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> Capitalism is predicated on the ability to loan out money. If that's true, then it's fundamentally broken (assuming interest bearing loans of course). You w

> Capitalism is predicated on the ability to loan out money. If that's true, then it's fundamentally broken (assuming interest bearing loans of course). You will never have a sustainable economic system that is based on interest bearing loans, we see it all the time with people waiting for the next crash to happen. > No debt means no credit for new businesses Not true. There are moral alternatives. If you want to start a business, pitch your idea to investors who are willing to put in money in exchange for a portion of the company. If it works out, everyone profits, otherwise, everyone takes risk equally and the holder of the idea is not left with crippling debt. This is just and fair. > No mortgages. Mortgages artificially increase property prices, continuing the cycle. There are alternatives that don't involve interest. You see it all the time in the auto industry where they have 0% loans. Do the same with houses. We already did that historically in Muslim nations. > Governments can't issue bonds to raise capital. Raise capital in an ethical way. The government can invest in its society and businesses for example. Obviously there are other solutions but that's for the specialists. > Society would literally collapse if we "do away with interest bearing and yielding assets." Except it didn't when people followed the teachings of their religion (specifically Islam). Great empires were built without interest. It's possible, it's just that it isn't as easy or perhaps convenient to those who stand to benefit the most from interest.

NovemberWhiskey 6y ago
>Mortgages artificially increase property prices, continuing the cycle. There are alternatives that don't involve interest. You see it all the time in the auto industry where they have 0% loans. Do the same with houses. If your perspective is that artificial bubbles in asset prices will be reduced by lowering the cost of borrowing (i.e. no interest) then you're going to have to explain that, because it's the opposite of what normally happens. EDIT: Shariah-compliant mortgages are generally constructed so there's no interest, but the cashflows between the parties often look very similar. e.g. a Musharakah loan where you only initially own the home in the proportion of your downpayment but gradually buy more of it over time by paying the bank off over time, as well an element of rent. Interest rate is replaced by return rate because the form of the contract is different.
- gher-shyu3i 6y ago
  When did we have 0% interest on houses in modern times? I said that mortgage interest contributes to bubbles, not that it's the only cause. Interest is more insidious, because it allows people who have wealth to gather even more wealth without putting in the appropriate risk to balance it, giving them the luxury to purchase assets easily, contributing to those bubbles somewhat indirectly. However, because of interest, those same wealthy people have an even bigger advantage. They take out mortgages, and after a while they can take out loans on said mortgages to acquire even more assets. It's genius really (in a very evil way). These things are very interconnected. Just banishing mortgages won't solve the issue. The economic system has to be fundamentally turned over.
  - NovemberWhiskey 6y ago
    >However, because of interest, those same wealthy people have an even bigger advantage. They take out mortgages, and after a while they can take out loans on said mortgages to acquire even more assets. It's genius really (in a very evil way). A mortgage is a liability, not an asset. You can't take out a loan against a liability. Nothing you're writing here really makes any sense to me, despite the benefit of the doubt.
    - gher-shyu3i 6y ago
      You can take out a loan on an existing mortgaged asset after you built some equity into it, especially if the asset increased in price during that period. You don't have to have paid it off. It goes to show how evil the entire setup is. It's basically laying domino blocks, the moment something happens, the entire thing collapses.
