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Let's take it one step at a time. Lending with interest is taking advantage of the needy, it's predatory and immoral, that I think we can all agree on. If we

by apta 6y ago

Let's take it one step at a time. Lending with interest is taking advantage of the needy, it's predatory and immoral, that I think we can all agree on. If we ban lending with interest, then you're right, there is no financial benefit to be made. So the lender would be lending out of good will. However, the seller might also be willing to let go of his product on installments (without raising the price, that's also usury). For example, if I go to purchase a car from the dealer, given most people would not be able to afford to pay cash outright, he'd be forced to give it out in installments, otherwise he wouldn't sell. The entire system must be set up properly for this to work. Introducing easy debt just ups prices for everyone, and pushes the poor deeper into misery, exactly as you note: car loans, mortgages, etc. There are solutions. Instead of business loans, the person providing the funds would get a share of the company in return. That way, if the company succeeds, he'll make a profit, and if it doesn't, he'll lose his investment. We can come up with similar scenarios for personal loans.

jefftk 6y ago
> Lending with interest is taking advantage of the needy, it's predatory and immoral, that I think we can all agree on. Many loans have nothing to do with the needy. If I borrow $1M to buy pile driving equipment to start a pile driving business, and pay the loan back with the proceeds of my business, nothing predatory or immoral has happened. Similarly, I borrowed money from the bank to buy my current house. I am relatively well-off; the bank did not take advantage of me by offering a loan at market rate, and I wasn't needy. > If I go to purchase a car from the dealer, given most people would not be able to afford to pay cash outright, he'd be forced to give it out in installments, otherwise he wouldn't sell. The entire system must be set up properly for this to work. To afford to let you (and everyone else) pay for the car in installments, the dealer is going to need to charge a higher price. The amount you end up paying in total for the car is approximately the same under an installment approach than under a loan-with-interest approach. > Instead of business loans, the person providing the funds would get a share of the company in return. This is what most startups do, yes
- apta 6y ago
  > Many loans have nothing to do with the needy. I understand, it's not just the needy. Easy credit also facilitates more corruption and inflation. > the dealer is going to need to charge a higher price Not if no one is buying at that higher price. > The amount you end up paying in total for the car is approximately the same under an installment approach than under a loan-with-interest approach. The difference is now the same item (car) is being sold at two different prices depending on whether or not you can (or are willing to) pay up front. This is substantive difference. > This is what most startups do, yes Exactly, and this model should be extended to other facets of financing, it's only fair for both the investor and the "borrower". It will lead to a much more fair society, and will play a huge role in closing the wealth gap.

by apta 6y ago

jefftk 6y ago

> Lending with interest is taking advantage of the needy, it's predatory and immoral, that I think we can all agree on. Many loans have nothing to do with the needy. If I borrow $1M to buy pile driving equipment to start a pile driving business, and pay the loan back with the proceeds of my business, nothing predatory or immoral has happened. Similarly, I borrowed money from the bank to buy my current house. I am relatively well-off; the bank did not take advantage of me by offering a loan at market rate, and I wasn't needy. > If I go to purchase a car from the dealer, given most people would not be able to afford to pay cash outright, he'd be forced to give it out in installments, otherwise he wouldn't sell. The entire system must be set up properly for this to work. To afford to let you (and everyone else) pay for the car in installments, the dealer is going to need to charge a higher price. The amount you end up paying in total for the car is approximately the same under an installment approach than under a loan-with-interest approach. > Instead of business loans, the person providing the funds would get a share of the company in return. This is what most startups do, yes

apta 6y ago
> Many loans have nothing to do with the needy. I understand, it's not just the needy. Easy credit also facilitates more corruption and inflation. > the dealer is going to need to charge a higher price Not if no one is buying at that higher price. > The amount you end up paying in total for the car is approximately the same under an installment approach than under a loan-with-interest approach. The difference is now the same item (car) is being sold at two different prices depending on whether or not you can (or are willing to) pay up front. This is substantive difference. > This is what most startups do, yes Exactly, and this model should be extended to other facets of financing, it's only fair for both the investor and the "borrower". It will lead to a much more fair society, and will play a huge role in closing the wealth gap.