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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 r

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.
        apta 6y ago
        Sketchy or not, they're using the same immoral and parasitic principal to operate. I mentioned in another post how usury is so ingrained in today's financial systems by means of bonds, options, CDs, debt for debt, and so on. It's not trivial to explain in a paragraph or two. By issuing debt, especially when not in dire need, the borrower is enabling others to engage in said parasitic practices.
        beervirus 6y ago
        You have some very peculiar ideas about morality.
- 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.

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.
        apta 6y ago
        Sketchy or not, they're using the same immoral and parasitic principal to operate. I mentioned in another post how usury is so ingrained in today's financial systems by means of bonds, options, CDs, debt for debt, and so on. It's not trivial to explain in a paragraph or two. By issuing debt, especially when not in dire need, the borrower is enabling others to engage in said parasitic practices.
        beervirus 6y ago
        You have some very peculiar ideas about morality.
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.