      - vageli 6y ago
        > You can take out a loan on an existing mortgaged asset after you built some equity into it, especially if the asset increased in price during that period. Is not a mortgage very similar to owning X% of a thing? Like, if I had a mortgage for $100,000 and I've paid $10,000 towards it, it's almost akin to owning 1/10 of the house (which would play out in the event of liquidation, all other things equal). That real estate tends to rise in value as an asset class is tangential to the topic of usary. It seems plain to me that there is a concept of the current value of something versus the future value of something, with the difference being expressed as interest (to some degree)?
rank0 6y ago
> If that's true, then it's fundamentally broken (assuming interest bearing loans of course). You will never have a sustainable economic system that is based on interest bearing loans Yes we should all switch the current economic system which has been the root cause of societal development. And we should switch to a fairy-tail system which you describe but miraculously does not and has not ever existed. One where people will lend out money for free! Why don't you start us off? I'd like a free loan please. > Not true. There are moral alternatives. If you want to start a business, pitch your idea to investors who are willing to put in money in exchange for a portion of the company. This is hilarious because its just another form of lending which in fact does yield interest. How do you think the investors will track ownership of the company? Shares which appreciate aka big bad interest. > There are alternatives that don't involve interest. You see it all the time in the auto industry where they have 0% loans. There are strings attached to those loans and the average auto loan absolutely has a non-zero interest rate. We are currently experiencing a massive auto loan bubble. Handing out low interest loans indiscriminately is irresponsible and the cause of massive economic damage throughout history. https://www.thedrive.com/news/33065/zero-percent-financing-and-cheap-loans-dont-mean-you-can-afford-that-new-car https://www.thedrive.com/news/33065/zero-percent-financing-a... > Raise capital in an ethical way. I think you are confused. The government is "taking out the loan" by issuing bonds and paying an interest rate to the bond buyers. So which side is unethical? The lender or the borrower? > Great empires were built without interest. Like which? At the end of the day, nobody is going to lend money without financial incentive. Why accept the risk? If you disagree then ask yourself why aren't you loaning out YOUR money for free? I will happily accept a free loan.
- KMag 6y ago
  > > Great empires were built without interest. > Like which? I think part of the problem is that the GP is conflating debt leverage and interest. My understanding is that there have been societies essentially without debt leverage, and no societies without loan yield. As far as interest, all non-altruistic loans have strictly positive yield. You can use contracts to shift payments around and nominally get rid of interest, but you can always calculate an equivalent interest rate from the loan's yield. In the middle ages, they discovered that an investment, an insurance contract, and a contract-for-difference (sale of profit) together (contractum trinius) could perfectly replicate the cash flows of an interest-bearing-loan.[0] Presumably the contractum trinius is what eventually lead to the Catholic Church allowing interest-bearing loans. My understanding is that the joint ventures set up for Islamic finance end up having cash flows equivalent to interest-bearing loans, though perhaps with important differences regarding collateral and leverage. The yield on these loans is always strictly positive, and an interest rate equivalent to that yield is easily calculated. You can shift payments around and structure things so that there's nominally no interest, but there's still yield on the loan. Now, I think there is some healthy debate to be had over the role of leverage and collateral in the economy, and also non-dischargeable debt like student loans. [0] https://en.wikipedia.org/wiki/Contractum_trinius https://en.wikipedia.org/wiki/Contractum_trinius

