usury. As long as the contract allows for a gain or loss (other caveats holding), then it should be fine in general. On a side note, there is no strict definition of what "Islamic banking" is, much of so called Islamic banking you hear about today, isn't.

by apta 6y ago

dang 6y ago

You broke the site guidelines by starting and then perpetuating this flamewar. Please read https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here. Note this one: "Eschew flamebait. Don't introduce flamewar topics unless you have something genuinely new to say. Avoid unrelated controversies and generic tangents." We detached this subthread from https://news.ycombinator.com/item?id=23821546 https://news.ycombinator.com/item?id=23821546.

yonaguska 6y ago

Let me know when you figure out a better way to put a price on the risk of loaning money. As evil as you may think interest rates are- without a price on the risk of loaning money- access to loans dry up and only the already wealthy will have access to capital.

apta 6y ago
Loaning money should not be done to make money, it's parasitic. It should purely be a charitable contribution without expecting a return. If the loanee decides, out of his or her own goodness to return more money than they took, then that's up to them. Now the obvious and direct effect of this is that people will generally not loan their money. This is a good thing. The follow up is that they will invest their money in hopefully legitimate and moral ways.
- namdnay 6y ago
  But here we’re talking about equity (stocks), not bonds (loans). So the interest isn’t coming from loaning, it’s coming from investing.
  - apta 6y ago
    When I say interest I mean money for money transactions, like savings accounts in banks or bonds where the return is set ahead of time and is practically guaranteed (i.e. usury). Investing is fine since it can incur a gain or loss.
    - beervirus 6y ago
      Why does that make investing fine?
      - apta 6y ago
        Because it does not exploit people, unlike usury.
        beervirus 6y ago
        Investing and lending are both voluntary transactions entered into by consenting adults. Neither one is coercive. Why would one be exploitative and the other not?
        apta 6y ago
        Because the borrower is out of options, and will have to resort to engaging in an interest based transaction, whereby he is exploited by the lender. It's not really voluntary at that point. Do you think anyone in their right mind wants to be on the paying side of an interest based loan?
        beervirus 6y ago
        I mean we're not just talking about sketchy payday lenders here, right? You're also saying that Fortune 500 companies that issue bonds are being forced into doing so by whoever's buying those bonds. That's crazy though. There are plenty of reasons that a company might prefer to issue debt instead of selling more equity.
- danans 6y ago
  > It should purely be a charitable contribution without expecting a return. > Now the obvious and direct effect of this is that people will generally not loan their money. This is a good thing. The follow up is that they will invest their money in hopefully legitimate and moral ways. What kind of investor are you referring to that doesn't expect returns? Even "social impact" investors expect returns in reputation, or in buttressing the foundation on which their primary profit driven business is built.
  - apta 6y ago
    You can expect returns, but not fix them ahead of time as what people do with interest bearing loans (i.e. usury). Loaning money for money is parasitic and immoral. Investing that can incur a profit or a loss is fine in general.
    - danans 6y ago
      > You can expect returns, but not fix them ahead of time Fixing them ahead of time is an attempt to quantify risk. It doesn't eliminate risk - loan defaults happen. The riskier a loan, the higher the interest rate. As long as the lendee has the option of refinancing with another institution (i.e. there is a competitive market for loans), usury shouldn't be an issue. Usury is an issue when the lendee has no other resort due to being persona-non-grata in the credit system (i.e. people whose only option is payday loans) Without loans, there would be no way for people without extraordinary amounts of capital to purchase such basic items of modern life as a home or a car. What other mechanism do you suggest for those? Also, a lot of businesses are not public investment like technology firms, i.e. a neighborhood deli. If they have multiple investors, they are just partnerships, often with the partners in the same family. Loans are how such businesses find "investors". I'd like a world where housing (in the right place), transportation, and costs of small enterprise startup were cheap and good enough for everyone to pursue without loans, but we aren't in that world yet. Maybe some technology advancement (modular homes, self driving buses, 3d printers) will help to reduce the cost of these things such that people won't need to make such large purchases, but that's still to be seen.
FlyMoreRockets 6y ago
> Let me know when you figure out a better way to put a price on the risk of loaning money. Collateral.
- refurb 6y ago
  So people with no collateral are SOL?
  - apta 6y ago
    If people have nothing for collateral, they're most likely in poverty and should be receivers of charity or other government assistance programs.
    - refurb 6y ago
      So no student loans? Most 19 year olds have no collateral.
      - apta 6y ago
        So that's a symptom of an underlying cause: the insanity of for profit college prices in the US. Other countries don't have this problem. There's also the obvious solution of giving them loans with 0% interest. Perhaps another option is to pay their tuition in exchange for working at the lender for a fixed number of years afterward.
  - cko 6y ago
    Partnerships, issuing stock? Not exactly collateral but there are aligned interests.

bryanlarsen 6y ago

So everything is sunshine and roses now that we have effectively 0% interest rates?

apta 6y ago
Not quite, because usury is deeply ingrained in the system, from bonds to CDs to buying debt for debt, etc. There are many usurious transactions that form the underpinning of the financial system that need to be abolished for things to be fair.

prussian 6y ago

Even islamic banking expects some kind of ROI. Perhaps it isn't strict usury, but there is generally some kind of ownership or profit sharing happening.

apta 6y ago
Expecting is different from enforcing in the contract, as is the case with interest/usury. As long as the contract allows for a gain or loss (other caveats holding), then it should be fine in general. On a side note, there is no strict definition of what "Islamic banking" is, much of so called Islamic banking you hear about today, isn't.