NovemberWhiskey 6y ago

>Mortgages artificially increase property prices, continuing the cycle. There are alternatives that don't involve interest. You see it all the time in the auto industry where they have 0% loans. Do the same with houses. If your perspective is that artificial bubbles in asset prices will be reduced by lowering the cost of borrowing (i.e. no interest) then you're going to have to explain that, because it's the opposite of what normally happens. EDIT: Shariah-compliant mortgages are generally constructed so there's no interest, but the cashflows between the parties often look very similar. e.g. a Musharakah loan where you only initially own the home in the proportion of your downpayment but gradually buy more of it over time by paying the bank off over time, as well an element of rent. Interest rate is replaced by return rate because the form of the contract is different.

gher-shyu3i 6y ago
When did we have 0% interest on houses in modern times? I said that mortgage interest contributes to bubbles, not that it's the only cause. Interest is more insidious, because it allows people who have wealth to gather even more wealth without putting in the appropriate risk to balance it, giving them the luxury to purchase assets easily, contributing to those bubbles somewhat indirectly. However, because of interest, those same wealthy people have an even bigger advantage. They take out mortgages, and after a while they can take out loans on said mortgages to acquire even more assets. It's genius really (in a very evil way). These things are very interconnected. Just banishing mortgages won't solve the issue. The economic system has to be fundamentally turned over.
- NovemberWhiskey 6y ago
  >However, because of interest, those same wealthy people have an even bigger advantage. They take out mortgages, and after a while they can take out loans on said mortgages to acquire even more assets. It's genius really (in a very evil way). A mortgage is a liability, not an asset. You can't take out a loan against a liability. Nothing you're writing here really makes any sense to me, despite the benefit of the doubt.
  - gher-shyu3i 6y ago
    You can take out a loan on an existing mortgaged asset after you built some equity into it, especially if the asset increased in price during that period. You don't have to have paid it off. It goes to show how evil the entire setup is. It's basically laying domino blocks, the moment something happens, the entire thing collapses.
    - vageli 6y ago
      > You can take out a loan on an existing mortgaged asset after you built some equity into it, especially if the asset increased in price during that period. Is not a mortgage very similar to owning X% of a thing? Like, if I had a mortgage for $100,000 and I've paid $10,000 towards it, it's almost akin to owning 1/10 of the house (which would play out in the event of liquidation, all other things equal). That real estate tends to rise in value as an asset class is tangential to the topic of usary. It seems plain to me that there is a concept of the current value of something versus the future value of something, with the difference being expressed as interest (to some degree)?

rank0 6y ago

> If that's true, then it's fundamentally broken (assuming interest bearing loans of course). You will never have a sustainable economic system that is based on interest bearing loans Yes we should all switch the current economic system which has been the root cause of societal development. And we should switch to a fairy-tail system which you describe but miraculously does not and has not ever existed. One where people will lend out money for free! Why don't you start us off? I'd like a free loan please. > Not true. There are moral alternatives. If you want to start a business, pitch your idea to investors who are willing to put in money in exchange for a portion of the company. This is hilarious because its just another form of lending which in fact does yield interest. How do you think the investors will track ownership of the company? Shares which appreciate aka big bad interest. > There are alternatives that don't involve interest. You see it all the time in the auto industry where they have 0% loans. There are strings attached to those loans and the average auto loan absolutely has a non-zero interest rate. We are currently experiencing a massive auto loan bubble. Handing out low interest loans indiscriminately is irresponsible and the cause of massive economic damage throughout history. https://www.thedrive.com/news/33065/zero-percent-financing-and-cheap-loans-dont-mean-you-can-afford-that-new-car https://www.thedrive.com/news/33065/zero-percent-financing-a... > Raise capital in an ethical way. I think you are confused. The government is "taking out the loan" by issuing bonds and paying an interest rate to the bond buyers. So which side is unethical? The lender or the borrower? > Great empires were built without interest. Like which? At the end of the day, nobody is going to lend money without financial incentive. Why accept the risk? If you disagree then ask yourself why aren't you loaning out YOUR money for free? I will happily accept a free loan.

KMag 6y ago
> > Great empires were built without interest. > Like which? I think part of the problem is that the GP is conflating debt leverage and interest. My understanding is that there have been societies essentially without debt leverage, and no societies without loan yield. As far as interest, all non-altruistic loans have strictly positive yield. You can use contracts to shift payments around and nominally get rid of interest, but you can always calculate an equivalent interest rate from the loan's yield. In the middle ages, they discovered that an investment, an insurance contract, and a contract-for-difference (sale of profit) together (contractum trinius) could perfectly replicate the cash flows of an interest-bearing-loan.[0] Presumably the contractum trinius is what eventually lead to the Catholic Church allowing interest-bearing loans. My understanding is that the joint ventures set up for Islamic finance end up having cash flows equivalent to interest-bearing loans, though perhaps with important differences regarding collateral and leverage. The yield on these loans is always strictly positive, and an interest rate equivalent to that yield is easily calculated. You can shift payments around and structure things so that there's nominally no interest, but there's still yield on the loan. Now, I think there is some healthy debate to be had over the role of leverage and collateral in the economy, and also non-dischargeable debt like student loans. [0] https://en.wikipedia.org/wiki/Contractum_trinius https://en.wikipedia.org/wiki/Contractum_trinius